AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 11, 2005
Registration No. 333-________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
EVOLVE ONE, INC.
(Exact name of registration as specified in its charter)
Delaware 13-3876100
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
1000 Clint Moore Road, Suite 101
Boca Raton, Florida 33487
(561) 988-0819
(Address and Telephone Number of Principal Executive Offices)
EVOLVE ONE, INC.
STOCK OPTION PLAN (As Amended)
(Full Title of the Plan)
Copies to:
Gary Schultheis
President
Evolve One, Inc.
1000 Clint Moore Road, Suite 101
Boca Raton, Florida 33487
(561) 988-0819
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
offering aggregate Amount of
Title of securities Amount to price per offering registration
to be registered be registered share price fee
________________________________________________________________________________
Common Stock, $.00001
par value per share (1) 8,000,000 $0.47 $3,760,000 $442.00
________________________________________________________________________________
(1) This calculation is made solely for the purpose of determining the
registration fee pursuant to the provisions of Rule 457(h) under the
Securities Act, and is calculated upon the average of the bid and asked
prices of the securities on the Over-the-Counter Bulletin Board on
January 7, 2005.
Pursuant to Rule 416, there are also being registered such additional
number of shares of common stock as may be issuable as a result of the
anti-dilution provisions of the options.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
This registration statement relates to separate prospectuses.
Items 1 and 2 of this Part I, and the documents incorporated herein by
reference pursuant to Item 3 of Part II of this Form S-8, constitute the first
prospectus relating to issuances to our employees, directors, consultants and
others of up to 8,000,000 shares of common stock pursuant to our Stock Option
Plan, as Amended (the "Plan"). Pursuant to the requirements of Form S-8 and Rule
428, we will deliver or cause to be delivered to Plan participants any required
information as specified by Rule 428(b)(1). The second prospectus, referred to
as the reoffer prospectus, relates to the reoffer or resale of any shares that
are deemed to be control securities or restricted securities under the
Securities Act of 1933.
PROSPECTUS
ITEM 1. PLAN INFORMATION
In November 1999, our Board of Directors adopted our Plan which was
approved by a majority of the stockholders at a meeting on November 11, 1999.
Under the Plan, we initially reserved 25,000,000 shares of common stock for the
grant of qualified incentive options or non-qualified options. On January 31,
2003, we effected a one-for-250 (1:250) reverse stock split which had the effect
of proportionately reducing both the number of shares of our common stock
available for issuance under the Plan as well as the number of shares of common
stock issuable upon the exercise of the then outstanding options. As a result of
the reverse stock split, we had 100,000 shares reserved for issuance under the
Plan. On October 20, 2004, our Board of Directors increased the number of shares
available for issuance under the Plan to 1,000,000 shares. The number of shares
available for issuance under the Plan further increased to 8,000,000 shares as a
result of an eight-for-one (8:1) forward stock split of our common stock which
became effective on December 3, 2004.
The issuance of shares under the Plan is restricted to persons and
firms who are closely-related to us and who provide services in connection with
the development and production of our products and services or otherwise in
connection with our business. The Plan authorizes us currently to issue up to
8,000,000 shares of our common stock. Securities must be issued only for bona
fide services. Shares are awarded under the Plan pursuant to individually
negotiated compensation contracts or as determined and/or approved by the Board
of Directors or compensation committee. The eligible participants include
directors, officers, employees and non-employee consultants and advisors. There
is no limit as to the number of securities that may be awarded under the Plan to
a single participant. We anticipate that a substantial portion of the securities
to be issued under the Plan will be issued as compensation to our employees,
directors, technical consultants and advisors who provide services in the
development and promoting of our various products and services and assisting the
Company in developing our internal infrastructure, our strategic planning, and
our acquisition and strategic alliance program.
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The Plan does not require restrictions on the transferability of
securities issued thereunder. However, such shares may be restricted as a
condition to their issuance where the Board of Directors deems such restrictions
appropriate. The Plan is not subject to the Employee Retirement Income
Securities Act of 1974 ("ERISA"). Restricted shares awarded under the Plan are
intended to be fully taxable to the recipient as earned income.
ITEM 2. COMPANY INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION
We will provide without charge, upon written or oral request, the
documents incorporated by reference in Item 3 of Part II of this Registration
Statement. These documents are incorporated by reference in the Section 10(a)
prospectus. We will also provide without charge, upon written or oral request,
all other documents required to be delivered to recipients pursuant to Rule
428(b). Any and all such requests shall be directed to the Company at is
principal office at 1000 Clint Moore Road, Suite 101, Boca Raton, Florida 33487,
attention: President.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED ON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
No person has been authorized by us to give any information or to make
any representation other than as contained in this prospectus and, if given or
made, such information or representation must not be relied upon as having been
authorized by us. Neither the delivery of this prospectus nor any distribution
of the shares of common stock issuable under the terms of the Plan shall, under
any circumstances, create any implication that there has been no change in our
affairs since the date hereof.
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REOFFER PROSPECTUS
EVOLVE ONE, INC.
8,000,000 SHARES OF COMMON STOCK
($.00001 PAR VALUE)
This prospectus forms a part of a registration statement, which
registers an aggregate of 8,000,000 shares of common stock issued or issuable
from time-to-time under the Evolve One, Inc. Stock Option Plan, as Amended. The
Plan, as now amended, covers the issuance of 8,000,000 common shares.
Evolve One, Inc. is referred to in this prospectus as "Evolve One," the
"Company," "we," "us" or "our." The 8,000,000 shares issued directly or
underlying options covered by this prospectus are referred to as the "shares."
Persons who are issued shares underlying options or directly are sometimes
referred to as the "selling security holders."
This prospectus also covers the resale of shares by persons who are our
"affiliates" within the meaning of federal securities laws. Affiliated selling
security holders may sell all or a portion of the shares from time to time in
the over-the-counter market, in negotiated transactions, directly or through
brokers or otherwise, and at market prices prevailing at the time of such sales
or at negotiated prices, but which may not exceed 1% of our outstanding common
stock in any three-month period.
We will not receive any proceeds from sales of shares by selling
security holders.
These securities have not been approved or disapproved by the
Securities and Exchange Commission nor has the Commission passed on the accuracy
or adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
This prospectus does not constitute an offer to sell securities in any
state to any person to whom it is unlawful to make such offer in such state.
The date of this prospectus is January 11, 2005.
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AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and, in accordance therewith, we file reports,
proxy statements and other information with the Securities and Exchange
Commission. Reports, proxy statements and other information filed with the
Commission can be inspected and copied at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of this
material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a website on the Internet
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission at
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by us with the Commission are
incorporated herein by reference and made a part hereof:
- Form 8-K Current Report filed on December 22, 2004;
- Form 8-K Current Report filed on November 19, 2004;
- Quarterly Report on Form 10-QSB filed on November 15, 2004;
- Form 8-K Current Report filed on November 15, 2004;
- Quarterly Reports on Form 10-QSB filed on October 6, 2004;
- Annual Report on Form 10-KSB filed on September 24, 2004; and
- Quarterly Report on Form 10-QSB filed on September 20, 2004.
All reports and documents filed by us pursuant to Section 13, 14 or
15(d) of the Exchange Act, prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the respective
date of filing of such documents. Any statement incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained herein or in any other subsequently filed
document, which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any statement modified or superseded
shall not be deemed, except as so modified or superseded, to constitute part of
this prospectus.
We hereby undertake to provide without charge to each person, including
any beneficial owner, to whom a copy of the prospectus has been delivered, on
the written request of any such person, a copy of any or all of the documents
referred to above which have been or may be incorporated by reference in this
prospectus, other than exhibits to such documents. Written requests for such
copies should be directed to Corporate Secretary, Evolve One, Inc., 1000 Clint
Moore Road, Suite 101, Boca Raton, Florida 33487.
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THE COMPANY
We are a diversified holding company that develops and operates
Internet and direct retail marketing companies. Our operating business segments
include:
o StogiesOnline.com, and
o AuctionStore.com.
STOGIESONLINE.COM
Formed in 1998, StogiesOnline is an online distributor and retailer of
brand name premium cigars within the United States. StogiesOnlines' products
consist of premium cigars, factory brand name seconds and mass market cigars and
related tobacco products which are sold online to retail and wholesale customers
through its website at www.CigarCigar.com. Stogies Online's cigar line consists
of nationally recognized brand names including:
o Arturo Fuente
o AVO
o Cohiba
o Don Diego
o Garcia y Vega
o H. Upmann
o Macanudo
o Montecristo
o Opus X
o Partagas
o Punch
o Te-Amo.
For each of the fiscal year ended December 31, 2003 and the nine months
ended September 30, 2004, StogiesOnline represented approximately 97% of our
total sales and revenues.
As a direct buyer from most manufacturers, StogiesOnline is eligible to
participate in promotions, which enables it to pass on substantial savings to
its customers. StogiesOnline purchases overstocked or overproduced items from
manufacturers and other retailers, including factory brand name seconds.
Currently, StogiesOnline has entered into non-exclusive distribution agreements
with:
o Miami Cigar, Inc., which distributes Leon Jimenes and Tatiana
cigars;
o Altadis, the manufacturer of Montecristo, H. Upmann, Don Diego, and
Romeo y Julieta cigars;
o General Cigar, the distributor of Punch, Macanudo, Cohiba Red Dot,
Partagas, and Hoyo de Monterrey cigars;
o Excalibur Inter-Continental Cigars, the manufacturer of Al Capone
cigars; and
o Santa Clara, the manufacturer of El Rey del Mundo and Garcia y Vega
cigars.
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StogiesOnline's website highlights its sale items and changes its
product offerings and featured specials weekly. In the event that StogiesOnline
does not have a particular product in stock, a customer may place an order to
ship on arrival, or telemarketers may direct the customer to similar products by
utilizing its database. StogiesOnline currently uses United Parcel Service for
shipping orders from its inventory, which is maintained in its Boca Raton,
Florida warehouse facility
Stogies Online's current client base consists of over 10,000 customers
in the United States. Purchases from repeat customers have been steady, with
repeat buyers accounting for approximately one-third of current orders. During
the two years ended December 31, 2003, Stogies did not have any significant
customers, the loss of which would have an adverse effect on operations.
During fiscal 2004 we determined to refocus StogiesOnline's product
offerings and the focus of this business segment to concentrate more on cigar
accessories, including cigar ashtrays, cigar books, cigar cutters, cigar
humidors and cigar lighters, which earn a greater gross profit margin than
cigars. As a result of this re-focus, we do not know if revenues from our
Stogies Online segment will reach historical levels in future periods.
AUCTIONSTORE.COM
In July 2004, we organized a new subsidiary, AuctionStore.com, and we
launched this segment on December 1, 2004. We believe that AuctionStore.com will
become our primary operating segment. The business plan for AuctionStore.com is
an Internet-based seller of consigned merchandise whose primary medium of sales
is eBay(TM). AuctionStore.com maintains a web site at www.AuctionStore.com. The
relationship between AuctionStore.com and a seller will be that of bailor and
bailee in which the bailee (seller) deposits his or her personal property
(goods) with the bailor (AuctionStore.com) for the purpose of listing and
selling the goods to third parties through eBay(TM). We did not generate any
sales and revenues from AuctionStore.com during fiscal 2003 and sales and
revenues from this subsidiary represented less than 1% of our total sales and
revenues for the nine months ended September 30, 2004.
The eBay(TM) Marketplace and Drop Off Stores
Founded in September 1995, eBay(TM) (NASDAQ: EBAY; http://www.ebay.com)
bills itself as the world's online marketplace for the sale of goods and
services by a diverse community of individuals and businesses. The eBay(TM)
community includes tens of millions of registered members from around the world.
On an average day, there are millions of goods listed on eBay(TM). People come
to the eBay marketplace to buy and sell goods in thousands of categories.
eBay(TM) offers a wide variety of features and services that enable members to
buy and sell on the site quickly and conveniently. Buyers have the option to
purchase goods in auction-style format or goods can be purchased at fixed price
through a feature called Buy-It-Now. In addition, goods at fixed price are also
available at Half.com, an eBay company.
Of eBay's(TM) approximately 114 million registered users, roughly 90%
are buyers. According to an August 2004 New York Times article, eBay(TM) would
like to attract more sellers, but many people are unwilling or unable to take
digital photos of their items, write complete descriptions and post the products
on eBay(TM) for sale. New eBay(TM) sellers are also more skeptically regarded
and their items can fetch lower prices because they do not have a track record
of successful transactions with which to market themselves. This market need has
spawned the creation of an industry segment of eBay(TM) drop off stores which
list, package and ship eBay(TM) items for sellers on a fee/commission basis.
Many of these eBay(TM) drop off stores are local, but several companies
including AuctionDrop, are seeking to establish a national presence. eBay(TM)
has recently begun promotion of the drop off stores on its web site, listing
them in a public database of drop off stores and creating standards of conduct.
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AuctionStore.com has become an eBay Trading Assistant and has joined the eBay
Trading Assistants' Directory. As an eBay Trading Assistant, it will be adding
the eBay Trading Assistant logo to all its listings with HTML code from eBay.
How AuctionStore.com Works
The premise of AuctionStore.com is simple -- customer drops off goods
they would like to sell at AuctionStore.com's location, and it arranges for
those goods to be sold online via an eBay(TM) auction. We envision that in the
future we will set up collection points for goods outside the South Florida area
in order to expand our customer base.
Goods to be sold are to be worth at least $50 and goods with an
estimated value of less than $50 will require a minimum upfront charge of $19.95
as a listing commission. AuctionStore.com's ordinary service commission for
goods sold will range from approximately 10% to 40%, depending on the sales
price of the goods. AuctionStore.com is not directly affiliated with or endorsed
by eBay(TM).
After accepting goods, it will be AuctionStore.com's responsibility to:
o create a detailed, informative, concise, compelling listing
description for goods to be listed on eBay(TM).
o describe the goods
o enter the listing for the goods on eBay(TM),
o professionally photograph the goods
o download the photograph(s) to eBay(TM)
o package the goods,
o store the goods,
o respond to all inquiries about the goods from potential buyers, via
telephone and email,
o process all financial transactions,
o process all shipping transactions,
o ship the goods, and
o mail a check to the customer once the goods have been paid for, once
the return period and refund period lapses and all payments settle.
It is anticipated that the customer will receive funds within 30
days of settlement.
Once it has listed the goods for its customer on eBay(TM),
AuctionStore.com will provide the customer with a link to the particular auction
as well as monitoring the ongoing auction. Payment by the purchaser of the
auctioned goods can be made using either PayPal(TM) or by check or credit card.
AuctionStore.com is utilizing the Andale, Inc. suite of software tools. Anadale,
Inc. is a provider of eBay(TM) market intelligence and auction management
services to more than 1.5 million online sellers worldwide. In future periods we
may purchase additional computer hardware and a customized software package with
expanded research and tracking capacities. We anticipate that the costs of this
additional hardware and software will be approximately $50,000.
We believe that there are a number of advantages for customers to use
our AuctionStore.com service, including:
o making it easy for people who do not know how to sell on eBay(TM)
and do not want to take the time to learn,
o making it easy for people who do not have a computer or access to a
computer or the Internet,
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o making it easy for people who do not know how to download pictures
or do not own a digital camera,
o providing a method for people to turn unwanted or un-needed goods
into cash quickly,
o providing a service for a one time seller or for the busy
individual,
o providing a feedback reputation that shows strength and
responsibility as eBay(TM) sellers without feedback generally do not
attract all potential bidders,
o providing a shipping, packing, storage and tracking service,
o providing anonymity to sellers, and
o removing the stigma attached to a pawn shop.
AuctionStore.com will generate revenues from commissions on goods sold
based the final sales price, as follows:
o 39% if the goods sell from $1.00 to $200.00,
o 35% if the goods sell from $200.01 to $500.00,
o 25% if the goods sell from $500.01 to $1000.00, and
o 20% if the goods sell from $1000.01 to $5000.00.
The minimum service commission is $19.95.
AuctionStore.com will pay all eBay(TM) charges when goods sells. These
charges include:
o 5.25% of the first $25.00,
o 2.75% of the next $975 ($25.01 to $1000),
o 1.5% of the remaining amount over $1000.00, and
o a 2.9% transaction commission.
AuctionStore.com will limit its liability, and the liability of its
employees and suppliers, to a seller or any third parties to the greater of the
estimated value of the applicable goods, as described by seller, or $100. Some
states do not allow the exclusion or limitation of incidental or consequential
damages, so the above limitation or exclusion may not apply to seller.
In order to properly staff this segment, we will need to hire and train
additional personnel, including:
o Auction sales consultants who will explain our service to customers
and work at drop off locations to evaluate and inspect the condition
of goods to be listed, accept the goods for listing and complete the
sign up process with our customer,
o Customer service representatives who will be responsible for
responding to customer email and telephone inquires, following up
with customers after the sale has been completed, process returns
from buyers, research information on eBay and analyze trends,
o Goods listers, proofreaders and photographers who will facilitate
the listing process, and
o Packers and shippers who will facilitate the order fulfillment
process.
As of the date hereof we are utilizing two temporary to hire
individuals and, based upon our preliminary analysis, we believe that we will
need to hire approximately two to three additional
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individuals to fill these positions. We do not believe we will have any
difficulty in hiring qualified personnel at competitive salaries.
ORDER FULFILLMENT AND SHIPPING
We handle all order fulfillment and shipping of products ordered from
StogiesOnline.com from our warehouse facilities in Boca Raton, Florida. These
facilities are equipped with the necessary infrastructure to warehouse and store
inventory and pack and ship orders. This existing infrastructure will be used
for the receipt, storage and shipment of goods sold through our AuctionStore.com
subsidiary.
OUR OTHER OPERATIONS
Our historic financial results included operations of two additional
subsidiaries, including:
A1DISCOUNTPERFUME
A1DiscountPerfume is an online distributor and retailer of brand name
premium colognes, perfumes and exercise and yoga equipment within the United
States through its web site located at www.A1DiscountPerfume.com. Formed in
September 2001, A1DiscountPerfume specializes in men's and women's fragrances.
The site employs the Microsoft/Great Plains eEnterprise system which permits
customers to benefit by having direct access to up-to-the-minute information
about inventory, pricing, "hot deals" as well as order information. The
eEnterprise system allows A1DiscountPerfume.com to inexpensively reach customers
anywhere, around the clock. For the fiscal year ended December 31, 2003 and the
nine months ended September 30, 2004, sales and revenues from A1DiscountPerfume
represented approximately 3.4% and approximately 3.0%, respectively, of our
total sales and revenues.
As a result of an increase in charge backs related to the unauthorized
use of credit cards by third parties to make online purchases of merchandise
from A1DiscountPerfume, as well as significant competition within this market
segment, we have ceased operations and are selling its remaining inventory.
INTERNATIONAL INTERNET VENTURE I, LLC
International Internet Venture I owns an equity interest in the
securities of an unaffiliated third party which are classified as on our balance
sheet as marketable equity securities. Our investment in available-for-sale
securities includes 10,000,000 shares which are not registered of SGD Holdings,
Ltd., formerly known as Goldonline International, Inc., a holding company
primarily engaged in acquiring and developing jewelry related businesses, with a
cost of $58,854 and a closing value on September 30, 2004 of $200,000 ($.02 per
share). Our investment represents approximately 10.4% of the outstanding stock
of SGD Holdings, and, accordingly, we are subject to certain restrictions on the
number of shares we can sell. There can be no assurance that we will realize the
calculated carrying value of the securities. We classify 6,059,000 shares of SGD
Holdings as non-current and 3,941,000 shares of SGD as current, which is
approximately the maximum number of shares we could sell within the next twelve
months.
During the latter part of 2002, we became aware, based upon SEC filings
by SGD Holdings that SGD Holdings had taken the position that we were the holder
of 1,666,666 pre-split shares (SGD had a 6 for 1 reverse split) and rather than
the 10 million shares of SGD Holdings that we assert ownership over. It is our
position that the number of shares that we held of SGD Holdings as of September
30, 2004 is based upon purchase and sale arrangements between Evolve One and SGD
Holdings wherein we were sold, issued and receive 10 million post split shares
of SGD Holdings. The shares issued and delivered to us by SGD Holdings reflected
the split and the new split CUSIP change. On November 11, 2000,
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following our receipt of these shares, we filed a Form 13D with the SEC, as
prepared by SGD Holding's counsel, reflecting the ownership of these shares. SGD
Holding filed quarterly and annual reports with the SEC reflecting the ownership
of 10 million shares by us. Should it ultimately be determined that the shares
should be pre-split shares, then our investment in SGD Holdings, as of September
30, 2004, rather then being included in the balance sheet as $200,000, might be
reduced depending upon the impact of the share price differential on the market
price of the SGD Holding's shares and the reduced number of shares that we would
be considered as holding which would, in turn, reduce our working capital.
Under certain circumstances holding securities of a third party for
investment purposes could result in our company becoming subject to the
Investment Company Act of 1940. As we do not want to become an "investment
company" under the Investment Company Act of 1940, we do not presently intend to
acquire any additional securities of third parties to be held by us for
investment purposes.
COMPETITION
All direct marketing and retail businesses are highly competitive. We
compete for consumer expenditures with all other forms of retail businesses,
including department, discount, warehouse and specialty stores, mail order,
catalog and television home shopping companies as well as other direct sellers
and infomercials. The Internet home shopping industry is highly competitive. The
industry offers consumers convenience, entertainment and the opportunity to test
market new products, create brand awareness and access additional channels.
Our StogiesOnline.com segment competes against a number of online cigar
and cigar accessory retailers, including JRcigar.com and CheapHumidors.com. Our
AuctionStore.com segment will compete against a number of similar companies
including Auction Drop.com, Complete Auctions.com, QuikDrop, AuctionWagon.com
and NuMarkets. We are at a competitive disadvantage in attracting viewers to our
web sites due to our limited advertising budget. We expect increasing
competition for viewers from major Internet providers and retailers that may
seek to enter Internet shopping. We believe that the number of new entrants into
the Internet shopping industry will also continue to increase. Most of our
competitors are larger and more diversified than Evolve One and have greater
financial, marketing, merchandising and distribution resources that we do. We
cannot predict the degree of success, if any, with which we will meet
competition in the future.
MARKETING
We market StogiesOnline.com to our existing base of customers through
weekly emails featuring special offers. For AuctionStore.com to be successful we
need to attract sellers to our service. We intend to advertise this company
utilizing print advertising in Boca Magazine, screen ads at local movie theatres
and radio. In addition, we intend to sponsor events with local charities as a
method of marketing AuctionStore.com. We anticipate the costs of advertising for
the first year will be approximately $25,000.
GOVERNMENT REGULATION
We are not currently subject to direct federal, state or local
regulation, and laws or regulations applicable to access or commerce on the
Internet, other than regulations applicable to businesses generally. However,
due to the increasing popularity and use of the Internet and other online
services, it is possible that a number of laws and regulations may be adopted
with respect to the Internet or other online services covering issues such as
user privacy, freedom of expression, pricing, content and quality of products
and services, taxation, advertising, intellectual property rights and
information security.
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The tobacco industry is subject to regulation at federal, state and
local levels. Federal law has required states, in order to receive full funding
for federal substance abuse block grants and other federal assistance, to
establish a minimum age of 18 years for the sale of tobacco products, together
with an appropriate enforcement program. The recent trend is toward increasing
regulation of the tobacco industry, and the increase in popularity of cigars
could lead to an increase in regulation of cigars.
The Food and Drug Administration (the "FDA") has determined that
nicotine is a drug and that it has jurisdiction over cigarettes and smokeless
tobacco products, as nicotine-delivering medical devices, and therefore,
promulgated regulations restricting and limiting the sale, distribution and
advertising of cigarette and smokeless tobacco products. Cigars are not
specifically included in the FDA's regulations. Present tobacco regulations
which do appear applicable to cigars in addition to focusing on cigarettes are
the prohibition on retailers from selling cigarettes, cigarette tobacco or
smokeless tobacco to persons under the age of 18 and requiring retailers to
check the photographic identification of every person under the age of 27 who
requests purchases of tobacco products, and requirement that cigars carry
warning labels similar to those contained on cigarette packages which cigar
companies are now required to display clearly and permanently on packages, in
print ads, on audio and video ads, on point of purchase displays and on the
Internet.
While the cigar industry historically has not been subject to
government regulatory efforts, focus has increased on possible need to increase
regulation in this area and there can be no assurance that there will not be an
increase in federal regulation in the future against cigar manufacturers or
distributors. The costs to us of increased government regulations could have a
material adverse effect on our business and results of operations.
As a result of our entry into the AuctionStore.com operating segment,
we could become subject to the International Money Laundering Abatement and
Financial Anti-Terrorism Act of 2001 which is part of the USA PATRIOT Act. This
Act, among other things, may require us to adopt an anti-money laundering
program and procedures to verify the identity of our customers, and to monitor
more closely international transactions. Regulations under this Act may impose
substantial burdens on our business. Failure to comply with this Act or other
applicable state and federal money laundering laws could result in significant
criminal and civil penalties and forfeiture of significant assets. Even if we
comply with these laws, federal and state law enforcement agencies could seize
customer funds that are proceeds of unlawful activity, which could result in
adverse publicity for us and affect our business adversely.
INTELLECTUAL PROPERTY
To protect our proprietary rights, we rely generally on copyright,
trademark and trade secret laws, confidentiality agreements with employees and
third parties, and agreements with consultants, vendors and customers, although
we have not signed such agreements in every case. Despite such protections, a
third party could, without authorization, copy or otherwise obtain and use our
intellectual property. We can give no assurance that our agreements with
employees, consultants and others who participate in development activities will
not be breached, or that we will have adequate remedies for any breach, or that
our trade secrets will not otherwise become known or independently developed by
competitors.
We believe that our Internet domain names are critical to our brand
recognition and our overall success. If we are unable to protect these domain
names, our competitors could capitalize on any brand recognition we may have or
we may develop. Governmental agencies and their designees generally regulate the
acquisition and maintenance of domain names. The regulation of domain names in
the United States and in foreign countries has changed, and may undergo further
change in the near future. Furthermore, the relationship between regulations
governing domain names and laws protecting trademarks and similar proprietary
rights is unclear. Therefore, we may not be able to protect our
11
company's own domain names, or prevent third parties from acquiring domain names
that are confusingly similar to, infringe upon or otherwise decrease the value
of our domain names.
In general, there can be no assurance that our efforts to protect our
intellectual property rights through copyright, trademark and trade secret laws
will be effective, if granted, or if granted that these protections will be
sufficient so as to prevent misappropriation of our intellectual property. Our
failure or inability to protect our proprietary rights could materially
adversely affect our business, financial condition and results of operations.
EMPLOYEES
At November 30, 2004, we had eight employees, all of whom are full-time
employees. None of our employees are covered by a collective bargaining
agreement, nor are they represented by a labor union. We consider our employee
relations to be good. We anticipate that we will add employees in future periods
as our business expands. We do not anticipate any difficulty in locating and
hiring qualified employees.
FACILITIES
In August 2004, we relocated to approximately 5,325 square feet of
office and warehouse space not far from our previous location in Boca Raton,
Florida. Under the terms of this five-year lease with an unaffiliated third
party, we pay an initial monthly base rent of approximately $6,500, which is
subject to an annual 5% escalation during the remaining years of the lease term.
We sub-lease approximately 1,545 square feet of this space to a company which is
an affiliated of our management for a monthly rental of $2,000. Our existing
facilities are equipped with the necessary material moving and storage
infrastructure as we believe is necessary to conduct our operations.
LEGAL PROCEEDINGS
We are not presently a party to any pending legal proceedings.
12
RISK FACTORS AFFECTING OUR FUTURE RESULTS OF OPERATIONS
Our future results of operations involve a number of risks and
uncertainties. The following paragraphs discuss a number of risks that could
impact the Company's financial condition and results of operations.
WE HAVE A HISTORY OF LOSSES AND A SUBSTANTIAL ACCUMULATED DEFICIT, AND
MANAGEMENT CANNOT ASSURE YOU THAT IT WILL OBTAIN PROFITABILITY IN THE FUTURE. AS
A RESULT, YOU COULD LOSE YOUR ENTIRE INVESTMENT IN OUR COMPANY.
For the fiscal years ended December 31, 2003 and 2002, we had sales and
revenues of $1,368,886 and $1,454,193, respectively, and net losses of
$1,344,883 and $1,535,406, respectively. For the nine months ended September 30,
2004 we reported sales and revenues of $494,953 and a net loss of $842,538. As a
result of a move to a new facility during which time we suspended shipments of
products, we reported no sales and revenues during the three months ended
September 30, 2004 and a net loss for that period of $279,400. We resumed
shipment of products in November 2004. The report of our independent registered
public accounting firm on our financial statements for the fiscal year ended
December 31, 2003 contained a qualification regarding the auditor's inability to
confirm the carrying value of certain of our assets which are marketable
securities held for investment. Our operating results for future periods will
include significant expenses, including sales and marketing costs, programming
and administrative expenses. As a result, we are unable to predict whether we
will achieve profitability in the foreseeable future, if ever. Our failure to
achieve profitable operations in future periods will adversely affect our
available working capital which would in turn limit our ability to grow,
increase revenues and continue as going concern.
A SUBSTANTIAL PORTION OF OUR HISTORICAL REVENUES HAS BEEN DERIVED FROM OUR
STOGIESONLINE SUBSIDIARY. WE ARE CHANGING THE FOCUS OF THAT SUBSIDIARY WHICH
COULD ADVERSELY AFFECT REVENUES IN FUTURE PERIODS.
Sales and revenues from our StogiesOnline subsidiary represented
approximately 97% of our total sales and revenues for each of the nine months
ended September 30, 2004 and the fiscal year ended December 31, 2003. For the
nine months ended September 30, 2004 our StogiesOnline subsidiary reported sales
and revenues of $480,006 and a net loss of $215,034 as compared to sales and
revenues of $1,003,122 and a net loss of $153,613 for the nine months ended
September 30, 2003. The results for the nine months ended September 30, 2004
represented a decline in sales and revenues of $523,116, or approximately 52%,
from the sales and revenues for the comparable nine-month period in fiscal 2003.
While a portion of this decline was attributable to the lack of any sales and
revenues during the three months ended September 30, 2004 as a result of a
suspension in the shipment of products while we relocated our facilities, this
decline is also attributable to a refocus of our business efforts within this
segment to concentrate more on the sales of cigar accessories, such as ashtrays,
cigar books, cutters, humidors and lighters, which earn a greater gross profit
margin, and reduce our focus on the sales of cigars which earn a smaller gross
profit margin. There are no assurances that sales and revenues from the
StogiesOnline subsidiary will return to historic levels following this refocus
of product mix. As a result of this uncertainty regarding future sales and
revenues from this segment, although there is a greater profit margin in cigar
accessories, there are also no assurances that the reduction in sales and
revenues attributable to this product mix change will not also increase our
losses in future periods which could adversely effect our ability to continue as
a going concern.
WE ARE FOCUSING A SIGNIFICANT PORTION OF OUR CURRENT EFFORTS ON DEVELOPING OUR
AUCTIONSTORE.COM SEGMENT. BECAUSE THIS IS A NEW BUSINESS VENTURE IN A HIGHLY
COMPETITIVE MARKET SEGMENT, THERE ARE NO ASSURANCES THAT THIS SEGMENT WILL EVER
REPORT SIGNIFICANT SALES AND REVENUES OR PROFITABLE OPERATIONS.
13
In July 2004, we organized a new subsidiary, AuctionStore.com. The
business plan of this new business segment is as an Internet-based seller of
consigned merchandise whose primary medium of sales is eBay(TM). We are still in
the development stages of this business and have yet to launch its web site.
There can be no assurances whatsoever that we will be able to successfully
implement our business model for this segment, penetrate its target markets,
develop brand recognition or attain a wide following for its products and
services. We are subject to all the risks inherent in a start-up enterprise,
which are further exacerbated by the highly competitive nature of this market
segment. The prospects for Auctionstore.com must be considered in light of the
numerous risks, expenses, delays, problems and difficulties frequently
encountered in the establishment of a new business. There are no assurances that
this operating segment will ever generate any significant sales and revenues or
attain profitable operations. In addition, as a result of management's focus on
this new business segment, the remaining segments of our operations may
adversely be effected which could hinder our ability to continue as a going
concern.
WE WILL REQUIRE ADDITIONAL CAPITAL TO FUND OUR ONGOING OPERATIONS. IF WE ARE
UNABLE TO RAISE ADDITIONAL CAPITAL, WE WILL NOT BE ABLE TO CONTINUE OPERATIONS.
Our sales and revenues have not been significant enough to generate
sufficient gross profits to fund our daily operations. While management believes
in the viability of our strategy to improve sales and revenues, we cannot
accurately predict when, or if, our sales and revenues and profits will increase
to the level necessary to sustain our operations. We will need to raise capital
to fully implement our business, operating and development plans and sustain our
ongoing operations. We do not presently have any sources of working capital. If
we are unable to obtain working capital when needed, we may be required to
curtail or discontinue some or all of our business and operations.
CAPITAL RAISING EFFORTS IN FUTURE PERIODS MAY BE DILUTIVE TO OUR STOCKHOLDERS OR
RESULT IN INCREASED INTEREST EXPENSE IN FUTURE PERIODS.
As described above, we may seek to raise capital through the sale of
equity and debt securities or a combination thereof. If we raise additional
capital through the issuance of debt, this will result in increased interest
expense. If we raise additional funds through the issuance of equity or
convertible debt securities, the percentage ownership held by existing
stockholders, including purchasers in this offering, will be reduced and those
stockholders may experience significant dilution. In addition, new securities
may contain certain rights, preferences or privileges that are senior to those
of our common stock.
WE CURRENTLY OWN MARKETABLE EQUITY SECURITIES HELD FOR INVESTMENT WHICH COULD
MAKE IT AN "INVESTMENT COMPANY." THE CARRYING VALUE OF THOSE SECURITIES COULD BE
SUBSTANTIALLY REDUCED OR WRITTEN OFF IN FUTURE PERIODS AS A RESULT OF A DISPUTE
REGARDING THOSE SECURITIES.
The Investment Company Act of 1940 restricts the operations of
companies that are deemed to be an "investment company." Previously, we have
made an investment in SGD Holdings, Inc. Based upon the current carrying value
of these investment securities at September 30, 2004 we could be deemed to be an
inadvertent investment company. As set forth in our annual and quarterly filings
with the SEC the number of shares of SGD Holdings, Inc. owned by us is in
dispute. Based upon certain future events the carrying value of these investment
securities could be reduced. It is not our intention, however, to become an
investment company and thereby be subject to the Investment Company Act of 1940.
If, however, we should inadvertently become subject to the Investment Company
Act of 1940 and if we should fail to comply with the requirements of that act,
we would be prohibited from engaging in business or selling our securities, and
could be subject to civil and criminal actions for doing so. Any failure to
comply with the Investment Company Act would therefore seriously harm our
business.
14
In addition, should it ultimately be determined that the number of
shares of SBG Holdings we reflect as owned by us is incorrect, then our
investment in SGD Holdings, as of September 30, 2004, rather then being included
in the balance sheet as $200,000, might be reduced depending upon the impact of
the share price differential on the market price of the SGD Holding's shares and
the reduced number of shares that we would be considered as holding which would,
in turn, reduce our working capital.
THE TRADING PRICE OF OUR COMMON STOCK HAS BEEN AND MAY CONTINUE TO BE EXTREMELY
VOLATILE.
The trading price of our common stock has been and is likely to be
extremely volatile. Our stock price could be subject to wide fluctuations in
response to a variety of factors, including the following:
o actual or anticipated variations in our quarterly operating results;
o additions or departures of key personnel;
o announcements of new services by us;
o conditions or trends in the Internet and online commerce;
o developments in Internet regulation;
o announcements by us of significant acquisitions, strategic
partnerships, joint ventures or capital commitments;
o sales of our common stock or other securities in the open market;
and
o other events or factors, including these described in this "Risk
Factors" section and others that may be beyond our control.
The trading price of our common stock has recently increased
significantly from historical trading prices. This trading price and valuation
may not be sustained. In the past, following declines in the market price of a
company's securities, securities class-action litigation often has been
instituted. Litigation of this type, if instituted, could result in substantial
costs and a diversion of management's attention and resources.
OUR COMMON STOCK IS CURRENTLY QUOTED ON THE OTCBB, BUT TRADING IN THE SHARES IS
LIMITED. BECAUSE OUR COMMON STOCK CURRENTLY TRADES BELOW $5.00 PER SHARE, AND IS
QUOTED ON THE OTC BULLETIN BOARD, OUR COMMON STOCK IS CONSIDERED A "PENNY STOCK"
WHICH CAN ADVERSELY AFFECT ITS LIQUIDITY.
The market for our common stock is extremely limited and there are no
assurances an active market for our common stock will ever develop. In addition,
the trading price of our common stock is currently below $5.00 per share and we
do not anticipate that it will be above $5.00 per share for any sustained period
of time in the foreseeable future. Because the trading price of our common stock
is less than $5.00 per share, our common stock is considered a "penny stock,"
and trading in our common stock is subject to the requirements of Rule 15g-9
under the Securities Exchange Act of 1934. Under this rule, broker/dealers who
recommend low-priced securities to persons other than established customers and
accredited investors must satisfy special sales practice requirements. SEC
regulations also require additional disclosure in connection with any trades
involving a "penny stock," including the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and its
associated risks. These requirements severely limit the liquidity of our
securities in the secondary market because few broker or dealers are likely to
undertake these compliance activities.
FOR ALL OF THE AFORESAID REASONS, AND OTHERS, INCLUDING THOSE SET FORTH HEREIN,
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING AN
INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF THESE AND OTHER
FACTORS SET FORTH IN THIS PROSPECTUS. THESE SECURITIES SHOULD ONLY BE PURCHASED
BY PERSONS WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT IN EVOLVE ONE AND
HAVE NO IMMEDIATE NEED FOR A RETURN ON THEIR INVESTMENT.
15
EVOLVE ONE, INC.
STOCK OPTION PLAN
INTRODUCTION
The following descriptions summarize certain provisions of our Evolve
One, Inc. Stock Option Plan, as Amended. This summary is not complete and is
qualified by reference to the full text of the Plan. A copy of the Plan and the
Plan, as Amended, have been filed as exhibits to the registration statement of
which is prospectus is a part. Each person receiving a Plan option or stock
award under the Plan should read the Plan in its entirety.
In November 1999, our Board of Directors adopted our Plan which was
approved by a majority of the stockholders at a meeting on November 11, 1999.
Under the Plan, we initially reserved 25,000,000 shares of common stock for the
grant of qualified incentive options or non-qualified options. On January 31,
2003, we effected a one-for-250 (1:250) reverse stock split which had the effect
of proportionately reducing both the number of shares of our common stock
available for issuance under the Plan as well as the number of shares of common
stock issuable upon the exercise of the then outstanding options. As a result of
the reverse stock split, we had 100,000 shares reserved for issuance under the
Plan. On October 20, 2004, our Board of Directors increased the number of shares
available for issuance under the Plan to 1,000,000 shares. The number of shares
available for issuance under the Plan further increased to 8,000,000 shares as a
result of an eight-for-one (8:1) forward stock split of our common stock which
became effective on December 3, 2004.
The purpose of the Plan is to advance the interests of our company by
providing an incentive to attract, retain and motivate highly qualified and
competent persons who are important to us and upon whose efforts and judgment
the success of our company is largely dependent, including our officers and
directors, key employees, consultants and independent contractors. The Plan is
administered by our Compensation Committee. The Compensation Committee
determines, from time to time, those of our officers, directors, employees and
consultants to whom Plan options will be granted, the terms and provisions of
the Plan options, the dates such Plan options will become exercisable, the
number of shares subject to each Plan option, the purchase price of such shares
and the form of payment of such purchase price. All other questions relating to
the administration of the Plan, and the interpretation of the provisions
thereof, are to be resolved t the sole discretion of the Compensation Committee.
Plan options granted under the Plan may either be options qualifying as
incentive stock options under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), or options that do not so qualify. Any incentive option
granted under the Plan must provide for an exercise price of not less than 100%
of the fair market value of the underlying shares on the date of such grant, but
the exercise price of any incentive option granted to an eligible employee
owning more than 10% of our common stock must be at least 110% of such fair
market value as determined on the date of the grant. Non-qualified options must
provide for an exercise price of not less than 85% of the fair market value of
our common stock on the date of grant.
The term of each option and the manner in which it may be exercised is
determined by the Board of Directors, provided that no option may be exercisable
more than 10 years after the date of its grant and, in the case of an incentive
option granted to an eligible employee owning more than 10% of our common stock,
no more than five years after the date of the grant.
16
The per share purchase price of shares subject to options granted under
the Plan may be adjusted in the event of certain changes in our capitalization,
but any such adjustment will not change the total purchase price payable upon
the exercise in full of options granted under the Plan. All options are
non-assignable and nontransferable, except by will or by the laws of descent and
distribution and, during the lifetime of the optionee, may be exercised only by
such optionee. Previously granted options are subject to early termination in
the event of the death, disability or mental incapacity of the option holder, or
in the instance of options granted to employees, the termination of that
employee's employment with our company.
The Board of Directors may amend, suspend or terminate the Plan at any
time, except that no amendment shall be made which:
o increases the total number of shares subject to the Plan or changes
the minimum purchase price therefore (except in either case in the
event of adjustments due to changes in our capitalization);
o affects outstanding options or any exercise right thereunder;
o extends the term of any option beyond 10 years; or
o extends the termination date of the Plan.
Unless the Plan is earlier suspended or terminated by the Board of
Directors, the Plan terminates 10 year from the date of the Plan's adoption. Any
termination of the Plan does not affect the validity of any options previously
granted thereunder.
The potential benefit to be received from a Plan option is dependent on
increases in the market price of the common stock. The ultimate dollar value of
the Plan options that have been or may be granted under the Plan is not
currently ascertainable. On January 7, 2005, the closing price of our common
stock as reported on the OTC Bulletin Board was $0.44.
The current members of our Compensation Committee are Irwin Horowitz
and Martin Scott.
FEDERAL INCOME TAX EFFECTS
The following discussion applies to the Plan and is based on federal
income tax laws and regulations in effect on September 30, 2004. It does not
purport to be a complete description of the federal income tax consequences of
the Plan, nor does it describe the consequences of state, local or foreign tax
laws which may be applicable. Accordingly, any person receiving a grant under
the Plan should consult with his own tax adviser.
The Plan is not subject to the provisions of the Employee Retirement
Income Security Act of 1974 and is not qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
An employee granted an incentive stock option does not recognize
taxable income either at the date of grant or at the date of its timely
exercise. However, the excess of the fair market value of common stock received
upon exercise of the incentive stock option over the exercise price is an item
of tax preference under Section 57(a)(3) of the Code and may be subject to the
alternative minimum tax imposed by Section 55 of the Code. Upon disposition of
stock acquired on exercise of an incentive stock option, long-term capital gain
or loss is recognized in an amount equal to the difference between the sales
price and the incentive option exercise price, provided that the option holder
has not disposed of the stock within two years from the date of grant and within
17
one year from the date of exercise. If the incentive option holder disposes of
the acquired stock (including the transfer of acquired stock in payment of the
exercise price of an incentive stock option) without complying with both of
these holding period requirements ("Disqualifying Disposition"), the option
holder will recognize ordinary income at the time of such Disqualifying
Disposition to the extent of the difference between the exercise price and the
lesser of the fair market value of the stock on the date the incentive option is
exercised (the value six months after the date of exercise may govern in the
case of an employee whose sale of stock at a profit could subject him to suit
under Section 16(b) of the Securities Exchange Act of 1934) or the amount
realized on such Disqualifying Disposition. Any remaining gain or loss is
treated as a short-term or long-term capital gain or loss, depending on how long
the shares are held. In the event of a Disqualifying Disposition, the incentive
stock option tax preference described above may not apply (although, where the
Disqualifying Disposition occurs subsequent to the year the incentive stock
option is exercised, it may be necessary for the employee to amend his return to
eliminate the tax preference item previously reported). We are not entitled to a
tax deduction upon either exercise of an incentive option or disposition of
stock acquired pursuant to such an exercise, except to the extent that the
option holder recognized ordinary income in a Disqualifying Disposition.
If the holder of an incentive stock option pays the exercise price, in
full or in part, with shares of previously acquired common stock, the exchange
should not affect the incentive stock option tax treatment of the exercise. No
gain or loss should be recognized on the exchange, and the shares received by
the employee, equal in number to the previously acquired shares exchanged
therefor, will have the same basis and holding period for long-term capital gain
purposes as the previously acquired shares. The employee will not, however, be
able to utilize the old holding period for the purpose of satisfying the
incentive stock option statutory holding period requirements. Shares received in
excess of the number of previously acquired shares will have a basis of zero and
a holding period which commences as of the date the common stock is issued to
the employee upon exercise of the incentive option. If an exercise is effected
using shares previously acquired through the exercise of an incentive stock
option, the exchange of the previously acquired shares will be considered a
disposition of such shares for the purpose of determining whether a
Disqualifying Disposition has occurred.
In respect to the holder of non-qualified options, the option holder
does not recognize taxable income on the date of the grant of the non-qualified
option, but recognizes ordinary income generally at the date of exercise in the
amount of the difference between the option exercise price and the fair market
value of the common stock on the date of exercise. However, if the holder of
non-qualified options is subject to the restrictions on resale of common stock
under Section 16 of the Securities Exchange Act of 1944, such person generally
recognizes ordinary income at the end of the six-month period following the date
of exercise in the amount of the difference between the option exercise price
and the fair market value of the common stock at the end of the six-month
period. Nevertheless, such holder may elect within 30 days after the date of
exercise to recognize ordinary income as of the date of exercise. The amount of
ordinary income recognized by the option holder is deductible by us in the year
that income is recognized.
In connection with the issuance of stock grants as compensation, the
recipient must include in gross income the excess of the fair market value of
the property received over the amount, if any, paid for the property in the
first taxable year in which beneficial interest in the property either is
"transferable" or is not subject to a "substantial risk of forfeiture." A
substantial risk of forfeiture exists where rights and property that have been
transferred are conditioned, directly or indirectly, upon the future performance
(or refraining from performance) of substantial services by any person, or the
occurrence of a condition related to the purpose of the transfer, and the
possibility of forfeiture is substantial if such condition is not satisfied.
Stock grants received by a person who is subject to the short swing profit
recovery rule of Section 16(b) of the Securities Exchange Act of 1934 is
18
considered subject to a substantial risk of forfeiture so long as the sale of
such property at a profit could subject the stockholder to suit under that
section. The rights of the recipient are treated as transferable if and when the
recipient can sell, assign, pledge or otherwise transfer any interest in the
stock grant to any person. Inasmuch as the recipient would not be subject to the
short swing profit recovery rule of Section 16(b) of the Securities Exchange Act
of 1934 and the stock grant, upon receipt following satisfaction of condition
prerequisites to receipt, will be presently transferable and not subject to a
substantial risk of forfeiture, the recipient would be obligated to include in
gross income the fair market value of the stock grant received once the
conditions to receipt of the stock grant are satisfied.
RESTRICTIONS UNDER SECURITIES LAWS
The sale of all shares issued under the Plan must be made in compliance
with federal and state securities laws. Our officers, directors and 10% or
greater stockholders, as well as certain other persons or parties who may be
deemed to be "affiliates" of ours under federal securities laws, should be aware
that resales by affiliates can only be made pursuant to an effective
registration statement, Rule 144 or other applicable exemption. Our officers,
directors and 10% and greater stockholders may also become subject to the "short
swing" profit rule of Section 16(b) of the Securities Exchange Act of 1934.
SELLING STOCKHOLDERS
As of the date of this prospectus, the names of our affiliates who have
received shares or options under our Stock Option Plan, and who may desire to
sell their shares under this prospectus, are reflected below. These persons will
be members of our Board of Directors and/or officers of Evolve One. In addition,
other options or stock grants may be made to affiliates which we are not able to
identify at this time. Before any of our affiliates sell any of his or her
shares received under the Plan, we will supplement this prospectus with the
required information regarding the names of the persons selling, the total
number of shares owned by these persons and the number of shares proposed to be
sold under this prospectus. Included among the options and restricted stock now
covered under our Plan will be the following awards to executives and/or
directors of Evolve One or its subsidiaries:
Number of
Name Options/Shares
---- --------------
Gary Schultheis 1,200,000
Herbert Tabin 1,200,000
Martin Scott 8,000
Irwin Horowitz 32,000
PLAN OF DISTRIBUTION
The information under this heading includes resales of shares covered
by this prospectus by persons who are our "affiliates" as that term in defined
under federal securities laws.
The shares covered by this prospectus may be resold and distributed
from time to time by the selling security holders in one or more transactions,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of these shares as
principals, at market prices existing at the time of sale, at prices related to
existing market prices, through Rule 144 transactions or at negotiated prices.
Usual and customary or specifically negotiated brokerage fees or commissions may
be paid by the selling security holders in connection with sales of securities.
19
The selling security holders may sell shares in one or more of the
following methods, which may include crosses or block transactions:
- through the "pink sheets", on the over-the-counter Bulletin Board,
or on such exchanges or over-the-counter markets on which our shares
may be listed from time-to-time, in transactions which may include
special offerings, exchange distributions and/or secondary
distributions, pursuant to and in accordance with the rules of such
exchanges;
- in transactions other than on such exchanges or in the
over-the-counter market, or a combination of such transactions,
including sales through brokers, acting as principal or agent, sales
in privately negotiated transactions, or dispositions for value,
subject to rules relating to sales by affiliates; or
- through the writing of options on our shares, whether or not such
options are listed on an exchange, or other transactions requiring
delivery of our shares, or the delivery of our shares to close out a
short position.
Any such transactions may be effected at market prices prevailing at
the time of sale, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices.
In making sales, brokers or dealers used by the selling security
holders may arrange for other brokers or dealers to participate. The selling
security holders who are affiliates of Evolve One and others through whom such
securities are sold may be "underwriters" within the meaning of the Securities
Act for the securities offered, and any profits realized or commission received
may be considered underwriting compensation. Information as to whether an
underwriter(s) who may be selected by the selling security holders, or any other
broker-dealer, is acting as principal or agent for the selling security holders,
the compensation to be received by underwriters who may be selected by the
selling security holders, or any broker-dealer, acting as principal or agent for
the selling security holders and the compensation to be received by other
broker-dealers, in the event the compensation of other broker-dealers is in
excess of usual and customary commissions, will, to the extent required, be set
forth in a supplement to this prospectus. Any dealer or broker participating in
any distribution of the shares may be required to deliver a copy of this
prospectus, including the supplement, if any, to any person who purchases any of
the shares from or through a dealer or broker.
We have advised the selling security holders who are affiliates that,
at the time a resale of the shares is made by or on behalf of a selling security
holder, a copy of this prospectus should be delivered. In addition, selling
security holders who are affiliates may not dispose of that number of shares
that exceed 1% of our outstanding common stock in any consecutive three-month
period.
We have also advised the selling security holders that during the time
as they may be engaged in a distribution of the shares included herein they are
required to comply with Regulation M of the Exchange Act. With certain
exceptions, Regulation M precludes any selling security holders, any affiliated
purchasers and any broker-dealer or other person who participates in the
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete. Regulation M also prohibits any bids
or purchase made in order to stabilize the price of a security in connection
with the distribution of that security.
Sales of securities by us and the selling security holders or even the
potential of these sales may have an adverse effect on the market price for
shares of our common stock.
20
DESCRIPTION OF SECURITIES
GENERAL
The following description of our capital stock and provisions of our
Certificate of Incorporation is a summary thereof and is qualified by reference
to our Certificate of Incorporation, copies of which may be obtained upon
request. Our authorized capital consists of 1,000,000,000 shares of common
stock, par value $.00001 per share, of which approximately 26,130,432 shares are
issued and outstanding on January 11, 2005. We are authorized to issue
10,000,000 shares of preferred stock, of which no shares are issued or
outstanding.
COMMON STOCK
Holders of shares of common stock are entitled to share, on a ratable
basis, such dividends as may be declared by the board of directors out of funds,
legally available therefor. Upon our liquidation, dissolution or winding up,
after payment to creditors, our assets will be divided pro rata on a per share
basis among the holders of our common stock.
Each share of common stock entitles the holders thereof to one vote.
Holders of common stock do not have cumulative voting rights which means that
the holders of more than 50% of the shares voting for the election of directors
can elect all of the directors if they choose to do so, and, in such event, the
holders of the remaining shares will not be able to elect any directors. Our
By-Laws require that only a majority of our issued and outstanding shares need
be represented to constitute a quorum and to transact business at a
stockholders' meeting. Our common stock has no preemptive, subscription or
conversion rights and is not redeemable by us.
PREFERRED STOCK
Our articles of incorporation authorizes our board of directors to
create and issue series of preferred stock from time to time, with such
designations, preferences, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as permitted under Indiana
law.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is Olde Monmouth
Stock Transfer Co., Inc., 200 Memorial Parkway, Atlantic Highlands, New Jersey
07716; telephone (732) 872-2727.
LEGAL MATTERS
The validity of the securities offered under the options described in
this registration statement will be passed upon for us by Schneider Weinberger &
Beilly LLP, 2200 N.W. Corporate Boulevard, Suite 210, Boca Raton, Florida
33431-7307.
EXPERTS
The consolidated financial statements of Evolve One, Inc. as of
December 31, 2003, and for the years ended December 31, 2003 and 2002 appearing
in our Annual Report on Form 10-KSB for the year ended December 31, 2003, have
been audited by Goldstein Lewin & Co., Certified Public Accountants, as set
forth in their report thereon and are incorporated by reference in reliance upon
the authority of such firm as experts in auditing and accounting.
21
INDEMNIFICATION
Section 145 of the General Corporation Law of Delaware, under which we
are incorporated, empowers a corporation to indemnify any person who was, or is,
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or enterprise. A corporation may indemnify against expenses
(including attorneys' fees) and, other than in respect of an action by or in the
right of the corporation, against judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action, suit
or proceeding if the person indemnified acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. In the case of an
action by or in the right of the corporation, no indemnification of expenses may
be made in respect to any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such caction was brought shall
determine that, despite the adjudication of liability, such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper. Section 145 of the General Corporation Law of Delaware further provides
that to the extent a director, officer, employee or agent of the corporation has
been successful in the defense of any action, suit or proceeding referred to
above or in the defense of any claim, issue or matter therein, eh or she shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
Our certificate of incorporation require us to indemnify our directors
and officers to the fullest extent permitted by the General Corporation Law of
the State of Delaware.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person 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 its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
22
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The documents listed below are incorporated by reference in the
Registration Statement. All documents subsequently filed by the Registrant
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in the Registration Statement and to be part thereof
from the date of filing of such documents.
- Form 8-K Current Report filed on December 22, 2004;
- Form 8-K Current Report filed on November 19, 2004;
- Quarterly Report on Form 10-QSB filed on November 15, 2004;
- Form 8-K Current Report filed on November 15, 2004;
- Quarterly Reports on Form 10-QSB filed on October 6, 2004;
- Annual Report on Form 10-KSB filed on September 24, 2004; and
- Quarterly Report on Form 10-QSB filed on September 20, 2004.
All reports and documents filed by us pursuant to Section 13, 14 or
15(d) of the Exchange Act, prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the respective
date of filing of such documents. Any statement incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained herein or in any other subsequently filed
document, which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any statement modified or superseded
shall not be deemed, except as so modified or superseded, to constitute part of
this prospectus.
We hereby undertake to provide without charge to each person, including
any beneficial owner, to whom a copy of the prospectus has been delivered, on
the written request of any such person, a copy of any or all of the documents
referred to above which have been or may be incorporated by reference in this
prospectus, other than exhibits to such documents. Written requests for such
copies should be directed to Corporate Secretary, Evolve One, Inc., 1000 Clint
Moore Road, Suite 101, Boca Raton, Florida 33487.
ITEM 4. DESCRIPTION OF SECURITIES
A description of the Registrant's securities is set forth in the
Prospectus incorporated as a part of this Registration Statement.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware, under which we
are incorporated, empowers a corporation to indemnify any person who was, or is,
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or enterprise. A corporation may indemnify against expenses
II-1
(including attorneys' fees) and, other than in respect of an action by or in the
right of the corporation, against judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with such action, suit
or proceeding if the person indemnified acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. In the case of an
action by or in the right of the corporation, no indemnification of expenses may
be made in respect to any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such caction was brought shall
determine that, despite the adjudication of liability, such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper. Section 145 of the General Corporation Law of Delaware further provides
that to the extent a director, officer, employee or agent of the corporation has
been successful in the defense of any action, suit or proceeding referred to
above or in the defense of any claim, issue or matter therein, eh or she shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him or her in connection therewith.
Our certificate of incorporation require us to indemnify our directors
and officers to the fullest extent permitted by the General Corporation Law of
the State of Delaware.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person 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 its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Persons eligible to receive grants under the Plan will have an existing
relationship with us and will have access to comprehensive information about us
to enable them to make an informed investment decision. The recipient must
express an investment intent and, in the absence of registration under the Act,
consent to the imprinting of a legend on the securities restricting their
transferability except in compliance with applicable securities laws.
ITEM 8. EXHIBITS
5.1 Consent of Schneider Weinberger & Beilly LLP*
10.1 Evolve One, Inc. Stock Option Plan, as Amended*
23.1 Consent of Independent Certified Public Accountants*
23.2 Consent of Schneider Weinberger & Beilly LLP (included in
Exhibit 5.1)*
_________________
* Filed herewith.
II-2
ITEM 9. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(a) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(b) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement;
(c) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 against such liabilities (other than the payment by the
registrant in the successful defense of an action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel, the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boca Raton, State of Florida on January 11, 2005.
EVOLVE ONE, INC.
By: /s/ Gary Schultheis
--------------------------------------------
Gary Schultheis, Chief Executive Officer,
President and Principal Executive, Financial
and Accounting Officer
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/ Gary Schultheis Chief Executive Officer January 11, 2005
------------------- and President (Principal
Gary Schultheis Executive, Financial
and Accounting Officer)
/s/ Herbert Tabin Director January 11, 2005
-------------------
Herbert Tabin
/s/ Martin Scott Director January 11, 2005
-------------------
Martin Scott
/s/ Irwin Horowitz Director January 11, 2005
-------------------
Irwin Horowitz