AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 26, 2001
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
eB2B COMMERCE, INC.
(Name of Registrant as Specified in Its Charter)
NEW JERSEY 22-2267658
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
757 THIRD AVENUE
NEW YORK, NEW YORK 10017
(212) 703-2000
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
JOHN J. HUGHES, JR., ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
eB2B COMMERCE, INC.
757 THIRD AVENUE
NEW YORK, NEW YORK 10017
(212) 703-2000
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
COPIES TO:
GARY T. MOOMJIAN, ESQ.
KAUFMAN & MOOMJIAN, LLC
50 CHARLES LINDBERGH BOULEVARD - SUITE 206
MITCHEL FIELD, NEW YORK 11553
(516) 222-5100
STANLEY MOSKOWITZ, ESQ.
ROSENMAN & COLIN LLP
575 MADISON AVENUE
NEW YORK, NEW YORK 10022-2595
(212) 940-8600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------
Title Of Shares To Be Amount to Be Proposed Maximum Proposed Maximum Amount Of
Registered Registered Offering Price Per Aggregate Registration Fee
Unit(1) Offering Price(1)
- ---------------------------------------------------------------------------------------------------------
Common Stock,
$0.0001 par value(2) 16,358,995 $0.922 $15,082,993 $3,770.75
- ---------------------------------------------------------------------------------------------------------
Common Stock,
$0.0001 par value(3) 12,434,863 $0.922 $11,464,944 $2,866.24
- ---------------------------------------------------------------------------------------------------------
Common Stock,
$0.0001 per value(4) 755,282 $0.922 $696,370 $ 174.09
- ---------------------------------------------------------------------------------------------------------
Total Registration Fee $6,811.08
- ---------------------------------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee, based on
the average of the high and low prices for the registrant's common stock at
$0.922 per share as reported on the Nasdaq Small Cap National Market on
January 23, 2001, in accordance with Rule 457(c) promulgated under the
Securities Act of 1933, as amended.
(2) Relates to the resale of shares of common stock issuable upon conversion of
the Company's Series A Preferred Stock and Series B Preferred Stock.
(3) Relates to the resale of shares of common stock issuable upon the exercise
of the warrants issued by the Company.
(4) Relates to the resale of shares of common stock issued by the Company.
Pursuant to Rule 416 of the Securities Act of 1933, this Registration
Statement also relates to such additional indeterminate number of shares of
Common Stock as may become issuable by reason of stock splits, dividends and
similar adjustments in accordance with the provisions of the Series A Preferred
Stock, Series B Preferred Stock or the warrants issued by the Company.
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.
The information contained in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is declared effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JANUARY 26, 2001
PROSPECTUS
eB2B COMMERCE, INC.
29,549,140 SHARES OF COMMON STOCK
This prospectus relates to the resale of up to 29,549,140 shares of our common
stock by the selling shareholders named in this prospectus from time to time.
The shares offered for resale hereby consist of 755,282 shares of our common
stock, 16,358,995 shares of our common stock underlying shares of our preferred
stock and 12,434,863 shares of our common stock issuable upon the exercise of
warrants issued by us.
We will not receive any of the proceeds from the sale of the shares other than
the exercise price, if any, to be received upon exercise of the warrants. We
have agreed to bear all of the expenses in connection with the registration and
sale of the shares, except for any applicable underwriting discounts, brokerage
fees or commissions and transfer taxes, as well as the fees and disbursements of
the selling shareholders' counsel and advisors.
Our common stock is quoted on the Nasdaq SmallCap Market under the symbol
"EBTB." On January 23, 2001, the closing price of our common stock, as reported
by Nasdaq, was $0.969 per share.
------------
THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY READ AND CONSIDER THE "RISK FACTORS" COMMENCING ON PAGE 4 FOR
INFORMATION THAT SHOULD BE CONSIDERED IN DETERMINING WHETHER TO PURCHASE ANY OF
THE SECURITIES.
------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------
THE DATE OF THIS PROSPECTUS IS __________, 2001
TABLE OF CONTENTS
Page
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eB2B COMMERCE, INC. ........................................................3
RISK FACTORS................................................................4
FORWARD-LOOKING STATEMENTS.................................................16
SELLING SHAREHOLDERS.......................................................17
PLAN OF DISTRIBUTION.......................................................33
USE OF PROCEEDS............................................................34
LEGAL MATTERS..............................................................35
EXPERTS....................................................................35
WHERE YOU CAN FIND MORE INFORMATION........................................36
INCORPORATION BY REFERENCE.................................................36
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND IN ANY ACCOMPANYING PROSPECTUS SUPPLEMENT. NO
ONE HAS BEEN AUTHORIZED TO PROVIDE YOU WITH DIFFERENT INFORMATION.
THE SECURITIES ARE NOT BEING OFFERED IN ANY JURISDICTION WHERE THE OFFER IS
NOT PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE
FRONT OF SUCH DOCUMENTS.
CONVENTIONS WHICH APPLY TO THIS PROSPECTUS
References in this prospectus to "eB2B Commerce, Inc.," "we," "our" and
"us" refer to eB2B Commerce, Inc., a New Jersey corporation.
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eB2B COMMERCE, INC.
Our Business
We provide Internet-based, business-to-business e-commerce solutions that
facilitate cost-effective end-to-end transactions between buyers and suppliers
within specific vertical industries. In addition, we provide authorized
technical education to our client base, and also design and deliver custom
computer and internet-based training seminars.
Within our first business unit, our principal products and services
provide:
- The necessary infrastructure and operational services to process
electronic transactions between buyers and suppliers; and
- Consulting expertise to businesses that wish to build, operate or
outsource their own e-commerce infrastructure.
We have established trading networks in both the golf and sporting goods
industries, and have launched extranet solutions in the chain pharmacy industry.
We have also recently signed a partnership agreement with another company to
provide full service e-commerce capability to the toy industry. Our electronic
trading communities provide direct links between buyers and suppliers, allowing
trading partners to process their existing transactions over the Internet and
establish new business relationships. Our solutions are designed to enable
seamless transaction processing, providing connectivity regardless of technology
and data format.
We provide a complete solution, tailored for each customer and designed
specifically for their business processes. By leveraging our expertise in
Electronic Data Interchange, electronic commerce, application development, and
Internet networking, we are able to provide a suite of tools that facilitate
management of the entire transaction lifecycle. Customers can use our products
not only to send business documents to each other, but also to provide access to
their trading partners data systems via our network. Customers of any size or
e-commerce capability can communicate and transact with their trading partners
regardless of the type of integration, connectivity or data format. Our
solutions integrate the entire transaction lifecycle, from creating a
relationship to making a transaction, to shipping and receiving a product, to
synchronizing product movements through the demand chain achieving higher
efficiencies and cost savings.
Within our second business unit, we design and deliver custom technical
education for our clients and provide education through delivery of custom
computer and internet based on-line training seminars. We provide authorized
technical education to our client base for software products offered by Citrix,
Lotus Development Corporation, Microsoft Corporation, and Novell Inc.
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Our Offices
Our principal executive offices are located at 757 Third Avenue, New York,
New York 10017. Our telephone number at that location is (212) 703-2000. Our
Internet address is www.eB2B.com. The information contained on our web site is
not incorporated by reference in this prospectus and shall not be considered a
part of this prospectus.
RISK FACTORS
You should carefully consider the risks and uncertainties described below,
as well as the discussion of risks and other information contained or
incorporated by reference in this prospectus before deciding whether to invest
in our common stock. Additional risks and uncertainties not presently known to
us or that we currently deem immaterial may also impair our business operations.
If any of the following risks actually occur, our business, financial
condition or operating results could be materially adversely affected. In such
case, the trading price of our common stock could decline and you may lose part
or all of your investment.
RISKS RELATING TO OUR BUSINESS
WE HAVE A LIMITED OPERATING HISTORY AND THEREFORE YOU CANNOT EVALUATE OUR
PROSPECTS BASED ON PAST RESULTS.
We have a limited operating history in the business-to-business electronic
commerce industry. We have been engaged in electronic commerce since our
inception and to date have generated limited revenues. Since we have a limited
operating history within the electronic commerce industry upon which you can
evaluate our business and prospects, you should consider all of the risks,
expenses and uncertainties typically encountered by young companies that operate
in the new and rapidly evolving markets for Internet products and services.
These risks include:
- evolving and unpredictable business models;
- intense competition;
- the need and ability to manage growth;
- the rapid evolution of technology in electronic commerce; and
- insufficient capital.
WE HAVE INCURRED AND WILL CONTINUE TO INCUR SUBSTANTIAL LOSSES; CONSEQUENTLY,
ADDITIONAL CAPITAL WILL BE NEEDED TO CONTINUE OPERATIONS.
We have engaged in the business of electronic commerce since our inception
and have incurred net losses from operations since that time. We can not give
assurances that we will soon make a profit or that we will ever make a profit.
Even though we expect that
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sales will increase substantially in the near future, expenses are expected to
outpace sales. Among other things, to achieve profitability, we must market and
sell substantially more products and services, and hire and retain qualified and
experienced employees. We may not be successful in these efforts.
Going forward, we expect to continue to invest in infrastructure
development, applications development and sales and marketing in order to extend
our services to potential customers and partners, and expect to continue to
incur net losses. We believe that our available cash resources will be
sufficient to meet anticipated working capital and capital expenditure
requirements for up to six months. However, the actual time period may differ
materially from that indicated in the foregoing forward-looking statement as a
result of a number of factors, and we may be required to obtain additional
financing at an earlier date. Such financing may not be available in sufficient
amounts or on favorable terms when required and may dilute the stock of existing
shareholders. Accordingly, present capital resources may not be sufficient for
anticipated or unanticipated working capital and capital expenditure
requirements for this period. We do not have any commitments or arrangements for
additional funding. Current market conditions are not favorable for financing
Internet-based business plans, and a recession or other downturn in the economy
may cause such market conditions to worsen. In addition, we believe that our
current outstanding shares of convertible preferred stock and options and
warrants and the termination of certain restrictions on resale has had, and may
continue to have, a negative effect on the price of our common stock and our
ability to raise additional financing. If we lack sufficient capital, we may not
be able to fund our operations, take advantage of unanticipated opportunities,
develop new products or services, or otherwise respond to competitive pressures,
and may need to substantially curtail or cease our operations.
THERE WILL BE SUBSTANTIAL ADVERSE EFFECTS TO OUR FUTURE OPERATING RESULTS
BECAUSE OF SUBSTANTIAL NON-CASH CHARGES.
As of September 30, 2000, our balance sheet included $59,108,000 of
goodwill and other intangible assets and $4,705,000 of unearned stock based
compensation. The goodwill arose in connection with the merger in April 2000
of eB2B Commerce, Inc., a Delaware corporation, with and into DynamicWeb
Enterprises, Inc., and the February 2000 acquisition of Netlan Enterprises,
Inc. and subsidiaries. We expect to incur quarterly non-cash charges through
March 2003 of approximately $3,400,000 corresponding to the amortization of
such goodwill and other intangibles. Between June 2003 and March 2005, the
quarterly amortization expense is expected to be approximately $3,100,000.
Unearned stock based compensation arose from the grant of stock options to
employees, directors and consultants and is being amortized over the vesting
periods of these securities. The $4,705,000 balance at September 30, 2000 will
be amortized at varying amounts per quarter through March 2002. All of these
non-cash charges will significantly affect our reported operating results.
5
OUR BUSINESS MODEL IS UNPROVEN AND MAY NOT BE SUCCESSFUL.
Our business-to-business electronic commerce model is based on the
development of trading communities for the purchase and sale of goods between
buyers and suppliers. To date, we have generated limited revenue from the
trading communities. While we have signed several participants into our golf,
sporting goods and chain pharmacy networks, none of the participants are
required to conduct a minimum level of business. We believe that in order to
reach significant revenue levels from these networks, additional trading
partners will need to be added, particularly those who already conduct business
among themselves. Accordingly, the success of our business model will depend
upon a number of factors, including:
- changes in and continued growth of the Internet for processing
business-to-business transactions;
- the number of buyers and suppliers that participate in the trading
communities;
- the volume of transactions conducted by buyers and suppliers;
- our ability to attract new customers and maintain customer
satisfaction;
- our ability to upgrade, develop and maintain the technology necessary
for our operations;
- the introduction of new or enhanced services by our competitors;
- the pricing policies of competitors; and
- our ability to attract personnel with Internet industry expertise.
If our business strategy is flawed or if we fail to execute our strategy
effectively, our business, operating results and financial condition will be
substantially harmed. We do not have substantial experience in developing and
operating trading communities and we can not assure you that the trading
communities will be operated effectively, that a sufficient number of buyers and
suppliers will join the trading communities or, if a sufficient number of buyers
and suppliers join, that they will conduct enough transactions to generate
significant revenues within the trading communities.
OUR SUCCESS WILL DEPEND ON EXPANDING MARKET ACCEPTANCE FOR INTERNET
BUSINESS-TO-BUSINESS ELECTRONIC COMMERCE.
Our future revenues and any future profits depend upon the widespread
acceptance and use of the Internet as an effective medium of business-to-
business electronic commerce, particularly as a medium to perform goods
procurement and fulfillment functions in our targeted markets. If the use of
the Internet in electronic commerce in such markets does not grow or if it
grows more slowly than expected, our business will suffer. A number of factors
could prevent such growth, including:
- Internet electronic commerce is at an early stage and buyers may be
unwilling to shift their purchasing from traditional methods to
electronic methods;
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- Internet electronic commerce may not be perceived as offering a cost
savings to users;
- the necessary network infrastructure for substantial growth in usage
of the Internet may not be adequately developed;
- increased governmental regulation or taxation may adversely affect the
viability of electronic commerce;
- any shift from flat rate pricing to usage based pricing for Internet
access may adversely impact the viability of the business models;
- insufficient availability of telecommunication services or changes in
telecommunication services could result in slower response times;
- technical difficulties; and
- concerns regarding the security of electronic commerce transactions.
IF WE CANNOT ENROLL A SUFFICIENT NUMBER OF MAJOR BUYERS AND SUPPLIERS IN THE
TRADING COMMUNITIES, WE WILL NOT BE ABLE TO ATTRACT ADDITIONAL BUYERS AND
SUPPLIERS.
Our business model depends in large part on our ability to create a network
effect of buyers and suppliers. Buyers may not perceive value in the communities
if there are an insufficient number of major suppliers. Similarly, suppliers may
not be attracted to the network trading communities if there are an insufficient
number of major buyers within the communities. If we are unable to increase
either the number of buyers or suppliers, we will not be able to benefit from
any network effect. As a result, the overall value of the trading communities
would be diminished, which could harm our business, operating results and
financial condition.
REVENUE GROWTH MAY BE DELAYED BY LENGTHY SALES AND IMPLEMENTATION CYCLES.
The period between initial contact with a potential customer and the
enrollment in our trading communities is often long and may have delays
associated with the lengthy budgeting and approval process of such potential
customers. A customer's decision to purchase these services is discretionary,
involves a significant commitment of resources and is influenced by the
customer's budgetary cycle. To successfully sell our services, we must educate
potential customers regarding the use and benefit of such services, which can
require significant time and resources. Once a customer is signed, we must
provide consulting and technological capabilities that will enable the customer
to process transactions with their trading partners already working with us.
Additionally, we must contact and implement our services with their remaining
partners in order for us to be successful. This process can be time consuming
and involves a significant commitment of resources. There can be no assurances
that we will be successful in implementing a significant number of trading
partners for each customer we sign. These lengthy cycles will have a negative
impact on the timing of our revenues, especially the realization of any
transaction fee-based revenues.
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OUR BUSINESS IS DEPENDENT ON A LIMITED NUMBER OF SERVICES AND PRODUCTS.
We derive most of our revenues from a relatively small number of services
and products. The development and marketing of many of these services and
products involve substantial costs. The failure of our services or products to
achieve anticipated results would adversely affect our business, financial
results and operations. We cannot predict whether we will:
- continue to remain dependent upon a limited number of services and
products for a substantial portion of our revenues;
- introduce new services and products that are commercially viable; or
- introduce new services or products which have life cycles sufficient
to permit us to recoup the development, marketing and other costs
associated with the service or product.
OUR BUSINESS IS DEPENDENT ON A LIMITED NUMBER OF CUSTOMERS.
In the three and nine-month periods ended September 30, 2000, one customer
accounted for approximately 20% and 16% of our total revenue, respectively.
If this customer were to substantially reduce or stop its use of our
products or services, our business, operating results and financial condition
would be harmed. Generally, we do not have any long-term contractual commitments
from any of our current customers, and customers may terminate their contracts
with us with little or no advance notice and without significant penalty. As a
result, we cannot assure you that any of our current customers will continue to
use our products or services in future periods.
WE MUST HAVE THE ABILITY TO QUICKLY ADAPT TO TECHNOLOGICAL CHANGES AND CUSTOMER
PREFERENCES.
The Internet and electronic commerce industries are characterized by:
- rapid technological change;
- changes in user and customer requirements and preferences;
- frequent introductions of new products and services embodying new
technologies; and
- the emergence of new industry standards and practices.
If we do not respond to these developments quickly and efficiently, we will
not be competitive within the industry. We face a significant danger because we
presently have a limited number of products and services to offer potential
customers. If we fail to determine accurately the features our customers
require, enhance our existing services or develop new services, we may lose
current and potential customers. Some of our customers also may require
customized features or capabilities, which would increase costs and consume our
limited resources. If we do not respond to the rapid technological
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changes in the industry, our services could become obsolete and our business
will be severely harmed.
THE INTERNET-BASED BUSINESS-TO-BUSINESS INDUSTRY IS HIGHLY COMPETITIVE AND HAS
LOW BARRIERS TO ENTRY.
The market for Internet-based, business-to-business electronic commerce
solutions is extremely competitive. Our competition is expected to intensify as
current competitors expand their service offerings and new competitors --
including larger, more established companies with more resources -- enter the
market. We may not be able to compete successfully against current or future
competitors and such competitive pressures could harm our business, operating
results or financial condition. Because there are relatively low barriers to
entry in the electronic commerce market, competition from other established and
emerging companies may develop in the future. In addition, our users and
technology partners may become competitors in the future. Certain competitors
may be able to negotiate alliances with technology partners on more favorable
terms than we may be able to negotiate. Increased competition is likely to
result in lower average transaction prices, reduced margins and decrease or loss
of market share, any of which could harm our business, operating results or
financial condition. In addition, competitors may be able to develop services
that are superior to, or that achieve greater acceptance than, the services
currently offered by us.
OUR BUSINESS IS DEPENDENT ON INTELLECTUAL PROPERTY RIGHTS.
To protect our proprietary products, we rely on a combination of copyright,
patent, trade secret and trademark laws, as well as contractual provisions
relating to confidentiality and related matters. Despite our efforts to protect
our proprietary rights, unauthorized parties may attempt to copy aspects of our
products or to obtain and use information that we regard as proprietary.
Moreover, we cannot assure you that our means of protecting our proprietary
rights will be adequate or that competitors will not independently develop
similar or superior technology.
Our principal trademark is "eB2B", for which we are seeking a federal
registration. The United States Patent and Trademark Office has issued an
initial objection to the registration application based upon the descriptiveness
of the trademark. We have filed a response with the United States Patent and
Trademark Office challenging the objection. There can be no assurance that a
trademark will be granted by the United States Patent and Trademark Office. If a
trademark is not obtained then there can be no assurance that the mark can be
adequately protected against any third party infringement, which could adversely
affect our business.
WE ARE DEPENDENT ON ONE PRIMARY DATA CENTER.
We operate our primary data center at Exodus Communications, Inc.'s
Internet Data Center facility in Jersey City, New Jersey. The data center
operates twenty-four
9
hours a day, seven days a week, and is connected to: (1) the Internet via Exodus
Communications, Inc.; and (2) the electronic data interchange network via AT&T
and IBM Global Network. The data center consists primarily of servers, storage
subsystems, and other peripheral technology to provide on-line, batch and
back-up operations. Customers' data is backed-up daily and stored off-site.
We rely on Exodus Communications to provide us with Internet capacity,
security personnel and fire protection, and to maintain the facilities, power
and climate control necessary to operate our servers. Additionally, we rely on
Exodus Communications for redundant subsystems, such as multiple fiber trunks
from multiple sources, fully redundant power on the premises and multiple
back-up generators. If Exodus Communications fails to adequately host or
maintain our servers, our services could be disrupted and our business and
operating results could be significantly harmed. We can make no assurances
regarding our recourse against Exodus Communications in the event of such
failure. Our agreement with Exodus Communications has a term of one year and is
automatically renewable for additional one-year terms.
There can be no assurance that Exodus Communications can effectively
provide and manage the aforementioned infrastructure and services in a reliable
fashion.
WE ARE DEPENDENT ON RETAINING KEY EMPLOYEES.
Our future performance will depend upon retaining key employees. The loss
of services of one or more key employees could harm our business, operating
results and financial condition. Our employees are required to sign
confidentiality and non-competition agreements as a part of their employment,
but even the enforcement of these agreements will not protect us from the loss
of an employee's knowledge and expertise upon termination of employment. To
protect ourselves against dependence on a few individuals, we may have life
insurance policies for key employees. Nevertheless, financial compensation may
not replace the knowledge lost upon the incapacity or death of a key employee.
IN ORDER TO REMAIN COMPETITIVE, WE MAY ENTER INTO ADDITIONAL BUSINESS
COMBINATIONS, EACH OF WHICH MAY ENTAIL ADDITIONAL RISKS AND COMPLICATIONS.
As part of our business strategy, we may elect to enter into additional
business combinations. Such transactions are typically accompanied by a number
of risks, including:
- the difficulty of integrating the operations and personnel of the
acquired companies;
- the attention of our management may be diverted;
- the challenges of integrating technology, including unanticipated
expenses;
- the risk of unknown liabilities of the acquired companies;
10
- the impact of new personnel on uniform procedures, standards and
policies developed by us;
- the impairment of relationships with customers; and
- if stock is used to pay for such transactions, the dilution of
existing shareholders.
If we fail to address these risks with respect to potential business
combinations, it may have a negative impact on our business and stock price.
SYSTEM FAILURE OR DELAY COULD DETER FUTURE USE OF OUR SERVICES.
Our business depends upon the satisfactory performance, reliability and
availability of our systems and network infrastructure. In addition, certain of
the systems and network infrastructure are operated by third parties over which
we exercise limited or no control. The performance and availability of such
systems and infrastructure may be damaged or interrupted due to natural
disaster, break-ins, hacker attacks, computer viruses or similar events. In
addition, if traffic levels increase, we may not be able to upgrade our systems
and infrastructure in a manner sufficient to avoid overloading or congestion,
which could lead to disruptions in service. Any system failure or interruption
could result in delays, loss of data or the inability to accept and confirm
purchases. Such decreased levels of customer service would reduce the volume of
sales and the attractiveness of our products and services and would negatively
affect our operating results.
FAILURE TO EXPAND INTERNET INFRASTRUCTURE COULD LIMIT FUTURE GROWTH.
The recent growth in Internet traffic has caused periods of decreased
performance. If Internet usage continues to grow rapidly, its infrastructure may
not be able to support these demands and its performance and reliability may
decline. If outages or delays on the Internet occur frequently, overall Internet
usage, including usage of our products and services, could grow more slowly or
decline. Our ability to increase the speed and scope of our services to
customers is ultimately limited by and depends upon the speed and reliability of
both the Internet and the customers' internal networks. Consequently, the
emergence and growth of the market for our services depends upon improvements
being made to the entire Internet as well as to the individual customers'
networking infrastructures to alleviate overloading and congestion. If these
improvements are not made, the ability of the customers to utilize our
Internet-based services will be hindered, and our business, operating results
and financial condition may be harmed.
OUR PRODUCTS MAY CONTAIN DEFECTS.
Our products are complex and may contain undetected errors which become
apparent only after introduction or adaptation to a customer's computer systems.
In particular, computer hardware is characterized by a wide variety of
non-standard peripherals and configurations that cause pre-release testing for
errors to be highly
11
difficult and time-consuming. Remedying such errors may delay the provision of
our services and products, cause us to incur additional costs and adversely
affect our reputation.
SECURITY RISKS ASSOCIATED WITH ELECTRONIC COMMERCE MAY DETER FUTURE USE OF OUR
PRODUCTS AND SERVICES.
A fundamental requirement to conduct Internet-based, business-to-business
electronic commerce is the secure transmission of confidential information over
public networks. Failure to prevent security breaches of the trading
communities, or well publicized security breaches affecting the Internet in
general, could deter potential customers from using the trading communities or
the Internet to conduct financial transactions or to transmit confidential
information, and therefore could significantly harm our business, operating
results and financial condition. Despite the advances in computer capabilities,
new discoveries in the field of cryptography, or other developments, the systems
which we use to protect content and transactions from unauthorized access may
nevertheless be compromised or breached. If these security measures are
breached, a person could misappropriate proprietary or confidential information
or cause interruptions in operations. There are significant cost requirements to
protect against security breaches or to alleviate problems caused by such
breaches.
ADDITIONAL GOVERNMENTAL LAWS AND REGULATIONS MAY INCREASE COSTS OF DOING
BUSINESS.
The laws governing Internet transactions remain largely unsettled. The
adoption or modification of laws or regulations relating to the Internet could
harm our business, operating results and financial condition by increasing our
costs and administrative burdens. It may take years to determine whether and how
existing laws such as those governing intellectual property, privacy, libel,
consumer protection and taxation apply to the Internet. Laws and regulations
directly applicable to communications or commerce over the Internet are becoming
more prevalent. The growth and development of electronic commerce may prompt
calls for more stringent consumer protection laws as well as new laws governing
the taxation of Internet-based commerce. We must comply with new laws and
regulations in the United States of America, as well as any laws and regulations
adopted by other countries where we may do business. Compliance with any newly
adopted laws may prove difficult and may harm our business, operating results
and financial condition.
WE WILL BE SUBJECT TO CERTAIN LEGAL RISKS AND UNCERTAINTIES RELATING TO OUR
SERVICES.
In the course of our business, we will be exposed to certain legal risks
and uncertainties relating to information transmitted in transactions conducted
by our customers. The services provided to customers may include access to
confidential or proprietary information. Any unauthorized disclosure of such
information could result in a claim against us for substantial damages. In
addition, our services include managing the collection and publication of
catalog content. The failure to publish accurate catalog
12
content could deter users from participating in trading communities, damage our
business reputation and potentially expose us to legal liability. From time to
time, some of our manufacturers may submit inaccurate pricing or other catalog
information. Even though such inaccuracies may not be caused by us and are not
within our control, we could be exposed to legal liability. Although we believe
that we have implemented and will continue to implement adequate policies to
prevent disclosure of confidential or inaccurate information, claims alleging
such matters may still be brought against us. Any such claim may be
time-consuming and costly and may harm our business and financial condition. We
maintain insurance for many of the risks encountered in our business, however,
there can be no assurances that the claims will be substantially covered by our
insurance.
WE ARE CURRENTLY SUBJECT TO LITIGATION AND MAY BE SUBJECT TO ADDITIONAL
LITIGATION IN THE FUTURE.
In October 2000, Cintra Software & Services Inc. commenced a civil action
against us in New York Supreme Court, New York County. The complaint alleges
that we acquired certain software from Cintra upon the authorization of our
former Chief Information Officer. Cintra is seeking damages of approximately
$856,000. While the action is at a very early stage, we believe we have
meritorious defenses to the allegations made in the complaint and intend to
defend the action vigorously.
More generally, some of our engagements involve the design and development
of customized e-commerce systems that are important to our clients' businesses.
Failure or inability to meet a client's expectations in the performance of
services could result in a diminished business reputation or a claim for
substantial damages regardless of which party is responsible for such failure.
In addition, the services provided to clients may provide us with access to
confidential or proprietary client information. Although we have policies in
place to prevent such client information from being disclosed to unauthorized
parties or used inappropriately, any unauthorized disclosure or use could result
in a claim against us for substantial damages. Contractual provisions attempting
to limit such damages may not be enforceable in all instances or may otherwise
fail to protect us from liability.
In addition, there is always the possibility that our shareholders will
blame us for taking an alleged inappropriate action that causes the loss of
their investment. In the past, following periods of volatility in the market
price of a company's securities, class action litigation often has been
instituted against a company experiencing stock price declines. Similar
litigation, if instituted against us, could result in substantial costs and a
diversion of our management's attention and resources. As a result, your
investment in our stock may become illiquid and you may lose your entire
investment.
13
RISKS RELATING TO OUR COMMON STOCK
OUR QUARTERLY OPERATING RESULTS MAY VARY, WHICH COULD AFFECT THE MARKET PRICE OF
OUR COMMON STOCK.
Fluctuations in our quarterly results could adversely affect the market
price of our common stock in a manner unrelated to our long-term operating
performance. We expect to increase activities and continue to spend significant
amounts in substantially all operational areas and will base our expense levels
on anticipated revenue levels. We may not be able to reduce our spending as a
short-term response to any shortfall in revenue that may occur. For these and
other reasons, we may not meet the earnings or loss estimates of securities
analysts or investors and our stock price could be adversely affected.
OUR DIRECTORS AND EXECUTIVE OFFICERS HAVE SIGNIFICANT CONTROL AND INFLUENCE OVER
THE COMPANY.
As a group, our directors and executive officers beneficially own
approximately 37.11% of our outstanding voting stock. If they vote together, the
directors and executive officers will be able to exercise significant influence
over all matters requiring shareholder approval, including the election of
directors. The interests of our directors and executive officers may conflict
with the interests of our other shareholders.
WE DO NOT ANTICIPATE PAYING DIVIDENDS ON OUR COMMON STOCK.
We have never paid dividends on our common stock and we do not anticipate
paying dividends in the future. We intend to reinvest any funds that might
otherwise be available for the payment of dividends in further development of
our business.
THE EXERCISE OR CONVERSION OF CONVERTIBLE SECURITIES MAY DILUTE THE PERCENTAGE
OWNERSHIP OF OUR SHAREHOLDERS AND THE POTENTIAL OR ACTUAL EXERCISE OR CONVERSION
HAS, AND MAY CONTINUE TO NEGATIVELY AFFECT THE PRICE OF OUR COMMON STOCK AND MAY
IMPEDE OUR ABILITY TO RAISE CAPITAL.
We have a substantial number of outstanding shares of convertible preferred
stock and a substantial number of outstanding options and warrants to purchase
shares of our common stock. As of January 15, 2001, there are outstanding shares
of convertible preferred stock to purchase an aggregate of 13,559,340 shares of
our common stock and options and warrants to purchase an aggregate of 21,755,061
shares of our common stock. If a significant number of these shares of preferred
stock were converted or if a significant number of these options or warrants
were exercised, the percentage ownership of our common stock would be materially
diluted. We believe that the potential exercise or conversion may have an
adverse impact on the price of our common stock and therefore on our ability to
raise capital. The actual conversion or exercise of convertible securities could
further negatively affect the price of our common stock.
14
THE EXPIRATION OF RESTRICTIONS ON THE RESALE OF CERTAIN SECURITIES MAY
NEGATIVELY AFFECT THE PRICE OF OUR COMMON STOCK.
A significant number of shares of common stock which are currently
outstanding, and a significant number of shares of common stock underlying
convertible preferred stock, options or warrants outstanding, are subject to
lock up agreements under which the shareholders have agreed not to sell such
shares for specified periods of time. Specifically, in connection with the
private placement of Series B Convertible Preferred Stock completed in December
1999, each of the investors in such private placement was required to enter into
a lock up agreement prohibiting the sale of the securities purchased in the
private placement for a period of at least twelve months from the closing of
such private placement.
All of our directors, officers and principal shareholders immediately prior
to the April 18, 2000 merger with eB2B Commerce, Inc., a Delaware corporation,
and all of current officers and directors have entered into lock up agreements
prohibiting the sale of such securities for various periods of time.
On December 2, 2000, the lock up expired to the extent of 25% of the
holdings of each person subject to a lock-up agreement. Every ninety days from
December 2, 2000, the restrictions will be lifted to the extent of an additional
25% of each such person's respective holdings. Upon the expiration of the
restrictions imposed by the lock up agreements described above, the persons
party to those agreements will be able to sell their shares, subject to the
restrictions imposed by the federal securities laws. The sale or the possibility
of the sale of shares of our common stock after the expiration of such lock up
periods has and may continue to adversely affect the market price of our common
stock, and may adversely affect our ability to raise capital.
THERE IS POTENTIAL EXPOSURE TO US IN THAT CERTAIN SHARES OF COMMON STOCK
UNDERLYING OUR PREFERRED STOCK HAVE BEEN SOLD PRIOR TO THE DATE OF THIS
PROSPECTUS
Prior to the date of this Prospectus, certain shares of our common stock,
which were issued by virtue of conversion of shares of preferred stock, were
sold by our shareholders in the open market. Such shareholders believed that
their shares were registered pursuant to a previous registration statement of
ours. The Securities and Exchange Commission has advised us of their opinion
that such shares were not covered by the prior registration statement. While
we believe that such sales were made in conformance with applicable securities
laws and regulations, a different determination may result in our having
liability. We are unable to assess, in the event that there is any liability,
what the amount thereof would be.
IF WE RAISE ADDITIONAL CAPITAL AT A PRICE BELOW $2.07 PER SHARE, OUR COMMMON
SHAREHOLDERS WILL BE DILUTED DUE TO PREFERENCES INCLUDED IN OUR OUTSTANDING
PREFERRED SHARES AND WARRANTS.
We have a substantial number of outstanding convertible preferred stock
and a substantial number of outstanding warrants to purchase shares of our
common stock. The preferred shareholders are entitled to an adjusted conversion
price, which results in their receiving additional shares of commons stock upon
conversion if we raise capital at a price below $2.07 per share prior to their
conversion. The warrant holders are entitled to a reduced exercise price on
their warrants if we raise capital at a price below $2.07 per share prior to
their exercise. Therefore, if we raise additional capital at a price below
$2.07, our common shareholders' percentage of ownership will be further diluted
by the additional common stock required to underly the preferred shares and
warrants.
THE PRICE OF OUR COMMON STOCK IS VOLATILE, WHICH COULD RESULT IN SUBSTANTIAL
LOSSES FOR INVESTORS.
Our stock price has been and is likely to continue to be volatile. For
example, from January 1, 2000 through January 23, 2001, our common stock traded
as high as $19.75 per share and as low as $0.50 per share.
Volatility in the future may be due to a variety of factors, including:
- volatility of stock prices of Internet companies generally;
- variations in our operating results and/or our revenue growth rates;
- changes in securities analysts' estimates of our financial performance,
or for the performance of our industry as a whole;
- announcements of technological innovations;
- the introduction of new products or services by us or our competitors;
- change in market valuations of similar companies;
- market conditions in the industry generally;
15
- announcements of additional business combinations in the industry or
by us;
- issuances or the potential issuances of additional shares;
- additions or departures of key personnel; and
- general economic conditions.
The stock market has experienced extreme price and volume fluctuations that
have particularly affected the market prices of securities of Internet-related
companies. These fluctuations may adversely affect the market price of our
common stock.
IF OUR COMMON STOCK IS REMOVED FROM NASDAQ, THE MARKETABILITY OF OUR COMMON
STOCK WILL BE DECREASED SUBSTANTIALLY.
Our common stock is traded on the Nasdaq SmallCap Market under the symbol
"EBTB." Since December 18, 2000, our common stock's price has closed at a bid
price below $1.00. In the event that our shares of common stock close below the
minimum $1.00 bid price for thirty consecutive business days, we will receive
notification from the NASDAQ Stock Market, Inc. ("NASDAQ") that we are not in
compliance with the minimum bid price requirement of NASDAQ. To regain
compliance with this standard, the common stock would be required to have a
closing bid price at or above $1.00 for ten consecutive business days within the
ninety-calendar day period from such notification. Should such compliance not be
achieved, NASDAQ could issue a delisting letter.
Our failure to meet NASDAQ's maintenance criteria, which includes minimum
price and other requirements, in the future may result in the discontinuance of
the inclusion of our securities on NASDAQ. In such event, trading, if any, in
the securities may then continue to be conducted on the non-NASDAQ
over-the-counter market in what are commonly referred to as the electronic
bulletin board and the "pink sheets". As a result, an investor may find it more
difficult to dispose of or obtain accurate quotations as to the market value of
the securities. In addition, we would be subject to a rule promulgated by the
Securities and Exchange Commission that, if we fail to meet criteria set forth
in such rule, imposes various practice requirements on broker-dealers who sell
securities governed by such rule to persons other than established customers and
accredited investors. For these types of transactions, the broker-dealer must
make a special suitability determination for the purchaser and have received the
purchaser's written consent to the transactions prior to the sale. Consequently,
this rule may have an adverse effect on the ability of broker-dealers to sell
the securities, which may affect the ability of shareholders to sell the
securities in the secondary market.
FORWARD-LOOKING STATEMENTS
The statements contained in this prospectus or incorporated by reference in
this prospectus that are not historical facts are "forward-looking statements,"
as defined in Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act of 1934. Such statements can be identified by the use of
forward-looking terminology such as "estimates," "projects," "anticipates,"
"expects," "intends," "believes," or the negative
16
thereof or other variations thereon or comparable terminology, or by discussions
of strategy that involve risks and uncertainties. Examples of these
forward-looking statements include, but are not limited to:
- expectations of anticipated benefits of our acquisitions;
- estimates of future operating results;
- expectations of generating a significant portion of our revenues from a
limited number of large clients;
- plans to further develop and commercialize value-added services;
- expectations regarding our relationships with clients and other third
parties;
- expectations of pricing for our services in the future;
- our anticipated capital expenditures; and
- other statements contained in this prospectus or incorporated by
reference regarding matters that are not historical facts.
These statements are only estimates or predictions and cannot be relied
upon. We can give you no assurance that future results will be achieved. Actual
events or results may differ materially as a result of risks facing us or actual
results differing from the assumptions underlying such statements. These risks
and assumptions could cause actual results to vary materially from the future
results indicated, expressed or implied in the forward-looking statements
included in this prospectus.
All forward-looking statements made in this prospectus that are
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the factors listed above in the section captioned "Risk
Factors" and other cautionary statements included in this prospectus. We
disclaim any obligation to update information contained in any forward-looking
statement.
SELLING SHAREHOLDERS
The shares covered by this prospectus are shares of our common stock that
have been issued and shares of our common stock that have been issued or will be
issued upon the conversion of our preferred stock or upon the exercise of
warrants to purchase shares of our common stock. The number of shares of common
stock that may be actually sold by the selling shareholders will be determined
by such selling shareholder, subject to the restrictions of the lock-up
agreements, if any. See "Risk Factors". The shares to which this prospectus
relates include but are not limited to the following:
17
399,000 of the shares consist of shares of common stock issued or issuable
upon conversion of the Series A Preferred Stock acquired by selling shareholders
in a private placement that was completed in May 1999.
15,959,995 of the shares consist of shares of common stock issued or
issuable upon conversion of the Series B Preferred Stock acquired by the selling
shareholders in a private placement that was completed in December 1999.
3,990,128 of the shares consist of shares of common stock issuable upon the
exercise of warrants to purchase our common stock acquired by the selling
shareholders in the December 1999 private placement.
3,943,716 of the shares consist of shares of common stock issuable upon the
exercise of warrants to purchase our common stock granted to Commonwealth
Associates LP and certain members and associates of Commonwealth Associates LP
for acting as the placement agent for the December 1999 private placement.
1,250,200 of the shares consist of shares of common stock issuable upon the
exercise of warrants to purchase our common stock granted to Commonwealth
Associates LP and certain members and associates of Commonwealth Associates LP
in connection with acting as a financial advisor regarding our merger with eB2B
Commerce, Inc., a Delaware corporation, in April 2000.
1,061,146 of the shares consist of shares of common stock issuable upon the
exercise of warrants to purchase our common stock granted to ComVest Partners LP
in connection with a pre-bridge and bridge offering conducted prior to the
December 1999 private placement.
847,162 of the shares consist of shares of common stock issuable upon
exercise of warrants to purchase our common stock granted to certain members and
associates of Commonwealth Associates LP in connection with a pre-bridge and
bridge financing conducted prior to the December 1999 private placement.
502,383 of the shares consist of shares of common stock issuable upon the
exercise of warrants to purchase our common stock granted to Commonwealth
Associates LP and certain members and associates of Commonwealth Associates LP
as a fee in connection with our April 2000 merger.
720,282 of the shares consist of shares of common stock issued to
Commonwealth Associates and certain members and associates of Commonwealth
Associates as a fee in connection with our April 2000 merger.
The selling shareholders are the persons and/or entities listed in the
table below whom own our common stock, shares of preferred stock convertible
into shares of our common stock, or warrants to purchase shares of our common
stock. We are registering for the selling shareholders named herein an aggregate
of 29,549,140 shares of common stock. Except as noted below, none of the selling
shareholders has, or within the past three years has had any relationship,
position or office with us or our affiliates.
The following table sets forth, as of January 23, 2001: (1) the name of
each selling shareholder, (2) the number of shares of our common stock
beneficially owned by
18
each selling shareholder, including the number of shares purchasable upon
exercise of warrants or conversion of preferred stock, (3) the maximum number of
shares of common stock which the selling shareholders can sell pursuant to this
prospectus and (4) the number of shares of common stock that the selling
shareholders would own if they sold all their shares registered by this
prospectus. Except as otherwise noted below, the number of shares of our common
stock registered for sale hereunder for a selling shareholder consists of shares
of our common stock issuable upon conversion of the Series B Preferred Stock and
exercise of the warrants to purchase our common stock issued in the December
1999 private placement (the ratio of common stock issuable upon conversion of
the Series B Preferred Stock to the common stock issuable upon exercise of the
warrants is approximately 4 to 1). Each selling shareholder will receive all of
the net proceeds from the sale of his or her shares of common stock offered by
this prospectus.
NUMBER OF SHARES OF
NUMBER OF SHARES NUMBER OF SHARES OF COMMON STOCK TO BE
OF COMMON STOCK COMMON STOCK BEING BENEFICIALLY
BENEFICIALLY OWNED REGISTERED BY THIS OWNED AFTER OFFERING
PRIOR TO OFFERING PROSPECTUS
SELLING SHAREHOLDER
Abatangelo, William P. & Angela K. 15,113 15,113 0
Acks, Shannon P. 15,113 15,113 0
Al-Bahar & Lulwa Al-Khaled, Alya 30,228 30,228 0
Alliance Equities, Inc. 75,569 75,569 0
Apodaca Investment Offshore, Ltd. 241,819 241,819 0
Apodaca Investment Partners, LP 241,819 241,819 0
Daphne Astor Grandchildren's Trust 15,113 15,113 0
Astor, Michael 15,113 15,113 0
Baily, Gary R. 15,113 15,113 0
Ballyhoo Partners 75,569 75,569 0
Barrington Capital Corp. 12,091 12,091 0
Beattie, Edwin J. 15,113 15,113 0
Bentley, Hugh P. & Jean J. 15,113 15,113 0
Bentley, Mark 15,113 15,113 0
Bentley, Richard 75,569 75,569 0
Blank, Gerald 6,047 6,047 0
Bodmer, Hans C. 120,909 120,909 0
Brogan, Thomas R. 6,047 6,047 0
Campos, Felix & Joyce 90,681 90,681 0
Cardwell, J.A. 30,228 30,228 0
Cass, C. Wyllys & Ellen M. 12,091 12,091 0
Cavanna, Kieran 3,022 3,022 0
Neil A. Chapman, SEP IRA 9,069 9,069 0
Chimbel, Marvin & Arlene 6,047 6,047 0
Clark, Martin E. & Glenda F. 9,069 9,069 0
19
Cohen, Alan N. 15,113 15,113 0
Jonathan R. Cohen Retirement Plan 6,047 6,047 0
Cooper, Stephen 15,113 15,113 0
Joseph Cornacchio Retirement Plan 18,137 18,137 0
Davenport, James A. & Rebecca C. 42,319 42,319 0
DiCesare, Dominick 15,113 15,113 0
DiCesare, Paul 6,650 6,650 0
Dozier, Robert and Deborah G. 15,115 15,115 0
Duncan, John 15,113 15,113 0
DW Trustees (BVI) Ltd. - Children's Fund 15,113 15,113 0
DW Trustees (BVI) Ltd. - Main Fund 30,228 30,228 0
Edgewater Ventures LLC 30,228 30,228 0
Elder, James 6,047 6,047 0
Faxon, David P. Jr. 7,556 7,556 0
Aubrey J. Ferrao TTEE Aubrey J. Ferrao Living 30,228 30,228 0
Trust u/a/d 6/26/98
Friedman, Philip & Rose 60,456 60,456 0
Friedman, Victor 60,456 60,456 0
Ernest J. Genco Retirement Plan 6,047 6,047 0
George Fox University 15,113 15,113 0
Gilfand, David S. 6,047 6,047 0
Goddu, Roger V. 120,909 120,909 0
Gould, William S. 6,047 6,047 0
The William S. Gould, Peter L. Gould & Deborah 18,137 18,137 0
Gould Cygler Irrevocable Trust
Grace, Roger 7,253 7,253 0
Greenspan, Burton E. 7,556 7,556 0
Greiper, Scott L.(3) 24,147 24,147 0
Grunwald, J. Thomas 30,228 30,228 0
Heine, Spencer H. & Margaret 60,456 60,456 0
Herrmann, Frederick J. & Marilyn C. 4,534 4,534 0
Hirsch, Allen 3,022 3,022 0
Hirsch, Marcia 6,047 6,047 0
Hoagland, Gina & Lee 15,113 15,113 0
Hodge, David 15,113 15,113 0
Insalaco, Paul 6,047 6,047 0
Jahdi, Nasrollah & Farahnaz 12,091 12,091 0
Jensen, Eric & Julie Patricia 3,022 3,022 0
JF Shea & Co., Inc. 934,180 934,180 0
L. Wayne Johnson SEP IRA 15,113 15,113 0
Kwiat Capital Corp. 30,228 30,228 0
LAD Equity Partners 15,113 15,113 0
Leon, Martin B. 15,113 15,113 0
Lightman, Ezra 9,069 9,069 0
20
Longobardi, Vincent & Carmela Basile 15,113 15,113 0
Luxenberg, Arthur 15,113 15,113 0
Mann, Michael 15,113 15,113 0
Mateer, Richard B. & Margaret J. 9,069 9,069 0
Mazzocchi, Leo F. & Nancy T. 15,113 15,113 0
Meringoff, Stephen J. 30,228 30,228 0
Moraes, Claude & Roshan 6,047 6,047 0
Moran, Jr., Charles E. 7,556 7,556 0
MRL Astor Expectancy Trust 30,228 30,228 0
Mullery, Gregg Wm. 6,047 6,047 0
Nemiroff, Karen 3,022 3,022 0
Newmark, Amy L. 30,228 30,228 0
Notowitz, Allen 15,113 15,113 0
Odlivak, Prudence & Andrew 15,113 15,113 0
Frank B. Palazzolo, Jr. - Profit Sharing Plan 6,047 6,047 0
Parrish, Edward L. 3,022 3,022 0
Perez, Michael 6,047 6,047 0
Piccolo, August 15,113 15,113 0
Porter, Barry 241,819 241,819 0
Priddy, Robert (3)(7) 7,385,073 858,611 0
RHL Ventures LLC 60,456 60,456 0
Rosenbloom, Keith (3)(8) 6,617,492 91,030 0
Russo, Paul & Sally 90,681 90,681 0
Sax Family Limited Partnership 3,022 3,022 0
Schultz, Gary D. & Barbara A. 42,319 42,319 0
Schwickert, Kent 15,113 15,113 0
Schwickert, Kim 30,228 30,228 0
Scotto, Peter 30,225 30,225 0
Seftel, Lawrence & Roslyn 15,113 15,113 0
Shapiro, J.D. 3,022 3,022 0
Nancy Shapiro 6,047 6,047 0
Shubash, May S. 6,047 6,047 0
Sica, Joseph L., Jr. & Emilia M. 30,228 30,228 0
Mercy Radiologists of Dubuque, PC 6,047 6,047 0
Money Purchase Pension Plan's Trust
f/b/o Roger R. Stenlund,
Stern, Jeremy B. & Wendy B. 15,113 15,113 0
Stransky, Barry & Lauren A. 9,069 9,069 0
Teirstein, Paul 15,113 15,113 0
David Thalheim Revocable Living Trust 15,113 15,113 0
David Thalheim c/f Lindsay Thalheim 6,047 6,047 0
David Thalheim c/f Marc Thalheim 6,047 6,047 0
Toombs, Walter F. 30,228 30,228 0
Tradex Commodities 15,113 15,113 0
21
Treitel, David 6,047 6,047 0
Trombone, Mario 6,047 6,047 0
Weitz, Perry 15,113 15,113 0
Wilkins, Stuart B. 15,113 15,113 0
Zale, John H. 15,113 15,113 0
Abrahamson, Melissa R. & Paul 3,022 3,022 0
Abrams, Beverly 6,047 6,047 0
Abrams, Burton R. 6,047 6,047 0
Abrams, Rodney A. 46,853 46,853 0
Adametz, James R. 22,369 22,369 0
Anderson, Jr., Ferdinand F. 15,113 15,113 0
Anderson, Jack L. 15,113 15,113 0
The Bald Eagle Fund Ltd. 22,029 22,029 0
Ballin, Scott 15,113 15,113 0
Barnes, Jr., Charles A. 15,113 15,113 0
Berger, Toby 6,047 6,047 0
Berglund, Donald 12,091 12,091 0
Berman, Marc G. 7,556 7,556 0
Bertoni, Christopher W. 30,228 30,228 0
Bettinger, Robert 30,228 30,228 0
Black, Lincoln Edward 7,556 7,556 0
Blomstedt & Susan LaScala, JTROS, Jeffrey 30,228 30,228 0
Bloom, Jack 90,684 90,684 0
Blue, Harold 30,228 30,228 0
Blue, Robert & Ruth 12,091 12,091 0
Blum, Gary 15,113 15,113 0
BNB Investment Associates L.P. 129,069 129,069 0
Brummer, Michael & Mary Jo 30,228 30,228 0
Burr Family Trust 7,556 7,556 0
Burgess, Paul 15,113 15,113 0
Cardoso, Manuel 12,091 12,091 0
C.E. Unterberg Towbin Capital Partners I, LP 120,909 120,909 0
Cohen & Nancy D. Shapiro, Jonathan R. 15,113 15,113 0
Collins, James C. 15,113 15,113 0
Conzett Europa Invest Ltd. 60,456 60,456 0
Corbin, Bruce 21,159 21,159 0
Corbin, Jeff 3,022 3,022 0
Corbin, Richard 21,159 21,159 0
Cranshire Capital, L.P. 302,275 302,275 0
Crown, Robert & Barbara 45,341 45,341 0
d'Autremont, Sloan 15,113 15,113 0
DeAtkine, Jr., David 30,228 30,228 0
The Dexter Corporation Grantor Trust 30,228 30,228 0
22
DiLeonardo, Frank L. 15,113 15,113 0
The DotCom Fund, L.L.C. 151,137 151,137 0
Echo Capital Growth Corp. 45,341 45,341 0
EDJ Limited 120,909 120,909 0
Burtt R. Ehrlich, IRA 30,228 30,228 0
Epstein, Frederick B. 60,456 60,456 0
Esformes, Joseph 30,228 30,228 0
Falk, Michael S. (3)(6) 7,641,715 1,076,865 0
Finkle, S. Marcus 30,228 30,228 0
Flavin, Blake Investors, L.P. 90,684 90,684 0
Flavin, John P. 15,113 15,113 0
FM Grandchildren's Trust 83,728 83,728 0
Flynn Corporation (10) 662,133 662,133 0
Fox, Karen A. 9,069 9,069 0
Friedlander, Charles L. 15,113 15,113 0
Gaba, Ilya & Alice 6,047 6,047 0
Gaffney, Michael F. 15,113 15,113 0
Gallagher Investment Corporation 662,133 662,133 0
Gaylord, Gregg M. 15,113 15,113 0
Giardina, Anthony J. 6,047 6,047 0
Glashow, Jonathan 45,341 45,341 0
Goldenheim, Paul D. 30,228 30,228 0
Gonchar, Andrew 15,113 15,113 0
Graves, Richard W. & Mary J. 9,069 9,069 0
Gruber & McBaine Capital Management Fiduciary 60,456 60,456 0
Trust
Gubitosa, Paul & Linda 12,091 12,091 0
Hart, Andrew C. 15,113 15,113 0
Hartman, Roland F. 15,113 15,113 0
Hartman, Timothy 9,069 9,069 0
Henry, William O. E. 30,228 30,228 0
Holtvogt, Annette 15,113 15,113 0
Isbell, Charles E. 6,047 6,047 0
Jacobs, Paul M. 15,113 15,113 0
Jaber, Jim & Aileen 24,181 24,181 0
Jordan, Peggy 45,341 45,341 0
Kabuki Partners 132,094 132,094 0
Keating, Patrick N. & Julie S. 15,113 15,113 0
Kensington Partners, L.P. 93,100 93,100 0
Kensington Partners II, L.P. 5,781 5,781 0
Ketcham, Edward 9,069 9,069 0
Knollmeyer, Paul P. & Phyllis M. 15,113 15,113 0
Lagunitas Partners LP 241,819 241,819 0
Landers, James R. 15,113 15,113 0
Levy, Stuart J. 45,341 45,341 0
Loegering, Charles J. 90,684 90,684 0
23
Luck, John 15,113 15,113 0
May, Gary D. & Deborah C. 30,228 30,228 0
McCarthy, John J. & Donna P. 55,013 55,013 0
McGary, Lawrence W. 9,069 9,069 0
Millstein, Gerald Jay 12,091 12,091 0
Mulkey II Limited Partnership 181,365 181,365 0
Nowak, Greg A. & Lynn M. 30,228 30,228 0
Odyssey Capital, L.P. 604,549 604,549 0
Palmer, Richard & Lynne Marie 15,113 15,113 0
Patil, Gangadhar 15,113 15,113 0
Pecord, Carmen 15,113 15,113 0
Petrus, Paul F. 9,069 9,069 0
Pobiel, Ronald 6,047 6,047 0
Pocisk, Anna M. 21,159 21,159 0
Polyviu, P. Tony 15,113 15,113 0
Porter Partners, L.P. 181,365 181,365 0
Prime Ventures, LLC 105,797 105,797 0
Primo, Joseph C. 7,859 7,859 0
Prude, Randy 30,228 30,228 0
Pryt, Bob 75,569 75,569 0
Bob K. Pryt -- Ttee BKP Capital 75,569 75,569 0
Management LLC 401(k) PSP &
MPP, Dtd. 1/1/92 FBO Bob K. Pryt
Radichel, William C. 60,453 60,453 0
Radix Associates 45,341 45,341 0
Rappaport, A.G. 120,909 120,909 0
Reichelt, Kurt V. & Laura M. 24,181 24,181 0
Reichenbaum, Mark 159,300 159,300 0
R M and L Burwick Family L.P. 120,909 120,909 0
RS Emerging Growth Partners LP 133,007 133,007 0
RS Pacific Partners 302,533 302,533 0
RS Premium Partners 169,013 169,013 0
Rice, William Anthony 120,909 120,909 0
Ronco, Edmund 6,047 6,047 0
Ronco, Edmund c/f Todd Ronco 6,034 6,034 0
Rosenbloom, Howard 15,113 15,113 0
Rosenfield, Laurence 15,113 15,113 0
Ross, Adam Ross & Lisa Falk- 15,113 15,113 0
Rubin, Brett 9,069 9,069 0
Santolo, Dennis & Thomas, JTROS 30,228 30,228 0
Scaglione, Domenic G. & Josephine 7,556 7,556 0
Scalo, JTROS, John F. & Carole M. 15,113 15,113 0
Stuart Schapiro IRA Account 30,228 30,228 0
Schroeder, Charles F. A. 15,113 15,113 0
Schwarzwaelder, Douglas 6,047 6,047 0
Schwencke, Kim M. 60,456 60,456 0
24
Shaw, John J. 60,456 60,456 0
Sheats, Fred B. 15,113 15,113 0
Simon Asset Management, LLC 181,365 181,365 0
Sivak, Cheryl R. and Gary Evan, M.D. 9,069 9,069 0
Sivak, George C., M.D. 9,069 9,069 0
SJG Management, Inc. 1981 Amended and Restated 15,113 15,113 0
Profit Sharing Plan
Spencer, Robert J. 15,113 15,113 0
Spigarelli, Anthony M. & Nancy M. 30,228 30,228 0
Spivak, Joel 30,228 30,228 0
Stellway, David L. 30,228 30,228 0
Sybesma, William & Martha Jane 30,228 30,228 0
Sybesma Research LLC 30,228 30,228 0
Tachibana , Glen 12,091 12,091 0
Thompson, George L. 15,113 15,113 0
Trupiano, Salvatore 9,069 9,069 0
Van Le, Linda 15,113 15,113 0
Ventana Partners, L.P. 60,456 60,456 0
Syd Verbin & Helen Verbin, Trustees under Trust 9,069 9,069 0
Agreement dated 12/20/88, FBO Syd Verbin
Voigt, TIC, Bryon & Jacelyn 18,137 18,137 0
Wasserstrum, Seymour 9,069 9,069 0
Weiskopf Silver & Co. L.P. 45,341 45,341 0
Wolfson Equities 755,687 755,687 0
Yalen, Richard (2) 23,814 23,814 0
ComVest Capital Management, LLC (1) 1,242,511 1,242,511 0
Ascuitto, Basil (2)(9) 5,315,873 25,875 0
Blitz, Craig & Annette 10,699 10,699 0
Campanella, Richard (2) 12,500 12,500 0
Coventry, Brian (2) 49,224 49,224 0
Michael S. Falk IRA 19,194 19,194 0
Giardina, Anthony J. (2) 12,500 12,500 0
Glaser, Bruce (2) 46,980 46,980 0
Kleidman, Carl (2) 151,263 151,263 0
Latour, Peter (2) 23,034 23,034 0
Lipman, Beth (2) 10,699 10,699 0
Moschetta, Ron (2) 23,034 23,034 0
Messana, Jerome (2) 123,214 123,214 0
O'Sullivan, Robert (2) 69,891 69,891 0
Tallur, Inder (2) 60,564 60,564 0
Vainberg, Vladik (2) 7,677 7,677 0
Waye, Thom (2) 8,221 8,221 0
Wynne, Joseph (2) 22,745 22,745 0
Ladouceur, Philip (2) 2,411 2,411 0
25
Cooperman, Edwin (2) 2,411 2,411 0
Potamianos, Constintine (2) 2,409 2,409 0
Bollag, Michael 38,388 38,388 0
Falk, Michael and Annie 19,194 19,194 0
Gianna Falk Trust 19,194 19,194 0
Mardale Investments Ltd. 83,728 83,728 0
Mikaela Falk Trust 19,194 19,194 0
Rosenblatt, Richard (2) 40,799 40,799 0
Commonwealth Associates L.P. (1) 5,283,951 5,283,951 0
Moran, Tim 199,500 199,500 0
Abraham, Dean 7,556 7,556 0
Abrams, Richard 33,250 33,250 0
A'Hearn, Michael F. & Maxine C. 15,113 15,113 0
The Leo J. Ambrogi II Trust dtd 2/1/95 9,069 9,069 0
Appelbaum, Michael L. 7,859 7,859 0
Basil J. Ascuitto IRA 6,047 6,047 0
Ashok, Shanthamallappa A. 15,113 15,113 0
Auerbach, A. Phillip 15,113 15,113 0
Aukstuolis, Jim G. 30,228 30,228 0
Bauer, Thomas W. & Paula S. 24,181 24,181 0
Beiser, John W. & Maureen W. 60,456 60,456 0
Kim M. Beretta 1994 Trust 15,113 15,113 0
Berney, L. Neal 15,113 15,113 0
Bernstein, Howard & Sandra 15,113 15,113 0
Bloom, Ron (2) 15,097 15,097 0
Bolding, Jeffrey O. & Deborah R. 15,113 15,113 0
Bolognue, Joseph T. 15,113 15,113 0
Boyd, John W. & Sandra L. 12,091 12,091 0
Briggs, Tom P. 12,091 12,091 0
Brigl, Thomas J. & Brenda J. 6,047 6,047 0
Brown, Raymond 45,341 45,341 0
Callahan, Daniel J. 30,228 30,228 0
Cameron, Jeffrey S. 15,113 15,113 0
Cardwell, Jr., James A. 15,113 15,113 0
Anders Carlegren SEP-IRA 6,047 6,047 0
Chance, Albert & Doris 15,113 15,113 0
Chandra-Sekar, Balasundaram 6,047 6,047 0
Chase, Arthur M. 12,091 12,091 0
Cohen, Dr. David 42,319 42,319 0
Collier,Timmy M. & Connie A. 6,047 6,047 0
Richard Corbin IRA 9,069 9,069 0
Cramer Taos Partners 60,456 60,456 0
Cunningham & Wendell Fleming, Stephen 15,113 15,113 0
Danieli, Mark 15,113 15,113 0
d'Autremont, Hugh 6,047 6,047 0
26
DellaValle, Anthony 9,069 9,069 0
Dercher, David J. & Su Ellen 24,181 24,181 0
Deshmukh, Sunil M. 60,456 60,456 0
DiCesare, Louis A. 6,650 6,650 0
Dickey, David L. & Susan M. 6,047 6,047 0
DiFatta, Tony 7,556 7,556 0
Drapkin, Donald 151,137 151,137 0
Dreyfuss, Jerome 24,181 24,181 0
EFG Reads Trustees Ltd. 9,069 9,069 0
Wayne D. Eig Chartered Defined Benefit Pension 6,047 6,047 0
Trust
Engfer, Jodi Abrams 6,047 6,047 0
Gerald I. Falke, IRA 6,047 6,047 0
Farzaneh, Hamid & Nildufar 24,181 24,181 0
Circle F. Ventures, LLC 22,672 22,672 0
Hayden R. & LaDonna M. Fleming Revocable Trust 22,672 22,672 0
Gerlach and Company, c/f Fleming (Jersey) Ltd. 30,228 30,228 0
Flom, Joseph H. 75,569 75,569 0
French, Robert A. 9,069 9,069 0
Friedman, Ronald 6,047 6,047 0
Funeral Financial Systems, Ltd. 52,897 52,897 0
Gajeski, Donald K. & Phyllis M. 6,047 6,047 0
Robert E. Gallucci DPM 15,113 15,113 0
Martin W. Gangel Roth IRA 30,228 30,228 0
Geller, Marshall 151,137 151,137 0
Generation Capital Associates 36,272 36,272 0
Gittis, Howard 151,137 151,137 0
Glasscock, Gary M. 15,113 15,113 0
Goebel, Gregg R. & Marilyn 12,091 12,091 0
Goldberg, Ira 30,228 30,228 0
Goldberg, Mark & Joanna 15,113 15,113 0
Steven B. Greenman IRA 15,113 15,113 0
Hammerman, Alan H. 15,113 15,113 0
Harrison, Judith P. 30,228 30,228 0
Hayden, TIC, Michael D. & Velma J. 6,047 6,047 0
Herscu, Robert 30,228 30,228 0
HFR - 07 Partners 37,784 37,784 0
Hornady, James Brooks 9,069 9,069 0
Intercontinental Investment Services, Inc. 15,113 15,113 0
Iseli, Andre 30,228 30,228 0
Jahn, Rosalie J. 18,137 18,137 0
Jajoor, Nagaraj O. & Sudha N. 15,113 15,113 0
Jeffers Family Ltd. Partnership 6,047 6,047 0
27
Johnson, Kimber & Susan 9,069 9,069 0
Johnson, L. Wayne 30,228 30,228 0
Jordan, Bette P. 7,556 7,556 0
Jordan, Edward C. 6,047 6,047 0
Joseph, Dr. Ralph 12,091 12,091 0
JR Squared, LLC 90,681 90,681 0
Kane, Norman 30,228 30,228 0
Hulas & Savita Kanodia Revocable Living Trust 75,569 75,569 0
Kanuit, Gary 15,113 15,113 0
Randall Kaplan Living Trust 90,681 90,681 0
Keeney, Thomas J. & Pamela C. 7,556 7,556 0
Kennett, David R. 6,047 6,047 0
Keough, Thomas G. 9,069 9,069 0
Keyway Investments Ltd. 302,275 302,275 0
Kirk, William F., Jr. & Lynn B. 15,113 15,113 0
Bernard Kirsner Trust 15,113 15,113 0
Klein, Michael 75,569 75,569 0
Koch, Kevin & Susan 15,113 15,113 0
Koniver, Garth A. 15,113 15,113 0
Kraus, Dennis H. & Daryl B. 6,047 6,047 0
Lenzo, Christopher 453,412 453,412 0
Lerner, Brian C. 27,206 27,206 0
Levitin, Eli 15,113 15,113 0
Lewis, Lindsay 15,113 15,113 0
Liebro Partners LLC 15,113 15,113 0
Lin, Rong-Chung 12,091 12,091 0
MacDonald, Allan & Eileen 18,137 18,137 0
Mallis, Stephen 6,047 6,047 0
Manhattan Group Funding 75,569 75,569 0
Manocherian, Jed 15,113 15,113 0
Mark, Laurel Lester 12,091 12,091 0
Marsh, Frederic A. 6,047 6,047 0
Martell, John A. 30,228 30,228 0
Martella, Richard R. & Jennifer K. 7,556 7,556 0
McCleeary, Robert A. 22,672 22,672 0
Meinershagen, Alan 15,113 15,113 0
Misher, Sheldon 15,113 15,113 0
Monie, Vijaykumar S. 15,113 15,113 0
Morfesis, F.A. & Gail 24,181 24,181 0
Moriber, Lloyd A. 30,228 30,228 0
Nano-Cap Hyper Growth Partnership L.P. 15,113 15,113 0
Nano-Cap New Millennium Growth Fund L.P. 7,556 7,556 0
Virginia R. Nelson Trust 15,113 15,113 0
28
Nelson, Jody 9,069 9,069 0
Norman, Gregory 30,228 30,228 0
Nussbaum, Jeffrey Kahn 9,069 9,069 0
Nussbaum, Samuel R. 30,228 30,228 0
O'Donnell, Edmond 6,047 6,047 0
O'Neill, William and Linda 15,113 15,113 0
Overdrive Capital Corp. 120,909 120,909 0
Erinch R. Ozada, IRA Rollover 45,341 45,341 0
Pamela Equities Corporation 45,341 45,341 0
Pannu, Jaswant Singh & Debra 6,047 6,047 0
Partoyan, Garo A. 21,159 21,159 0
Patel, Sanjiv M. 15,113 15,113 0
Patil, Jayakumar & Purnima J 105,797 105,797 0
Patil, Nagaraja & Shantha 15,113 15,113 0
Paulson, Timothy G. 15,113 15,113 0
Pesele, Robert 6,047 6,047 0
Pickett, George F. & Elizabeth H. 15,113 15,113 0
Piccolo, John 60,456 60,456 0
Pinto, James J. 60,456 60,456 0
Porter, Jeffrey 60,456 60,456 0
Poujol, Michael A. & Angela G. 30,228 30,228 0
Rahn & Bodmer 211,593 211,593 0
Rasnick, James A. & MaryAnn 15,113 15,113 0
Reese-Cole Partnership Ltd. 45,341 45,341 0
Richmond, Gerald & Amy 30,228 30,228 0
Rion, James H., Jr. 18,137 18,137 0
Roberts, Cindy D. 22,672 22,672 0
Rodler, Lawrence 9,069 9,069 0
Rolling Investment Group 6,047 6,047 0
Rosenbloom, Dale 60,456 60,456 0
Rubin, Jeffrey 9,069 9,069 0
Rubinson, Brett 3,022 3,022 0
Runckel, Douglas & Evelyn 51,387 51,387 0
Russell, Donnie H. 30,228 30,228 0
Salkind, Scott 15,113 15,113 0
Sandhu, Avtar S. 6,047 6,047 0
Scalo, John T. 20,556 20,556 0
Schenker, Monroe H. 15,113 15,113 0
Schlank, Lionel 15,113 15,113 0
Schneider, Sidney 15,113 15,113 0
Schoen, William R. & Barbara J. 15,113 15,113 0
The Rodney N. Schorlemmer SEP IRA 24,181 24,181 0
Schottenstein, Gary L. 9,069 9,069 0
Schultz, Gary & Lance 6,047 6,047 0
Serra, Jose E. & Cecilia P. 30,228 30,228 0
Serubo, John 7,556 7,556 0
29
Shagadelic Partners 15,113 15,113 0
Shrager, Jay J. & Carole B. 54,409 54,409 0
Shroff, Burjis N. and Havovi B. 9,069 9,069 0
Siddiqi, Tariq S. 6,047 6,047 0
Signore, Claude M. & Marie 6,047 6,047 0
Silverman, Robert & Lois B. 15,113 15,113 0
Singer, Michael 45,341 45,341 0
SIRHC Holdings Limited 24,181 24,181 0
Skoly, Jr., Stephen T. 15,113 15,113 0
Smith , Harlan B. 19,950 19,950 0
Spiegelberg, Joan 6,047 6,047 0
Spielman , Melvin 30,228 30,228 0
Stalker, Philip 6,047 6,047 0
Starapoli, Fedele 6,047 6,047 0
Steele, Michael D. 18,137 18,137 0
Bachner Tally Polevoy 401K Profit Sharing Plan 6,047 6,047 0
dtd 010184 FBO Fran Stoller
Strazzulla, Domenic M. 24,181 24,181 0
Sullivan, Jesse 15,113 15,113 0
Sutton, Patrick 7,556 7,556 0
Thau, Clifford 3,022 3,022 0
Tickner, Todd 15,113 15,113 0
Todywala, Sam & Lyla 3,022 3,022 0
Uday, Kalpana A. & Udayashankar K. 15,113 15,113 0
Union Cattle Company 15,113 15,113 0
Vandewalle, John Joos- 30,228 30,228 0
Voigt, Kevin J. & Cindy G. 15,113 15,113 0
Voss Limited Partnership 6,047 6,047 0
Waxman, David B. & Jeremy 6,047 6,047 0
Weidenbener, Erich J. and Diane D. 24,181 24,181 0
Weksler, Luiz 9,069 9,069 0
Westmont Venture Partners, LLC 151,137 151,137 0
Wilkins, Charles P. 30,228 30,228 0
Wilson, Kenneth B. 13,916 13,916 0
Wingate Investments Limited 302,275 302,275 0
Wisseman, Charles L., III 24,181 24,181 0
Wolf, Aizik L. & Robyn 12,091 12,091 0
Wynne, Joanne 9,069 9,069 0
Lyons, Jerry (4)(5) 43,890 43,890 0
Pappel, Jeffrey (4) 33,250 33,250 0
Leeds, Laurence (4) 99,750 99,750 0
Leeds, Carey (5) 224,770 224,770 0
Kisky School (4) 133,000 133,000 0
Kestenbaum, Richard (4) 18,620 18,620 0
Goldberg, Joshua R. (4) 18,620 18,620 0
30
Harrison, Gilbert (4) 22,610 22,610 0
Traub, Marvin (4) 6,650 6,650 0
Treuille, Antoine G. (4) 13,300 13,300 0
Smith, William M. (4) 13,300 13,300 0
Sperduto, Vito A. (4) 9,310 9,310 0
Goodman, Karen (4) 3,990 3,990 0
Harrison, Edward D. (4) 6,650 6,650 0
MD Investors, Inc. (5) 53,200 53,200 0
Byrnes, Christopher (5) 26,600 26,600 0
Cephas Capital (5) 10,321 10,321 0
Moskowitz, Stanley (5) 48,766 48,766 0
Altman, Alan W. (5) 48,766 48,766 0
Bengraff, Robert (5) 2,014 2,014 0
Blitzer, Alfred (5) 2,014 2,014 0
Brown, Stephanie (5) 2,014 2,014 0
Edwards, Daniel (5) 2,014 2,014 0
Smith, Scott (5) 2,014 2,014 0
Sommer, Cindy (5) 572 572 0
Corliss, Robert (5) 6,650 6,650 0
Clark, Denis (5) 7,500 7,500 0
Donner Corp International (5) 6,000 6,000 0
Gailus, Robert (5) 25,000 25,000 0
Fragetti, Gerard (5) 26,400 26,400 0
Trautman, Wasserman & Co. (5) 75,000 75,000 0
Virtual Ex', Inc. (5) 27,000 27,000 0
Sands Brothers & Co. Ltd. 95,000 95,000 0
TOTALS 29,549,140 0
(1) Includes shares of our common stock: (a) issued in connection with the
merger (b) issuable upon conversion of the Series B Preferred Stock; (c)
issuable upon the exercise of pre-bridge warrants; (d) issuable upon the
exercise of the bridge warrants; (e) issuable upon the exercise of the warrants
issued in connection with the December 1999 private placement; (f) issuable upon
the exercise of agents warrants; (g) issuable upon the exercise of financial
advisor warrants; and (h) issuable upon the exercise of merger warrants.
(2) Includes shares of our common stock: (a) issued in connection with the
merger; (b) shares of our common stock issuable upon conversion of the Series B
Preferred Stock; (c) issuable upon the exercise of the warrants issued in
connection with the December 1999 private placement; (d) issuable upon the
exercise of agents warrants; (e) issuable upon the exercise of financial advisor
warrants; and (f) issuable upon the exercise of merger warrants.
(3) Includes shares of our common stock: (a) issued in connection with the
merger; (b) issuable upon conversion of the Series B Preferred Stock; (c)
issuable upon the exercise of the bridge warrants; (d) issuable upon exercise of
the warrants issued in connection with the December 1999 private placement; (e)
upon the exercise of agents warrants; (f)
31
issuable upon the exercise of financial advisor warrants; and (g) issuable upon
the exercise of merger warrants.
(4) Includes shares of our common stock issuable upon conversion of the Series A
Preferred Stock.
(5) Includes shares of common stock and shares of common stock issuable upon
exercise of warrants.
(6) The shares of common stock listed as beneficially owned consist of (a)
shares of common stock issuable upon conversion of shares of Series B Preferred
Stock; (b) warrants to purchase shares of common stock; (c) shares of common
stock issuable upon conversion of shares of Series B Preferred Stock held in an
Individual Retirement Account ("IRA"); (d) warrants to purchase shares of common
stock held in an IRA; (e) shares of common stock issuable upon the conversion of
shares of Series B Preferred Stock and warrants to purchase shares of common
stock which are held by Commonwealth Associates L.P. of which Mr. Falk shares
voting and dispositive power with respect to the securities beneficially owned
by Commonwealth Associates L.P. and may be deemed to be the beneficial owner of
such securities; (f) shares of common stock issuable upon the conversion of
shares of Series B Preferred Stock and warrants to purchase shares of common
stock which are held by ComVest Capital Management, LLC of which Mr. Falk is
manager and principal member and may be deemed to be the beneficial owner of
such securities, although Mr. Falk disclaims beneficial interest in such shares
other than that portion which corresponds to his membership interest in ComVest
Capital Management, LLC; and (g) shares of common stock issuable upon conversion
of shares of Series B Preferred Stock and warrants to purchase shares of common
stock which are held jointly with his spouse. Mr. Falk is also a director of
eB2B Commerce, Inc.
(7) The shares of common stock listed as beneficially owned consist of (a)
shares of common stock issuable upon conversion of shares of Series B Preferred
Stock; (b) warrants to purchase shares of common stock; (c) shares of common
stock issuable upon the conversion of shares of Series B Preferred Stock and
warrants to purchase shares of common stock which are held by Commonwealth
Associates L.P. Associates L.P. of which Mr. Priddy shares indirect voting and
dispositive power with respect to the securities beneficially owned by
Commonwealth Associates L.P.; and (d) shares of common stock issuable upon the
conversion of shares of Series B Preferred Stock and warrants to purchase shares
of common stock which are held by ComVest Capital Management, LLC of which Mr.
Priddy is manager and principal member and may be deemed to be the beneficial
owner of such securities, although Mr. Priddy disclaims beneficial interest in
such shares other than that portion which corresponds to his membership interest
in ComVest Capital Management, LLC.
(8) The shares of common stock listed as beneficially owned consist of (a)
shares of common stock issuable upon conversion of shares of Series B Preferred
Stock; (b) warrants to purchase shares of common stock; (c) shares of common
stock issuable upon the conversion of shares of Series B Preferred Stock and
warrants to purchase shares of common stock which are held by Commonwealth
Associates L.P. of which Mr. Rosenbloom shares indirect voting and dispositive
power with respect to the securities beneficially owned by Commonwealth
Associates L.P.
32
and (d) shares of common stock issuable upon the conversion of shares of Series
B Preferred Stock and warrants to purchase shares of common stock which are held
by ComVest Capital Management, LLC of which Mr. Rosenbloom is manager and
principal member and may be deemed to be the beneficial owner of such
securities, although Mr. Rosenbloom disclaims beneficial interest in such shares
other than that portion which corresponds to his membership interest in ComVest
Capital Management, LLC.
(9) The shares of common stock listed as beneficially owned consist of (a)
shares of common stock issuable upon conversion of shares of Series B Preferred
Stock; (b) warrants to purchase shares of common stock; (c) shares of common
stock issuable upon conversion of shares of Series B Preferred Stock held in an
IRA; (d) warrants to purchase shares of common stock held in an IRA; and (e)
shares of common stock issuable upon the conversion of shares of Series B
Preferred Stock and warrants to purchase shares of common stock which are held
by Commonwealth Associates L.P. of which Mr. Ascuitto shares indirect voting and
dispositive power with respect to the securities beneficially owned by
Commonwealth Associates L.P.
(10) The shares of common stock listed as beneficially owned consist of (a)
shares of common stock issuable upon conversion of shares of Series B Preferred
Stock; and (b) warrants to purchase shares of common stock. Timothy P. Flynn, a
director and the Chairman of the Audit Committee of eB2B, Commerce, Inc., is the
principal owner of the Flynn Corporation.
PLAN OF DISTRIBUTION
The selling shareholders (and their respective pledgees, transferees,
donees or other successors in interest) may offer and sell the shares of common
stock derived from the conversion of our preferred stock and exercise of
warrants covered by this prospectus from time to time as follows:
- in the open market;
- on the Nasdaq SmallCap Market;
- in privately negotiated transactions;
- in an underwritten offering; or
- a combination of such methods or any other legally available means.
Such sales may be made at varying prices determined by reference to, among other
things:
- market value prevailing at the time of the sale;
33
- prices related to the then-prevailing market price; or
- negotiated prices.
Negotiated transactions may include:
- purchases by a broker-dealer as principal and resale by such
broker-dealer for its account pursuant to this prospectus;
- ordinary brokerage transactions and transactions in which a broker
solicits purchasers; or
- block trades in which a broker-dealer so engaged will attempt to sell
the shares as agent but may take a position and resell a portion of
the block as principal to facilitate the transaction.
In connection with distributions of our common stock, any selling shareholder
may:
- enter into hedging transactions with broker-dealers and the
broker-dealers may engage in short sales of our common stock in the
course of hedging the positions they assume with the selling
shareholders;
- sell our common stock short and deliver the common stock to close out
such short positions;
- enter into option or other transactions with broker-dealers that
involve the delivery of our common stock to the broker-dealers, which
may then resell or otherwise transfer such common stock; and
- loan or pledge our common stock to a broker-dealer which may then sell
our common stock so loaned, and upon a default, the common stock may
be sold or otherwise transferred.
Broker dealers may receive commissions or discounts from the selling
shareholders in amounts to be negotiated immediately prior to the sale. The
selling shareholders and any broker executing selling orders on behalf of the
selling shareholders may be deemed to be an "underwriter" within the meaning of
the Securities Act. Commissions received by any such broker may be deemed to be
underwriting commissions under the Securities Act.
USE OF PROCEEDS
The proceeds from the sale of the shares by the selling shareholders will
belong to the individual selling shareholders. We will not receive any of the
proceeds from the sale of the shares other than with respect to the exercise
price, if any, of the warrants. Although the selling shareholders have a
cashless exercise option associated with the exercise of
34
their warrants, the selling shareholders may elect to make cash payments in
connection with their exercise of the warrants. Assuming exercise of all of the
warrants and the selling shareholders' election of a cash payment in connection
with their exercise of all of such warrants, the estimated net proceeds from the
exercise of such warrants to purchase shares of our common stock that are being
registered pursuant to the registration statement to which this prospectus
relates would be approximately $24 million. We intend to use the proceeds,
if any, from the exercise of the warrants for general corporate purposes and
working capital.
LEGAL MATTERS
The validity of the shares of our common stock offered hereby will be passed
upon for us by Kaufman & Moomjian, LLC.
EXPERTS
The financial statements of eB2B Commerce, Inc. (a development stage
company) as of December 31, 1998 and 1999 and for the period from November 6,
1998 (inception) through December 31, 1998, the year ended December 31, 1999 and
the period from November 6, 1998 (inception) through December 31, 1999,
appearing in the DynamicWeb Enterprises, Inc. Registration Statement on Form S-4
and the related Prospectus filed on March 22, 2000, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report, thereon included
therein and incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
The financial statements for the years ended September 30, 1999 and 1998,
incorporated in this prospectus by reference from DynamicWeb Enterprises, Inc.'s
annual report on Form 10-KSB for the year ended September 30, 1999, have been
audited by Richard A. Eisner & Company, LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The consolidated financial statements of Netlan Enterprises, Inc. for the
years ended December 31, 1999 and 1998, incorporated in this prospectus by
reference, have been audited by Rothstein, Kass & Company, P.C., independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
35
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3, including exhibits filed with the registration statement,
under the Securities Act with respect to the shares of common stock to be sold
in this offering. This prospectus does not contain all of the information set
forth in the registration statement. For further information about our company
and the shares of common stock to be sold in the offering, please refer to the
registration statement. For additional information, please refer to the exhibits
that have been filed with our registration statement on Form S-3.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy all or any portion of any
report, document or any other information that we file at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can
request copies of these documents, upon payment of a duplicating fee, by writing
to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. Our SEC filings are also available to
you on the SEC's website (http://www.sec.gov).
INCORPORATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated is considered to
be a part of this prospectus, and information that we later file with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and the exhibits thereto and any future
filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 until the earlier of the date that the selling
shareholders sell all of the common stock or such other date as the offering is
terminated and any unsold shares are deregistered by the filing of a
post-effective amendment.
SEC Filing Period Covered or Date of Filing
- -------------------------------------------- ----------------------------------------------------
Annual Report on Form 10-KSB Year ended September 30, 1999
Registration Statement on Form S-4,
including the related Proxy Statement March 22, 2000*
Quarterly Report on Form 10-QSB Quarter ended September 30, 2000
Quarterly Report on Form 10-QSB Quarter ended June 30, 2000
Quarterly Report on Form 10-QSB Quarter ended March 31, 2000
Quarterly Report on Form 10-QSB Quarter ended December 31, 1999
36
Current Report on Form 8-K January 12, 2001
Current Report on Form 8-K July 13, 2000
Current Report on Form 8-K July 10, 2000
Current Report on Form 8-K April 25, 2000
* Effective Date
You may request a copy of these filings or exhibits thereto (if such exhibits
are incorporated by reference herein), at no cost on the SEC's website
(http://www.sec.gov), or by making a telephonic or written request to:
eB2B Commerce, Inc.
Attn: Investor Relations
757 Third Avenue
New York, NY 10017
Telephone: (212) 703-2000
The information incorporated by reference is deemed to be a part of this
prospectus, except for any information superseded by information contained
directly in this prospectus. Any information we later file with the SEC will
automatically update and supersede this information.
37
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We estimate that expenses in connection with the offering described in this
Registration Statement, all of which are to be borne by the Company, will be as
follows:
Item Amount
Registration Fee--------------------------- $6,811
Blue Sky fees and expenses----------------- $15,000
Attorneys' fees and expenses--------------- $40,000
Accountants' fees and expenses------------- $10,000
Printing and engraving--------------------- $15,000
Miscellaneous------------------------------ $10,000
-----------
Total-------------------------------------- $96,811
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's amended and restated certificate of incorporation provides
that the Company will indemnify any person who is or was a director, officer,
employee or agent of the Company to the fullest extent permitted by the New
Jersey Business Corporation Act, and to the fullest extent otherwise permitted
by law. The New Jersey law permits a New Jersey corporation to indemnify its
directors, officers, employees and agents against liabilities and expenses they
may incur in such capacities in connection with any proceeding in which they may
be involved, unless a judgment or other final adjudication adverse to the
director, officer, employee or agent in question establishes that his or her
acts or omissions (a) were in breach of his or her duty of loyalty (as defined
in the New Jersey law) to the Company or its shareholders, (b) were not in good
faith or involved a knowing violation of law or (c) resulted in the receipt by
the director, officer, employee or agent of an improper personal benefit.
Pursuant to the Company's amended and restated certificate of incorporation
and the New Jersey law, no director or officer of the Company will be personally
liable to the Company or to any of its shareholders for damages for breach of
any duty owed to the Company or its shareholders, except for liabilities arising
from any breach of duty based upon an act or omission (i) in breach of such
director's or officer's duty of loyalty (as defined in the New Jersey law) to
the Company or its shareholders, (ii) not in good faith or involving a knowing
violation of law or (iii) resulting in receipt by such director or officer of an
improper personal benefit.
II-1
In addition, the Company's bylaws include provisions to indemnify its
officers and directors and other persons against expenses, judgments, fines and
amounts incurred or paid in settlement in connection with civil or criminal
claims, actions, suits or proceedings against such persons by reason of serving
or having served as officers, directors, or in other capacities, if such person
acted in good faith, and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Company and, in a criminal action or
proceeding, if he had no reasonable cause to believe that his/her conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent will
not, of itself, create a presumption that the person did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the Company or that he or she had reasonable cause to
believe his or her conduct was unlawful. Indemnification as provided in the
bylaws will be made only as authorized in a specific case and upon a
determination that the person met the applicable standards of conduct.
ITEM 16. EXHIBITS
Number Description
- ------ -----------
5.1 Opinion and Consent of Kaufman & Moomjian, LLC regarding the legality
of the securities being registered.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Richard A. Eisner & Company, LLP
23.3 Consent of Rothstein, Kass & Company, P.C.
23.4 Consent of Kaufman & Moomjian, LLC (Included in legal opinion filed as
Exhibit 5.1)
24 Power of Attorney (set forth on the signature page of this Registration
Statement on Form S-3)
II-2
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which we offer or sell securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or its most
recent post-effective amendment) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in this Registration Statement. Notwithstanding the
foregoing, any increase or decrease in the volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered), and any deviation from the
low or high end of the estimated maximum offering range, may be
reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement; provided, however, that the undertakings
set forth in paragraphs (a)(1)(i) and (a)(1)(ii) above do not
apply if the information required with or furnished to the
Securities and Exchange Commission to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the Securities Act,
each filing of our annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act (and, where applicable, each filing of an
employee benefit plan's
II-3
annual report pursuant to section 15(d) of the Securities Exchange Act)
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, 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 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person of ours 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, we
will, unless in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that we have reasonable grounds to believe that we meet all of the
requirements for filing on Form S-3 and have duly caused this Registration
Statement to be signed on our behalf by the undersigned, thereunto duly
authorized, in the city of New York, State of New York, on January 26, 2001.
eB2B COMMERCE, INC.
By: /s/ Alan J. Andreini
------------------------
Alan J. Andreini
Chief Executive Officer
POWER OF ATTORNEY
KNOWN BY ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Alan J. Andreini and Victor L. Cisario, and each
of them his true and lawful attorneys-in-fact and agents, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments to this Registration
Statement (including post-effective amendments), and any registration statement
for the same offering covered by this Registration Statement that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming that said attorneys-in-fact
and agents or any of them, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
/s/ Alan J. Andreini Chief Executive Officer and Director January 26, 2001
- ---------------------------- (principal executive officer)
Alan J. Andreini
/s/ Victor L. Cisario Chief Financial Officer (principal January 26, 2001
- ---------------------------- financial and accounting officer)
Victor L. Cisario
/s/ Peter J. Fiorillo Chairman of the Board of Directors January 26, 2001
- ----------------------------
Peter J. Fiorillo
/s/ Michael S. Falk Director January 26, 2001
- ----------------------------
Michael S. Falk
/s/ Timothy P. Flynn Director January 26, 2001
- ----------------------------
Timothy P. Flynn
/s/ John Slevin Director January 26, 2001
- ----------------------------
John Slevin