EBONY & GOLD VENTURES INC, BOOKTECH COM INC, filed this 10KSB on 07/03/2001.
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U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-KSB
[x] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES ACT EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2000
[ ] Transition Report under Section 13 or 15(d) of
THE SECURITIES ACT EXCHANGE ACT OF 1934
For the Transition Period From _____ To _____
Commission File Number: 000-26903
booktech.com, inc.
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(Name of small business issuer as specified in its charter)
Nevada 88-0409153
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
42 Cummings Park, Woburn, Massachusetts 01801
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(Address of principal executive offices)
Issuer's telephone number, including area code: (781) 933-5400
Securities registered pursuant to Section 12(b) of the Exchange Act: Common
Stock, Par Value $.00042 Per Share
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes No X
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Check if the disclosure of delinquent filers in response to Item 405 of
Regulation SB is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendments to this Form 10-KSB. [ ]
State issuer's revenues for the most recent fiscal year: $1,725,019
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At April 30, 2001, 20,766,489 shares of our common stock were outstanding. The
aggregate market value of our voting and non-voting stock held by non-affiliates
(based upon the closing price on the American Stock Exchange on April 23, 2001
of $.73 per share) was approximately $9,335,339. The American Stock Exchange
halted trading of our common stock on April 23, 2001.
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BOOKTECH.COM, INC. AND SUBSIDIARY
INDEX TO FORM 10-KSB
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PART I
PAGE
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ITEM 1. Description of Business ...................................................................................... 3
ITEM 2. Description of Property ...................................................................................... 10
ITEM 3. Legal Proceedings ............................................................................................ 10
ITEM 4. Submission of Matters to a Vote of Security Holders .......................................................... 10
PART II
ITEM 5. Market for Common Stock and Related Stockholder Matters ...................................................... 11
ITEM 6. Management's Discussion and Analysis of Financial Condition and Results of Operations ........................ 14
ITEM 7. Financial Statements ......................................................................................... 29
ITEM 8. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure ......................... 29
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control Persons, Compliance With Section 16(a) of the
Exchange Act ............................................................................................... 30
ITEM 10. Executive Compensation ....................................................................................... 32
ITEM 11. Security Ownership of Certain Beneficial Owners and Management ............................................... 35
ITEM 12. Certain Relationships and Related Transactions ............................................................... 36
ITEM 13. Exhibits and Reports on Form 8-K ............................................................................. 38
Signatures .............................................................................................................. 40
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PART I.
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
booktech.com, inc., the predecessor to the Company ("booktechmass"), was formed
under the laws of the State of Massachusetts on October 31, 1995 and is a
publisher of digital and on-demand custom textbooks, also known as coursepacks.
In anticipation of the acquisition of booktechmass, Ebony & Gold Ventures, Inc.
("Ebony & Gold"), a publicly held corporation formed under the laws of the state
of Nevada, changed its name to booktech.com, inc. ("btc"). On March 31, 2000, EG
Acquisitions Corporation, a Nevada corporation and the wholly owned subsidiary
of Ebony & Gold, acquired booktechmass pursuant to the terms of an Agreement and
Plan of Merger (the "Merger"). The business of our Company is identical to that
of booktechmass. For financial statement purposes, the transaction has been
treated as a recapitalization of booktechmass. For tax purposes, the acquisition
was a tax-free exchange of equity securities. Subsequent to the acquisition, the
sole activities of booktech.com, inc. have been, and will continue to be, those
previously conducted by booktechmass. Accordingly, the following discussion of
our business relates to the business previously conducted by booktechmass.
BUSINESS OF THE COMPANY
GENERAL
We are a publisher of digital and on-demand custom textbooks, also known as
coursepacks, which are distributed primarily through college bookstores.
Educators can select from copyrighted content, public domain content, and their
own work to create a unique set of course materials. Materials can include
chapters from trade or textbooks, and articles from newspapers, magazines or
scholarly journals. booktech.com. was initially conceived in 1995 by Dr. Morris
Shepard, formerly a professor of Political Science at Northeastern University.
Dr. Shepard recognized the need for highly customized and flexible teaching
materials and founded the business that has developed into booktech.com. We are
now a national provider of cutting edge teaching materials, dedicated to
empowering academic and corporate educators through technology and highly
personalized customer service. Since 1995, we have attracted a wide range of
individuals to our executive management team, including a university program
chairman, a former college president, three executives from publishing and an
academic librarian.
We are committed to providing academic and corporate-training educators
with the e-learning and customized on-demand publishing needs that traditional
textbook publishers cannot satisfy. We believe that due to our offering of
digital formats, through CD-ROMs and digital downloads, we will be in the
forefront of the online e-education movement. We expect to launch a Web site
that will make it possible for educators to access our vast digital library of
content, and create entirely new collections of material from anywhere in the
world, 24 hours a day.
MARKET OPPORTUNITY
Educators are demanding the ability to create, publish, and deliver
their own copyright-protected custom textbooks and course materials online. This
demand, at all levels of our educational system, arises from multiple factors
including:
o THE NEED FOR CURRENT, HIGH QUALITY AND COMPELLING CONTENT. Traditional
textbooks can be out-of-date before they even hit an editor's desk and
educators often want to teach with current information unavailable
from traditional sources and standard textbooks.
o THE DESIRE TO TEACH FROM DIVERSE SOURCES AND VIEWPOINTS.
o LACK OF ACCESS TO FIRST-RATE LIBRARIES.
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o THE PREVALENCE OF NETWORKED LEARNING ENVIRONMENTS. Colleges and
universities are the most wired community on the Web, with over 90% of
college students accessing the Internet, 52% of them daily. Likewise,
the number of K-12 schools connected to the Internet has climbed from
35% in 1994 to 96% today. Moreover, the number of K-12 students with
Internet access has grown from virtually zero in 1994 to 10 million in
1996 and is projected to grow to 40 million by 2002.
o THE EMERGENCE OF DISTANCE LEARNING PROGRAMS THROUGHOUT THE UNITED
STATES AND ABROAD.
o THE DEVELOPMENT OF COURSEWARE TO ASSIST EDUCATORS IN CREATING
WEB-BASED COURSES.
INDUSTRY BACKGROUND
The market for educational services is continually expanding. According to
a May 2000 study by Merrill Lynch, the U.S. market for online higher education
is estimated to grow from $1.2 billion in 1999 to $7 billion in 2003, a growth
rate of 55%. Currently there are 84 million students enrolled in higher
education worldwide, forecasted to reach 160 million by 2005, with at least 40
million students enrolled in online education. Expenditures for elementary and
high school texts are in excess of $2 billion annually, while spending for other
instructional materials are around $5 billion. Recent catalysts such as
for-profit education, charter schools, distance learning, school accountability
and individual learning issues have created a new climate for dynamic change in
the U.S. educational industry, as technology solutions are rapidly replacing
traditional brick and mortar solutions. The market for custom course material
also extends past traditional academic institutions and extends into the
burgeoning fields of distance and corporate education.
The textbook market is dominated by on-campus bookstores, although online
retailers are threatening to become more popular with students. We employ both
on-campus and online venders to provide our services, and also engage in direct
e-commerce. Our relationship with bookstores revolves around their need for
outsourcing copyright management and production services that we provide.
College and independent school bookstores have sought our services for a variety
of reasons, ranging from necessary staffing levels to copyright compliance
assurance.
According to the same May 2000 Merrill Lynch study, distance education
programs are currently in place at 50% of the country's postsecondary
institutions, a number that is projected to reach 84% by 2002. The growing need
to deliver educational content to a decentralized group of learners is apparent.
Our ability to fulfill individual orders digitally (through CD-ROM, digital
download, and sometimes Zipdisk) or in a paper-based format falls directly into
line with the needs of this expanding demographic.
STRATEGY
Our primary objective is to establish ourselves as a leading force in
custom publishing in both traditional media and web-enabled content delivery.
Our present strategies, assuming funding is available, consist of:
o EXPANDING THE EDUCATORS ONLINE LIBRARY(TM). We have accrued an
extensive digital library of custom content that will be available to
educators through the Internet. We intend to increase the number of
library items available as more intellectual content is licensed or
acquired, and as the demand for customized educational and training
materials expands. All content is catalogued, archived and copyright
cleared before printing or downloading. It will include premium
content from the H.W. Wilson Company. We have licensed H.W. Wilson's
Omnifile Full-Text Mega Edition database for use in our Educator's
Online Library(TM). The H.W. Wilson index and full-text article
databases, which index over 2 million items, including full text
versions of 760 periodicals and comprehensive abstracts for 2,700
journals, will link with our Professor Portal for inclusion with other
course materials.
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o INAUGURATING OUR PROFESSOR/STUDENT AND PUBLISHER PORTALS. We plan to
make our Professor and Student Portals available for the Fall Semester
2001. The Professor Portal will enable professors and teachers both in
the U.S. and abroad to link to The Educators Online Library(TM) in
order to design custom textbooks over the Internet. Student selection
of required materials, payment method and choice of delivery will all
be facilitated by the Student Portal. The accompanying Publisher
Portal will provide up-to-the-minute information on the management of
rights and permissions.
o TARGETING MARKET SEGMENTATION. We intend to differentiate ourselves
from our competitors by identifying and building strong relationships
with a very select segment of opinion leaders, change agents and first
movers in custom publishing. We currently have a market presence both
in New England and the Mid-Atlantic States and are committed to
broadening the geographic distribution of the market both nationally
and internationally. We plan to aggressively expand into expanding
markets such as distance learning, K-12, and corporate training.
Presently, we have established channels of distribution to:
o Thousands of individual educators in higher education, distance
education, corporate training and K-12.
o Hundreds of college bookstores that recommend custom publishing
providers to educators.
o Institutions with new and developing distance education programs,
such as the University of Maryland University College and the
University of Texas TeleCampus.
o Educational associations such as the United States Distance
Learning Association (USDLA), the Program on Negotiation (PON),
and the Consortium for Worker Education (CWE).
o BUILDING THE CATEGORY. We are strategically positioned to build
awareness, understanding, and usage of custom publishing as a teaching
tool. As professors and teachers seek to enrich and deepen the
learning experience of their students, we expect to continue to
partner with professors and teachers to enhance current course
materials with relevant and quality-added custom textbooks. Through a
national print advertising campaign and introductory guides to both
traditional as well as web-enabled custom publishing, we hope to
increase category awareness and provide educators with the tools to
make custom textbooks accessible and feasible. We intend to promote an
understanding of the complex, changing and often confusing issues
related to reproduction of printed and digital materials by educating
and encouraging schools to comply with current copyright laws.
o CULTIVATING BRAND AWARENESS. We intend to establish ourselves as the
leading custom textbook brand through targeted marketing and
promotional campaigns to higher education, distance education, K-12,
and corporate training markets.
o STRATEGIC ACQUISITIONS. We continually assess the market and plan to
pursue selective acquisitions such as local coursepack competitors,
K-12 supplementary publishers, and technology providers.
ALLIANCES AND RELATIONSHIPS
We have established partnerships with Reciprocal, Content Guard, Oracle,
Mimeo.com and Xerox. Also established are key strategic relationships with the
University of Maryland, University of Texas Telecampus, Consortium for Worker
Education, Lesley University, and the U.S. Distance Learning Association.
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COMPETITION
Traditional textbook publishers, new media publishers, and online libraries
are all competing to capture the attention of professors, K-12 teachers, and
corporate trainers. Even companies like iUniverse (an eBook and print-on-demand
retailer, distributor, and conversion operation) are realizing that the
educational market is the only place today to generate significant revenues for
digital content and are beginning to adapt their business models accordingly.
Traditional textbook publishers, like McGraw-Hill and Pearson, are
recombining their own content and reselling it as printed text, lab manuals,
readers, and workbooks. And while many of these publishers are offering
web-based content selection tools, their offers are limited predominantly to
their own content databases. booktech, based on experience working with
educators for over six years, believes this approach has the limitation of being
publisher-driven not educator-driven. Our daily customer contact and market
research demonstrates that educators, especially those who teach graduate and
higher-level undergraduate courses, want to choose from unlimited content
sources and formats and do not want to be restricted to a single publishers'
database of content.
Traditional publishers are also striking deals with new media publishers to
migrate their content to the Web. These publishers are grappling with decisions
about what to convert into digital format, how to pay for the conversion, and
whether to convert new, backlist titles or both. Our ability to offer teachers
and students access to up-to-date content from any source sets it apart from
these companies.
Online libraries, such as Questia, ebrary, and netLibrary, are pursuing a
variety of business models in the education market. In general, the
research-oriented sites (Questia and ebrary) are focused on selling student
subscriptions to content they either own, license or are in the process of
acquiring. Much of the content acquired by these companies comes from
out-of-print and slow-selling books. netLibrary's MetaText division works with
textbook publishers to translate their physical texts into interactive web
pages, enabling professors to add pedagogical frameworks and links to images,
audio, video, other parts of the books, and web pages.
Few of these companies appear to have the teacher focus of booktech the
wide access to multiple types of quality content (books, journals, newspapers,
magazines, etc.), or the ability to create custom course materials online and
output these material in both printed and digital form. booktech already has
over 6 years of experience creating high quality, print-on-demand custom
textbooks. Assuming we receive additional funding, we will soon launch our
online Educator's Portal(TM) (the "Portal"), a 24/7 web site and e-Commerce
platform that will enable professors to request, compile, and track their
material online from anywhere in the world. The Portal will feature
booktech.com's Educators' Online Library(TM), a digital repository of over
35,000 unique titles that are being used in college classrooms around the
country. Plus, students and bookstores will be able to search for, select, and
pay for custom textbooks online. The Portal, along with pending content
licensing deals, will be hard to replicate.
XanEdu is a 1 year-old division of Bell+Howell that offers teachers online
access to the ProQuest library of newspapers, magazines and journals for the
purpose of building custom textbooks. XanEdu is only now experimenting with
allowing educators to include content beyond that held in the ProQuest database
and to support print delivery as well as digital.
OPERATING INFRASTRUCTURE
We intend to create a powerful and complex system of hardware and software
to perform all functions associated with being a full service custom publisher.
Our computer system will be designed to enable customers and users to interface
with a Web Portal that is customized to their needs through the Professor
Portal, Student Portal, and Publisher Portal as described below.
PROFESSOR PORTAL: The Professor Portal is a website that streamlines
the process teachers use to design their course material. The Educators Online
Library(TM) utilizes technology that has been customized
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to our needs. Once the order is placed the professor will be able to monitor
developments such as permissions received and still outstanding, or current
permission costs, and once completed, the number of students purchasing the
material.
STUDENT PORTAL: The Student (or Bookstore) Portal allows customers to
purchase their course material online. This area is powered by e-commerce
software and uses data encryption technology to protect credit card data while
it is passed through the site. For students who are downloading digital
material, ContentGuard, Inc. and Reciprocal Inc. technologies will assist in
protecting the copyrighted material from any unauthorized dissemination.
Students purchasing digital materials will also have options for electronic
delivery such as point-of-purchase downloading, and/or CD-ROM.
PUBLISHER PORTAL: The Publisher Portal, will be the area of the website
through which publishers will be able to view up-to-date status reports on
outstanding permission requests, material usage and royalty payments.
Publishers' accounts receivable departments will have the option of establishing
an Electronic Data Interchange (EDI) for payments and invoicing.
We use an Enterprise Resource Planning (ERP) Solution that operates on
Hewlett-Packard servers. This is the system through which the rights and
permission analysts generate and log permission requests, communicate with the
production department about quality issues, assemble custom textbook for clients
who do not use the Professor Portal, and ultimately finalize all aspects of the
custom textbook prior to its production.
The production department utilizes Xerox DocuImage 6205 Scanners to
generate black/white and color scans of all materials. The scanning equipment is
used in conjunction with Xerox's DigiPath print management software. Once all
content is scanned, cleaned, assembled online, and given final approval, our
paper-based custom texts are printed on a DocuTech 6180 printer. For texts on
CD-ROM, we use an AMS Plexwriter 8/20 to burn the CD, which can hold up to 650
MB of information.
HarvardNet is the collocation facility that we will use for hosting. This
will allow us to have twenty-four hour a day, seven day a week monitoring for
uptime, redundant power supplies, battery backup, diesel generators, carbon
dioxide fire suppression systems, climate controls, raised floors, and
protection from sabotage.
INTELLECTUAL PROPERTY
We regard our copyrights, service marks, trademarks, trade dress, trade
secrets, proprietary technology and similar intellectual property as critical to
our success. We rely on trademark and copyright law, trade secret protection and
confidentiality and license agreements with our employees, customers,
independent contractors, sponsors and others to protect our proprietary rights.
We may be required to obtain licenses from others to refine, develop,
market and deliver new products and services. There can be no assurance that we
will be able to obtain any such license on commercially reasonable terms or at
all, or that rights granted pursuant to any licenses will be valid and
enforceable.
Domain names are the user's Internet "address." Domain names have been the
subject of significant trademark litigation in the United States. Domain names
derive value from the individual's ability to remember such names, therefore
there can be no assurance that our domain name will not lose its value if, for
example, users begin to rely on mechanisms other than domain names to access
online resources. The current system for registering, allocating and managing
domain names has been the subject of litigation and of proposed regulatory
reform. There can be no assurance that our domain name will not lose its value,
or that we will not have to obtain an entirely new domain name in addition to or
in lieu of our current domain name, if such litigation or reform effort results
in a restructuring of the current domain name system.
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