As Filed With the Securities and Exchange Commission on August , 2001
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________________________
Amendment No. 1
to
FORM SB - 2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SCIENTIO, INC.
(Name of Small Business Issuer)
____________________________________________________________________________
Delaware 7372 11-3581664
(State of Incorporation) (SIC) (Employer I.D.#)
461 Beach 124 Street
Belle Harbor, N.Y. 11694
(718) 318-0994
(Address and telephone number of principal executive offices and
principal place of business)
Gerald Kaufman
33 Walt Whitman Road
Ste 233
Huntington Station, New York 11746
(631) 271-2055
(Name, Address and telephone number of agent for service)
Approximate date of commencement or proposed sale to the public:
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 earliest 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. [ ]
If any 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, check the following box: [ ]
CALCULATION OF REGISTRATION FEE
Title of each class Amount to Proposed Proposed Registration
Of securities to be be registered maximum maximum fee
Registered offering aggregate
price offering Price
Per share
__________________________________________________________________________
Common Stock 403,000 shares $0.03 (2) $12,090- $100 (3)
($.001 par value
Per share) (1)
__________________________________________________________________________
1. Shares of common stock of the registrant being distributed to
shareholders of Modern Technology Corp.
2. Based upon the book value of the stock solely for purposes of
calculating the registration fee pursuant to Rule 457.
3. The Registration Fee is the minimum amount.
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.
PAGE 2
PRELIMINARY PROSPECTUS
Subject to Completion
SCIENTIO, INC. ("SCIENTIO")
PROSPECTUS
403,000 Shares of Common Stock
The shares of Scientio being offered will be issued as a dividend
distribution to the shareholders of Modern Technology Corp. ("Modern")
of record as of August , 2001 on the basis of one share of
Scientio common stock for each 50 shares of Modern common stock.
Modern shareholders are not required to take any action to receive their
shares of Scientio common stock. No consideration need be paid by holders of
Modern shares for shares of Scientio. See, however, "Federal Income Tax
Consequences of the Distribution".
This is our initial public offering and no public market currently exists
for our shares. We cannot guarantee that any market will develop for our
shares. We will apply for listing on the over-the-counter Bulletin
Board under the proposed symbol "SCEN".
The Scientio shares involve a high degree of risk. Scientio's XML Miner
Software package is complete and available for sale. The XML Rule software
package is under development and Scientio has no sales to date. Both
software packages will be directed at web users and others.
You should carefully consider the information appearing under the caption
"Risk Factors", on page .
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved 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 AUGUST , 2001
PAGE 3
SCIENTIO, INC.
PROSPECTUS
TABLE OF CONTENTS
Prospectus Summary .................................................
Risk Factors........................................................
Forward Looking Statements..........................................
Dividend Policy.....................................................
Capitalization......................................................
Information Concerning Modern.......................................
Plan of Distribution................................................
Federal Income Tax Consequences
Of the Distribution.............................................
Management's Discussion of
Plan of Operation...............................................
Description of Scientio's Business..................................
Management of Scientio..............................................
Related Transactions................................................
Principal Shareholders of Common Stock..............................
Description of Securities of Scientio...............................
Legal Matters ......................................................
Experts.............................................................
Disclosure of Company Position on Indemnification for Securities
Act Liabilities.................................................
Financial Statements................................................
Until ( ),2001 (90 days after the commencement of the offering), all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus.
This is in additions to the dealers' obligation to deliver a prospectus
when acting as underwriters and with respect to their unsold allotments or
subscriptions.
PAGE 4
PROSPECTUS SUMMARY
You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent
information, you should not rely on it.
THIS SUMMARY HIGHLIGHTS MATERIAL INFORMATION REGARDING OUR COMPANY
AND THE OFFERING CONTAINED IN THIS PROSPECTUS. HOWEVER, THIS SUMMARY
IS NOT COMPLETE AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE
IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY,
INCLUDING THE FINANCIAL DATA AND RELATED NOTES, BEFORE MAKING AN
INVESTMENT DECISION.
Organization and Business of Scientio.
Scientio was incorporated in the State of Delaware, on
December 11, 2000. We intend to develop, market and support software
components that can be used to analyze data (data mining) flowing in the
XML (extensible markup language) protocol between computers over the
Internet or Intranets. We have yet to generate any sales to date.
We intend to engage in the following activities: market our products
in component form to software developers, enter into joint ventures with
third party software developers to integrate, customize and develop on the
intellectual property contained in its initial products for specific markets
and offer general consultancy making use of our products to third parties.
We have completed development and are offering for sale our first
datamining software product, the XML Miner package version 1.0. The package
contains three components, XML Miner, XML Rule and Strucfind. We are working
on an XML Rule package which will contain two components, XML Rule and a
Rule Editor. The XML Rule component is completed, while the XML Rule Editor
component is not yet finished. The XML Miner Package is self contained and
on sale. The XML Rule Package will also be self contained when the Rule
Editor is finished. We are currently not offering the XML Miner component as
a stand alone product and we do not intend to offer the XML Rule component
as a stand alone product. However we may license the technology of XML Rule
and XML Miner to other software development companies with the objective of
developing a new software product for a specific market function. We expect
that the XML Rule Editor component will be completed by the end of September
2001 along with an updated version 1.1 of the XML Miner Package.The targeted
customers are software developers.
PAGE 5
While our XML Miner Package has been installed and running on our web
site, offering online demonstrations of its performance in two distinct
application areas, we have not yet sold any units of XML Miner or the XML
Miner Package nor has our technology been installed to date by any business
and no assurance can be given that our technology will work in an
operational setting. To date, we have also not entered into any joint
venture or general consultancy agreements nor licensed any of our technology
to software development companies.
The XML Miner package has been developed by our president, Andrew Edmonds
and we anticipate future software products (including the XML RULE
package)will be developed by Mr. Edmonds.Mr. Edmonds is our only paid and
significant employee. He devotes his full time to the business of Scientio.
Anneke Edmonds, our treasurer and chief financial officer/director
and Arthur Seidenfeld, our company secretary and director both devote about
20% of their time to company business and both are non paid officers/
directors.
Agreement with Modern Technology Corp.
On December 8, 2000, Modern entered into an agreement with
Andrew Edmonds, President, and Anneke Edmonds, principal shareholder,
to form Scientio and whereby Modern agreed to purchase 403,000 shares
of Scientio representing 20% of the outstanding shares, for an investment
of $188,500 and an additional investment of up to $50,000 to
cover the costs of registering those shares and distributing them to
shareholders of Modern. Modern's 403,000 shares are these shares to be
issued as a dividend in this offering. Anneke Edmonds is the principal
shareholder of Scientio.
Modern Technology Corp is engaged in financial consulting activities
since 1983. This is the second distribution of shares by Modern to its
shareholders since 1983. Modern considers distribution of shares on a case
by case basis. Management of Modern has not yet determined if these
distributions of shares will become a regular business practice. There was
no prior affiliation between Andy and Anneke Edmonds and Modern. There will
be no affiliation between Scientio and Modern after the distribution of
Modern's shares, other than Arthur Seidenfeld's ownership of shares in
Modern and Scientio. The effective per share paid by Modern is
$.59 (assuming an investment of $188,500 and the $50,000 to cover
registration costs of this offering). As of the date of this registration
statement, Modern has invested $218,500 ($188,500 and $30,000 paid to cover
registration costs). Based upon this $218,500 paid to date the effective per
share paid by Modern to date is $.54.
Arthur Seidenfeld has a 47.9% ownership interest in Modern and a 9.6%
ownership interest in Scientio.
Lack of Trading Market.
Prior to the date of this document, there has not been any established
trading market for Scientio's common stock. Application will be made to list
the shares of Scientio common stock on the OTCBB under the symbol "SCEN".
Scientio cannot predict the liklihood of the application being accepted. If
the application is accepted Scientio cannot predict the extent to which
investor interest in the company will lead to the development of an active,
liquid trading market. Active trading markets generally result in lower
price volatility and more effecient execution of buy and sell orders for
investors.
PAGE 6
Public Ownership of Scientio
Scientio's management and board of directors decided that public
ownership is consistent with, and would best support, Scientio's
strategic business development plan. To this end, Scientio entered
into an agreement with Modern that provided for Modern to receive
shares for its investment and distribute them to its shareholders.
The Offering
We are registering for distribution by Modern to its security
holders 403,000 shares of our common stock. Distribution will be
made on the basis of 1 share of Scientio for each 50 shares of
Modern owned by shareholders on August , 2001.
Because of Modern's role in the distribution there is a possibility
That it may be deemed to be a "statutory underwriter within the meaning of
Section 2(11) of the Securities Act. Modern has advised us that it will
comply the prospectus delivery requirements that would apply to a statutory
underwriter in connection the distribution of our shares to its
shareholders. Further, Modern has acknowledged that it is familiar with the
anti-manipulation rules of the SEC, including Regulation M. These rules may
apply to sales by Modern in the market if a market develops. However, Modern
will not own any shares of our company after the distribution and has no
plans for future sales or purchases.
Regulation M prohibits any person who participates in a distribution
from bidding for or purchasing any security which is the subject of the
distribution until the entire distribution is complete. It also prohibits
bid or purchases to stabilize the price of a security in the distribution.
Tax Consequences of the Distribution.
Dividends and distributions received are taxable as ordinary income for
federal income tax purposes pursuant to Section 311 of the Internal Revenue
Code provided that Modern has current or accumulated earnings and profits.
The fair market value of Scientio's shares will be established by trading
that develops immediately subsequent to the Distribution. As of May 15,
2001, the taxable dividend value of each of the Scientio shares to be
distributed to Modern shareholders was $.02. This was arrived by taking
Scientio's shareholders equity $34,494 at May 15, 2001 and dividing that
amount by the number of outstanding Scientio shares on May 15, 2001:
2,015,000.
The foreign, state and local tax consequences of receiving the
distribution may differ materially from the federal income tax consequences
described above. Shareholders should consult their tax advisor.
Location
Our offices are located at 461 Beach 124 Street. Belle Harbor,
N.Y. 11694 (Modern Technology's office) and at Haydon House, Station Road,
Woburn Sands, Bucks MK178RX in
PAGE 7
the United Kingdom. (MK178RX is the United
Kingdom mail zip code). The Haydon House address in the United Kingdom is
where we conduct our research and business activities. Our telephone number
in the U.S.A. is 718 318-0994 and in the United Kingdom 44 1908 584-226.
Our Internet web site is located at http://www.metadatamining.com
RISK FACTORS
An investment in our securities is speculative and involves a
high degree of risk. Please carefully consider the following risk
factors, as well as the possibility of the loss of your entire investment,
before deciding to invest in our securities.
Financial Position Is Weak
We are a very early stage company, we have a limited history, no
revenues and we expect losses in the future. We have never been
profitable, we expect to incur net losses for the foreseeable future
and we may never be profitable. We have incurred only expenses
from inception through May 15, 2001 and no revenues. As of
May 15, 2001, we had an accumulated deficit of $76,569.
We have only recently introduced our new products
As a result of our very limited operating history, it is difficult to
forecast our future operating results. We expect to substantially
increase our sales and marketing, product development and general
administrative expenses. As a result, we will need to generate
significant revenues to achieve and maintain profitability in the future.
If the market's acceptance and adoption of XML technologies does not
develop, our future results may suffer.
All of our products are based upon and rely solely upon XML
technology, which has only recently been commercially introduced.
We have yet to generate any sales of our XML Miner Software Package
Version 1.0 which was introduced for sale on our website in June 2001 and by
Component Source, a marketing company of software components in July 2001.
The communication and data standards for the internet, are set by the
W3C (World Wide Web Consortium) committee. They issued the first XML
standard in 1997 and management believes it was almost immediately used in
commercial products by Microsoft and others who had worked on the
specification with the W3C.
Because XML was produced by the W3C committee, management believes
its acceptance is highly likely. Some standards generated by them are more
successful than others. For instance, management believes Microsoft has made
XML fundamental to their "net" initiative. A majority of new web site will
use XML technology, and as web sites are redesigned and re-engineered they
will be converted. Management believes a majority of all web sites will use
XML within four years. Management's statements are opinions of Andy Edmonds,
our president who is active in developing XML software.
PAGE 8
While we believe XML has demonstrated clear advantages over the
previous methodologies for transferring data between databases and web
servers, web servers and internet browsers and between business
automation servers over the Internet or intranets, there are many such
systems in existence and we cannot guarantee that our statements
regarding the uptake or conversion rate of existing systems in existence
or the uptake or conversion rate of existing systems or the percentage of
new web sites that will adopt XML will come true.
We cannot be sure that XML technology and XML based products
will achieve broad market acceptance, that our XML products will be
accepted or that other superior technologies will not be developed.
The failure of XML or of our XML products to achieve broad
acceptance would adversely affect our ability to generate revenues.
The XML technology is one of several competing technologies used in
information exchange and Internet commerce.
Lack of growth or decline in Internet usage or the lack of acceptance
of commerce conducted via the Internet could be detrimental to our
future operating results.
Our products enhance a company's ability to transact business and
conduct operations utilizing the Internet. Therefore, our future sales
and any future profits are substantially dependent upon the widespread
acceptance and use of the Internet as an effective medium of commerce of
consumers and businesses. Rapid growth in the use of the Internet
and other online services is a recent development, and we are unsure
whether that acceptance and use will continue to develop, or that a
sufficiently broad base of consumers will adopt and continue to use the
Internet and other online services as a medium of commerce.
In addition, the Internet may not be accepted as a viable commercial
marketplace for a number of reasons, including potentially inadequate
development of the necessary network infrastructure or delayed development
of enabling technologies and web performance improvements. If the Internet
continues to experience significant growth in the number of users,
frequency of use or an increase in bandwidth requirements, the
Internet's infrastructure may not be able to support the demands placed
upon it. In addition, the Internet could lose its viability due to
delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity, or due to
increased governmental regulation. If Congress, or other governing
bodies within and outside the United States, decide to alter
materially the current approach to, and level of, regulation of the
Internet, we may need to adapt our technology. If use of the
Internet does not continue to grow or grows more slowly than expected,
if the infrastructure for the Internet does not effectively support
growth that may occur, if government regulations change, or if the
Internet does not become a viable commercial marketplace, our
business will likely suffer.
Intense competition and increasing consolidation in our industry could
create stronger competitors and harm our business.
PAGE 9
The market for our products is intensely competitive, highly
fragmented, characterized by rapid technological change and significantly
affected by new product introductions. Recent acquisitions of several
competitors by large software companies and other market activities of
industry participants have increased the competition in our market. Our
competitors consist of a number of private and public companies,
including, among others, Sequoia Software, which markets an XML search
engine called Xdex for intranet use; Inktomi, which has already
established relationships with companies such as America Online, British
Telecommunications, Cnet, Excite@Home, Intel, Microsoft, Sun
Microsystems and Yahoo, each of which uses XML for various purposes;
Ultraseek, a division of Go.com (a Disney company) whose customers include
Sun Microsystems, 3Com, Ericsson and others; and IBM, which has
modified an existing HTML search tool to accommodate XML documents.
In addition, we face competition from in-house software developers who
may develop some or all of the functionally that our products provide.
Many of our competitors have longer operating histories, significantly
greater financial, technical, marketing and other resources, greater name
recognition, a broader range of products to offer and a larger installed
base of customers, any of which factors could provide them with a
significant competitive advantage.
If we fail to develop strategic relationships with industry partners,
our efforts to license our product may be unsuccessful.
At the present time, we lack an existing installed customer base to
which our innovative products and services can be offered. As a result,
we will need to establish critical strategic relationships with industry
partners who have large installed customer bases to whom we can offer
licenses to our products, which may be combined or bundled, with their own
software. If we are not successful in establishing these relationships, it
will be more difficult for us to be successful in our efforts to achieve a
large customer base for our products.
If we fail to develop new products and services in the face of our
industry's rapidly evolving technology, our future results may be
adversely affected.
Due to the recent emergence of the Internet and the Web as a
forum for conducting business, the market for Web application server
systems in which we participate is subject to rapid technological change,
changing customer needs, frequent new product introductions and
PAGE 10
evolving industry standards
that may render existing products and services obsolete. Our growth and
future operating results will depend in part upon our ability to enhance
existing applications and develop and introduce new applications or
components that:
* meet or exceed technological advances in the marketplace
* meet changing customer requirements
* achieve market acceptance
* integrate successfully with third party software and platforms, and
* respond to competitive products
Our product development and testing efforts have required, and we
are expected to continue to require, substantial investment. We may not
possess sufficient resources to continue to make the necessary
investments in technology.
We will continue to need significant capital, without which our business
may fail
We have required significant capital to date and will require
additional capital to fully implement our business plan. We believe we have
sufficient funds to cover working capital needs through March 31, 2002 and
will need to raise between $50,000-$100,000 over the next twelve months.
We do not currently have arrangements with respect to other sources of
additional financing and there can be no assurance that additional financing
will be available to us on commercially reasonable terms or at all.
The inability to obtain additional financing, when needed, would have
a material adverse affect on us, including possibly requiring us to
curtail or cease our operations. To the extent that future financing
involves the sale of our equity securities, other then existing
stockholders, including investors in this offering, could be
substantially diluted.
We need to manage our growth effectively or we may not succeed.
We need to be a growing company. Our ability to manage our
growth will depend in large part on our ability to generally
improve and expand our operational and sales and marketing capabilities.
Additionally, we may not adequately anticipate all the demands that
growth may impose on our systems, procedures and structure. Any
failure to inadequately anticipate and respond to these demands or
manage our growth effectively would have a material adverse affect on
our future prospects.
PAGE 11
If we lose our key personnel or fail to attract and retain additional
personnel, the success and growth of our business may suffer
Our management team has been in place for a relatively short
period of time. We do not have written employment agreements with
any of our key personnel. We only have a limited consulting
arrangement with Mr. Andrew Edmonds, our president and
the chief technology leader of the XML products. Our future success
will also depend significantly on our ability to attract, integrate and
retain highly skilled technical personnel who are active and highly
regarded in the XML community. As XML technology is relatively new,
the degree to which it is accepted and absorbed in the marketplace is
dependent, in part, upon assembling technology personnel who have the
credibility and skills to successfully promote acceptance of our
products. If we are unable to attract, integrate and retain such
persons, our business could be adversely affected. We will obtain a
key man life insurance policy on Andy Edmonds in the amount of
$1,000,000 after the effective date of the registration statement.
If we were to lose his services it would have a material adverse
effect upon our competitive position in the industry.
Capacity restrictions of our XML-based products could reduce the
demand and utility for our products
Concurrency restrictions can limit Internet deployment and use
capacity. The boundaries or our XML analysis capacity, in
terms of numbers of concurrent users or interactions, are unknown
because, to date, no customer or testing environment has reached
these boundaries. The XML analysis capacity boundaries may, at
some future time, be reached and, when reached, may be insufficient
to enable our customers to achieve their desired levels of
information deployment and exchange. We may lose customers or
fail to gain new customers if either of these occurs.
Lack of Trading Market
There currently exists no public trading market for our common
stock, and there can be no assurance that a public trading
market will develop or be sustained in the future. Without an
active public trading market, there can be no assurances that
you will be able to liquidate your investment without
considerable delay, if at all. If a market does develop,
the price for our securities may be highly volatile and may bear
no relationship to our actual financial condition or results of
operations. Factors we discuss in this prospectus, including the many
risks associated with an investment in us, may have a significant
impact on the market price of our common stock. Also, because of the
relatively low price of our common stock, many brokerage firms may not
effect transactions in the common stock.
In addition, it is likely that our common stock will be subject to
rules adopted by the Commission regulating broker dealer practices in
connection with transactions in "penny stocks." Those disclosure rules
applicable to "penny stocks" require a broker dealer, prior to a
transaction in a "penny stock" not otherwise exempt from the rules, to
deliver a standardized list
PAGE 12
disclosure document prepared by the
Commission. That disclosure document advises an investor that
investment in "penny stocks" can be very risky and that the investor's
salesperson or broker is not an impartial advisor but rather paid to
sell the shares. The disclosure contains further warnings for the
investor to exercise caution in connection with an investment in
"penny stocks," to independently investigate the security, as well as
the salesperson with whom the investor is working and to understand
the risky nature of an investment in this security. The broker dealer
must also provide the customer with certain other information and 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. Further, the rules require that, following
the proposed transaction, the broker provide the customer with monthly
account statements containing market information about the prices of
the securities.
These disclosure requirements may have the effect of reducing the
level of trading activity in the secondary market for our common stock.
Many brokers may be unwilling to engage in transactions in our common
stock because of the added disclosure requirements, thereby making
it more difficult for stockholders to dispose of their shares.
FORWARD LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have
based these forward-looking statements on our current expectations
and projections about future events. We identify forward-looking
statements with the words "plan", "expect", "anticipate", "will",
"should", and similar expressions. These forward-looking
statements are subject to risks, uncertainties and assumptions about
us which are discussed in the Risk Factors section below as well as
throughout this prospectus. In light of these risks, uncertainties
and assumptions, the forward-looking events discussed in this prospectus
might not occur. In light of the significant uncertainties inherent
in the forward-looking statements made in this prospectus, particularly
in view of our early stage of operations, the inclusion of this
information should not be regarded as a representation by us or any
other person that our objectives and plans will be achieved.
DIVIDEND POLICY
We have not declared or paid cash dividends on our common stock in the
preceding two fiscal years. We currently intend to retain all future
earnings, if any, to fund the operation of our business, and therefore,
do not anticipate paying dividends in the foreseeable future. Future
cash dividends, if any, will be determined by our Board of Directors,
based upon such factors as the Company's historical and projected
earnings, its working capital surplus and anticipated demands for
capital expenditures.
PAGE 13
CAPITALIZATION
The following table sets forth the capitalization of Scientio as of
May 15, 2001. This table should be read in conjunction with the
accompanying Financial Statements and Notes.
$
Stockholders Equity
Common Stock $.001 par value,
30,000,000 Shares authorized,
2,015,000 Shares issued and outstanding. 2,015
Paid-in capital 197,548
(Deficit) Accumulated during the Development Stage (76,569)
Subscription Receivable (88,500)
________
Total Capitalization 34,494
========
The subscription receivable of $88,500 was paid by May 31, 2001.
INFORMATION CONCERNING MODERN
Modern Technology, Inc., is a Nevada company that is publicly
owned (but not traded). It is engaged in financial consulting
activities and through a subsidiary, an internet business to business
marketplace which is in the development stage and has yet to generate
any revenues to date.
Modern has over 350 shareholders with 20,150,000 outstanding common
shares. For the year ended June 30, 2000, Modern had total assets of
$788,106 and shareholder's equity of $777,806. For the year ended June 30,
2000, total revenues amounted to $43,812 with a net loss of $39,216. For
the nine months ended March 31, 2001, Modern had total assets of $816,770
with shareholder's equity of $803,243. For the nine months ended March 31,
2001, Modern's revenues were $104,799 with net income of $25,437.
On December 8, 2001, Modern and Scientio entered into an
agreement whereby Modern invested $188,500 in the Common Stock of
Scientio and received 403,000 shares equal to 20% of the outstanding
shares. Modern also agreed to invest up to $50,000 to defray expenses of
registering the shares issued to Modern and to allow the distribution on
a pro rata basis to Modern shareholders.
This is the second distribution of shares by Modern to its shareholders
since 1983. Modern considers distribution of shares on a case by case basis.
Management of Modern has not yet determined if these distributions of shares
will become a regular business practice.
PLAN OF DISTRIBUTION
PAGE 14
Modern will distribute the 403,000 of the Scientio shares it owns to
the its shareholders as a dividend as of a record date , 2001
on the basis of one Scientio share for each 50 Modern common shares.
Modern shareholders will initially have their ownership of Scientio
common stock registered only in book-entry form in which no certificates
are issued. On the distribution date, each Modern shareholder of
record as of the close of business on the record date will be mailed
one share of Scientio common stock for each 50 shares of Modern
Technology Corp they hold. Modern shareholders that hold their stock in
street name will have their Scientio common stock credited to their
brokerage accounts. The record date for the distribution is the close of
business on , 2001.
Modern shareholders will not be required to pay any cash or other
consideration to receive Scientio common stock in the distribution.
No fractional shares will be issued. Arthur Seidenfeld, president of
Modern will provide a limited number of his shares in Scientio to those
Modern shareholders holding more than a half share in Scientio to round
up to the nearest whole number (a total of less than 500 shares is
available for rounding).
Shares of Scientio common stock distributed to Modern shareholders
will be freely transferable, except for shares of Scientio common stock
received by persons who may be deemed to be affiliates of Scientio under the
Securities Act of 1933, as amended. Persons who are affiliates of Scientio
following the Distribution will be permitted to sell their shares of Scientio
common stock only pursuant to an effective registration statement under the
Securities Act or an exemption from the registration requirements of the
Securities Act, such as the exemption afforded by Section 4(1) of the
Securities Act or Rule 144 issued under the Securities Act. Arthur
Seidenfeld, president of Modern and also secretary/director of Scientio may
be deemed to be an affiliate of Scientio.
Scientio was created to develop XML datamining products. We believe
that if our stock is traded in the public markets it will be easier for us
to raise capital to fund our operations. We therefore entered into the
agreement with Modern to have our stock distributed as a dividend to Modern
shareholders.
The management of Modern considers the distribution of the 403,000
Scientio shares to its shareholders as a way to enhance shareholder value
and as a means to maximize the long-term financial return to its
shareholders. Modern believes that the distribution of Scientio shares and
the resulting creation of a publicly-held corporation may increase the value
of the Scientio shares and it may offer the stockholders of Modern greater
liquidity than if all 403,000 shares purchased by Modern were retained by
it. In addition, the Distribution will result in Scientio becoming a
publicly-traded company.Assuming Scientio shares are publicly traded, with
equity securities could be used in its compensation programs and to
facilitate potential alliances.
The discussion of the reasons for the Distribution set forth herein
includes forward-looking statements that are based on numerous assumptions
with respect to the trading characteristics of the Scientio common stock and
the ability of Scientio management to successfully take advantage of growth,
acquisition and alliance opportunities. Many of these factors are
discussed above under the captions "Forward-Looking Statements" and "Risk
Factors".
PAGE 15
Because of Modern's role in the Distribution, there is a possibility
that it may be deemed to be a statutory "underwriter" within the meaning of
Section 2(11) of the Securities Act. Modern has advised us that it will
comply with the prospectus delivery requirements that would apply to a
statutory underwriter in connection with the distribution of our shares to
its stockholders. Further, Modern has acknowledged to us that it is familiar
with the anti-manipulation rules of the SEC, including Regulation M under
the Securities Act of 1934. These rules may apply to sales by Modern in the
market, following the creation of a public market, if such a market ever
develops.
With certain exceptions, Regulation M prohibits any selling
shareholder, any affiliated purchasers and any broker-dealer or other person
who participates in an applicable distribution from bidding for or
purchasing, or attempting to induce any person to bid for or purchase, any
security which is the subject of the distribution until the entire
distribution is complete. Regulation M also prohibits any bids or
purchases made in order to stablilize the price of a security in connection
with the distribution of that security. The foregoing restrictions may
affect the marketability of our common stock.
FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
The following discussion is a general summary of current Federal
Income tax consequences of the Distribution as presently interpreted,
and a shareholder's particular tax consequences may vary depending on
his individual circumstances. You are urged to consult your own tax
advisor as to the particular tax consequences to you of the Distribution,
including, without limitation, the applicability and effect of any state,
local or foreign tax laws and the possible effects of changes of
applicable tax laws.
The Internal Revenue Service will not give an advance ruling as to
the valuation of the Scientio common stock to be distributed as a
dividend by Modern to its shareholders. The IRS is not bound by any
determination made by Modern as to the fair market value of the
property distributed to the Modern shareholders.
The distribution of Scientio common stock to Modern shareholders as a
dividend is a taxable event. Section 301 of the Internal Revenue Code of
1986 provides that the taxable amount of the dividend shall be the fair
market value of the property distributed. Section 316 of the Code
provides generally that a corporate distribution will be treated as a
dividend to the extent the distribution is paid out of earnings and
profits accumulated since 1983, or out of earnings and profits for the
year of the distribution. Management believes Modern has accumulated
earnings and profits in the corporation as of June 30, 2001. The year
of the distribution will be fiscal 2002 (year ended June 30, 2002).
Thus, the distribution will be taxable as an ordinary dividend only to
the extent there are accumulated earnings and profits.
If Modern has no earnings and profits for the fiscal year 2002, then the
distribution will be treated as a dividend of Modern to the extent of
the fair market value of the property distributed, to the extent of
accumulated earnings and profits. If the fair market value of the
distribution is greater than the accumulated earnings and profits of
Modern, the excess will be treated as a liquidating distribution.
Generally a liquidating distribution is treated as a return of the
shareholder's basis, reducing his or her tax basis in the investment.
To the extent the
PAGE 16
distribution exceeds the tax basis of the investment,
the excess will be treated as a gain from the sale of the investment.
If Modern has earnings and profits for the fiscal year 2002, but not enough
earnings and profits to cover the value of the property distributed,
then the distribution will be taxed as an ordinary income dividend to
the extent of the earnings and profits through fiscal year 2001 and
any remainder will be treated as a liquidating dividend. If Modern
has accumulated earnings and profits through the date of
distribution that exceed the value of the distribution then the
entire distribution will be considered a taxable dividend to
the shareholders.
Corporate holders of Modern shares (other than S Corporation)
may be entitled to the dividends-received deduction, which would
generally allow such shareholders a deduction, subject to certain
limitations, from their gross income of either 70% or 80% of the
amount of the dividend depending on their ownership percentage in
Modern. The holding period for the Modern shareholders for the
Scientio common stock received in the Distribution will commence on
the date of the Distribution.
Computation of Fair Market Value. For income tax purposes,
Fair Market Value is the price at which a willing buyer and a
willing seller would agree to exchange property, neither being under
a compulsion to buy or sell. Fair market value must be determined on the
date (or as close to as possible) of the distribution. Since
there is no trading market for Scientio shares, fair market value will
be calculated at the appropriate time using other valuation techniques. We
are going to use the net book value of Scientio on the date of distribution,
since there is currently no trading market for Scientio's shares. As of May
15, 2001, the taxable dividend value of each of the Scientio shares to be
distributed to Modern shareholders would be $.02. This is arrived at by
dividing Scientio's shareholders equity on May 15, 2001- $34,494 by the
number of Scientio shares outstanding on May 15, 2001: 2,015,000.
The recipients of the distribution are not paying for the shares
received and are therefore not making a decision about investing in the
shares. The tax consequences of the distribution do not change the fact
that shareholders of Modern will receive the shares without any direct
payment for them. The information about the amount of the taxable dividend
per share will be delivered to each shareholder in the ordinary course of
business after the computation of earnings and profits for Modern for its
fiscal year 2002. Modern's fiscal year 2002 is the year ended June 30, 2002,
the period for which the most recent financial data about Modern will be
available.
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION AND PLAN OF OPERATION.
We are in the development stage, not yet generating any revenues.
We have completed development of our XML Miner software package Version 1.0
consisting of the XML Miner, XML Rule and Strucfind components which we are
currently offering for sale on our Company's website. We are working on the
XML Rule Package, which will contain the XML Rule component (already
completed) and the XML Rule Editor which is not yet finished. We expect the
Rule Editor and an updated 1.1 version of the XML Miner package will be
finished by the end of September 2001. Over the next twelve months, we do
not anticipate the purchase of any significant amount of plant or equipment
and we do not anticipate any significant changes in the number of company
employees.
For the period from inception (December 12, 2000) to May 15, 2001 we
incurred expenses of $76,744, consisting of funds paid to our president
($50,007) as part of a
PAGE 17
management's agreement, fees for professional
services ($10,260), general and administrative expenses ($16,058),
depreciation expense ($419) and offset by interest income of $175-. The
expenses, offset by interest income resulted in a net loss of $76,569.
We received initial funding from Modern Technology Corp., ("Modern")
one of our principal shareholders. As of May 15, 2001, Modern invested
$100,000 and had invested an additional $88,500 by May 31, 2001.
We believe these funds will be sufficient to cover working capital
needs through March 31, 2002 and we will need to raise an additional
$50,000-$100,000 over the next 12 months. There are no commitments for any
additional financing.
At May 15, 2001, we had shareholders' equity of $34,494.
BUSINESS
Our Company develops markets and supports software components that can
be used to analyze data (data mining) flowing in the XML (extensible
markup language) protocol between computers over the Internet or Intranets.
The end user of these software products can build intelligent interfaces
for e-business to improve profitability, dynamically select business
partners and terms and improve support to customers. We believe we are
the only software company to focus on data mining data in the XML format.
Our principal products, the XML Miner Package Version 1.0 and the XML
Rule Package can be purchased by developers of internet web sites and
general software. The XML Miner and XML Rule Packages will be used by
internet web or general application software developers seeking to add
intelligence to an internet web site or application. Examples are an
insurance web site pre-screening customers into specific risk groups to be
offered particular products. On a financial services web site, selecting
product offerings based on a simple questionnaire or on a web site
where customers are shown specific products which may be of interest to them
based upon their past buying history.
The XML Miner Package Version 1.0 which is completed and offered for
sale on our website and marketed by the company, Component Source, consists
of three components, XML Miner, XML Rule and Strucfind. XML Miner extracts
knowledge in a Metarule format. Metarule is an XML based standard for
describing knowledge. XML Rule makes use of the knowledge in our proprietary
Metarule format. Strucfind displays to the user the structure of XML data so
that a person can decide what knowledge the person wants to extract from it
when using XML Miner. An example of a potential buyer for the XML Miner
package is a software developer who is working with a mail order client's
website. The mail order company wants to determine who would be a potential
buyer of one of their products based upon records showing purchasers of
similar products. The mail order company wants to extract data from its
records in order to identify potential buyers. We have not yet sold any
units of the XML Miner Package Version 1.0.
Our web site was live on June 1, 2001 with our XML Rule Package
Version 1.0 ready for sale. We started our marketing effort on June 8, 2001.
ComponentSource, a U.S. marketer of "off-the-shelf" reusable software
components started marketing our XML Rule Package Version 1.0 at the
beginning of July 2001.
PAGE 18
The software developer's purchasing process takes some time and the
stages, in management's opinion, are likely to be the following:
*A developer is asked to research developing a piece of software.
*The developer plans out the general form of the solution including the
kinds of objects it should contain.
*For each object the developer determines if it already exists off the
shelf or if the developer has to write it. The developer looks around
for objects and downloads demo versions and evaluates them (usually a
2-3 week process).
*He presents the solution to his or her superiors and gets permission
to purchase (2-3 weeks?).
*We get a sale.
In our conversations with personnel of ComponentSource, they informed
us it was not uncommon for it to take several months before receiving orders
for software components. No assurance can be given that sales will be
received within the time frame outlined above or even at all.
Our XML Rule Package will consist of two components: the XML Rule and
XML Editor. The XML Rule component has been completed and we anticipate
completing developing the XML Editor by the end of September 2001. The Rule
Editor component will allow a person to write in their own knowledge, in our
Metarule format and in verbal terms to indicate how to work a system. An
example of a potential buyer of the XML Rule Package would be a software
developer who wants to develop a credit rating system which would allow
for checking one's credit without being prejudicial or discriminatory and by
using an existing human process and automating this process.Both the XML
Miner Package and the XML Rule Package will be stand along products. We do
not anticipate selling separately components of each product, only the
complete software package.
We also will enter into joint ventures with third party software
developers to integrate, customize and develop on the intellectual property
contained in its initial products for specific markets and also offer
general consultancy making use of our products to third parties. We may
license the technology of XML Miner and XML Rule to software development
companies. To date we have not signed on any joint venture, consultancy or
licensing agreements for our technology.
Background Information
The communication and data standards for the internet, are set by the
W3C (World Wide Web Consortium) committee. They issued the first XML
standard in 1997 and management believes it was almost immediately used in
commercial products by Microsoft and others who had worked on the
specification with the W3C.
XML is used for transactions and passing data in relatively small lumps
between machines running different operating systems and software,
frequently across the Internet. XML permits information to be transferred in
a format that is universally accessible and readable by both men and
machine. The structure and meaning of the data transferred via XML,
enclosed
PAGE 19
as a stream of text or a document, can be explained using another
document (a DTD-document type definition) that sets out the formal and
structure of the first document in a way that is again universally
accessible and controlled by international standards. Consumers and creators
of data with a common interest, for example, financial traders, medical
insurers can and have agreed on a common DTD that permit them to exchange
data freely over the internet in a common format.
A strong area of growth for XML is the business to business market
where companies are looking for savings in communication between
manufacturers, suppliers and dealers passing orders, confirmations,
delivery notes between different and dissimilar computer systems over
the Internet using XML.
Data Mining is the process of finding meaningful relationships in
data that help to predict some useful and perhaps profitable fact or
event. Examples are predicting customer behavior in supermarkets based
on purchasing patterns, detecting patters of fraudulent transactions or
identifying customers who are bad risks for credit or insurance.
Depending on one's educational background, data mining can be considered
an extension of statistics and probability theory or Artificial/
Computational Intelligence. Both these disciplines are useful in this
field and can overlap in their application.
Data mining products have in general been tied to databases of a
particular type. One of Microsoft's newest products. SQL Server 2000,
includes basic elementary data mining built in. Manufacturers of more
general products have had to adapt their software to work with multiple
databases and carry the related costs of testing and support.
XML offers the opportunity to develop data mining tools that
operate directly on XML documents themselves, whatever DTD is used.
Such tools would not need to support multiple database types or be
relegated to niche markets. In addition, the way in which XML is used
and the way in which business applications are frequently arranged in
tiers, with the middle tier performing the legacy database to XML
conversion and checking against business rule offers in management's
opinion an ideal place inside computing systems to locate data mining
tools if they understand XML.
Data mining tools must be considered as separate from the normal
analytical processing of data. Data mining is concerned with vague and
fuzzy data, and relationships that do not always hold, but hold often
enough to be useful. This requires far more sophisticated software
than is currently on sale in the XML market. Our company has
developed just such a set of tools.
The data mining process can be thought of as consisting of two
parts, the discovery of relationships and the exploitation and use of
them. The discovery process need not be performed every day, or even
every week, assuming that the relationships detected have a reasonable
lifetime. A user would typically wish to exploit very opportunity that
came about, however, this might be every few milliseconds in a busy
system. The discovery system can be relatively complex and run either
continually or in a batch or group mode. The exploitation systems must
be simple and very fast.
Introduction to our Products
A software developer could buy products off the shelf and assemble
something that would perform the same tasks, but only after writing a
good deal of code to link these objects. A
PAGE 20
software developer that
created such a solution for a web site he or she was working on would
be unlikely to see the solution as one he or she could sell to others,
since it would contain objects he or she did not own. The developer
would look at our products as something to use on his or her next website
design that would in management's opinion save him or her money and
achieve the same ends more efficiently with less requirement for coding
testing and debugging.
The XML Miner and XML Rule Packages can be applied to two classes of
problems: those that has gone unsolved because the people with the problem
did not know anything about artificial intelligence or thought the solution
would be too expensive to implement, or the other class, problems that have
already been solved with special purpose code that cannot be re-used,
where in management's opinion, we can offer a solution that is more
efficient. It is management's opinion that the component software industry,
which is currently valued at $1 Billion annually by Component Source is
predicated on the idea that it is almost always cheaper for developers to
use a component written by someone else that has been thoroughly tested and
encapsulates knwledge that would be expensive to obtain, rather than write
their own, to use just once with the concommitant expense of testing and bug
fixing.
Products
We have two products, XML Miner Package Version 1.0 (completed and
being marketed)and XML Rule Package (to be completed by the end of September
2001). The XML Miner package is the discovery program. It analyzes data
prescribed in XML files, strings or data islands and stores the results in
another XML file or string, the rule file. The file or string containing
the discovered rules can be passed on to XML Rule package, which is
the exploitation program. Data flowing in or out of a business server
in XML format can flow through XML Rule, the exploitation component,
which will apply the rules and pass if so wished, the results directly
into the XML data stream. Alternatively, XML Rule can be accessed
programmatically so that data values passed from a user or calculated on the
server can be placed into XML Rule, and the results used to change the flow
of a program especially one running on an internet server.
The opportunity exists with these software tools to do things like
apply a risk rating to online customers automatically, to segment
customers online, filtering out likely low spenders or predicting customer
likes and dislikes. The users server would receive all of the customer's
data, plus the analyses of it provided by XML Rule. Where data is complete
and where values can be determined from other data values that are present
XML Rule can fill in the missing data. For instance, a customer may supply
height and weight to a web site but not dress size for an online clothing
retailer. XML Rule could predict the dress size, assuming training data
were available.
Technology
XML development, although very new, has proceeded a lot like the early
days of Internet development. Companies and individuals have developed
solutions that can be used on a wide variety of software platforms, such
as MS-Dos, Microsoft Windows, Macintosh and Linux, and then giving them
away free or at low cost. These are "loss leaders" intended to give the
company a presence in the new XML market,and have created a strong
interest in this technology, and provided the basic tools to use it.
The opportunity is present for more
PAGE 21
sophisticated tools, priced
commercially, to take advantage of the market that has already been built.
Our first product the XML Miner Software Package Version 1.0 (already
completed and being marketed) and the XML Rule Package(to be completed in
September 2001) are coded as COM objects and will run only on Microsoft
platforms with Microsoft servers. Our initial product, the XML Miner Package
version 1.00 is priced for single users at $800-limited to a maximum of five
simultaneous uses and a version 1.0 for six or more simultaneous uses is
priced at $3,000. For someone who has purchased an $800 single to five
simultaneous uses package and wants to obtain a six or more simultaneous
uses package, he or she can pay an additional $2,200 and obtain the benefits
of a six or more simultaneous user. XML Miner is presently offered for
sale on our Internet web site http//www.metadatamining.com and by
ComponentSource.
Competition
There were no data mining products that claimed to work with XML when
we searched reference sources in the XML Community, nor when
we searched reference sources in the data mining community. We are the
only company to focus on data mining data in the XML format. Microsoft has
made significant investment in XML and XML is vital to its future plan.
Should Microsoft develop datamining products in the XML format they would be
a substantial competitor for us. We may experience competition from software
data mining companies who prepare future products in an XML format. Future
web mining software products may also be written in an XML format. If data
mining and web mining software companies introduce products written in an
XML format, that event would intensify competition in our field.
The competition as discussed in the risk factors section is one of a
General nature. Where there is a specific datamining need which can be
solved by our software products, there will also be software written in a
non XML format by other software companies (probably requiring the use of a
data mining consultant). Where there is a requirement for a datamining
product in an XML format, a software developer will use a pre-existing
datamining product already written for a specific application in a non XML
format which has to be modified by an expert in both data mining
and XML. If a potential customer uses XML and wants to solve such a
datamining need using the minimum of specially written code, and without
hiring experts, that person will find that in management's opinion, our XML
software is currently unique in representing a general solution to such
problems applicable to a wide range of circumstances.
Markets
Software can be divided into two basic categories, software for
developers and software for end users. Developers can be those looking
to create new products for sale, or working inside large firms integrating
products together to produce business platforms such as internet web sites.
XML Miner and XML rule are components, not entire solutions in their own
right. They cannot at present be used by end-users without any technical
abilities. Per Component Source, the market for software components
purchased by software developers for all business applications (including
but not limited to datamining and artificial intelligence components) is
about $1 billion yearly.
Our products are therefore geared to software developers. Our sales and
marketing approach combines direct sales through our London office
with a web presence at our
PAGE 22
http://www.metadataming.com website.
The basic software for our XML Miner and XML Rule are available as a
free but time and user limited download at our metadatamining website
allowing developers to sample the software before committing to a
purpose. By allowing free downloads of the XML Miner and XML rule
software, we believe we will expose our XML products to its intended
audience of software developers.
We are planning to advertise our XML products on relevant web site and
to place our products for sale with a company which is a vendor of component
software. This Company is a market place for technical decision makers
(including software developers) involved in specifying, locating and
buying software components. One of their marketing approaches is to
send out compact discs (CD's) with every Microsoft development system
with details of all of the component software they sell. We will also
list our metadatamining web site on Internet search engines. We also
anticipate reaching software developers through direct email advertising
and advertising in publications devoted to software developers.
We have filed trademark applications for the names XML RULE and XML
MINER with the United States Patent and Trademark Office with a filing
date of February 6, 2001. We currently own the following domain names,
all of which will be used as alternative addresses for our web site or
future spin offs from the site: metadatamining.com,
FuzzyInference.com,xmlminer.com,xmlrule.com and websiteanalyzer.com.
MANAGEMENT
The officers and directors of the Company are as follows:
NAME AGE POSITION
Andrew Edmonds 45 President and Director
Anneke Edmonds 39 Treasurer and Director
Arthur Seidenfeld 50 Secretary and Director
Andrew Edmonds
Dr. Edmonds has been President of the Company since its formation in
December 2000. During the past ten years he has acted as a director and
chief technology officer of various companies concerned with creating
software making use of artificial and computational intelligence. In 1987,
he wrote his first commercial software product, a neural network simulator
called Neurun. This was Britain's first Neural network product. In 1989,
he formed a new company called Neural Computer Sciences and produced the
first Windows based Neural network system in 1990. In 1993, he developed
a product that dynamically created financial trading systems called
Darwin and thereafter his company, Science in Finance developed products
exclusively for Transworld Oil, a Bermuda based futures trading company.
He is the author of a variety of published papers covering Neural networks,
genetic algorithms, Chaos theory, genetic programming and Fuzzy logic, and
their applications to biotechnology, Financial time series prediction and
other areas. From April 2000 to December 2000 he worked on consultancy
projects investigating a speaker verification system for e-commerce
applications. Dr. Edmonds received a PhD degree from the
University of Luton in 1996 and in 2000 he became a member of the
British Computer Society.
PAGE 23
Anneke Edmonds
Mrs. Edmonds is the wife of Andrew Edmonds and for the past five
years has been assisting her husband in marketing activities and in
web site and graphic design. During 1990-1991 she was a Marketing Manager
for Amscan, Ltd. Mrs. Edmonds has a B.A. Degree from Tulane University
(1985) and is a member of the Chartered Institute of Marketing.
Arthur Seidenfeld
Mr. Seidenfeld is President and a Director of Modern Technology
Corp., a public financial consulting company, which has invested in
Scientio and will spin-off to its shareholders the Scientio shares it
owns. Mr. Seidenfeld was President of Davin Enterprises, Inc., a
"blind pool" from 1987 to 1998 when it merged with Creative Masters, Inc.
He is also President (since 1998) of Daine Industries, a "blind pool",
which company previously owned Lite King Corp., which merged with
National Cabling Service in 2000. He has a B.S. in Accounting from
New York University School of Commerce (1972) and an M.B.A. in
Finance from Pace University (1978).
Executive Compensation
The only officer entitled to compensation is Andrew Edmonds, the
President of the Company. Dr. Edmonds devotes his full time to the business
of Scientio. Pursuant to the shareholder's agreement of December 8, 2000,
Dr. Edmonds is to be paid a minimum salary of $90,000 on or before December
8, 2001. Dr. Edmonds has agreed to transfer to the Company all improvements
of the Company's products and any new software products he develops for a
three year period ending December 8, 2003. In the event this salary is not
paid to Dr. Edmonds he will be free of the three year restriction provided
all shares issued to Mrs. Edmonds are returned to the treasury of the
Company.
We are paying rent monthly of about $1,700 (1,200 british pounds) to
Anneke Edmonds, treasurer and director for use of two rooms (about 300
square feet) in Mrs. Edmond's home under an oral agreement on a month by
month basis. Included in the rental are monthly payments for telephone,
utilities and the use of equipment, computers and software owned by Andrew
and Anneke Edmonds. Management believes the amount payment is equivalent to
or less than current market rental rates. Anneke Edmonds, our treasurer and
chief financial officer/director and Arthur Seidenfeld, our company
secretary and director both devote about 20% of their time to company
business and both are non paid officers/directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was formed pursuant to an Agreement as of
December 8, 2000 among Modern Technology Corp., Andrew Edmonds and
Anneke Edmonds where it was agreed to form the Company and issue
2,015,000 shares as follows: 1,591,850 shares to Anneke for assigning
the software to the Company; 403,000 shares to Modern for $188,500 with
an additional investment of up to $50,000 to cover registration costs and
20,150 shares to Richard Kashdan for services related to the formation of
the Company. On December 6, 2000, Andrew Edmonds assigned to Anneke Edmonds
the software he developed, before the time the Company was organized
PAGE 24
(December 11, 2000)and before December 8, 2000, the date an agreement was
signed with Modern Technology Corp.
PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to
beneficial ownership of our common stock by:
* each person who beneficially owns more than 5% of the
Common Stock;
* each of our executive officers named in the Management
section;
* each of our Directors; and
* all executive officers and Directors as a group.
The table shows the number of shares owned as of July 1, 2001 and
the percentage of outstanding common stock owned as of July 1, 2001.
Each person has sole voting and investment power with respect to the
shares shown, except as noted.
Number of Shares
Of Common Stock
Name and Address Beneficially Percentage of Outstanding
Of Beneficial Owner Owned (1) Shares Owned (2)
__________________________________________________________________________
Anneke Edmonds 1,591,850 79%
Andrew Edmonds -0-
Modern Technology Corp.(3) 403,000 20%
Arthur Seidenfeld (3) -0-
(1) Beneficial ownership is based on information provided to us, and
the beneficial owner has no obligation to inform us of or otherwise
report any changes in beneficial ownership. Except as indicated, the
persons named in the table above have sole voting and investment power
with respect to all shares of common stock shown as beneficially owned
by them.
(2) The percentages shown are calculated based upon 2,015,000
shares of common stock outstanding on July 1, 2001.
In calculating the percentage of ownership, unless as otherwise indicated,
all shares of common stock that the identified person or group had the
right to acquire within 60 days of July 1, 2001 upon the exercise of
options and warrants are deemed to be outstanding for the purpose of
computing the percentage of shares of Common Stock owned by such
person or group, but are not deemed to be outstanding for the
purpose of computing the percentage of the shares of Common Stock
owned by any other person. There are currently no options outstanding.
(3) Upon completion of this offering, Modern Technology will
distribute to its shareholders all its shares of the Company and
will no longer own any shares. Arthur Seidenfeld as a shareholder,
owning 47.9% of Modern will receive 193,096 shares of Scientio (9.6%) and
his mother as a 12% shareholder of Modern will receive 48,530 shares(2.4%).
PAGE 25
DESCRIPTION OF SECURITIES
We are authorized to issue 30,000,000 shares of Common Stock, par
value $.001 per share. We do not have any authorized preferred shares.
The Common Stock shall have voting rights on all matters requiring
a vote of stockholders. Each share of Common Stock issued and outstanding
shall be identical in all respects one with the other, and no dividends
hall be paid on any shares of Common Stock unless the same is paid on
all shares of Common Stock outstanding at the time of such payment.
The holders of Common Stock shall have exclusively all other rights of
stockholders. There is no cumulative voting with respect to the
election of Directors, with the result that the holders of more than
50% of the shares voting for the election of Directors can elect all of
the Directors. The holders of Common Stock are entitled to receive
dividends if declared by the Board of Directors out of funds legally
available for them. In the event of liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to
share ratably in all assets remaining which are available for distribution
to them after payment of liabilities and after provision has been made for
each class of stock, if any, having preference over the Common Stock.
Holders of shares of Common Stock, as such, have no conversion,
preemptive or other subscription rights, and there are no redemption
provisions applicable to the Common Stock.
Transfer Agent
Our transfer agent is Jersey Transfer Trust Co. Their telephone
number is 973 239-2712.
Reports to Shareholders
We intend to furnish annual reports to shareholders which will
include audited financial statements reported on by our certified
public accountants. In addition, we may issue unaudited quarterly or
other interim reports to shareholders as we deem appropriate. We will
comply with the periodic reporting requirements imposed by the Securities
Exchange Act of 1934.
Shares Eligible for Future Sales
If a trading market develops, the market price of the Common
Stock may be adversely affected by the sale, or availability for sale,
of substantial amounts of the Common Stock in the public market following
the distribution. The 403,000 shares included in the distribution will
be freely tradable. However the 193,096 shares held by Arthur Seidenfeld,
our secretary and director will be subject to Rule 144 of the Securities
Act as discussed in the next paragraph. Shares can be sold subject to the
volume limitations and other conditions of Rule 144.
PAGE 26
All of the other 1,612,000 outstanding shares of Common Stock may be
sold in the public market only if registered or pursuant to Rule 144 of
the Securities Act. The provisions of Rule 144 provide that these
securities will be available for sale in the public market on December 15,
2001 which is one year from the date they were issued, subject to the
volume limitations and other conditions of Rule 144.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby
will be passed upon for us by Gerald A. Kaufman, of 33 Walt Whitman Road,
Suite 233, Huntington Station, New York 11746.
EXPERTS
Our financial statements as of March 31, 2001 and for the period
from inception December 12, 2000 to March 31, 2001, have been included
herein in reliance on the report of Greenberg & Company CPA's LLC,
independent certified public accountants, appearing elsewhere herein,
given upon the authority of that firm as experts in auditing and
accounting.
DISCLOSURE OF COMPANY POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our certificate of incorporation and by-laws provide that we
shall indemnify all of our directors and officers to the fullest
extent permitted by Delaware law. Under such provisions, the
director or officer, who in his capacity as such is made or threatened
to be made, party to any suit or proceeding, shall be indemnified if it
is determined that such director or officer acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of Interactive. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to directors,
officers, and persons controlling Interactive pursuant to the foregoing
provision, or otherwise, we have been advised that in the opinion of
the SEC such indemnification is against public policy as expressed in
the Securities Act of 1933 and is, therefore, unenforceable.
PAGE 27
SCIENTIO, INC.
FINANCIAL STATEMENTS
MARCH 31, 2001
PAGE 28
I N D E X
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 1
BALANCE SHEET - ASSETS 2
BALANCE SHEET - LIABILITIES AND EQUITY 3
STATEMENT OF OPERATIONS 4
STATEMENT OF SHAREHOLDERS' EQUITY 5
STATEMENT OF CASH FLOWS 6
NOTES TO THE FINANCIAL STATEMENTS 7 - 9
PAGE 29
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
SCIENTIO, INC.
We have audited the accompanying balance sheets of SCIENTIO, INC. (a
development stage enterprise) as of March 31, 2001 and the related statement
of operations, shareholders' equity and cash flows for the period December
11, 2000 (inception) to March 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based upon our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statements' presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of SCIENTIO, INC. (a
development stage enterprise) as of March 31, 2001, and the results of its
operations and its cash flows for the period ended March 31, 2001, in
conformity with generally accepted accounting principles.
GREENBERG & COMPANY LLC
Springfield, New Jersey
June 12, 2001
Page 1 of 9
PAGE 30
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
A S S E T S
May 15, 2001 March 31,
(Unaudited) 2001
CURRENT ASSETS
Cash and Cash Equivalents $ 29,002 $ 56,248
-------- ---------
TOTAL CURRENT ASSETS 29,002 56,248
-------- --------
FIXED ASSETS, At Cost
Equipment 4,360 4,177
Software 1,592 1,592
-------- --------
5,952 5,769
Less: Accumulated Depreciation (411) (242)
-------- --------
FIXED ASSETS, net 5,541 5,527
-------- --------
OTHER ASSETS
Deposits -0- 157
-------- --------
TOTAL OTHER ASSETS -0- 157
-------- --------
TOTAL ASSETS $ 34,543 $ 61,932
======== ========
See accompanying summary of accounting policies and notes to financial
statements.
Page 2 of 9
PAGE 31
SCIENTIO, INC.
BALANCE SHEET
(A DEVELOPMENT STAGE ENTERPRISE)
L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y
May 15, 2001 March 31,
(Unaudited) 2001
CURRENT LIABILITIES
Accounts Payable and Accrued Expenses $ 49 $ 49
--------- ---------
TOTAL CURRENT LIABILITIES 49 49
-------- ---------
COMMITMENTS & CONTINGENCIES
SHAREHOLDERS' EQUITY
Common Stock - 30,000,000 Shares
Authorized, 2,015,000 Issued &
Outstanding Shares at $.001 Par Value 2,015 2,015
Paid In Capital 197,548 197,548
(Deficit) Accumulated during the
Development Stage (76,569) (49,180)
Subscription Receivable (88,500) (88,500)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 34,494 61,883
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 34,543 $ 61,932
========= ========
See accompanying summary of accounting policies and notes to financial
statements.
Page 3 of 9
PAGE 32
SCIENTIO, INC.
(A DEVELOPMENT STATE ENTERPRISE)
STATEMENT OF OPERATIONS
For the For the Cumulative
Period Period Amounts
April 1, December from December
2001 to 11, 2000 11, 2000
May 15, (Inception) (Inception) to
2001 to March May 15, 2001
(Unaudited) 31, 2001 (Unaudited)
Interest Income $ -0- $ 175 $ 175
General and Administrative Expenses (7,241) (8,817) (16,058)
Officer Salary (19,820) (30,187) (50,007)
Professional Fees (157) (10,103) (10,260)
Depreciation Expense (171) (248) (419)
---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES (27,389) (49,180) (76,569)
Income Tax Expense (Benefit) -0- -0- -0-
---------- ---------- ----------
NET INCOME (LOSS) $ (27,389) $ (49,180) $ (76,569)
========== ========== ==========
Basic and Diluted Earnings (Loss) Per Share $ (.01) $ (.02) $ (.04)
========== ========== ==========
Weighted Average Number of Shares of
Common Stock Outstanding 2,015,000 2,015,000 2,015,000
========== ========== ==========
See accompanying summary of accounting policies and notes to financial
statements.
Page 4 of 9
PAGE 33
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD DECEMBER 11, 2000 (INCEPTION) TO MAY 15, 2001
(Deficit)
Accumulated
Common Stock During the Total
Number $.001 Paid-In Development Subscription Shareholder's
of Shares Par Value Capital Stage Receivable Equity
Initial Investment
in Common Stock
at December 15,
2000 403,000 $403 $188,097 $(88,500) $ 100,000
Stock issued for
service at
December 15, 2000 20,150 20 9,451 9,471
Stock issued for
Software at
December 15, 2000 1,591,850 1,592 1,592
Net Income (Loss)
for the period
December 11, 2000
(Inception)
through March 31,
2001 (49,180) (49,180)
--------- ------ -------- --------- --------- ----------
BALANCES AT
MARCH 31, 2001 2,015,000 2,015 197,548 (49,180) (88,500) 61,883
Net Income (Loss)
for the period
April 1, 2001 to
May 15, 2001
(Unaudited) (27,389) (27,389)
--------- ------ -------- --------- --------- ----------
BALANCES AT
MAY 15, 2001 2,015,000 $2,015 $197,548 $(49,180) $(76,569) $ 34,494
========= ====== ======== ========= ========= ==========
See accompanying summary of accounting policies and notes to financial
statements.
Page 5 of 9
PAGE 34
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
For the For the Cumulative
Period Period Amounts
April 1, December 11, December
2001 to 2000 11, 2000
May 15, (Inception) (Inception) to
2001 to March May 15, 2001
(Unaudited) 31, 2001 (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (27,389) $ (49,180) $ (76,569)
Adjustments to Reconcile Net Income (Loss)
to Net Cash
Provided by (Used In) Operating Activities:
Depreciation 169 248 417
Stock Issued for Services -0- 9,471 9,471
Change in Assets and Liabilities:
Decrease (Increase) in Deposits 157 (157) -0-
Increase (Decrease) in Accounts Payable -0- 49 49
--------- -------- ----------
Net Cash Provided by (Used In)
Operating Activities (27,063) (39,569) 66,632)
--------- -------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Equipment (185) (4,177) (4,362)
--------- -------- ----------
Net Cash Provided By (Used In)
Investing Activities (185) (4,177) (4,362)
--------- -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Common Stock Insurance -0- 100,000 100,000
--------- -------- ----------
Net Cash Provided By (Used In)
Financing Activities -0- 100,000 100,000
--------- -------- ----------
Effect of Exchange Rate Changes on Cash 2 (6) (4)
Net Increase (Decrease) in Cash and
Cash Equivalents (27,246) 56,248 29,002
Cash and Cash Equivalents at Beginning
of Period 56,248 -0- -0-
---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 29,002 $ 56,248 $ 29,002
========== ========== ==========
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period For:
Interest Expense $ -0- $ -0- $ -0-
Income Tax $ -0- $ -0- $ -0-
Non Cash Investing and Financing Transactions:
Stock Issued for Services $ -0- $ 9,471 $ 9,471
Stock Issued for Software $ -0- $ 1,592 $ 1,592
See accompanying summary of accounting policies and notes to financial
statements.
Page 6 of 9
PAGE 35
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD DECEMBER 11, 2000 (INCEPTION) TO MAY 15, 2001
(Unaudited)
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
Scientio, Inc. (Scientio) is a Delaware corporation. Scientio is
in the development stage and has not generated any revenue
operations. Scientio's offices are located in the United Kingdom
and the United States. Scientio's principal purpose was to
acquire the ownership and commercialization rights to a line of
software products developed by Andy Edmonds and owned by
Anneke Edmonds and designated "the family of XML products"
defined as XML Miner, XML Rule and Strucfind. These products
mine XML code to find relationships and predict values using
fuzzy-logic rules, then apply them to web sites, applications,
or anywhere that a COM control or Java bean can be used.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Currency Translation
The Company's functional currency is the British pounds sterling
in which revenue and expenses are generated. For
reporting purposes, the reporting currency is the US Dollar. The
translating functional currency statement into the reporting
currency was performed in accordance with Statements of
Financial Accounting Standards (SFAS) 52 and General Accepted
Accounting Principles (GAAP).
Cash and Cash Equivalents
Cash equivalents consist of highly liquid, short-term
investments with original maturities of 90 days or less.
Property and Equipment, At Cost
Depreciation is calculated using the straight line method over
the asset's estimated useful life, which is 5 years for
equipment and 3 years for software. Depreciation expense for the
Period December 11, 2000 (inception) to March 31, 2001 was $248,
and for the period April 1, 2001 to May 15, 2001 was $171.
Revenue Recognition Policy
The company recognizes sales, for both financial statement
purposes and for tax purposes, when the products are shipped to
customers.
Page 7 of 9
PAGE 36
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD DECEMBER 11, 2000 (INCEPTION) TO MAY 15, 2001
(Unaudited)
(Continued)
Estimates in Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
Income Taxes
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes." SFAS 109 has as its basic
objective the recognition of current and deferred income tax
assets and liabilities based upon all events that have been
recognized in the financial statements as measured by the
provisions of the enacted tax laws.
Valuation allowances are established when necessary to reduce
deferred tax assets to the estimated amount to be realized.
Income tax expense represents the tax payable for the current
period and the change during the period in the deferred tax
assets and liabilities.
NOTE 3: OFFICER SALARY AND PROFESSIONAL FEES
The company has an agreement with its president to complete and
maintain the company's product. In this agreement, the company
agrees to pay the officer at least $90,000 per annum. The
officer has received $30,187 and $19,820 for the period December
11, 2000 (inception) to March 31, 2001 and for the period
April 1, 2001 to May 15, 2001, respectively.
NOTE 4: STOCK BASED COMPENSATION
The person who performed services in relation to the formation of
the corporation received 20,150 common shares
approximating the fair market value of $9,471. This amount
was changed to professional fees during the period ended
March 31, 2001. This stock based compensation plan is
accounted for in accordance with SFAS No. 123.
Page 8 of 9
PAGE 37
SCIENTIO, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD DECEMBER 11, 2000 (INCEPTION) TO MAY 15, 2001
(Unaudited)
(Continued)
NOTE 5: TRANSFERS OF NONMONETARY ASSETS BY SHAREHOLDERS
According to the Securities and Exchange Commission's Staff
Accounting Bulleting 48, when the company
acquires assets from shareholders in exchange for stock just
prior to its first public offering, the assets should generally
be recorded at cost to the shareholder. On December 15, 2000,
the company acquired software from a shareholder and recorded
the software at a cost of $1,592 (the cost to the shareholder).
NOTE 6: INCOME TAXES
Income taxes are accrued at the statutory U.S. and state income
tax rates.
Income tax expense is as follows:
5/15/01 3/31/01
Current tax expense (benefit):
Income tax at statutory rates $ -0- $ -0-
Deferred tax expense (benefit):
Operating Loss Carryforward (7,061) (7,081)
-------- -------
(7,061) (7,081)
Valuation allowance (7,061) (7,081)
-------- -------
Total Tax Expense (Benefit) $ -0- $ -0-
======= =======
Deferred tax assets:
NOL $ 14,142 $ 7,081
Valuation allowance (14,142) (7,081)
-------- -------
Net deferred tax assets $ -0- $ -0-
======== =======
The Company has net operating loss (NOL) carryforwards for
income tax purposes of approximately $76,500. This loss is
allowed to be offset against future income until the year 2021
when the NOL's will expire.
The loss has been fully reserved for in the valuation allowance
account due to the startup of operations and the uncertainty of
the company to achieve profitability in the future.
PAGE 38
PART II
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides for broad
indemnification of officers and directors. Our Bylaws provide that we
shall, to the fullest extent permitted by applicable law, as amended
from time to time, indemnify all of our directors, as well as any of
our officers or employees to whom we have agreed to grant indemnification.
The By-Laws provide as follows:
"No director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a
director, except with respect to (1) a breach of the director's duty of
loyalty to the corporation or its stockholders, (2) acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (3) liability which may be specifically defined by
law or (4) a transaction from which the director derived an improper
personal benefit, it being the intention of the foregoing provision to
eliminate the liability of the corporation's directors to the corporation
or its stockholders to the fullest extent permitted by law. The
corporation shall indemnify to the fullest extent permitted by law
each person that such law grants the corporation the power to indemnify."
Because the ByLaws of the Company provide for such imdemnification,
the foregoing provisions of Delaware law and the organization documents of
the Company are broad enough to permit the Company to indemnify its officers
and Directors from liabilities that may arise under the Securities Act.
INSOFAR AS INDEMNIFICATION FOR LIABIITIES ARISING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, MAY BE THE FOREGOING
PROVISIONS, IT IS THE OPINION OF THE SECURITIES AND EXCHANGE
COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS
EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with
this Registration Statement
Filing Fee-Securities and Exchange Commission $ 100
Fees and Expenses of Legal Counsel $ 20,000
Accounting Fees and Expenses $ 20,000
Blue Sky Fees and Expenses $ 1,000
Printing and EDGARizing Expenses $ 3,500
Miscellaneous Expenses $ 2,000
--------
$ 46,600
========
PAGE 39
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS
FROM THE REGISTERED SECURITIES
On December 11, 2000, the Company was incorporated under the laws of
the State of Delaware.
The date, title, and amount of unregistered securities sold/issued by
the Company are as follows:
As of December 15, 2000, the Company issued 2,015,000 shares to three
persons as follows: 1,591,850 shares to Anneke Edmonds 403,000 shares to
Modern Technology Corp. and 20,150 shares to Richard Kashdan. These shares
were issued for assignment of software, cash and services rendered,
respectively. The shares sold to Modern Technology for cash of $238,500
(assuming an investment of $188,500 and $50,000 to cover registration costs)
amount to a cash price of $.59 per share. To the date of this Registration
Statement $218,500 was paid, ($188,500 and $30,000 covering registration
costs of this distribution, amounting to a cash payment of $.54 per share.
Shares issued to Anneke Edmonds for assignment of software were valued at
$1,592, or $.001 per share. Shares issued to Richard Kashdan for services
were valued at $9,471, or $.47 per share.
There was no underwriter involved and the shares were issued pursuant to
Section 4(2) of the Securities Act.
EXHIBITS
(a) Exhibits
3(I) Articles of Incorporation
3(ii) By-Laws of the Company
5.1 Opinion re: legality
10.1 Agreement Between Andy Edmonds and Modern Technology Corp.
23.1 Consent of Counsel (included in Exhibit 5.1)
23.2 Consent of Greenberg & Company LLC.
__________________________________________________________________________
(b) The following financial statement schedules are included in this
Registration Statement.
UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) 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 registration statement required by
Section 10(a)(3) of the Securities Act of 1933;
PAGE 40
(ii) To reflect in the Registration Statement 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;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statements or any material change to such
information in the registration statement.
(b) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registration pursuant
to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of
registration statement filed as part of this registration
statement in reliance upon Rule 430A and contained in a form
of Registration Statement filed by the registrant pursuant to
Rule 424(b)(1) or 497(h) under the Securities Act shall be
deemed to be part of this Registration Statement as of the
time it was declared effective.
(ii) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment
that contains a form of 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.
PAGE 41
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Scientio, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirments for filing on Form SB-2 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
New York, State of New York, on the 23rd day of August, 2001.
SCIENTIO, INC.
By: S/Andrew Edmonds___________
Andrew Edmonds
President and Director
In accordance with the requirements of the Securities Act of 1933,
the Registration Statement was signed by the following persons in the
capacities and on the dates stated:
S/Andrew Edmonds_____________________
Chief Executive Officer and Director
S/Anneke Edmonds_____________________
Chief Financial and Accounting
Officer and Director
S/Arthur Seidenfeld__________________
Secretary and Director
Dated: August 23, 2001
PAGE 42
Exhibit 3(l)
Certificate of Incorporation
Of
SCIENTIO, INC.
The undersigned, being of legal age, in order to form a
corporation under and pursuant to the laws of the State of
Delaware, does hereby set forth as follows:
FIRST: The name of the corporation is:
SCIENTIO, INC.
SECOND: The address of the initial registered and principal
office of this corporation in the state is c/o United Corporate
Services, Inc., 15 East North Street, in the City of Dover,
County of Kent, State of Delaware 19901 and the name of the
registered agent at said address is United Corporate Services,
Inc.
THIRD: The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized
under the corporation laws of the State of Delaware.
FOURTH: The corporation shall be authorized to issue the
following shares:
Class Number of Shares Par Value
------- ------------------ ----------
COMMON 30,000,000 $.001
FIFTH: The name and address of the incorporator is as
follows:
Name Address
---------------- ------------------------------
Michael A. Barr 10 Bank Street
White Plains, New York 10606
SIXTH: The following provisions are inserted for the
management of the business and for the conduct of the affairs of
the corporation, and for further definition, limitation and
PAGE 43
regulation of the powers of the corporation and of its directors
and stockholders:
(1) The number of directors of the corporation shall be
such as from time to time shall be fixed by, or in the
manner provided in the by-laws. Election of directors
need not be by ballot unless by By-laws so provide.
(2) The Board of Directors shall have power without the
assent or vote of the stockholders:
(a) To make, alter, amend, change, add to or
repeal the By-laws of the corporation; to fix and vary
the amount of capital to be reserved for any proper
purpose; to authorize and cause to be executed
mortgages and liens upon all or any part of the
property of the corporation; to determine the use and
disposition of any surplus or net profits; and to fix
the times for the declaration and payment of dividends.
(b) To determine from time to time whether, and to
what times and places, and under what conditions the
accounts and books of the corporation (other than the
stock ledger) or any of them, shall be open to the
inspection of the stockholders.
(3) The directors in their discretion may submit any
contract or act for approval or ratification at any
annual meeting of the stockholders, at any meeting of
the stockholders called for the purpose of considering
any such act or contract, or through a written consent
in lieu of a meeting in accordance with the
requirements of the General Corporation Law of Delaware
as amended from time to time, and any contract or act
that shall be so approved or be so ratified by the vote
of the holders of a majority of the stock of the
corporation which is represented in person or by proxy
at such meeting, (or by written consent whether
received directly or through a proxy) and entitled to
vote thereon (provided that a lawful quorum of
stockholders be there represented in person or by
proxy) shall be as valid and as binding upon the
corporation and upon all the stockholders as though it
had been approved, ratified, or consented to by every
stockholder of the corporation, whether or not the
contract or act would otherwise be open to legal
PAGE 44
attack
because of directors' interest, or for any other
reason.
(4) In addition to the powers and authorities herein before
or by statute expressly conferred upon them, the
directors are hereby empowered to exercise all such
posers and do all such acts and things as may be
exercised or done by the corporation; subject,
nevertheless, to the provisions of the statutes of
Delaware, of this certificate, and to any by-laws from
time to time made by the stockholders; provided,
however, that no by-laws so made shall invalidate any
prior act of the directors which would have been valid
if such by-law had not been made.
SEVENTH: No director shall be liable to the corporation or
any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except with respect to (1) a breach
of the director's duty of loyalty to the corporation or its
stockholders, (2) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware General Corporation
Law or (4) a transaction from which the director derived an
improper personal benefit, it being the intention of the
foregoing provision to eliminate the liability of the
corporation's directors to the corporation or its stockholders to
the fullest extent permitted by Section 102 (b)(7) of the
Delaware General Corporation Law, as amended from time to time.
The corporation shall indemnify to the fullest extent permitted
by Sections 102(b)97) and 145 of the Delaware General Corporation
Law, as amended from time to time, each person that such Sections
grant the corporation the power to indemnify.
EIGHTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them
and/or between this corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware, may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this
corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for this corporation under
the provisions of Section 279 Title 8 of the Delaware Code order
a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in
value of the creditors or class of
PAGE 45
creditors, and/or of the
stockholders or class of stockholders of this corporation, as the
case may be, agree to any compromise or arrangement and to any
reorganization of this corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and
the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders
or class of stockholders, of this corporation, as the case may
be, and also on this corporation.
NINTH: The corporation reserves the right to amend, alter,
change or repeal any provision contained in this certificate of
incorporation in the manner now or hereafter prescribed by law,
and all rights and powers conferred herein on stockholders,
directors and officers are subject to this reserved power.
IN WITNESS WHEREOF, the undersigned executes this document
and affirms that the facts set forth herein are true under the
penalties of perjury this eight day of December, 2000.
S/MICHAEL A. BARR
Michael A. Barr, Incorporator
Exhibit 3(ii)
BY-LAWS
OF
SCIENTIO, INC.
ARTICLE I
OFFICES
PAGE 46
SECTION 1. REGISTERED OFFICE. - The registered office shall
be established and maintained at c/o United Corporate Services,
Inc., 15 East North Street, Dover, Delaware 19901 and United
Corporate Services, Inc. shall be the registered agent of this
corporation in charge thereof.
SECTION 2. OTHER OFFICES. - The corporation may have other
offices, either within or without the State of Delaware, at such
place or places as the Board of Directors may from time to time
appoint or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. - Annual meetings of
stockholders for the election of directors and for such other
business as may be stated in the notice of the meeting, shall be
held at such place, either within or without the State of
Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the
meeting.
If the date of the annual meeting shall fall upon a legal
holiday, the meeting shall be held on the next succeeding
business day. At each annual meeting, the stockholders entitled
to vote shall elect a Board of Directors and they may transact
such other corporate business as shall be stated in the notice of
the meeting.
SECTION 2. OTHER MEETINGS. - Meetings of stockholders for
any purpose other than the election of directors may be held at
such time and place, within or without the State of Delaware, as
shall be stated in the notice of the meeting.
SECTION 3. VOTING. - Each stockholder entitled to vote in
accordance with the terms of the Certificate of Incorporation and
in accordance with the provisions of these By-laws shall be
entitled to one vote, in person or by proxy, for each share of
stock entitled to vote held by such stockholder, but no proxy
shall be voted after three years from its date unless such proxy
provides for a longer period. Upon the demand of any stockholder,
the vote for directors and the vote upon any question before the
meeting, shall be by ballot. All elections for directors shall be
decided by plurality vote; all other questions shall be decided
by majority vote except as otherwise
PAGE 47
provided by the Certificate
of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the
ensuing election, arranged in alphabetical order, with the
address of each, and the number of shares registered in the name
of each shareholder, shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior
to the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified,
at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during
the whole time thereof, and may be inspected by any stockholder
who is present.
SECTION 4. QUORUM. - Except as otherwise required by law, by
the Certificate of Incorporation or by these By-laws, the
presence, in person or by proxy, of stockholders holding a
majority of the stock of the corporation entitled to vote shall
constitute a quorum at all meetings of the stockholders. In case
a quorum shall not be present at any meeting, a majority in
interest of the stockholders entitled to vote thereat, present in
person or by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the
meeting, until the requisite amount of stock entitled to vote
shall be present. At any such adjourned meeting at which
requisite amount of stock entitled to vote shall be represented,
any business may be transacted which might have been transacted
at the meeting as originally noticed; but only those stockholders
entitled to vote at the meeting as originally noticed shall be
entitled to vote at any adjournment or adjournments thereof. If
the adjournment is for more than thirty (30) days, or if after
the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote the meeting.
SECTION 5. SPECIAL MEETINGS. - Special meetings of the
stockholders for any purpose or purposes may be called by the
President or Secretary, or by resolution of the directors.
SECTION 6. NOTICE OF MEETINGS. - Written notice, stating the
place, date and time of the meeting, and the general nature of
the business to be considered, shall be given to each
PAGE 48
stockholder
entitled to vote thereat at his address as it appears on the
records of the corporation, not less than ten nor more than sixty
(60) days before the date of the meeting. No business other than
that stated in the notice shall be transacted at any meeting
without the unanimous consent of all the stockholders entitled to
vote thereat.
SECTION 7. ACTION WITHOUT MEETING. - Unless otherwise
provided by the Certificate of Incorporation, any action required
to be taken at any annual or special meeting of stockholders, or
any action which may be taken at any annual or special meeting,
may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of
the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders
who have not consented in writing.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM. - The number of directors shall
be three (3). The directors shall be elected at the annual
meeting of the stockholders and each director shall be elected to
serve until his successor shall be elected and shall qualify. A
director need not be a stockholder.
SECTION 2. RESIGNATIONS. - Any director, member of a
committee or other officer may resign at any time. Such
resignation shall be made in writing, and shall take effect at
the time specified therein, and if no time be specified, at the
time of its receipt by the President or Secretary. The acceptance
of a resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. - If the office of any director,
member of a committee or other officer becomes vacant, the
remaining directors in office, though less than a quorum, by a
majority vote, may appoint any qualified person to fill such
PAGE 49
vacancy, who shall hold office for the unexpired term and until
his successor shall be duly chosen.
SECTION 4. REMOVAL. - Any director or directors may be
removed, with or without cause, by the holders of a majority of
all the shares of stock outstanding and entitled to vote, at an
election of directors. (See Title 8 141(k) of the General
Corporation Law for exception.)
SECTION 5. INCREASE OF NUMBER. - The number of directors may
be increased by amendment by these By-laws, by the affirmative
vote of a majority of the directors, though less than a quorum,
or, by the affirmative vote of a majority in interest of the
stockholders, at the annual meeting or at a special meeting
called for that purpose, and by like vote the additional
directors may be chosen at such meeting to hold office until the
next annual election and until their successors are elected and
qualify.
SECTION 6. POWERS - The Board of Directors shall exercise
all of the powers of the corporation except such as are conferred
upon or reserved to the stockholders by law, or by the
Certificate of Incorporation of the corporation or by these By-
laws.
SECTION 7. COMMITTEES. - The Board of Directors may, by
resolution or resolutions passed by a majority of the whole
board, designate one or more committees, each committee to
consist of two or more of the directors of the corporation. The
board may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member
at any meeting of the committee. In the absence or
disqualification of any member or such committee or committees,
the member or members thereof present at any such meeting and not
disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent
or disqualified member.
Any such committee, to the extent provided in the resolution
of the Board of Directors, or in these By-laws, shall have and
may exercise all the posers and authority of the Board of
Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee
shall have the power of authority in reference to
PAGE 50
amending the
Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease
or exchange of all or substantially all of the corporation's
property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution,
or amending the By-laws of the corporation; and unless the
resolution, these By-laws, or the Certificate of Incorporation
expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of
stock.
SECTION 8. MEETINGS. - The newly elected Board of Directors
may hold their first meeting for the purpose of organization and
the transaction of business, if a quorum be present, immediately
after the annual meeting of the stockholders; or the time and
place of such meeting may be fixed by consent, in writing, of all
the directors.
Unless restricted by the incorporation document or elsewhere
in these By-laws, members of the Board of Directors or any
committee designated by such Board may participate in a meeting
of such Board or committee by means of conference telephone or
similar communications equipment allowing all persons
participating in the meeting to hear other at the same time.
Participation by such means shall constitute presence in person
at such meeting.
Regular meetings of the Board of Directors may be scheduled
by a resolution adopted by the Board. The Chairman of the Board
or the President or Secretary may call, and if requested by any
two directors, must call a special meeting of the Board and give
five (5) days notice by mail, or two (2) days notice personally
or by telegraph or cable to each director. The Board of Directors
may hold an annual meeting, without notice, immediately after the
annual meeting of shareholders.
SECTION 9. QUORUM. - A majority of the directors shall
constitute a quorum for the transaction of business. If at any
meeting of the Board there shall be less than a quorum present, a
majority of those present may adjourn the meeting from time to
time until a quorum is obtained, and no further notice thereof
need be given other than by announcement at the meeting which
shall be so adjourned.
SECTION 10. COMPENSATION. - Directors shall not receive any
stated salary for their services as directors or as members of
PAGE 51
committees, but by resolution of the Board a fixed fee and
expenses of attendance may be allowed for attendance at each
meeting. Nothing herein contained shall be construed to preclude
any director from serving the corporation in any other capacity
as an officer, agent or otherwise, and receiving compensation
therefor.
SECTION 11. ACTION WITHOUT MEETING. - Any action required or
permitted to be taken at any meeting of the Board of Directors,
or of any committee thereof, may be taken without a meeting, it
prior to such action a written consent thereto is signed by all
members of the Board, or of such committee as the case may be,
and such written consent is filled with the minutes of
proceedings of the Board or committee.
PAGE 52
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. - The officers of the corporation shall
be a President, a Treasurer, and a Secretary, all of whom shall
be elected by the Board of Directors and who shall hold office
until their successors are elected and qualified. In addition,
the Board of Directors may elect a Chairman, one or more Vice-
Presidents and such Assistant Secretaries and Assistant
Treasurers as they may deem proper. None of the officers of the
corporation need be directors. The officers shall be elected at
the first meeting of the Board of Directors after each annual
meeting. More than two offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. - The Board of
Directors may appoint such other officers and agents as it may
deem advisable, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. - The Chairman of the Board of
Directors, if one be elected, shall preside at all meetings of
the Board of Directors and he shall have and perform such other
duties as from time to time may be assigned to him by the Board
of Directors.
SECTION 4. PRESIDENT. - The President shall be the chief
executive officer of the corporation and shall have the general
powers and duties of supervision and management usually vested in
the office of the President of a corporation. He shall preside at
all meetings of the stockholders if present thereat, and in the
absence or non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall
have general supervision, direction and control of the business
of the corporation. Except as the Board of Directors shall
authorize the execution thereof in some other manner, he shall
execute bonds, mortgages and other contracts on behalf of the
corporation, and shall cause the seal to be affixed to any
instrument requiring it and when so affixed the seal shall be
attested by the signature of the Secretary or the Treasurer or
Assistant Secretary or an Assistant Treasurer.
PAGE 53
SECTION 5. VICE PRESIDENT. - Each Vice-President shall have
such powers and shall perform such duties as shall be assigned to
him by the directors.
SECTION 6. TREASURER. - The Treasurer shall have the custody
of the corporate funds and securities and shall keep full and
accurate account of receipts and disbursements in books belonging
to the corporation. He shall deposit all monies and other
valuables in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as
may be ordered by the Board of Directors, or the President,
taking proper vouchers for such disbursements. He shall render
to the President and Board of Directors at the regular meetings
of the Board of Directors, or whenever they may request it, an
account of all his transactions as Treasurer and of the financial
condition of the corporation. If required by the Board of
Directors, he shall give the corporation a bond for the faithful
discharge of his duties in such amount and with such surety as
the Board shall prescribe.
SECTION 7. SECRETARY. - The Secretary shall give or cause to
be given notice of all meetings of stockholders and directors,
and all other notices required by the law or by these By-laws,
and in the case of his absence or refusal to neglect to do so,
any such notice may be given by any person thereunto directed by
the President, or by the directors, or stockholder, upon whose
requisition the meeting is called as provided by these By-laws.
He shall record all the proceedings of the meetings of the
corporation and of the directors in a book to be kept for that
purpose, and shall perform such other duties as may be assigned
to him by the directors or the President. He shall have the
custody of the seal of the corporation and shall affix the same
to all instruments requiring it, when authorized by the directors
or the President, and attest the same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. -
Assistant Treasurers and Assistant Secretaries, if any, shall be
elected and shall have such powers and shall perform such duties
as shall be assigned to them, respectively, by the directors.
ARTICLE V
PAGE 54
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK. - A certificate of stock,
signed by the Chairman or Vice-Chairman of the Board of
Directors, if they be elected, President or Vice-President, and
the Treasurer or an Assistant Treasurer, or Secretary or
Assistant Secretary, shall be issued to each stockholder
certifying the number of shares owned by him in the corporation.
When such certificates are countersigned (1) by a transfer agent
other than the corporation or its employee, or, (2) by a
registrar other than the corporation or its employee, the
signatures of such officers may be facsimiles.
SECTION 2. LOST CERTIFICATES. - A new certificate of stock
may be issued in the place of any certificate theretofore issued
by the corporation, alleged to have been lost or destroyed, and
the directors may, in their discretion, require the owner of the
lost or destroyed certificate, or his legal representatives, to
give the corporation a bond, in such sum as they may direct, not
exceeding double the value of the stock, to indemnify the
corporation against any claim that may be against it on account
of the alleged loss of any such certificate, or the issuance of
any such new certificate.
SECTION 3. TRANSFER OF SHARES. - The shares of stock of the
corporation shall be transferable only upon its books by the
holders thereof in person or by their duly authorized attorneys
or legal representatives, and upon such transfer the old
certificate shall be surrendered to the corporation by the
delivery thereof to the person in charge of the stock and
transfer books and ledgers, or to such other person as the
directors may designate, by whom they shall be canceled and new
certificates shall thereupon be issued. A record shall be made of
each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed
in the entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. - (a) In order that the
corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment
thereof, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors. A
determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the
PAGE 55
Board of
Directors may fix a new record date for the adjourned meeting.
(b) In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing
without a meeting, the Board of Directors may fix a record date,
which record date shall not precede the date upon which the
resolution fixing the record is adopted by the Board of
Directors.
(c) In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders
entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date,
which record date shall not precede the date upon which the
resolution fixing the record date is adopted.
SECTION 5. DIVIDENDS. - Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of
funds legally available therefor at any regular or special
meeting, declare dividends upon the capital stock of the
corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the
corporation available for dividends, such sum or sums as the
directors from time to time in their discretion deem proper for
working capital or as a reserve fund to meet contingencies or for
equalizing dividends or for such other purposes as the directors
shall deem conductive to the interests of the corporation.
SECTION 6. SEAL. - The corporate seal shall be circular in
form and shall contain the name of the corporation, the year of
its creation and the words "Corporate Seal, Delaware, 2000". Said
seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.
SECTION 7. FISCAL YEAR. - The fiscal year of the corporation
shall be determined by resolution of the Board of Directors.
SECTION 8. CHECKS. - All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness
issued in the name of the corporation shall be signed by such
officer or officers, agent or agents of the corporation, and in
PAGE 56
such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE. - Whenever any
notice is required by these By-laws to be given, personal notice
is not meant unless expressly so stated, and any notice so
required shall be deemed to be sufficient if given by depositing
the same in the United States mail, postage prepaid, addressed to
the person entitled thereto at his address as it appears on the
records of the corporation, and such notice shall be deemed to
have been given on the day of such mailing. Stockholders not
entitled to vote shall not be entitled to receive notice of any
meetings except as otherwise provided by Statute.
Whenever any notice whatsoever is required to be given under
the provisions of any law, or under the provisions of the
Certificate of Incorporation of the corporation of these By-laws,
a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE VI
AMENDMENTS
These By-laws may be altered or repealed and By-laws may be
made at any annual meeting of the stockholders or at any special
meeting thereof if notice of the proposed alteration or repeal of
By-law or By-laws to be made be contained in the notice of such
special meeting, by the affirmative vote of a majority of the
stock issued and outstanding and entitled to vote thereat; or by
the affirmative vote of a majority of the Board of Directors, at
any regular meeting of the Board of Directors, or at any special
meeting of the Board of Directors, if notice of the proposed
alteration or repeal of By-law or By-laws to be made, be
contained in the notice of such special meeting.
ARTICLE VII
INDEMNIFICATION
No director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as
a director, except with respect to (1) a breach of the director's
duty of loyalty to the corporation or its
PAGE 57
stockholders, (2) acts
or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (3) liability which may
be specifically defined bylaw or (4) a transaction from which the
director derived an improper personal benefit, it being the
intention of the foregoing provision to eliminate the liability
of the corporation's directors to the corporation or its
stockholders to the fullest extent permitted by law. The
corporation shall indemnify to the fullest extent permitted by
law each person that such law grants the corporation the power to
indemnify.
Exhibit 5.1
GERALD A KAUFMAN
ATTORNEY AT LAW
33 WALT WHITMAN ROAD
SUITE 233
HUNTINGTON STATION, NEW YORK 11746
______
TELEPHONE (631)271-2055
FAX (631)271-2488
June 26, 2001
Scientio, Inc.
461 Beach 124th Street
Belle Harbor, NY 11684
Re: Registration Statement on Form SB-2
Ladies/Gentlemen:
I have acted as counsel for Scientio, Inc. (The
"Company") in connection with the Registration Statement on
Form SB-2 to be filed by the Company with the Securities
Exchange Commission (the "Registration Statement") relating
to 403,000 shares of Common Stock ("Shares") to be issued as
a distribution to the shareholders of Modern Technology
Corp.
In connection with the Registration Statement, I have
examined such records and documents and have made such other
examinations as I deemed relevant I have assumed the
genuiness of all documents.
Based upon the above examination, I am of the opinion
that the Shares to be issued pursuant to the Registration
Statement are validly authorized and, when issued, will
remain and be fully paid, and nonassessable.
PAGE 58
I hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference
to my name under the caption "Legal Matters". In giving this
consent, I do not admit that I am within the category of
persons whose consent is required under Section 7 or 11 of
the Securities Act.
Sincerely yours,
Gerald A. Kaufman
GAK:jgc
PAGE 59
Exhibit 10.1
AGREEMENT
Agreement made this 8th day of December by and among Modern
Technology Corp., a Nevada corporation ("MTC") with an address at
POB 940007, Belle Harbor, N.Y. 11694 U.S.A., Andrew N. Edmonds,
an individual ("Andy") with an address at Haydon House, Station
Road, Woburn Sands, Bucks MK17 8RX, United Kingdom, Anneke
Edmonds (Anneke") with an address at Haydon House, Station Road,
Woburn Sands, Bucks MK17 8RX, United Kingdom and Arthur
Seidenfeld, an individual ("Arthur") with an address at 461 Beach
124 Street, Belle Harbor, N.Y. 11694 U.S.A.
WHEREAS the above parties desire to organize a new Delaware
corporation to acquire ownership and commercialisation rights to
a line of software products designated as "the family of XML
products" and
WHEREAS, the parties desire to set forth their agreements and
respective rights and obligations:
NOW THEREFORE IT IS AGREED AS FOLLOWS:
1. Formation of Corporation. A Delaware corporation shall be
formed within 15 days from the date of this agreement with a
capitalization of 30,000,000 authorized shares, par value $.001
per share. The name of the corporation shall be Scientio Inc., or
if the name is not available, as agreed to by Andy and Arthur.
Expenses in connection with the incorporation shall be borne by
MTC.
2. Capitalization. (a) The Corporation shall be capitalized with
30,000,000 authorized shares, which shall be common shares of the
par value $.001 per share, and will issue 2,015,000 shares as
follows:
(b) Initially, Anneke will be issued shares
equal to 79% of the shares to be outstanding (1,591,850) MTC
shall be issued 20% of the shares to be outstanding (403,000
shares) and Richard Kashdan will be issued 1% of the shares to be
outstanding (20,150 shares).
3. Consideration. (a) In exchange for the shares, Anneke will
PAGE 60
assign to the Corporation all the rights, including ownership and
commercialisation rights, to a line of software products
developed by Andy, known as "the family of SML products" and
designated in Schedule 1 hereto. Anneke declares that she is the
owner of these products and has the right to sell them.
(b) MTC will receive its shares for agreeing to
invest $188,500 as follows (1) $100,000 dollars to be invested
within 60 days of the organization of the Delaware corporation
(2) $88,500 between four and six months from the date of the
first investment.
(c) Richard Kashdan will receive his shares
for the services he performed in relation to the formation of the
corporation.
4. Additional Shares. In the event any additional shares are
issued by the Corporation within three (3) years from the date of
this agreement, then MTC will be granted an option for a period
of three years to buy shares equal in number to those issued at
the same price offered to the new shareholders.
5. Management. (a) The initial board of directors shall consist of
three persons who shall be Andy Edmonds, Anneke Edmonds, and
Arthur Seidenfeld. Anneke and MTC agree to vote their shares for
these persons as the board of directors for a three-year period
from the date hereof or until the corporation becomes a "public
company", whichever is earlier.
(b) Officers shall be nominated as follows:
Andy Edmonds - President
Anneke Edmonds - Treasurer
Arthur Seidenfeld - Secretary
6. Business. (a) The main purpose of the Delaware corporation
is to acquire the ownership and commercialisation rights to a line
of software products developed by Andy and owned by Anneke and
designated "the family of XML products" and set forth on schedule 1.
(b) In addition, Andy agrees to transfer and assign
PAGE 61
to the Delaware corporation all improvements of products in
Schedule 1 and any new software products he develops along with
the revenues from any future software consulting agreements he
forms with third parties and to develop software products
exclusively fro the corporation for three (3) years from the date
hereof.
(c) At the end of one year from date of
organization, in the event the Delaware corporation is unable to
pay Andy a salary of at least $90,000 per annum, Andy will be
free of any restrictions imposed by subparagraph (b) above,
provided further that Anneke returns to the treasury of the
Delaware corporation all issued shares owned by her for no
compensation. Should Andy leave within the 3 year period
discussed above, he agrees not to develop any products
competitive with the products mentioned in Schedule 1 for a 3
year period.
7. Use of Funds. The parties agree that the $188,500 investment
will be used over the next twelve months as set forth in Schedule
2 hereto and for the purposes set forth therein. There shall be
no change greater than 10% in the use of proceeds in Schedule 2
unless all three directors approve the change. The corporation
agrees to hire a payroll and bookkeeping service in the United
Kingdom with copies sent to MTC.
8. Registration of Shares. It is the intention that the shares of
the Corporation will be registered under the Securities Acts for
Distribution and Trading.
It is agreed that, at an appropriate time within a period of
one year from the date hereof, the Corporation shall prepare and
file a registration statement under the Securities Act of 1933 in
order to distribute to MTC's shareholders, MTC's shareholdings in
the Corporation on a pro rate basis.
Andy agrees to fully cooperate with MTC's lawyers and
accountants in connection with the registration of the
distribution.
MTC agrees to pay all expenses related to filing the
registration statement, including legal and accounting expenses
and fees.
IN WITNESS WHEREOF the parties have signed this agreement as of
the day first written above.
PAGE 62
Modern Technology Corp.
By__________________________
Arthur Seidenfeld, President
____________________________
Andrew N. Edmonds
_____________________________
Anneke Edmonds
_____________________________
Arthur Seidenfeld
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SCHEDULE 1
The "family of XML products" is defined as follows:
A software product, initially named XML Miner, configured to be
compatible with Microsoft Corporation COM interface
specification, intended to read data generated by a third party
application encoded in Extensible Mark-up Language (XML) as
specified by the World Wide Web Consortium, and to generate from
that data, using the process of rule induction, rules enabling
the prediction of values of blank or missing data items in that
same data set or others of compatible structure and content. The
rules so generated are expressed in XML using a proprietary data
structure specification or "schema" (the Rule Schema), which also
forms part of the family of products.
A software product, initially names XMLRule, configured to be
compatible with Microsoft Corporations COM interface
specification, intended to read XML encoded rules generated by
XMLMiner, or by any other source that produces XML compatible
with the Rule Schema, and to enable the evaluation of the
contained rules with actual data values. These data values being
easily applied using the COM interface, and the products response
based on the rule set being easily accessible over the same COM
interface, this product can be easily incorporated into a range
of web sites and applications based on Microsoft NT or Windows
2000 technology.
Support products: The first initially named "Strucfind" that
displays the structure of XML document so that selection of the
data values within the document to form the source of the
predictions, and the data values that represent the predicted
entity are made simpler. The second consisting of an "XSLT" style
sheet that permits the display in human readable form of rules
conforming to the Rule Schema when used in concert with a
suitable web browser, the Rule Display Style Sheet.
State of Completion
XMLMiner and XMLRule have been tested with a variety of small
test sets and have been shown so far to comply with the above
description, but exhaustive testing, and any required corrective
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action, has not yet been performed. StrucFind and the Rule
Display Style Sheet are not yet completed.
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SCHEDULE 2
USE OF PROCEEDS - NEW CORPORATION
Salary - Andy Edmonds $120,000
Rent and use of equipment 21,000
Advertising 15,000
Telephone 3,000
Increase in Bandwidth 8,500
Added software professionals 9,500
Bookkeeping and payroll 1,500
--------
TOTAL $188,500
========
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Exhibit 23.2
Independent Auditors' Consent
We consent to the use in this Registration Statement of
Scientio Inc on Form SB-2 of our report dated June 12, 2001,
appearing in the Prospectus, which is part of this
Registration Statement.
We also consent to the reference to us under the heading
"Experts" in such Prospectus.
Greenberg & Company CPA's LLC
Springfield, NJ
August 23, 2001
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