- -------------------------------------------------------------------------------
Registration Statement No. 333-50532
SECURITIES AND EXCHANGE COMMISSION
FORM S-3/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
JAWZ Inc.
-------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
-------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
98-0167013
- --------------------------------------------------------------------------------
(I.R.S. Employer Identification Number)
JAWZ Inc.
12 Concorde Gate,
Suite 900
Toronto, Ontario Canada M36 3N6
- --------------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Riaz Mamdani, Chief Financial Officer
JAWZ INC.
12 Concorde Gate, Suite 900
Toronto, Ontario, M3G 3N6
(416) 444-2526
Copy to: Luke P. Iovine, III, Esq.
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue, New York, New York 10022
(212) 318-6000
-------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Approximate date of commencement of proposed sale to public: As soon as
practicable following the effectiveness of this registration statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
NY/312749.3
12/11/00
Calculation of Registration Fee
Title of Proposed Proposed
Each Class Amount to be Maximum Maximum Amount of
of Registered Offering Price Aggregate Registration Fee
Securities Per Share Offering Price
to be
Registered
- ---------------- ------------------- ----------------------- ----------------------- --------------------------
Common 3,697,290 $.90625(1) $3,350,670(1) $885(1)
Stock
Common 7,426,229 (2) (3) (3)
Stock shares(2)
Common 6,437,095 (4) (5) (5)
Stock shares(4)
Common 7,624,248 (6) (7) (7)
Stock shares(6)
(1) Calculated in accordance with Rule 457(c) under the Securities Act of 1933.
(2) Represents an aggregate of 7,426,229 shares of common stock previously
registered pursuant to this registration statement on Form S-3 (Registration No.
333-50532), filed with the Securities and Exchange Commission on November 22,
2000.
(3) This amount has been previously paid by the registrant as the registration
fee for 7,426,229 shares of common stock previously registered pursuant to this
registration statement on Form S-3 (Registration No. 333-50532), filed with the
Securities and Exchange Commission on November 22, 2000.
(4) Represents an aggregate of 6,437,095 shares of common stock previously
registered pursuant to registration statement on Form S-1 (Registration No.
333-38088) that are being carried forward in the prospectus filed with this
registration statement.
(5) This amount has been previously paid by the registrant as the registration
fee for 5,196,669 shares of common stock previously registered pursuant to
registration statement on Form S-1 (Registration No. 333-38088) and 1,240,426
shares of common stock registered pursuant to registration statement on Form S-1
(Registration No. 333-38088) that are being carried forward in the prospectus
filed with this registration statement.
(6) Represents an aggregate of 7,624,248 shares of common stock previously
registered pursuant to registration statement on Form S-1 (Registration No.
333-30406) that are being carried forward in the prospectus filed with this
registration statement.
(7) This amount has previously been paid by the registrant as the registration
fee for the 7,624,248 shares of common stock carried forward from the prior
registration statement on Form S-1 (Registration No. 333-30406).
PURSUANT TO RULE 429 OF THE GENERAL RULES AND REGULATIONS UNDER THE SECURITIES
ACT OF 1933, THE PROSPECTUS INCLUDED AS PART OF THIS REGISTRATION STATEMENT
SHALL BE DEEMED A COMBINED PROSPECTUS WHICH SHALL ALSO RELATE TO OUR
REGISTRATION STATEMENTS ON FORM S-1 (REGISTRATION NOS. 333-30406 AND 333-38088)
AND CONSTITUTES A POST-EFFECTIVE AMENDMENT TO OUR REGISTRATION STATEMENTS ON
FORM S-1 (REGISTRATION NOS. 333-30406 AND 333-38088). THIS REGISTRATION
STATEMENT AND SAID PRIOR REGISTRATION STATEMENTS ARE COLLECTIVELY REFERRED TO
HEREIN AS THE "REGISTRATION STATEMENT."
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.
NY/312749.3
12/11/00
The information in this prospectus in not complete and may be charged. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. The prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
- --------------------------------------------------------------------------------
Preliminary Prospectus Subject to completion, dated December __, 2000
25,184,862 SHARES
JAWZ Inc.
COMMON STOCK
Of the shares of common stock included in this prospectus:
o 6,253,723 shares are owned by the stockholders (other than Strong
River Investments, Inc., Bay Harbor Investments, Inc. and Calp II
Limited Partnership) listed in the section of this prospectus called
"Selling Stockholders" or are issuable on exercise of warrants owned
by these selling stockholders; and
o 12,495,022 shares are owned by, or are issuable upon the exercise of
warrants owned by, Strong River Investments, Inc., Bay Harbor
Investments, Inc. and Calp II Limited Partnership, three of the
selling stockholders listed in the "Selling Stockholders" section of
this prospectus. See "Selling Stockholders" beginning on Page 10.
The selling stockholders may sell any or all of their shares from time to time.
See "Plan of Distribution."
In addition, in connection with our prior acquisitions of Pace,
Offsite, General Network Services, 4Comm and Betach, we have prepared this
prospectus to register under the Securities Act for the issuance of the
following shares of our common stock:
o 4,190,234 shares of our common stock issuable to the former
shareholders and warrantholders of Offsite upon their exchange of
exchangeable shares of our subsidiary JAWS Acquisition Corp., an
Alberta corporation ("JAC");
o 1,731,932 shares of our common stock issuable to the former
shareholders of Pace upon their exchange of exchangeable shares of
our subsidiary, JAWS Acquisition Canada Corp., an Alberta
Corporation ("JACC");
o 140,618 shares of our common stock issuable to the former
shareholders of 4Comm upon their exchange of exchangeable shares
of JACC; and
o 373,333 shares of our common stock issuable to the former
shareholders of Betach upon their exchange of exchangeable shares of
JACC.
We will not receive any of the proceeds of sales by the selling
stockholders, or upon the issuance of any shares of our common stock to the
holders of JAC exchangeable shares.
We have agreed to bear all expenses related to this offering, other
than any underwriting discounts and commissions and any transfer taxes on the
shares of common stock that the selling stockholders are offering.
Our common stock is included for quotation on the Nasdaq National
Market System under the symbol "JAWZ".
Investing in this common stock involves a high degree of risk. See
"Risk Factors" beginning on page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
---------------
The date of this prospectus is December __, 2000.
- --------------------------------------------------------------------------------
NY/312749.3
12/11/00
--------------------------------------------
TABLE OF CONTENTS
Page
Prospectus Summary..................................................... 3
Risk Factors........................................................... 4
Use of Proceeds........................................................ 9
Selling Stockholders................................................... 10
Plan of Distribution................................................... 12
Legal Matters.......................................................... 13
Experts................................................................ 13
--------------------------------------------
You should rely only on the information contained in this prospectus.
We have not authorized anyone to provide you with information different from
that contained in this prospectus. The information contained in this prospectus
is accurate only as of the date of this prospectus, regardless of the time of
delivery of this prospectus or any sale of the common stock.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This prospectus includes forward-looking statements. Some of the
forward-looking statements can be identified by the use of forward-looking words
such as "believes," "expects," "may," "will," "should," "seeks,"
"approximately," "intends," "plans," "estimates" or "anticipates" or the
negative of those words or other comparable terminology. Forward-looking
statements involve risks and uncertainties. A number of important factors could
cause actual results to differ materially from those in the forward-looking
statements. These factors include the inability to successfully develop and
commercialize products, the JAWZ' limited operating history and continuing
operating losses, recent and potential development strategic alliances, the
JAWZ' liquidity and capital resources, systems failures, technological changes,
volatility of securities markets, government regulations, and economic
conditions and competition in the geographic and the business areas where we
conduct our operations. For a discussion of the factors that could cause actual
results to differ from projected results, please see the discussion under "Risk
Factors" contained in this prospectus and in other information contained in our
publicly available SEC filings and press releases.
CURRENCY REFERENCES
Financial information herein is expressed in the United States dollars
(US$," "$" or "dollars"), unless stated in Canadian dollars ("Cdn$"). As of
December 11, 2000, the exchange rate was US$1.00 equal Cdn$1.54.
2
NY/312749.3
12/11/00
PROSPECTUS SUMMARY
This summary is not a substitute for the more detailed information,
financial statements and the notes to the financial statements appearing
elsewhere in this prospectus. This prospectus contains forward looking
statements that involve risks and uncertainties. JAWZ' actual results could
differ materially from the results anticipated in these forward looking
statements as a result of the factors set forth under "Risk Factors" and
elsewhere in this prospectus.
JAWZ is currently the parent corporation of five subsidiaries. Our
operating companies are JAWZ Canada Inc. and JAWZ USA Inc. and JAWZ Illinois,
Inc., an Illinois corporation (formerly named Nucleus Consulting, Inc.). Our
other two subsidiaries, which are non-operating, are JAWS Acquisition
Corporation and JAWS Acquisition Canada Corporation, both of which subsidiaries'
sole purpose is to facilitate acquisitions of Canadian operating entities.
JAWZ directs its information security operations towards six target
markets, namely: Financial Services, Health Care, Cyber-crime & Forensics,
Government, Telecommunications (which includes Internet Service Providers and
Application Service Providers), and Strategic & Emerging Markets.
Both of JAWZ' two material operating subsidiaries, JAWZ Canada and JAWZ
USA, specialize in the field of information security including, without
limitation providing consulting services and software solutions to minimize the
threats to clients' information and communications. The overall strategic goal
for JAWZ is to consolidate the highly fragmented information security industry,
achieve increasing economies of scale through the acquisition of high growth,
emerging market operating entities and integrating such operating entities
through centralized administration and planning. Through industry and management
expertise, JAWZ attempts to ensure that acquired companies' receive the capital
and corporate planning necessary to maximize the growth potential within each
information security niche.
JAWZ also has developed or purchased several other products or services
that assist in the direction of operations into our target markets. These
products and services include managed services (which includes JAWZ Secure
Network Storage offering) and managed security services, professional services
and professional security services, JAWZ products (such as encryption products
and custom public key infrastructure products) and third party products (such as
fraud detection products, firewall products and virus protection products).
JAWZ also has developed several niche market areas of expertise. At its
offices in Calgary, Alberta, JAWZ Canada develops proprietary encryption
software using what is currently one of the world's strongest encryption
algorithms, L5, to secure binary data in various forms, including streamlining
or blocking data. Additionally, JAWZ Secure Network Storage offers secure, fully
automated on-line backup, retrieval and storage services through the Internet
from its data center in Calgary. Finally, at its offices in Toronto, Ontario,
JAWZ' financial information technology security solutions services are provided
and include services in the area of payment systems, including Point of Sale and
Automated Banking Machine Electronic Funds Transfer Switch Implementation,
network architecture and design, system integration and project management.
JAWZ registered offices are located at The Corporation Trust Company,
1209 Orange Street, in the City of Wilmington, County of New Castle, 19801 and
our head office is located at 12 Concorde Gate, Suite 900, Toronto, Ontario,
Canada M36 3N6. Our website is located at www.jawzinc.com.
3
NY/312749.3
12/11/00
RISK FACTORS
Investors should carefully consider the risks and uncertainties
described below before making an investment decision.
If any of the following risks actually occur, our business, financial
condition or operating results could be materially harmed. In this case, the
trading price of our common stock could decline and you may lose all or part of
your investment.
Risks Relating to Ownership of JAWZ common stock
JAWZ common stock could be delisted from the Nasdaq National Market,
which delisting could hinder your ability to obtain accurate quotations as to
the price of JAWZ common stock, or dispose of JAWZ common stock in the secondary
market
Although JAWZ common stock is currently listed on the Nasdaq National
Market, JAWZ cannot guarantee that an active public market for its common stock
will continue to exist. JAWZ common stock is required to maintain a minimum bid
price of $1.00 per share in order to trade on the Nasdaq National Market. In the
event that JAWZ common stock fails to maintain the minimum bid price criteria,
JAWZ common stock may be delisted from the Nasdaq National Market or be required
to reapply for listing meeting the Nasdaq initial listing requirements, which
are generally more stringent that the requirements currently governing JAWZ.
Additional factors giving rise to delisting could include, but might not be
limited to (1) a reduction of JAWZ' net tangible assets below $4,000,000, (2) a
reduction to one active market maker, (3) a reduction in the market value of the
public float in JAWZ' securities to less than $5,000,000, or (4) the discretion
of the Nasdaq National Market.
Nasdaq National Market trading, if any, of JAWZ common stock would
thereafter be conducted in the over-the-counter markets of the National
Association of Securities Dealers. Consequently, the liquidity of JAWZ common
stock would likely be impaired, not only in the number of shares which could be
bought and sold, but also through delays in the timing of the transactions,
reduction in the coverage of JAWZ by securities analysts and the news media, and
possibly lower prices for our securities than might otherwise prevail.
High volume of shares eligible for sale pursuant to this prospectus
The resale of the 25,184,862 shares of common stock registered in JAWZ
registration statement of which this Prospectus is a part could adversely affect
the price of the shares of common stock. As of November 28, 2000, there were
32,421,265 shares of JAWZ common stock outstanding. No prediction can be made as
to the effect that future sales of shares of common stock, or the availability
of shares of common stock for future sales, will have on the market price of the
common stock prevailing from time to time. Sales of substantial amounts of
common stock, or the perception that these sales could occur could adversely
affect prevailing market prices for the common stock.
The volatility of the stock markets could adversely affect our stock
price
Stock markets are subject to significant price and volume fluctuations
which may be unrelated to the operating performance of particular companies and
the market price of JAWZ common stock may frequently change. The market price of
JAWZ common stock could also fluctuate substantially due to a variety of other
factors, including: quarterly fluctuations in JAWZ' results of operations, JAWZ'
ability to meet analysts' expectations, adverse circumstances affecting the
introduction of market acceptance of new products and services offered by JAWZ,
announcements of new products and services by competitors, changes in the
information technology environment, changes in earnings estimates by analysts,
changes in accounting principles, sales of JAWZ common stock by existing holders
and loss of key personnel.
JAWZ does not anticipate paying dividends on its common stock in the
foreseeable future
JAWZ has generated minimal cash flow in the past and does not currently
anticipate generating significant cash flows from operations in the near future.
Therefore, JAWZ has not paid any dividends on its common stock to date and plans
to retain earnings, if any, for the continued development and expansion of JAWZ'
business operations. Accordingly, potential investors should not acquire shares
of JAWZ common stock with the investment objective of receiving dividend income
from JAWZ.
An investment in JAWZ may be diluted
JAWZ may issue a substantial number of shares of JAWZ common stock or
preferred stock without investor approval. Any such issuance of JAWZ securities
in the future could reduce an investor's ownership percentage and voting rights
in JAWZ and further dilute the value of his or her investment.
4
NY/312749.3
12/11/00
Penny Stock Rules limit the liquidity of JAWZ common stock
JAWZ common stock has recently been included for quotation on the
Nasdaq National Market System at a price between $1.00 and $2.50 per share, and,
therefore, may now and in the future be subject to the penny stock rules under
the Exchange Act. These rules regulate broker-dealer practices for transactions
in "penny stocks." Penny stocks generally are equity securities with a price of
less than $5.00. The penny stock rules require broker-dealers to deliver a
standardized risk disclosure document that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer must also provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson and monthly account statements showing the market value of each
penny stock held in the customer's account. The bid and offer quotations, and
the broker dealer and salesperson compensation information, must be given to the
customer orally or in writing prior to completing the transaction and must be
given to the customer in writing before or with the customer's confirmation.
In addition, the penny stock rules require that prior to a transaction,
the broker and/or dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These additional penny stock
disclosure requirements are burdensome and may reduce purchases of this offering
and reduce the trading activity in the market for JAWZ common stock. As long as
JAWZ common stock is subject to the penny stock rules, holders of JAWZ common
stock may find it more difficult to sell their securities.
Risks Relating to the Business of JAWZ
JAWZ' proceeds from available financing may not be sufficient to pursue
its operating objectives
Developing, manufacturing and marketing software and information
security solutions and the plans of JAWZ for expansion of its operations, as
mentioned above, will require significant amounts of capital. Because JAWZ has
no significant internal revenues to finance its continuing operations and plans
for expansion, JAWZ is dependent upon the proceeds from sales of JAWZ'
securities to satisfy its capital and operating requirements. JAWZ believes that
it has adequate financing to satisfy its capital and operating requirements
through the end of 2000. Thereafter, JAWZ will have to arrange for additional
financing, unless it can generate revenues from its products and services, to
finance its manufacturing and marketing operations at a sufficient level.
Financing options could include, but will not be limited to, additional sales of
JAWZ' securities or an operating line of credit. JAWZ will need, and is
considering, financing beyond this period including strategic partnerships,
public or private equity and/or debt financing. No assurance can be given,
however, that JAWZ will be able to obtain additional financing on terms
acceptable to JAWZ, if at all. If JAWZ fails to obtain financing, or fails to
obtain financing on terms favorable to JAWZ, JAWZ may be unable to continue to
complete the commercialization of its products, or continue its current
operations as presently conducted, if at all.
JAWZ and its subsidiaries have limited operating histories and
continued operating losses
Generally, JAWZ and its subsidiaries have short operating histories,
limited sales and insignificant operating revenues. For example, JAWZ Canada was
incorporated on September 19, 1997, did not begin producing software until
October 1997 and did not begin marketing software until May 1998.
Because of JAWZ short operating history and limited sales, it faces all
the risks and problems associated with a new business, including the existence
of operating losses. For example, between the time of the incorporation of JAWZ
and September 30, 2000, JAWZ has, on a consolidated basis, incurred cumulative
losses of $28,042,866. JAWZ anticipates that losses will continue in the future
unless it is able to produce revenue from sales of its software.
JAWZ cannot be certain that the operations of Pace, Nucleus, GNS,
4Comm, BSI and BASI, that have been integrated into JAWZ Canada and JAWZ USA,
can sustain profitability in any future period. Potential investors should be
aware that JAWZ Canada and JAWZ USA operate in a new and rapidly evolving market
and must respond to competitive developments, continue to upgrade and expand the
services it offers and continue to attract, retain and motivate employees in
order to maintain its profitability.
JAWZ cannot predict future revenues and operating results of JAWZ
Canada and JAWZ USA nor can it predict the operating expenses of JAWZ Canada and
JAWZ USA based on previous results for a number of reasons including the factors
described below. The revenues associated with a particular sale may vary
significantly depending upon the number of products licensed by a client, the
number of devices used by the client and the client's relative need for the
services of JAWZ Canada and/or JAWZ USA. Large individual sales or even minor
delays in customer orders can cause significant variation in licensing revenues
and results of operations for a particular period. In addition, JAWZ expects
each of JAWZ Canada and JAWZ USA to increasingly focus its efforts on the sale
of enterprise-wide security solutions, including JAWZ Amalco's entire product
suite and the related services of JAWZ Canada and JAWZ USA, as opposed to the
sale of component products. As a result, JAWZ anticipates that each sale made by
each of JAWZ Canada and JAWZ USA may require additional time and effort from
sales staff. Further, JAWZ expects each of JAWZ Canada and JAWZ USA to expand
upon the services it provides as well as its sales and marketing operations and
to improve its
5
NY/312749.3
12/11/00
internal operating and financial systems. Finally, to enhance the market share
of each of JAWZ Canada and JAWZ USA and the services they offer, JAWZ intends to
seek additional candidates for acquisition. As a result, spending levels for
each of JAWZ Canada and JAWZ USA will be established by JAWZ based, in large
part, on expected future revenues. If the revenues of any of JAWZ Canada and
JAWZ USA and actual results in any future period fall below the expectations of
JAWZ, the operating results of JAWZ will be adversely affected. Due to these
factors, JAWZ anticipates that the quarterly and annual revenues, expenses and
operating results of each of JAWZ Canada and JAWZ USA will vary significantly in
the future.
JAWZ is a defendant in pending litigation which could have a material
adverse effect on our business
On August 10, 2000, Bristol Asset Management LLC, an investor in JAWZ,
filed a complaint against JAWZ and Robert Kubbernus in Los Angeles Superior
Court. The complaint alleges breach of contract, fraud in the inducement, and
breach of fiduciary duty and unfair competition (Cal. Bus. Code s. 17200). On
October 3, 2000, we filed an answer to the Complaint in the Los Angeles Superior
Court in which we have denied substantially all of Bristol's material
allegations and listed eighteen affirmative defenses. No assurance can be given
that Bristol will not succeed in whole or in part on the claims made or that the
damages, if any, associated with Bristol's claims will not have a material
adverse effect on our operations and our financial position.
If we cannot protect our copyright, trademark and patents pending,
other companies could use our technology in competitive products. If we infringe
on the copyrights, trademarks or patents of others, other companies could
prevent us from developing or marketing our products
JAWZ' success depends upon, amongst other things, its proprietary
encryption technology. We rely on a combination of contractual rights,
copyright, trade secrets, know-how, trademarks, non-disclosure agreements and
technical measures to establish and protect these rights. We cannot assure
investors that we can protect our rights and prevent third parties from using or
copying our technology or intellectual property.
JAWZ does not presently own any patents or copyright registrations but
it has filed a U.S. patent application for its data encryption algorithm L5,
which is pending. However, there is no guarantee JAWZ will be successful and
receive a patent.
JAWZ believes that its technologies have been independently developed
and that these technologies do not infringe on the proprietary rights or trade
secrets of others. However, we cannot assure investors that it has not infringed
on the technologies of third parties or that third parties will not make
infringement violation claims against us. Any infringement claims against JAWZ
may negatively effect JAWZ' ability to produce and sell software.
International companies currently use all or a portion of the name
"JAWZ" in connection with products or services in industries the same as and
different from that of JAWZ. While JAWZ is attempting to qualify under a
trademark its name throughout the U.S. and Canada, significant issues may be
present as to the ability to widely use the name in connection with the products
or services to be rendered by JAWZ.
Recent acquisitions include inherent risks
JAWZ has recently acquired Pace, Offsite, Nucleus, BSI, BASI, 4Comm and
GNS, and substantially all of the assets of Secure Data Technologies Corporation
("SDTC") and JAWZ may acquire or invest in other businesses, technologies and
product lines from time to time that are complementary to our business. These
recent acquisitions are accompanied by the risks commonly encountered in these
types of transactions, including, among others, the difficulty of assimilating
the operations and personnel of the acquired businesses, the potential
disruption of our ongoing business, the diversion of our management from our
day-to-day operations, our ability to incorporate acquired technologies
successfully into our products and services, the additional expense associated
with amortization of acquired intangible assets, the potential impairment of our
relationships with our employees, customers and strategic partners, our ability
to retain key technical and managerial personnel of the acquired business and
our ability to maintain uniform standards, controls, procedures and policies. We
would also encounter these risks if we acquire or invest in the other businesses
in the future. Because of these and other factors, the recent acquisitions and
any future acquisitions, if consummated, could negatively impact our business,
operating results and financial condition.
JAWZ' business is in an early stage of market development and its
success depends on market acceptance of its products and services
JAWZ' success depends on whether or not our products and services are
accepted in the marketplace. Investors should be aware that companies
introducing new products into the market are subject to a high level of
uncertainty and risk. Because the market for its software and services is new
and evolving, JAWZ cannot predict the size and future growth rate, if any, of
the market. JAWZ cannot assure investors that the market for its various
products and services will develop or that demand for these products and
services will emerge or become economically sustainable. Market acceptance of
its products and services depends on its ability to establish brand images and
reputations for high quality and to differentiate their products and services
from competitors. There can be no assurance that the products and
6
NY/312749.3
12/11/00
services will be perceived as being of high quality or better than products and
services of others, or that JAWZ will be successful in establishing their brand
image. Additionally, the management teams ofJAWZ has no experience manufacturing
or marketing software or providing services on a large scale. This lack of
experience could result in JAWZ' failure to commercialize and sell its products
and services.
JAWZ may not be able to continue to compete in its rapidly changing
industry
Rapid changes in technology pose significant risks to JAWZ that it
cannot either control or influence the forces behind these changes. In addition
to emerging competition, evolving requirements and needs of clients and the
extent to which hackers and others seek to compromise secure systems, JAWZ must
adapt to changing computer hardware and software standards as well as to
frequent introductions of new products and enhancements to existing products.
The success of JAWZ will depend on its ability to create, develop, adapt and
improve information technology solutions in response to these and other changes.
JAWZ cannot assure investors that it will be able to successfully
identify new opportunities and develop and bring new products and services to
market in a timely manner, nor can JAWZ guarantee investors that products and
services developed by its competitors will not make JAWZ products and services
noncompetitive or obsolete. Further, the techniques used by hackers to
compromise the security of networks and intranets are constantly evolving and
are increasingly sophisticated. Because new hacking techniques are usually not
recognized until utilized against one or more targets, JAWZ is not able to
anticipate such techniques. To the extent that new hacking techniques result in
the compromise of JAWZ security systems, affected clients may believe that JAWZ
products and services are ineffective and may affect JAWZ business, operating
results and financial condition.
Because JAWZ products and services involve complex technology, major
new products and product enhancements require a long time to develop and test
before going to market. JAWZ cannot assure investors that it will have the
capital resources or the ability to implement any new technology or service. In
addition, because it is difficult to estimate the amount of time which is
required to develop new products and product enhancements, JAWZ has had to delay
the scheduled introduction of new and enhanced products in the past and JAWZ may
have to delay the introduction of new products, enhancements and services in the
future. Any failure by JAWZ to timely develop and introduce new products and
services or enhance current products and services could adversely affect JAWZ
business, operating results and financial condition.
Further, the market for network security monitoring, detection and
response solutions is intensely competitive and Pace expects competition to
increase in the future. JAWZ cannot guarantee that each of JAWZ Canada and JAWZ
USA will compete successfully against current or potential competitors,
especially those with significantly greater financial resources or brand name
recognition. Increased competition may result in price reductions, reduced gross
margins and loss of market share for JAWZ Canada and JAWZ USA.
The competitors of JAWZ Canada and JAWZ US generally fall within one of
the following four categories:
(a) internal information technology departments of clients and the
consulting firms that assist them in formulating security systems;
(b) relatively small software companies offering relatively limited
applications for network and internet security;
(c) large companies that currently sell competitive products and
services as well as other large software companies that have the
technical capability and resources to develop competitive
products; and
(d) software or hardware companies that could integrate features that
are similar to the products of JAWZ Canada into their own
products.
Mergers or consolidations between these competitors, or acquisitions of
small competitors by larger companies, would make these combined entities more
formidable competitors to JAWZ Canada and JAWZ USA. Large companies may have
advantages over each of JAWZ Canada and JAWZ USA because of their longer
operating histories, greater name recognition, larger customer bases or greater
financial, technical and marketing resources. As a result, they may be able to
adapt more quickly to new or emerging technologies and changes in customer
requirements. These companies can also devote greater resources than JAWZ Canada
and JAWZ USA to the promotion and sale of their products.
Potential liabilities could arise in JAWZ' future based on product
defects
Many of our customers use our products and services for critical
functions of monitoring and enhancing network security. As a result, JAWZ risks
product liability and related claims for products and services if it does not
adequately perform this function. JAWZ typically seeks to limit liability for
special, consequential or incidental damages
7
NY/312749.3
12/11/00
in their licensing agreements but these provisions may not in all cases
be enforceable under applicable laws. A product liability claim, to the extent
not covered by insurance, could adversely affect JAWZ' business, operating
results and financial condition.
In addition, complex software products, like those we develop, may
contain undetected "bugs" that, despite testing, are discovered only after
installation and use by clients. These bugs could result in adverse publicity,
loss of or delay in market acceptance or claims by clients against JAWZ, any of
which could be very damaging to JAWZ' business, operating results and financial
condition. Clients who deploy or use products improperly or incompletely may
experience temporary disruptions to their computer networking systems, which
could damage the JAWZ' reputation and its relationship with clients. Current
products may not be error-free and it is extremely doubtful that the future
products of JAWZ will be error-free. Furthermore, computers are manufactured in
a variety of different configurations with different operating systems, like
Windows, Unix, Macintosh and OS/2, and embedded software. As a result, it is
very difficult to comprehensively test software products for programming or
compatibility errors. Errors in the performance of JAWZ products, whether due to
design or their compatibility with products of other companies, could hinder the
acceptance of these products, and thus JAWZ' ability to implement those
products.
JAWZ' marketing strategies may not be successful
JAWZ expects to derive some of their sales revenue through independent
third parties who will either resell or use JAWZ' products to enhance their own
products. JAWZ is unable to determine how successful these providers will be in
selling JAWZ' software. Furthermore, JAWZ does not have any history or
experience in establishing or maintaining this third party support, and there
can be no assurance that we will be able to successfully support reseller
networks. If we are unable to provide this support, we may lose resellers and,
consequently, distribution of our products would be adversely affected.
Additionally, most resellers will offer competitive products manufactured by
third parties. There can be no assurance that resellers will give priority to
JAWZ' products and services over competitors' products and services. Finally, if
JAWZ is unable to support a reseller, we will need to attract additional or
replacement resellers to sell JAWZ' products and services. There can be no
assurance that JAWZ will be able to attract a sufficient number of additional or
replacement resellers in order to assure that our products and services will be
successfully marketed and distributed at a profit or that the additional or
replacement resellers will be successful in selling our products and services.
JAWZ' expansion of production and distribution capacities may not be
successful
JAWZ must increase its software production capacity and expand its
marketing network to sell its software before it will have a chance to compete
in the marketplace. Increasing JAWZ' manufacturing, service and marketing
capacity will involve hiring additional personnel, purchasing additional
manufacturing equipment and spending significant funds on advertising. The
foregoing will require significant capital expenditures, which will most likely
increase JAWZ' operating losses for an indefinite period of time. JAWZ'
expansion plans will also place a great deal of strain on its management team,
most of whom have not had experience managing large complex business operations.
JAWZ cannot guarantee that it will be able to expand its software production,
service and marketing capabilities as planned. If any of these obstacles prevent
JAWZ from expanding its software production, service and marketing business,
JAWZ may be forced to terminate its operations.
Although direct sales have accounted for JAWZ' revenues in 1999, JAWZ'
future performance will depend, in part, upon its ability to attract new
partners and develop additional distribution channels to effectively market and
support its services and the products of JAWZ. JAWZ cannot guarantee that it
will be able to attract these partners or develop additional distribution
channels.
Due to the rapidly changing nature of the information security industry
and the size of our company, we depend on key personnel at all levels
JAWZ depends on the efforts of its management team. Even though JAWZ
has employment agreements with Messrs. Kubbernus, Mamdani, Labrinos, Surbey and
Cumming and Minhas, it cannot guarantee that these persons will continue their
employment. Each of these members of JAWZ management team has entered into an
employment agreement with JAWZ, pursuant to which, in each case, the term of
employment extends until the earlier of (i) the date specified by the executive
officer in a notice of voluntary termination delivered by the executive officer
to JAWZ; provided that the notice shall not be effective until at least ten (10)
days after delivery thereof, (ii) the date the executive officer is terminated
by JAWZ for "just cause" (as defined in the employment agreement), or (iii) with
respect to termination other than for "just cause," the date which is determined
by providing the executive officer with one month's notice for each full year of
completed service commencing on the date JAWZ provides the executive officer
with a notice of termination. The loss of the services of one or more of the key
people may have a negative effect on JAWZ' ability to conduct its operations.
8
NY/312749.3
12/11/00
JAWZ' success also depends on its ability to attract and retain highly
qualified engineers, managers, marketers and sales and service personnel. The
competition for employees at all levels of the information security industry,
especially those with experience in the relatively new discipline of security
software, is increasingly intense and JAWZ cannot assure that it will be able to
hire or retain necessary personnel.
Risks associated with the authorization of preferred stock and possible
takeover effects
The board of directors of JAWZ is authorized to create and issue shares
of preferred stock without the approval of JAWZ' shareholders. Any preferred
stock that the board of directors of JAWZ creates and issues could negatively
affect the voting power or other rights of holders of shares of JAWZ common
stock. Also, the board of directors of JAWZ may create preferred stock which
could be used to prevent a third party from taking control of JAWZ.
Internet networks may not become widely adopted, limiting the market
for JAWZ' products
In order for us to be successful, internet networks must be widely
adopted as a means of trusted and secure communications and commerce within an
adequate time frame. Because trusted and secure communications and commerce over
internet networks is new and evolving, it is difficult to predict with any
assurance the size of this market and its growth rate, if any. To date, many
businesses and consumers have been deterred from utilizing internet networks for
a number of reasons, including, but not limited to, potentially inadequate
development of network infrastructure, security concerns, inconsistent quality
of service, lack of availability of cost-effective, high-speed service, limited
numbers of local access points for corporate users, inability to integrate
business applications on internet networks, the need to interoperate with
multiple and frequently incompatible products, inadequate protection of the
confidentiality of stored data and information moving across internet networks
and a lack of tools to simplify access to and use of internet networks. The
adoption of internet networks, for trusted and secure communications and
commerce, particularly by individuals and entities that historically have relied
upon traditional means of communications and commerce, will require a broad
acceptance of new methods of conducting business and exchanging information.
Companies and government agencies that already have invested substantial
resources in other methods of conducting business may be reluctant to adopt a
new strategy that may limit or compete with their existing efforts. Furthermore,
individuals with established patterns of purchasing goods and services and
effecting payments may be reluctant to alter those patterns. There can be no
assurance that internet networks will be widely adopted or adopted by enough
people to make our products successful.
The use of internet networks for trusted and secure communications and
commerce may not increase or may increase more slowly than expected because the
infrastructure required to support widespread trusted and secure communications
and commerce on these networks may not develop. For example, the internet has
experienced, and may continue to experience, significant growth in its number of
users and amount of traffic. There can be no assurance that the internet
infrastructure will continue to support the demands placed on it by this
continued growth or that the performance or reliability of the internet will not
be adversely affected by this continued growth. In addition, internet networks
could lose their viability due to delays in the development or adoption of new
standards and protocols to handle increased levels of activity or due to
increased governmental regulation. Changes in or insufficient availability of
communications services to support internet networks could result in slower
response times and also adversely affect usage of internet networks. If the
market for trusted and secure communications and commerce over internet networks
fails to develop or develops more slowly than expected, or if the internet
infrastructure does not adequately support any continued growth, our business,
operating results and financial condition would be adversely affected.
Fluctuations in the exchange rate could adversely affect JAWZ because
some of its operating subsidiaries are located in Canada
JAWZ' operating currency for its Canadian subsidiaries is Canadian
dollars, while its reporting currency is in United States dollars. Any change in
the value of the United States dollar against the Canadian dollar will affect
our Canadian dollar revenues and earnings when translated into United States
dollars. No assurance can be given that a fluctuation in the value of the
Canadian dollar against the United States dollar will not negatively impact
JAWZ' reported revenue and earnings.
USE OF PROCEEDS
JAWZ will not receive any proceeds from the sales of common stock by
the selling stockholders pursuant to this prospectus.
9
NY/312749.3
12/11/00
SELLING STOCKHOLDERS
The following table sets forth information with respect to the amount
of common stock held by each selling stockholder as of the date of this
prospectus and the shares being offered by the selling stockholders. The table
indicates the nature of any position, office or other material relationship that
the selling stockholder has had within the past three years with JAWZ or any of
its predecessors or affiliates. This prospectus relates, in part, to (i) the
offer and sale of the selling stockholders (other than Strong River Investments,
Inc., Bay Harbor Investments, Inc. and Calp II Limited Partnership) of up to
6,253,723 shares of common stock, including 3,232,417 shares of common stock
issuable upon the exercise of outstanding warrants issued by JAWZ, (ii)
6,663,920 shares, which are owned, or are issuable upon the exercise of warrants
owned by, Strong River Investments, Inc. and Bay Harbor Investments, Inc., two
of the selling stockholders listed in the "Selling Stockholders" section of this
prospectus (includes an aggregate of (a) 800,000 shares issued by the Company on
June 22, 2000, (b) 400,000 shares which were issued by the Company on July 17,
2000, (c) 1,456,176 shares which were issued by the Company on November 27, 2000
(d) 240,000 shares of our common stock issuable upon the exercise of warrants,
and (e) an additional 2,241,114 shares of our common stock which may be issued
upon the exercise of warrants), and (iii) 5,861,102 shares are owned by, or are
issuable upon the exercise of warrants owned by Calp II Limited Partnership,
another of the selling stockholders listed in the "Selling Stockholders" section
of this prospectus (includes an aggregate of (a) 235,295 shares issued by the
Company on February 22, 2000, (b) 600,000 shares issued by the Company on August
21, 2000, (c) 400,000 shares issued by the Company on October 11, 2000, (d)
300,000 shares of our common stock issuable upon the exercise of warrants, and
(e) an additional 4,208,159 shares of our common stock which may be issued upon
the exercise of warrants). The selling stockholders may offer all or part of
these shares of common stock covered by this prospectus. Information with
respect to shares owned beneficially after this offering assumes the sale of all
of the shares offered and no other purchases or sales of common stock, and that
no shares of common stock are issued to holders of JAC exchangeable shares. The
6,253,723 shares of common stock offered by this prospectus and owned by the
selling stockholders (other than Strong River Investments, Inc., Bay Harbor
Investments, Inc. and Calp II Limited Partnership), the 2,936,630 shares of
common stock offered by this prospectus and owned by Strong River Investments,
Inc. and Bay Harbor Investments, Inc., and the 5,861,102 shares of common stock
offered by this prospectus and owned by Calp II Limited Partnership, in each
case, may be offered from time to time by the selling stockholders named below.
10
NY/312749.3
12/11/00
Number of
Shares of Total Number
Common Number of Number of of Shares to Number Percentage
Stock, not Shares Shares of be Offered of Shares to be
including Represented Common Percentage for the to be Beneficially
Warrants, by Warrants Stock Beneficially Account of Owned Owned
Beneficially Beneficially Beneficially Owned Before the Selling after this after this
Name Owned Owned Owned+ Offering Stockholder Offering Offering
---- ----- ----- ------ -------- ----------- -------- --------
BPI Canadian Small Companies
Fund.............................. 0 117,647.5 117,647.5 * 117,647.5 0 *
Interward Capital Corporation. 0 20,000 20,000 * 20,000 0 *
Rockhaven Holdings Ltd........ 20,000 10,000 30,000 * 30,000 0 *
YMG Capital Management Inc.... 0 23,529 23,529 * 23,529 0 *
Acuity Investment Management
Inc**............................. 75,000 235,295 310,295 * 310,295 0 *
Beluga NV..................... 0 117,647.5 117,647.5 * 117,647.5 0 *
Pinetree Capital Corp......... 0 20,000 20,000 * 20,000 0 *
Fallingbrook Investments Ltd.. 0 17,647.5 17,647.5 * 17,647.5 0 *
Glentel Inc***................ 700,000 934,000 1,634,000 4.90% 1,634,000 0 0
Kehler International Equities
(1990) Inc........................ 0 11,765 11,765 * 11,765 0 *
Jean Gevaert.................. 47,060 23,530 70,590 * 70,590 0 *
Murdoch & Co.................. 0 137,500 137,500 * 137,500 0 *
Royal Trust Corp. of Canada
ITF2363129003................. 0 117,647.5 117,647.5 * 117,647.5 0 *
Bristol Asset
Management, LLC............... 0 850,000 850,000 2.55% 850,000 0 *
Thomas E. Skidmore............ 69,000 57,546 126,546 * 126,546 0 *
A. Allan Skidmore............. 0 57,546 57,546 * 57,546 0 *
Arthur Skidmore............... 0 8,340 8,340 * 8,340 0 *
Brian Skidmore................ 0 6,255 6,255 * 6,255 0 *
Cary Skidmore................. 0 8,340 8,340 * 8,340 0 *
Garry Skidmore................ 0 6,255 6,255 * 6,255 0 *
Beverly Droulis............... 0 417 417 * 417 0 *
Margrit Hartman............... 0 7,506 7,506 * 7,506 0 *
Margaret Alexis Kennedy....... 0 7,089 7,089 * 7,089 0 *
Suzanne Lowndes............... 0 7,506 7,506 * 7,506 0 *
Thomson Kernaghan & Co.
Limited***........................ 1,952,293 276,466 2,228,759 6.82% 2,228,759 0 0
Third Point Partners LP....... 0 53,676.5 53,676.5 * 53,676.5 0 *
Third Point Offshore Fund Ltd. 0 29,985 29,985 * 29,985 0 *
Points West International
Investments Ltd................... 0 17,326.5 17,326.5 * 17,326.5 0 *
Bonzai Partners LP............ 0 13,393 13,393 * 13,393 0 *
Bonzai Offshore Fund Ltd...... 0 3,266.5 3,226.5 * 3,226.5 0 *
CALP II LP, c/o Forum Fund
Services.......................... 1,235,295 4,625,807 5,861,102 15.82% 5,861,102 0 *
David Schecter................ 47,059 23,529.5 70,588.5 * 70,588.5 0 *
Kruco Inc. ................... 0 11,765 11,765 * 11,765 0 *
Michael Pluscanskas........... 55,447 0 55,447 * 55,447 0 *
Tyson Macaulay................ 55,447 0 55,447 * 55,447 0 *
Strong River Investments,
Inc.****.......................... 1,328,088 1,240,557 2,568,645 7.63% 2,568,645 0 *
Bay Harbor Investments,
Inc.****.......................... 1,328,088 1,240,557 2,568,645 7.63% 2,568,645 0 *
* Less than 1%.
11
NY/312749.3
12/11/00
** Acuity Investment Management Inc. is the record holder of all 75,000 shares.
Acuity Investment Management Inc. disclaims beneficial ownership for all
75,000 shares of common stock listed above. Acuity Investment Management Inc.
purchased these shares of common stock at the direction of the Bank of Nova
Scotia Custodian for a/c #382 308.
*** The relationship of Glentel Inc. and Thomson Kernaghan & Co. Limited, in
each case, with JAWZ is described under the caption, "Certain Relationships
and Related Transactions" in this prospectus.
**** Of the 2,568,645 shares, (a) 400,000 shares were issued by the Company on
June 22, 2000, (b) 200,000 shares were issued by the Company on July 17,
2000, (c) 728,088 shares were issued on November 27, 2000, (d) 120,000
shares are issuable upon the exercise of warrants granted on June 22, 2000,
and (e) up to an additional 1,120,557 shares are issuable upon the exercise
of warrants, subject to certain adjustments (the "Adjustable Warrant"). For
purposes of calculating the number of shares issuable upon exercise of the
Adjustable Warrants, the Company determined the number of shares of common
stock which would have been issuable pursuant to the Adjustable Warrant
assuming the market price for shares of the Company's common stock was
equal to 50% of the closing bid price on June 21, 2000 (the business day
immediately preceding the initial closing date in connection with the
private placement transaction in connection with the Adjustable Warrant was
issued by the Company).
+ the information contained in this table reflects "beneficial" ownership of
common stock within the meaning of Rule 13d-3 under the Exchange Act. On
November 28, 2000, JAWZ had 32,461,265 shares of common stock outstanding.
Beneficial ownership information reflected in the table includes shares
issuable upon the exercise of outstanding warrants issued by JAWZ.
PLAN OF DISTRIBUTION
Of the shares of common stock covered by this prospectus, (i) 6,253,723
shares are owned by the selling stockholders (other than Strong River
Investments, Inc., Bay Harbor Investments, Inc. and Calp II Limited
Partnership), (ii) 6,633,920 shares are owned by, or are issuable upon the
exercise of warrants owned by, by Strong River Investments, Inc. and Bay Harbor
Investments, Inc., two of the selling stockholders listed in the "Selling
Stockholders" section of this prospectus (includes an aggregate of (a) 800,000
shares issued by the Company on June 22, 2000, (b) 400,000 shares which were
issued by the Company on July 17, 2000, (c) 1,456,176 shared were issued by the
Company on November 27, 2000, (d) 240,000 shares of our common stock issuable
upon the exercise of warrants, and (e) an additional 2,241,114 shares of our
common stock which may be issued upon the exercise of warrants), and (iii)
5,861,102 shares are owned by, or are issuable upon the exercise of warrants
owned by Calp II Limited Partnership, another of the selling stockholders listed
in the "Selling Stockholders" section of this prospectus (includes an aggregate
of (a) 235,295 shares issued by the Company on February 22, 2000, (b) 600,000
shares issued by the Company on August 21, 2000, (c) 400,000 shares issued by
the Company on October 11, 2000, (d) 300,000 shares of our common stock issuable
upon the exercise of warrants, and (e) an additional 4,208,159 shares of our
Common Stock which may be issued upon the exercise of warrants). As used in the
rest of this section of the prospectus, the term "selling stockholders" includes
the named selling stockholders and any of their pledgees, donees, transferees or
other successors in interest selling shares received from a named selling
stockholder after the date of this prospectus. The selling stockholders may
offer and sell, from time to time, some or all of the shares of common stock
registered hereby. We have advised the selling stockholders that Regulation M
under the Exchange Act may apply to the activities of the selling stockholders
or broker-dealers in connection therewith. We will pay all costs, expenses and
fees in connection with the registration of the shares including fees and
disbursements of counsel to the selling stockholders. In addition, we have
prepared this prospectus in connection with our prior acquisition of Pace
Systems Group Inc. ("Pace"), Offsite Data Systems Ltd. ("Offsite"), General
Network Services ("GNS") Inc., 4Comm.Com Inc., Betach Systems Inc., and Betach
Advanced Solutions Inc. The shares of common stock attributable to these prior
acquisitions are as follows: (1) 4,190,234 shares to allow the former
shareholders and warrantholders of Offsite to acquire shares of our common stock
upon their exchange of exchangeable shares of our subsidiary JAC, (2) 1,731,932
shares to allow the former shareholders of Pace (now shareholders of JAWS
Acquisition Canada Corp., and Alberta Corporation ("JACC") to acquire shares of
our common stock upon their exchange of exchangeable shares of our subsidiary
JACC; (3) 140,618 shares to allow the former shareholders of 4Comm to acquire
shares of our common stock upon their exchange of exchangeable shares of our
subsidiary JACC; and (4) 373,333 shares to allow the former shareholders of
Betach to acquire shares of our common stock upon their exchange of exchangeable
shares of JACC.
The shares may be sold by or for the account of the selling
stockholders from time to time in transactions included for quotation on the
Nasdaq National Market or otherwise. These sales may be at fixed prices or
prices that may be changed, at market prices prevailing at the time of sale, at
prices related to these prevailing market prices or at negotiated prices. The
shares may be sold by means of one or more of the following methods:
-- in a block trade in which a broker-dealer will attempt to sell a block
of shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
-- purchases by a broker-dealer as principal and resale by that
broker-dealer for its account pursuant to this prospectus;
-- on markets where our common stock is traded or in an exchange
distribution in accordance with the rules of the exchange;
-- through broker-dealers, that may act as agents or principals;
12
NY/312749.3
12/11/00
-- broker-dealers may agree with the Selling Stockholders to sell a
specified number of these shares at a stipulated price per share;
-- in connection with the loan or pledge of shares to a broker-dealer, and
the sale of the shares so loaned or the sale of the shares so pledged
upon a default;
-- in connection with put or call option transactions, in hedge
transactions, and in settlement of other transactions in standardized
or over-the-counter options;
-- through short sales of the shares by the selling stockholders or
counterparties to those transactions, in privately negotiated
transactions;
-- in any combination of the above. In addition, any of the shares that
qualify for sale pursuant to Rule 144 under the Securities Act may be
sold under Rule 144 promulgated under the Securities Act rather than
pursuant to this prospectus; or
-- any other method permitted pursuant to applicable law.
In effecting sales, brokers or dealers engaged by the selling
stockholders may arrange for other brokers or dealers to participate.
Broker-dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for the purchaser of
shares, from the purchaser) in amounts to be negotiated. The Selling
Stockholders do not expect these commissions and discounts to exceed what is
customary in the types of transactions involved. The broker-dealer transactions
may include:
-- purchases of the shares by a broker-dealer as principal and resales of
the shares by the broker-dealer for its account pursuant to this
prospectus;
-- ordinary brokerage transactions; or
-- transactions in which the broker-dealer solicits purchasers.
If a material arrangement with any broker-dealer or other agent is entered
into for the sale of any shares of common stock through a block trade, special
offering, exchange distribution, secondary distribution, or a purchase by a
broker or dealer, a prospectus supplement will be filed, if necessary, pursuant
to Rule 424(b) under the Securities Act disclosing the material terms and
conditions of these arrangements.
The selling stockholders and any broker-dealers or agents participating in
the distribution of the shares may be deemed to be "underwriters" within the
meaning of the Securities Act, and any profit on the sale of the shares of
common stock by the selling stockholders and any commissions received by a
broker-dealer or agents, acting in this capacity, may be deemed to be
underwriting commissions under the Securities Act. We have agreed to indemnify
the selling stockholders against certain liabilities, including liabilities
arising under the Securities Act.
Certain of the Selling Stockholders have advised the Company that they have
not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their shares other than
ordinary course brokerage arrangements, nor is there an underwriter or
coordinating broker acting in connection with the proposed sale of shares by the
Selling Stockholders.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for us by Paul, Hastings, Janofsky & Walker LLP.
EXPERTS
The financial statements audited by Ernst & Young, LLP have been herein
incorporated by reference in reliance on their report given on their authority
as experts in accounting and auditing and herein incorporated by reference.
PricewaterhouseCoopers LLP, independent accountants, have audited Offsite's
financial statements at and for the periods ended June 30, 1999 and 1998, as set
forth in their report herein incorporated by reference. We have herein
incorporated by reference these financial statements and notes thereto in
reliance on such report given on the authority of that firm as experts in
accounting and auditing.
13
NY/312749.3
12/11/00
Klayman & Korman, LLC, independent accountants, have audited Nucleus'
financial statements at and for the periods ended December 31, 1999, 1998 and
1997 as set forth in their report herein incorporated by reference. We have
herein incorporated by reference these financial statements and the notes
thereto in reliance on such report given on the authority of that firm as
experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission ("SEC"). You may read
and copy all or any portion of any document that we file at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
regional offices of the SEC located at Seven World Trade Center, 13th Floor, New
York, New York 10048 and at Citicorp Center, 500-West Madison Street, Suite
1400, Chicago, Illinois 60661. You can request copies of these documents, upon
payment of a duplicating fee, by writing to the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
rooms. Our SEC filings, including the registration statement, are also available
to you on the SEC's Web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
o Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999, filed with the SEC on March 24, 2000 (SEC File No. 001-12002);
o Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000,
filed with the SEC on May 15, 2000;
o Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000,
filed with the SEC on August 14, 2000;
o Our Quarterly Report on Form 10 - Q for the quarter ended September 30,
2000, filed with the SEC on November 14, 2000;
o Our Definitive Proxy Statement on Schedule 14A, filed with the SEC on
August 22, 2000;
o Our Definitive Proxy Statement on Schedule 14A, filed with the SEC on
April 28, 2000;
o Our Amended Current Report on Form 8-K filed with the Commission on
January 18, 2000;
o Our Amended Current Report on Form 8-K filed with the Commission on
February 25, 2000;
o Our Amended Current Report on Form 8-K filed with the Commission on April
13, 2000;
o Our Current Report on Form 8-K filed with the Commission on May 5, 2000;
o Our Amended Current Report on Form 8-K filed with the Commission on June
16, 2000;
o Our Current Report on Form 8-K filed with the Commission on September 11,
2000;
o Our Current Report on Form 8-K filed with the Commission on September 18,
2000; and
o Our Current Report on Form 8-K filed with the Commission on November 1,
2000.
You may request a copy of these filings (not including the exhibits to such
documents unless the exhibits are specifically incorporated by reference in the
information contained in this prospectus), at no cost, by writing or telephoning
us at the following address:
Ian H. Kennedy, Corporate Counsel
JAWZ INC.
400, 630 - 8th Avenue S.W.,
14
NY/312749.3
12/11/00
Calgary, Alberta T2P 1G8
Telephone requests may be directed to (403) 508-5055
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide you with different information.
We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document.
Statements contained in this prospectus as to the contents of any contract
or document are not necessarily complete and in each instance reference is made
to the copy of that contract or document filed as an exhibit to the registration
statement or as an exhibit to another filing, each such statement being
qualified in all respects by such reference and the exhibits and schedules
thereto.
15
NY/312749.3
12/11/00
We have not authorized any
dealer, salesperson or other person
to give you written information
other than this prospectus or to
make representation as to matters
not stated in this prospectus. You
must not rely on unauthorized
information. This prospectus is
not an offer to sell these
securities or our solicitation of
your offer to buy the securities in
any jurisdiction where that would
not be permitted or legal. Neither
the delivery of this prospectus nor
any sales made hereunder after the
date of this prospectus shall
create an implication that the
information contained herein or ----------------------
the affairs of JAWZ Inc. have not
changed since the date hereof.
25,184,862
TABLE OF CONTENTS
Page
Prospectus Summary........ 3
Risk Factors.............. 4
Use of Proceeds........... 9
Selling Stockholders...... 10 JAWZ Inc.
Plan of Distribution...... 12
Legal Matters............. 13
Experts................... 13 Prospectus
December __, 2000
----------------------
16
NY/312749.3
12/11/00
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses payable by the Registrant in connection with the issuance and
distribution of the securities being registered (other than underwriting
discounts or commissions) are estimated as set forth below:
SEC Registration Fee US$............ $ 22,658
Accounting Fees and Expenses........ $ 75,000
Legal Fees and Expenses............. $100,000
Printing expenses................... $ 10,000
Miscellaneous....................... $ 5,000
----------
TOTAL $212,658
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware provides
that directors and officers of Delaware corporations are entitled, under certain
circumstances, to be indemnified against expenses (including attorneys' fees)
and other liabilities actually and reasonably incurred by them as a result of
any suit brought against them in their capacity as a director or officer, if
they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and with respect to any
criminal action or proceeding, if they had no reasonable cause to believe their
conduct was unlawful.
Section 6.01 of the Company's bylaws provides that the Company shall
indemnify, to the fullest extent permissible by applicable law, any person (an
"Indemnitee") who was or is made or is threatened to be made a party or is
otherwise involved in an action, suit or proceeding, whether civil, criminal,
administrative or investigative (a "proceeding"), by reason of the fact that he,
or a person for whom he is the legal representative, is or was a director or
officer of the corporation or, while a director or executive officer of the
corporation, is or was serving at the request of the corporation as a director
or executive officer of another corporation or of a partnership, joint venture,
trust, enterprise or nonprofit entity, including services with respect to
employee benefit plans, against all liability and loss suffered and expenses
(including attorneys' fees) reasonably incurred by such Indemnitee.
Section 6.06 of the Company's bylaws also permits the Company to purchase
insurance on behalf of any such person against any liability asserted against
such person and incurred by such person in any capacity, or out of such persons
status as such, whether or not the Company would have the power to indemnify
such person against such liability under the foregoing provisions of the bylaws.
Insofar as indemnification for liability arising under the Securities Act
may be permitted to directors, officers, and controlling persons, JAWZ is aware
that, in the opinion of the Securities and Exchange Commission, the
indemnification is against public policy as expressed in the Securities Act and
is unenforceable.
ITEM 16. EXHIBITS
4.1* Investment Agreement by and between JAWS Technologies, Inc., a Nevada
corporation, and Bristol Asset Management LLC, dated August 27, 1998 and letter
of termination.
4.2* Debenture Acquisition Agreement by and between JAWS Technologies, Inc.,
a Nevada corporation, and Thomson Kernaghan & Co. Limited, dated September 25,
1998.
II-1
NY/312749.3
12/11/00
4.3* Amendment No. 1 to Debenture Purchase Agreement by and between JAWZ and
Thomson Kernaghan, dated April 27, 1999.
4.4* Warrant to purchase 1,000,000 shares of common stock of JAWS
Technologies, Inc., a Nevada corporation, issued to Bristol Asset Management
LLC, dated April 20, 1999.
4.5* Form of Warrant to purchase 834,000 shares of common stock of JAWS
Technologies, Inc., a Nevada corporation, issued to Glentel Inc., dated June 21,
1999.
4.6* Schedule of Warrant holders which received the Form of Warrant set
forth in 4.5 above.
4.7* Form of Warrant issued by JAWZ in connection with the Private Placement
Transaction.
4.8* Schedule of Warrant holders which received the Form of Warrant set
forth in 4.7 above.
4.9* Warrant to purchase 217,642 shares of common stock of JAWS
Technologies, Inc., a Nevada corporation, issued to Thomson Kernaghan & Co.
Limited, dated December 31, 1999.
4.10* Certificate of the Designation, Voting Power, Preference and Relative,
Participating, optional and other Special Rights and Qualifications, Limitations
or Restrictions of the Special Series & Preferred Voting Stock of JAWS
Technologies, Inc., dated November 30, 1999.
4.11* Incentive and Non-Qualified Stock Option Plan of JAWS Technologies,
Inc., a Nevada corporation.
4.12* Placement Agency Agreement by and between JAWS Technologies, Inc., a
Nevada corporation, and Thomson Kernaghan & Co. Limited, dated December 31,
1999.
4.13* Placement Agency Agreement by and between JAWS Technologies, Inc., a
Nevada corporation, and Thomson Kernaghan & Co. Limited, dated February 15,
2000.
4.14* Placement Agency Agreement by and between JAWS Technologies, Inc., a
Nevada corporation, and SmallCaps Online LLC, dated February 15, 2000.
4.15* Form of Subscription Agreement to purchase 235,295 Units of JAWS
Technologies, Inc., a Nevada corporation, by and between JAWS Technologies,
Inc., a Nevada corporation, and BPI Canadian Small Companies Fund, dated
December 20, 1999.
4.16*** Schedule of Subscribers that purchased subscriptions pursuant to the
Form of Subscription Agreement set forth above in 4.15.
4.17*** Form of Warrant to purchase up to 120,000 shares of common stock of
JAWS Technologies, Inc., dated June 22, 2000.
4.18*** Form of Warrant to purchase that number of shares of common stock of
JAWS Technologies, Inc. as calculated pursuant to Section 3 thereto, dated June
22, 2000.
4.19*** Schedule of Warrant holders which received the Form of Warrant set
forth in 4.17 and 4.18 above: (1) Strong River Investments, Inc.; (2) Bay Harbor
Investments, Inc.
5.1 Opinion of Paul, Hastings, Janofsky & Walker LLP.
23.1**Consent of Lionel Sawyer & Collins LLP (included in exhibit 5.1).
II-2
NY/312749.3
12/11/00
23.2 Consent of Ernst & Young LLP. (JAWZ Inc., Pace Systems Group Inc.,
4Comm.com and Betach Systems Inc.).
23.3 Consent of PricewaterhouseCoopers LLP (Offsite Data Services Ltd.).
23.4 Consent of Klayman & Korman, LLC
23.5 Consent of Paul, Hastings, Janofsky & Walker LLP (included in exhibit
5.2).
27.1**** Financial Data Schedule.
------------------
* Previously filed in JAWZ' registration statement on Form S-1 (File No.
333-30406), filed with the Securities and Exchange Commission on February 14,
2000.
** Previously filed in JAWZ' registration statement on Form S-1 (File No.
333-38088), filed with the Securities and Exchange Commission on May 30, 2000.
*** Previously filed in JAWZ' registration statement on Form S-1/A (File
No. 333-30406), filed with the Securities and Exchange Commission on July 13,
2000.
**** Previously filed in JAWZ' registration statement on Form S-3 (File
No. 333-50532), filed with the Securities and Exchange Commission on November
22, 2000.
II-3
NY/312749.3
12/11/00
ITEM 17. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Registrant pursuant to the provisions described above in Item 15, or otherwise,
the Registrant has been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, 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 prospectus
filed with the Commission pursuant to Rule 424(b) of the Securities Act of 1933,
as amended, if, in the aggregate, the changes in volume and price represent not
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;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) For purposes of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) For purposes of determining any liability under the Securities Act,
each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(4) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
this offering.
II-4
NY/312749.3
12/11/00
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New York, State of New
York, on December 12, 2000.
JAWZ INC.
By: /s/ Robert J. Kubbernus
---------------------------
Name: Robert J. Kubbernus
Title: Chairman of the Board, Chief Executive Officer and President
(Principal Executive Officer)
POWER OF ATTORNEY
Each person signing below also hereby appoints Robert J. Kubbernus and Riaz
Mamdani, and each of them singly, with full power of substitution, his lawful
attorney-in-fact, with full power to execute and file any amendments to the
registration statement, and generally to do all such things, as such
attorney-in-fact may deem appropriate to comply with the provisions of the
Securities Act of 1933 and all requirements of the Securities and Exchange
Commission.
Pursuant to the requirements of the Securities Act of 1933, this amendment
has been signed by the following persons in the capacities indicated and on the
dates indicated.
Signatures Title Date
---------- ------- --------
/s/Robert J.Kubberus Chairman of the Board, Chief December 12, 2000
-------------------- Executive Officer, President
Robert J. Kubbernus and Director (Principal
Executive Officer)
/s/ Riaz Mamdani Chief Financial Officer and December 12, 2000
----------------- Director (Principal Financial
Riaz Mamdani Officer and Principal
Accounting Officer)
* Director December 12, 2000
-------------------
Julia L. Johnson
* Director December 12, 2000
-------------------
Arthur Wong
* Director December 12, 2000
-------------------
John S. Burns
* Director December 12, 2000
-------------------
James Canton
*/s/ Riaz Mamdani Chief Financial Officer and December 12, 2000
----------------- Director (Principal Financial
Riaz Mamdani Officer and Principal
Attorney-In-Fact Accounting Officer)
S-1
NY/312749.3
12/11/00
EXHIBIT INDEX
-------------
4.1* Investment Agreement by and between JAWS Technologies, Inc., a Nevada
corporation, and Bristol Asset management LLC, dated August 27, 1998 and letter
of termination.
4.2* Debenture Acquisition Agreement by and between JAWS Technologies, Inc.,
a Nevada corporation, and Thomson Kernaghan & Co. Limited, dated September 25,
1998.
4.3* Amendment No. 1 to Debenture Purchase Agreement by and between JAWZ and
Thomson Kernaghan, dated April 27, 1999.
4.4* Warrant to purchase 1,000,000 shares of common stock of JAWS
Technologies, Inc., a Nevada corporation, issued to Bristol Asset Management
LLC, dated April 20, 1999.
4.5* Form of Warrant to purchase 834,000 shares of common stock of JAWS
Technologies, Inc., a Nevada corporation, issued to Glentel Inc., dated June 21,
1999.
4.6* Schedule of Warrant holders which received the Form of Warrant set
forth in 4.5 above.
4.7* Form of Warrant issued by JAWZ in connection with the Private Placement
Transaction.
4.8* Schedule of Warrant holders which received the Form of Warrant set
forth in 4.7 above.
4.9* Warrant to purchase 217,642 shares of common stock of JAWS
Technologies, Inc., a Nevada corporation, issued to Thomson Kernaghan & Co.
Limited, dated December 31, 1999.
4.10* Certificate of the Designation, Voting Power, Preference and Relative,
Participating, optional and other Special Rights and Qualifications,
Limitations or Restrictions of the Special Series & Preferred Voting Stock of
JAWS Technologies, Inc., dated November 30, 1999.
4.11* Incentive and Non-Qualified Stock Option Plan of JAWS Technologies,
Inc., a Nevada corporation.
4.12* Placement Agency Agreement by and between JAWS Technologies, Inc., a
Nevada corporation, and Thomson Kernaghan & Co. Limited, dated December 31,
1999.
4.13* Placement Agency Agreement by and between JAWS Technologies, Inc., a
Nevada corporation, and Thomson Kernaghan & Co. Limited, dated February 15,
2000.
4.14* Placement Agency Agreement by and between JAWS Technologies, Inc., a
Nevada corporation, and SmallCaps Online LLC, dated February 15, 2000.
4.15* Form of Subscription Agreement to purchase 235,295 Units of JAWS
Technologies, Inc., a Nevada corporation, by and between JAWS Technologies,
Inc., a Nevada corporation, and BPI Canadian Small Companies Fund, dated
December 20, 1999.
4.16*** Schedule of Subscribers that purchased subscriptions pursuant to the
Form of Subscription Agreement set forth above in 4.15.
4.17*** Form of Warrant to purchase up to 120,000 shares of common stock of
JAWS Technologies, Inc., dated June 22, 2000.
4.18*** Form of Warrant to purchase that number of shares of common stock of
JAWS Technologies, Inc. as calculated pursuant to Section 3 thereto, dated June
22, 2000.
4.19*** Schedule of Warrant holders which received the form of Warrant set
forth in 4.17 and 4.18 above: (1) Strong River Investments, Inc.; (2) Bay Harbor
Investments, Inc.
E-1
NY/312749.3
12/11/00
5.1 Opinion of Paul, Hastings, Janofsky & Walker LLP.
23.1** Consent of Lionel Sawyer & Collins LLP (included in exhibit 5.1).
23.2 Consent of Ernst & Young LLP. (JAWZ Inc., Pace Systems Group Inc.,
JAWZ Inc., Pace Systems Group Inc., 4Comm.com and Betach Systems
Inc.
23.3 Consent of PricewaterhouseCoopers LLP (Offsite Data Services Ltd.).
23.4 Consent of Klayman & Korman, LLC
23.5 Consent of Paul, Hastings, Janofsky & Walker LLP (included in
exhibit 5.2).
27.1**** Financial Data Schedule.
-----------------
* Previously filed in JAWZ' registration statement on Form S-1 (File No.
333-30406), filed with the Securities and Exchange Commission on February 14,
2000.
** Previously filed in JAWZ' registration statement on Form S-1 (File No.
333-38088), filed with the Securities and Exchange Commission on May 30, 2000.
*** Previously filed in JAWZ' registration statement on Form S-1/A (File No.
333-30406), filed with the Securities and Exchange Commission on July 13, 2000.
**** Previously filed in JAWZ' registration statement on Form S-3 (File
No. 333-50532), filed with the Securities and Exchange Commission on November
22, 2000.
E-2
NY/312749.3
12/11/00