SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[ ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 for fiscal year ended _______________.
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the transition period from
January 1, 1999 to June 30, 1999
Commission file number 0-23769
AMERICOM USA, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-2068322
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1303 Grand Avenue, Arroyo Grande, California 93420
(Address of principal executive offices) (zip code)
Issuer's Telephone Number: 805/542-6700
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.0001 par value per share
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the last 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 X No .
---- ----
Check if there is no disclosure of delinquent files in response to Item 405 of
Regulation S-B 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 amendment to this Form 10-KSB. [ ]
Revenue for the year ended June 30, 1999, was $143,591.
As of August 31, 1999, the aggregate market value of the voting stock held by
non-affiliates was $32,490,540 based on the average bid and ask price of $2.00
per share.
As of August 31, 1999, the number of shares of Common Stock outstanding was
36,660,672.
Documents incorporated by reference: None
Transitional Small Business Disclosure Format (check one): Yes No X .
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<PAGE>2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
OVERVIEW
AmeriCom USA, Inc. ("AmeriCom" or the "Company") is an emerging
technology company focused on developing innovative systems to facilitate
advertising and commerce over the world wide web (hereinafter referred to as
"Web" or "Internet"). The core product of the Company is a proprietary
technology known and marketed under the name AdCast and TrueManagementTM.
AdCast and TrueManagementTM constitute unique advertising and merchandising
solutions which provide enhanced services to companies that advertise or conduct
business via the Internet.
The AdCast system is the primary product offered by the Company. The
AdCast system is an advertising delivery system which delivers non-scrollable
advertisement frames ("e-Billboards") which can contain animated ads lasting
from 15 to 90 seconds in length with audio, video and pop-up frame capability.
AdCast e-Billboards are placed on Web sites which have entered into agreements
to carry advertising ("AdCast Affiliates"), as well as hot links to other Web
sites. (For the Company's own descriptive purposes Web site owners who have
agreed to the placement of an e-Billboard ad are referred to as "AdCast
Affiliates" and their respective Web sites as "AdCast Affiliate Sites". They are
not affiliates as that term is used by the Securities and Exchange Commission
and they do not directly or indirectly control, nor are controlled by, nor are
under common control with, the Company.)
The AdCast advertisement space appears on an AdCast Affiliate Site each
time a viewer visits that Web site. The ad appears as an outlined frame in which
an advertisement is run. Because the AdCast e-Billboard frame does not disappear
when the visitor moves down the page or between pages in that particular Web
site, complete viewing of the advertisement is likely.
The TrueManagementTM system provides management tools, analytical
reports, and operating control data pertaining to advertising on the Internet
for users of the AdCast system.
The Company compensates AdCast Affiliates for placing the AdCast
e-Billboards on their Web sites, and the Company sells the e-Billboard space to
advertisers and sponsors. The AdCast Affiliates receive a fee based on the
number of visitors to their Web site and/or advertising credits which can be
used to promote their Web site on other AdCast Affiliate Sites.
The pricing structure for the AdCast advertising rates is based on spot
minute increments, similar to spot pricing for television. Similar to
television, e-Billboard ads can vary in length. However, unlike television
AdCast e-Billboard ads play only when the viewer or Web surfer stays at that
particular AdCast Affiliate Web Site.
COMPANY BACKGROUND
The Company was incorporated in Delaware in 1994 under the name
AmeriCom USA, Inc. to market MyLine, a telecommunication system developed by RMC
Diversified Associates International, Ltd. ("RCM Intl."), a California company
under contract to Americom Ltd., a Turks and Caicos corporation. RCM Intl. was
owned by Robert Cezar, Chief Executive Officer, President and a director of the
Company. In April, 1996, the Company sold the MyLine technology to Enhanced
Service Providers LLC ("ESP"), a Massachusetts corporation. As part of the
transaction
<PAGE>3
the Company was required to release its international marketing rights to the
MyLine technology to Americom Ltd. As consideration for the Company's release of
the MyLine technology, the Company received $540,000 in cash and 161,000 shares
of ESP common stock. The ESP common stock was valued at $0 in the Company's
financial statements. (The MyLine technology has subsequently been re-acquired
by the Company. See "Company Acquisitions".) Following the sale of the marketing
rights to the MyLine technology, the Company was inactive until July, 1998, when
it acquired, as a wholly-owned subsidiary, RCM Intl., which had developed the
AdCast and TrueManagementTM technologies. Since the acquisition of RCM Intl.,
the Company has concentrated on enhancement of these technologies and their
development into a comprehensive Internet commerce and advertising system.
CORPORATE RESTRUCTURING
On December 4, 1998, the Company merged with Chatsworth Acquisition
Corporation ("Chatsworth"), a Delaware corporation, under an Agreement and Plan
of Merger (the "Chatsworth Merger"). The Chatsworth Merger took the form of a
share exchange in which all of the shares of the Company were exchanged for
common stock representing 91.8% of all shares outstanding of Chatsworth. The
Chatsworth Merger was accounted for under the reverse take-over method of
accounting. Thereafter, the name of Chatsworth was changed to AmeriCom USA, Inc.
The intention of the Chatsworth Merger was to give the Company access
to the benefits of being a public corporation, including the ability to have its
shares listed on the National Association of Securities Dealers Over-The-Counter
Bulletin Board system (@NASD OTC-BB@). Subsequent to the Chatsworth Merger,
application was made to the National Association of Securities Dealers for the
Company's stock to be tradable on the NASD OTC-BB.
The National Association of Securities Dealers ("NASD") did not approve
the Company's application within the time period envisaged prior to the merger.
On the advice of counsel, representations were made to NASD Regulation, Inc.
(which scrutinizes trading applications for the NASD) to satisfy its
reservations regarding the trading of the Company's stock on the NASD OTC-BB.
Also on the advice of counsel, additional shares of common stock were issued to
certain officers and directors of the Company pursuant to an Employee
Compensation Bonus Agreement and registered on Form S-8, in accordance with
Regulation S of the Securities Act of 1933.
Ultimately, in April 1999, the Company's application for listing on the
NASD OTC-BB was unsuccessful, primarily due to concerns related to an
insufficient number of shares of common stock of Chatsworth which were freely
tradable prior to the merger with the Company.
As a consequence of the Company's inability to secure a listing on the
NASD OTC-BB, the Company was unable to meet commitments to certain investors
that the Company's stock would be traded on the NASD OTC-BB by January 31, 1999.
The Company entered into negotiations with 13 such investors and has obtained an
extension of time until September 30, 1999 in which to secure a NASD OTC-BB
listing.
COMPANY ACQUISITIONS
Kiosk Software, Inc. Acquisition. On January 24, 1999, the Company
entered into an Agreement and Plan of Reorganization with Kiosk Software, Inc.,
a California corporation, whereby Kiosk Software, Inc. merged with and into
Kiosk Acquisition Inc., a newly formed corporation wholly owned by the Company
(the "Kiosk Agreement"). The Kiosk Agreement became effective on February 8,
1999, at which time the name of Kiosk Acquisition Inc. was changed to Kiosk
<PAGE>4
Software, Inc. and Kiosk Software, Inc. became a wholly owned subsidiary of the
Company. Shares of the Company's common stock were issued to the shareholders of
Kiosk Software, Inc. based on the following formula: (i) an exchange ratio
computed by dividing 1,000,000 by the quantity of outstanding Kiosk Software,
Inc. outstanding shares just prior to the merger, and (ii) the number of shares
to be issued to Kiosk Software, Inc. shareholders to be equal to the product of
the number of shares owned by such shareholder times the exchange ratio. The
number of Kiosk Software, Inc. shares outstanding prior to the merger was
1,000,000 and the exchange ratio was one-for-one. The Company issued 1,000,000
shares of common stock pursuant to the merger. The Kiosk Agreement also provided
that outstanding options to purchase shares of common stock of Kiosk Software,
Inc. would be exchanged for options to purchase shares of the Company, with the
price and number of option shares subject to the exchange ratio. Pursuant to the
Company's Qualified Stock Option Plan, options for the purchase of 248,834
shares of the Company's common stock at a purchase price of $0.35 per share,
132,245 shares at a purchase price of $1.15 per share, and 65,539 shares at a
purchase price of $1.04 were granted to former Kiosk Software, Inc. option
holders.
The Company advanced Kiosk Software, Inc. an aggregate amount of
$629,950 to pay its outstanding liabilities. Lori Fisher, the principal
shareholder of Kiosk Software, Inc., was appointed a director, president and
chief operating officer of the Company's subsidiary, Kiosk Software, Inc.
MyLine Technology Acquisition. Effective March 11, 1999, the Company
entered into an Agreement of Purchase and Sale and Exclusive Licensing of
Technology with Americom Ltd., a Turks and Caicos corporation ("MyLine
Agreement"). Under the MyLine Agreement, the Company agreed to re-acquire the
MyLine and the InstAccount technologies from AmeriCom Ltd. for an aggregate
consideration of (i) $538,000 in cash over a two year term, (ii) issuance of
500,000 shares of common stock of the Company and (iii) re-conveyance to the
Turks and Caicos corporation of all shares held by the Company in ESP. The
MyLine Agreement was subsequently amended to provide for payment of $503,000 in
cash and 517,500 shares. The re-acquisition was completed on April 30, 1999. As
a result of the MyLine Agreement, the Company acquired all right, title and
interest to the MyLine and InstaAccount technologies. See "Company Technologies"
below.
Jim and Jon Tech Acquisition. On February 26th, 1999, the Company and
its subsidiary company RMC Diversified Associates, Ltd ("RMC") entered into
an Agreement and Plan of Reorganization with Jim and Jon Tech, a California
corporation, to acquire certain technology ("J&J Agreement"). The J&J Agreement
provides for the Company to acquire Jim and John Tech and its net assets,
including the J-Engine Tool (See "Company Technologies"), for consideration to
each of the two shareholders, Jon Iverson and Jim Heintz, of (i) a total of
200,000 shares of common stock of the Company to be divided pro rata between the
two shareholders in accordance with their original shareholdings in Jim and Jon
Tech, (ii) options for each of the two shareholders to purchase 300,000 shares
of the common stock of the Company at an exercise price of $2.00 per share,
(iii) $100,000 for each of the two shareholders in cash, payable in
installments, and (iv) Jon Iverson would serve as president of RMC. and Jim
Heintz would serve as chief technological officer of RMC. The agreement has
subsequently been amended to provide for a revised timetable for payment of the
cash element of the consideration and the transaction has not yet closed.
Although RMC continues as a separate corporate entity, the J-Engine Technology
is utilized by AmeriCom's DAI Division.
Business Services Agreement. On September 8, 1998, the Company entered
into a twelve month agreement, subject to renewal, with Asia Pacific Finance
Group Ltd., a British Virgin Islands corporation ("APFG") for services generally
<PAGE>5
related to financial and management advisory services for identifying and
evaluating a U.S. stock market listing through a reverse merger with a U.S.
publicly held company, and for assisting the Company in connection with a
private placement offering. Under the terms of the agreement, the Company shall
pay to APFG: (i) 5% management success fees for the services of the private
placement upon the execution of each subscription agreement, and (ii) 4% of the
Company's common stock payable for the services related to U.S. stock market
listing transactions, payable upon execution of a reverse merger with a U.S.
publicly held company.
The 5% fee as noted in (i) above, was subsequently amended to 10%. The
Company has been paying the 10% fees to the APFG as new subscription agreements
are received. Upon closing of the Chatsworth Merger, the APFG was issued
1,200,000 shares of the Company's common stock equivalent to 4% of the total
outstanding common stock of the Company at that time.
RECENT DEVELOPMENTS SUBSEQUENT TO YEAR END
Telespace, Ltd. Merger. On July 1, 1999 the Company entered into a
Merger Agreement and Plan of Reorganization with Telespace Ltd. ("Telespace"), a
Delaware corporation (the ATelespace Merger@). The Telespace Merger was adopted
by the unanimous resolution of the Board of Directors of Telespace and approved
by the written consent of a majority of the shareholders of Telespace. The
Telespace Merger was adopted by the unanimous resolution of the Board of
Directors of the Company on June 29, 1999.
The Telespace Merger provided that the Company would merge into
Telespace and the shareholders of the Company would exchange their shares of the
Company for 99.3% of the shares of Telespace and the name of Telespace would be
changed to Americom USA, Inc. Further, the holders of options to purchase shares
of the Company would receive options to purchase the same number of Telespace
shares. If fully exercised, option holders would be entitled to purchase, in the
aggregate, approximately 24% of Telespace's outstanding common stock (on a fully
diluted basis). It was the parties intention that upon completion of the
Telespace Merger, all outstanding stock of the Company would be tradable on the
NASD OTC-BB.
The Telespace Merger was conditioned upon the occurrence of several
events. One of the conditions prior to the merger was that the Company receive a
limited offering merger permit from the State of California, Department of
Corporations ("DOC") and a Fairness Hearing and order from the DOC which would
make available the Section 3(a)(10) exemption under the Securities Act of 1933,
as amended. On July 23, 1999, an application for a limited offering merger
permit and request for a Fairness Hearing before the DOC was submitted. However,
due to various concerns raised by the DOC relating to Telespace Ltd., the
Telespace Merger was terminated by mutual consent and the DOC application was
voluntarily withdrawn by Telespace.
DigiCities, Inc. Merger. On July 1, 1999, the Company executed a
Memorandum of Understanding with DigiCities, Inc. ("DigiCities"), a California
corporation, in which the Company will acquire all of DigiCities' issued and
outstanding Common Stock in exchange for 3,500,000 shares of the Company's
Common Stock ("Memorandum"). In addition, the Company will allocate options to
purchase 1,500,000 shares of its Common Stock to DigiCities employees, pursuant
to the Company's employee stock option plan. The Memorandum also calls for Scott
Carni to remain as President and a director of DigiCities, and for Chad Lems to
remain as a Vice President and director of DigiCities. Pursuant to the
Memorandum, the proposed acquisition of DigiCities is to be completed one day
prior to the effective date of the proposed Telespace Merger, but in any case
not later than September 30, 1999.
<PAGE>6
On August 2, 1999, a formal Agreement and Plan of Reorganization was
executed between the Company and DigiCities ("DigiCities Agreement"). However,
in light of the termination of the Telespace Merger, on September 27, 1999, the
Company and DigiCities entered into a new Merger Agreement to provide for a
merger between the Company and DigiCities in which (i) the Company's Certificate
of Incorporation will be amended to change the authorized capital stock to
120,000,000, of which 99,000,000 shares shall be Class A Common Stock, $.0001
par value, 1,000,000 shares shall be Class B Common Stock, $.0001 par value, and
20,000,000 shares shall be preferred stock, $.0001 par value; (ii) all of the
outstanding common stock of DigiCities will be converted into 3,500,014 shares
of the Company's Class A Common Stock; and (iii) the Company will issue options
representing 1,500,000 shares of the Company Class A Common Stock to DigiCities
employees ("DigiCities Merger"). As a result of the DigiCities Merger,
DigiCities will disappear and the Company will be the Surviving Entity.
Based upon the DigiCities Merger, the Company will file a new
application for a merger permit and Fairness Hearing with the DOC. The new
application will also provide for the Company to exchange all of its currently
outstanding common stock with Class A Common Stock having the same rights and
status as the current outstanding Common Stock.
DigiCities specializes in the marketing and development of Web sites
for small to medium sized businesses. DigiCities commenced business in January
1999 building Web sites for business customers using a standardized layout and
format, and maintains those sites on its own Web servers, located in Santa
Monica, California. Following the acquisition of DigiCities by the Company,
owners of Web sites maintained by DigiCities would be offered advertising income
by becoming an AdCast Affiliate, and the opportunity to draw traffic to their
Web site by participation in the e-Billboard Exchange program.
DigiCities commenced selling its Web site product by outbound
telemarketing in January 1999, using both its own telemarketing facilities and
telemarketing rooms managed by outside contractors. Charges include a fee for
initial site set-up, and a monthly maintenance fee. Fees are primarily collected
via a Billing Service Contract with an aggregator company. The aggregator
represents several hundred telephone local exchange carriers (?LECs@). By this
mechanism, the business customer buying a web site agrees to have their local
telephone service account charged with DigiCities' fees. DigiCities passes the
new customer's billing information to the aggregator, who in turn distributes it
to the relevant LEC. Customers pay the DigiCities charges along with their other
monthly telephone charges, and the net proceeds are ultimately passed back via
the aggregator to DigiCities.
In August 1999 DigiCities launched an alternative business Web site
product called Flash 4 Websites which is sold by direct marketing networks.
Revenues from this product are charged to customers' credit cards, resulting in
significantly faster cash flow to DigiCities.
DigiCities presently maintains approximately 15,000 Web sites, has 10
full time employees, and generated revenues of approximately $1.2 million.
Appointment of AdCast Division President. In August 1999 Mr. Tom
Hopfensperger joined the Company as President of AdCast Division. Mr.
Hopfensperger was previously Director of New Media for KGO/KSFO, the San
Francisco affiliates of Disney's GO network, and has an extensive advertising
media sales background.
<PAGE>7
Marketing Agreement for Russia with Nicola Savoretti. On September 22,
1999 the Company entered into a memorandum of understanding with Nicola
Savoretti, pursuant to which the Company appointed Mr. Savoretti exclusive
licensee to market AmeriCom's products in Russia. The memorandum provides for a
term of 10 years with a renewal option for an additional 10 year term. In
consideration, Mr. Savoretti paid the Company a licensing fee of $100,000. Mr.
Savoretti was also granted an option to purchase 20,000 common shares of the
Company at a price of $2.00 per share, exercisable within one year.
THE COMPANY'S OPERATIONS
The Company began online operations on February 1, 1999 showing unpaid
advertisements while it tested the AdCast system. This phase is commonly
referred to as the "beta" phase of development. In July 1999, the Company
commenced the sale of paid advertising. The Company is currently displaying in
excess of 4 million ads per day. Of these, 25% are ads displayed on the AdCast
Affiliate sites and promote products of the Company's sponsorship advertiser and
advertisers with whom the Company has entered into commission based contracts or
"paid-per-click" programs. The balance are unpaid ads which cross-promote AdCast
Affiliate sites pursuant to AdCast's e-E-Billboard Exchange program.
The Company anticipates that it will continue to receive revenue from
(i) its sponsorship ad program (see "Marketing") which provides display of a
sponsor's logo on AdCast Affiliate Sites (ii) sale of advertising space on the
e-Billboard ads displayed on AdCast Affiliate Sites and (iii) commissions from
sales of merchandise from ads displayed. The Company has one member in its
sponsorship program and has received nominal revenues from commissions on sales
of merchandise. The Company has received firm orders for e-Billboard commercial
advertising subsequent to the year end.
The Company's has previously entered into AdCast Affiliate agreements
with Web sites focused on relatively narrow audiences. The Company intends to
broaden the type of Web sites on which it places AdCast e-Billboards.
The Company currently has three wholly owned subsidiaries: Kiosk
Software, Inc., Adcast, Inc. and AdCast Canada, Ltd; another subsidiary company
RMC Diversified Associates, Inc. was wound up in August 1999 subsequent to the
fiscal year end. The Company intends to operate its various lines of business
through four operating divisions: AdCast, MyLine, Direct Access Internet ("DAI")
and AdCast Studios.
MyLine Division This Division develops innovative telecommunication
products. Its core product is the MyLine technology which was re-acquired in
March 1999 (see "Background and Current Transactions"). MyLine is a value added,
remote programmable personal communications system which has to date been sold
via telephone local exchange carriers in the United States. The Company intends
to re-engineer MyLine to exploit the cost savings and service innovations
offered by a technology known as Internet Protocol Telephony. MyLine will form
the basis for a unified messaging system which will integrate with the Company's
other businesses. Unified messaging will permit messages sent via different
media including fax, email and voice mail to be accessed and read or listened to
by any of the other media, at any time and from any location.
Direct Access Internet Division. The Direct Access Internet division
("DAI Division") manages all engineering and operational tasks associated with
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the delivery of AdCast advertising, the e-E-Billboard Exchange program and the
TrueManagement system. In addition, the DAI Division is tasked with developing
additional products for the Company and coordinating all intra-company
engineering projects.
AdCast Division. AdCast is responsible for marketing and sales of the
AdCast and TrueManagementTM technologies.
AdCast Studios Division AdCast Studios provides graphic design and
creative services to advertisers and web site owners including those advertising
via AdCast.
Kiosk Software, Inc. Kiosk Software, Inc. is engaged in the
development and delivery of products and services for the deployment of
interactive kiosk software applications. Kiosk Software, Inc. provides complete
kiosk development services from design through delivery. It specializes in
multi-media software development in addition to full kiosk integration and
support including graphics for effective user interface, custom cabinet design,
multimedia software development and development of custom applications for
education, retail and tourist environments. Its primary products are the Kiosk
Operating Suite (K/OS), a proprietary kiosk application development tool and
TerraVista, a product for Internet access control. Kiosk Software, Inc. uses its
proprietary software to manage and update remote systems from a central
location.
Co-location Agreement. On April 7, 1999 the Company entered into an
Internet Services and Co-Location Agreement with AboveNet Communications, Inc.
to locate the Company's server equipment at the facilities of AboveNet in San
Jose, California. The agreement also provides for basic maintenance and network
provisioning to be provided to the servers.
COMPANY TECHNOLOGIES
AdCast Technology. The AdCast system delivers to AdCast Affiliate Sites
non-scrollable e-Billboards in which animated ads of 15 to 90 seconds in length
are placed. The AdCast system also provides various audience measurements.
Measurements provided include number of click-throughs, number of times an
advertisement is viewed and duration of stay on a Web site. This data is
provided to both advertisers and the AdCast Affiliates enabling them to make
adjustments to their advertisements or Web sites, respectively, to increase
effectiveness.
TrueManagementTM. TrueManagementTM. provides a series of management
tools that enable AdCast Affiliates to maintain interaction between the AdCast
system and their AdCast Affiliate Sites. In addition, the AdCast Affiliate can
use the TrueManagementTM system to manage their own promotional advertising
campaigns via the AdCast delivery system, analyze specific e-Billboard
advertisement performance, and obtain real-time reports summarizing visits to
their site, by hour, day, or month.
For the advertiser, TrueManagementTM permits advertising managers to
monitor the results of their advertisements and to easily make adjustments to ad
campaigns as needed. The Company believes that what differentiates the AdCast
system from other Internet advertising delivery systems is its ability to allow
advertisers to eliminate waste in advertising dollars by setting the precise
number of advertisements and click-throughs per visitor, on a per day, per
month, and/or per campaign basis. AdCast combines all of the traditional
features of existing Internet ad delivery systems with accountability, by
providing both the AdCast Affiliates and advertisers with detailed information
concerning the performance of advertising campaigns.
<PAGE>9
The benefits of the AdCast system include:
* Non-scrolling e-Billboard ads which can be set for durations from
15 to 90 seconds featuring audio, video, pop-up animation frames
and hot links.
* Non-scrolling e-Billboard ads appearing at the bottom of the Web
site page during a Web site visitor's entire stay with a
clickable link to that company's Web site or other
post-processing facilities.
* Specified number of times that ads are shown to each visitor, per
day, per month or for the entire ad campaign.
* Ability to provide hot-links to on-line ordering, coupon printing
and special offers.
The TrueManagementTM system contains tools that enable AdCast
Affiliates and advertisers to control, review, and manage certain standard
features. Some of the benefits of the TrueManagementTM system include:
* Reliable audience measurement as well as collection of historical
data for analysis and review.
* Easy on-line access to the information generated by AdCast
advertisers and Web site hosts.
* Ability of advertisers to easily change their ads.
* Real-time information including total number of new visitors,
daily visitors, cumulative repeat visitors and cumulative total
visitors.
MyLine. MyLine is a programmable personal telecommunication system. The
associated InstAccount product is a real time communication accounting and
management tool. The Company will re-engineer the Myline technology to exploit
the cost savings offered by Internet Protocol Telephony and thus create a price
and service competitive product. MyLine will be marketed by the Company's
subsidiary, Telespace, Inc., a Delaware corporation, to re-resellers both in the
United States and selected foreign markets.
Kiosk Software Technology. Kiosk Operating Suite ("K/OSTM"). K/OS is a
fully developed kiosk developer tool kit which includes remote management, usage
and event logging, read/write access for standard Open Database Connectivity
(ODBC/JDBC) databases and program interfaces to common peripherals. K/OS enables
software programmers to easily create interactive business solutions, maintain
hardware and remotely manage public access kiosks. The system is designed to be
steadfastly reliable and easy to customize. K/OS can deliver any interactive,
multimedia content that can be viewed or played using Microsoft Internet
Explorer. The product provides system flexibility through its Java and ActiveX
interfaces.
TerraVistaTM. TerraVistaTM is an extension of Microsoft's Internet
Explorer and controls public access on the Internet by serving as a programmable
gateway to selected Internet sites. TerraVistaTM gives the system administrator
the tools to focus a user's attention on those portions of the Internet that
have been pre-selected and approved. TerraVistaTM constrains the hardware to
<PAGE>10
prevent the user from circumventing the system. TerraVistaTM is a fail-safe
solution, ideal for use in academic environments, libraries, correctional
facilities, corporate visitor centers and other public areas.
DAI Technology. Pursuant to the reorganization agreement with Jim and
Jon Tech, the Company, through its subsidiary RMC, acquired the J-Engine Tool
for use with the Company's Direct Access Internet ("DAI") Services. The J Engine
Tool is a portable, scalable, modular approach to building and managing Web
sites. The J-Engine Tool provides Internet Service Providers ("ISPs") with the
ability to sell turnkey systems such as content management and e-commerce to an
unlimited number of users with unlimited customization. The J-Engine Tool can be
used to target both business-to-consumer and business-to-business clients. This
is achieved with the implementation of a powerful layout function that allows
customization, via on-line interface, all the way from final Web-page design
down to the look of the program interface layouts themselves. The J-Engine Tool
also allows the Web site manager to control access to the management system
developed for their Web site through specified password protection.
Fields can be added or deleted at will because the J-Engine Tool
technology is based on an object database. Java Servlets allow the program to be
implemented in virtually any environment and as a result, the J-Engine Tool's
modular architecture makes it easy to add new functionality as needed. This
could allow for example, a Web polling or statistics module to be added to help
a user create a more compelling Web site. This means that not only will the
program meet today's e-commerce needs, it can be fashioned into any number of
new uses, virtually without limit.
The layout section allows for virtually unlimited control over commerce
page layouts, text and graphics, checkout screens, product layouts and even the
layout of the program and editor itself. This includes complete access to
database variables and programming constructs such as "if", "while", and others.
Complete control of all HTML elements is also possible.
e-Billboard Exchange Program Under the E-Billboard Exchange program, in
addition to being paid for each visitor to their Web site, AdCast Affiliates are
given 3 free ads on other Affiliate Web sites for each ad shown on their own
web. These free ads can be used by the affiliate to encourage visitors to visit
the affiliate's own web site.
MARKETING
General. The Company is marketing the AdCast system to domestic and
foreign businesses involved in publishing and commerce over the Internet. The
Company intends to target manufacturers and suppliers of products, goods and
services that utilize the Internet for dissemination and sales of their
products.
The Company offers a sponsorship program in which a participant is
allocated several AdCast Affiliate Sites on which its logo is placed. These Web
sites are selected, based on compatibility of interests, from the Company's pool
of Web sites. The sponsor compensates the Company either through commissions
based on the amount of sales generated from viewers clicking on the sponsor's
logo on an AdCast Affiliate Site, or through advertising referral guarantees.
The Company believes that its sponsorship program is unique and anticipates that
it will appeal to larger organizations that already have name and logo
recognition.
<PAGE>11
Agreement with Internet Store. On September 3, 1998, the Company
entered into a non-binding memorandum of understanding ("MOU") with Copelands
Sports Fitness Superstore, a large chain storefront and Internet retailer of
sporting goods (the "Store"). The MOU stipulates that the Company shall receive
30% of the Store's net margin on sales, as defined in the MOU, generated by
consumers who have "clicked" through to the Store's Web site from the Company's
Internet e-Billboards. In addition, the Company leases e-Billboard space, paid
on a per visitor basis, on the Store's Web site. The Company has also agreed to
allow the Store to be the preferred sponsor on all of its customer's sports and
school related Web sites and all of its customer's Web sites where the Store's
vendors advertise.
Consulting Agreement. On January 8, 1999, the Company entered into a
consulting agreement with R.A.A.M. International, Inc., a Canadian corporation
(the "Consultant"), whereby the Consultant will head American Web site customer
acquisition efforts. Under the agreement, the initial term was from January 1,
1999 through April 30, 1999, and the amount budgeted for the Consultant's fees
and expenses during this initial term was approximately $100,000, subject to
ongoing audit and review by the Company of the Consultant's performance in
obtaining the stipulated Web sites. The Company agreed to pay an advance fee of
$30,000 to the Consultant on a bi-weekly basis from January 1, 1999 through
April 30, 1999. This Agreement was terminated by the Company in July 1999 after
payment of $84,000.
RESEARCH AND DEVELOPMENT
The Company has begun development of additional products. There is no
assurance that such products will ever become viable products or that the
Company will be able to market such products. In fiscal year ended June 30,
1999, the company estimates that it spent $168,510 on research and development
activities.
In August, 1998, the Company entered into a joint-development agreement
with Systeam SpA, an Italian company engaged in information technology,
consulting, software development and software support. Under the terms of the
agreement, Systeam SpA has contracted to provide ongoing development and support
of the Company's AdCast, Manufacturers' Outlet, TrueManagementTM, MyChannel and
MyLine technologies. In consideration the Company has agreed to pay an annual
royalty equal to 8% of the worldwide revenues of the Company for a period of 10
years, renewable for successive 10 year terms provided that Systeam continues to
develop, implement, support and upgrade the Technology and Licensed Software
during such periods. Subsequent to fiscal year end, the Company amended its
agreement with Systeam to guarantee a minimum royalty payment in the amount of
$500,000 payable between August 31, 1999 and January 2000. Systeam SpA has
established a permanent presence at the DAI Division of the Company to assist in
the technical changes necessary to accommodate the Company's growth.
Systeam SpA is currently implementing the telecommunications protocol
known as "IP" within MyLine. Once completed, this enhancement will enable MyLine
calls to be made over the Internet. MyLine will ultimately be developed into a
unified messaging system which will integrate with the Company's other
businesses. Unified messaging will permit messages sent by different media
including fax, email and voice mail to be accessed and read or listened to by
any of the other media, at any time and from any location.
Systeam SpA is also developing a Web site known as the Manufacturer's
Outlet. The Manufacturer's Outlet is an Internet Web site designed for the small
<PAGE>12
and medium sized business. This e-commerce site enables business to take on-line
orders for their products from retailers and/or individual consumers. Call-to
action ads, distributed by the AdCast system, drive traffic to the
Manufacturers' Outlet site.
MyChannel is a permission marketing business model by which consumers
or businesses are incentivized with cash or other benefits to participate in an
Internet advertising network. By obtaining detailed demographic and physographic
information about a large population of web users, MyChannel will be able to
precisely target advertising and merchandising material to narrowly defined, and
thus extremely valuable, target audiences. The basic technology and the business
plan for MyChannel already exists but development work to bring it to market
continues.
PROPRIETARY RIGHTS
The Company has filed two applications for patents of the AdCast
technology with the United States Patent and Trademark Office (applications No.
09/291,785 dated April 14, 1999 and 09/335,384 dated June 17, 1999) and a
copyright application for the AdCast service with the United States Register of
Copyrights. Work is in process for the filing of an additional patent
application to protect certain other features of the Company's proprietary
technology. The Company does not currently have patent or trademark protection
for any of its proprietary technology.
There can be no assurance that the Company's pending patent
applications will result in the issue of the patents, that if patents were
issued, it would afford protection against a competitor, or that any patents
issued to the Company could not be challenged, invalidated or circumvented by
others. Further, since patent applications in the United States are maintained
in secrecy until patents issue, the Company cannot be certain that others have
not filed patent applications directed toward inventions covered by its pending
patent applications or that it was the first to file patent applications on such
inventions. There can also be no assurance that any application of the Company's
technologies will not infringe patents or proprietary rights of others or that
licenses that might be required for the Company's processes or products would be
available on reasonable terms. The extent to which the Company may be required
to obtain licenses under other proprietary rights, the cost and the availability
of such licenses are unknown.
The Company also makes use of its trade secrets or "know-how" developed
in the course of its research and development. To the extent that the Company
relies upon trade secrets, un-patented know-how and the development of
improvements in establishing and maintaining a competitive advantage in the
market for the Company's products, there can be no assurances that such
proprietary technology will remain a trade secret or that others will not
develop substantially equivalent or superior technology to compete with the
Company's products.
COMPETITION
The Company faces competition from numerous companies, some of which
are more established, have greater market recognition, and have greater
financial and marketing resources than the Company. The Company's services
compete on the basis of certain factors, including a variety of viewer
demographics, price, duration of exposure of each advertisement, and the number
of visual impact of each advertisment. The market for the Company's services is
competitive, subject to rapid change and evolution as the Internet grows and
matures.
The Company's competitors include Doubleclick, Inc., 24/7 Media, Inc. and
Flycast, Inc., as well as other traditional banner advertising networks and
portals. More general competition for advertising revenues also comes from
<PAGE>13
conventional, non-internet advertising media such as television and radio.
EMPLOYEES
As of June 30, 1999, the Company and its subsidiaries had a total of 52
employees. This number includes 27 technicians/engineers, 5 marketing and 20
administrative personnel.
ITEM 2. DESCRIPTION OF PROPERTY
The Company and its subsidiaries maintain offices in five
locations. The executive offices are located at 1303 Grand Avenue, Arroyo
Grande, California 93420 pursuant to one-year leases totaling $3,187 per month
for approximately 4,000 square feet. The offices of the AdCast and DAI Divisions
are located at 124 South Halcyon Road, Arroyo Grande, California 93420 under a
monthly lease of $2,600 per month for approximately 3,500 square feet. The
AdCast sales and marketing office is located at 1901 S. Bascom Avenue, Suite
880, Compton, California under a 3 year lease at $4,221 per month. The Kiosk
Software, Inc. offices are located at 3534-A Empleo Street, San Luis Obispo,
California 93401 pursuant to a monthly lease of $1,600 for approximately 2,400
square feet. DigiCities, Inc. rent a total of 3,659 square feet at 5855 Green
Valley Circle, #206, Culver City, CA for $4,600 per month.
ITEM 3. LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the period covered by this report.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
On December 23, 1998, following the Chatsworth merger, the Company
applied to NASD Regulation, Inc. for quotation of the Company's common stock on
the NASD OTC Bulletin Board. On January 30, 1999, the Company received the
trading symbol AMUS from NASD Regulation, Inc. However, trading was not cleared
by NASD Regulation, Inc. at that time. Consequently, the Company's common stock
is not currently listed for trading on any stock exchange.
As of August 31, 1999 the Company had approximately 280 shareholders.
Recent Sale of Unregistered Securities
2,350,000 Common Stock. On January 29, 1999, the Company completed an
offering of 2,350,000 shares of its common stock for an aggregate sales price of
$3,687,500 (before costs) to investors located outside the United States through
Asia Pacific Finance Group Ltd., a British Virgin Islands Corporation, pursuant
to Regulation S of the Securities Act of 1933, as amended (the "Securities
Act"). The subscription agreements for these sales included representations that
the Company's stock would be traded on the OTC-BB by January 31, 1999, and that
<PAGE>14
the Company would use its best efforts to assist the subscribers in having their
stock registered under the Securities Act. Certain of the subscription
agreements also permitted 10% partial payment of the subscription price with the
balance payable once the Company's stock was traded on the OTC-BB.
As of June 30, 1999 subscriptions for 300,000 shares had been cancelled
pursuant to the contingency clause of the subscription agreements which allowed
for cancellation of the subscription, at the investor's option, if the Company
did not achieve a NASD over-the-counter bulletin board listing by January 31,
1999. As a result of these cancellations, the net amount raised by the
Regulation S offering, after costs, was reduced to $2,948,064.
Subsequent to June 30, 1999, subscriptions for a further 72,000 shares
at an aggregate subscription price of $129,600 (after costs) were also canceled.
Consequently, the final outcome of this Regulation S offering was subscriptions
for 1,978,000 shares which realized $2,818,464.
A further 1,350,000 shares were sold to non-United States residents
prior to the formal Regulation S offering, at a total price of $485,000. These
shares were offered and sold exclusively to purchasers residing outside the
United States.
$5,000,000 Convertible Subordinated Promissory Note. On February 12,
1999, the Board of Directors of the Company authorized issuance of up to
$5,000,000 of Convertible Subordinated Promissory Notes for the purpose of
raising funds for working capital. These notes are payable in full within two
years after issue, bear annual interest of 6%, have the right to convert to
shares of the Company's common stock at a conversion price of $2.00 for each
share of common stock ($.0001 par value). To date, $1,323,500 has been raised by
way of sales of these promissory notes in private transactions to individuals
who qualify as accredited investors as defined in Rule 501 of Regulation D.
Notes totaling $1,187,422, including accrued interest, had been converted into
593,711 shares of common stock as of June 30, 1999. As of September 23, 1999 all
the notes issued have been converted to common stock. The sale and conversion of
these Notes was made pursuant to an exemption provided by Section 4(2) and 4(6)
of the Securities Act.
During the fiscal year the Company sold a total of 213,680 shares of
common stock to other accredited investors for aggregate consideration of
$88,417, an average price of $0.41 per share. The shares were sold in private
placements to accredited investors (as that term is defined in Rule 501 of
Regulation D). The sale of these shares was made pursuant to an exemption
provided by Section 4(2) and 4(6) of the Securities Act. In addition, stock
options were exercised resulting in 43,545 shares being issued for a total
exercise price of $49,392.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
PLAN OF OPERATIONS:
The Company's anticipates revenues being generated in the second
quarter of the fiscal year ending June 30, 2000, with breakeven on an accrual
basis being achieved only in the last quarter of the fiscal year. However, it is
unlikely that cash-flow breakeven will be achieved within the fiscal year 2000
due to the aggressive growth objectives of the Company. Accordingly, the Company
will require substantial injections of capital in order to finance its
operations, meet capital expenditure requirements and retire existing debt over
the next three months.
The Company believes that it will need approximately $5 million to $7
million to supplement working capital. This amount will fund the operations of
the Company over the next 12 months. The Company anticipates that it will
receive its working capital through the issuance of debt or equity securities,
<PAGE>15
but the Company may consider other financing vehicles such as partnerships and
joint ventures.
As of June 30, 1999, the Company had no substantial revenues, and does
not anticipate any substantial revenues until the second quarter of fiscal 2000.
Historically, the Company has raised funds through equity financing to fund its
operations and provide working capital. It is anticipated that the Company will
finance its operations and those operations of its subsidiaries through equity
and debt financing. Subsequent to the fiscal year end, the Company entered into
a Subscription Agreement with an accredited investor providing for the sale of
1,250,000 shares of the Company's common stock for a total purchase price of
$2,500,000. The Agreement provides for the sales price to be held in escrow, and
the release of the funds and the completion of the sale are conditioned upon the
Company's stock being listed for trading on the NASD OTC Bulletin Board. The
Company is currently seeking commitments for an additional $5 million.
The Company plans to expand the number of employees from approximately 75 as of
September 23, 1999, including DigiCities personnel, to approximately 200 at the
end of fiscal year 2000. Increases will occur in the number of employees engaged
in engineering and operations functions in particular. In order to attract and
retain qualified employees, the Company may need to offer increasingly
attractive compensation arrangements to employees.
The plan of operations also anticipates purchasing capital plant, equipment and
software at a cost of approximately $2 million in fiscal year 2000. The Company
expects that a significant proportion of the cost of this capital expenditure
will be financed by leases or bank lines of credit. To the extent that capital
expenditures cannot be financed by leases or lines of credit, liquid cash
injections will be required by the Company, as discussed above.
During fiscal 2000, expenditures on research and development for new products
and systems will increase. Particular emphasis will be given to the Company's
MyLine and MyChannel technologies.
Due to the merger between the Company and Chatsworth, an Annual Report
on Form 10-KSB was required for the six month period of July 1, 1998 to December
31, 1998. This was due to the fact that Chatsworth (as the surviving entity) had
a December 31 fiscal year end. Subsequent to this merger, the Company changed
its reporting fiscal year to June 30 to coincide with AmeriCom's historic
accounting periods. As a result, the Management Discussion and Analysis can be
presented with comparable 12 month periods ending on June 30.
RESULTS OF OPERATIONS:
Fiscal Year Ended June 30, 1999 Compared to Fiscal year Ended June 30, 1998
In the 1999 fiscal year ended June 30, 1999, the Company had revenues
of $143,591 from business operations. During the comparable period in 1998, the
Company had no revenue from business operations. The Company had anticipated the
generation of significant revenues commencing in the second quarter of fiscal
1999. However, these sales were not realized in fiscal 1999 as expected due to
the Company's decision to re-engineer its AdCast delivery system to ensure its
ability to accommodate a large volume of advertising transactions. The Company
began beta testing of AdCast on February 1, 1999. The Company is currently
displaying in excess of 4 million ads per day. Of these, 25% are ads displayed
on the AdCast Affiliate sites and promote products of the Company's sponsorship
advertiser and advertisers with whom the Company has entered into commission
based contracts or "paid-per-click" programs. The balance consists of unpaid ads
which cross-promote AdCast Affiliate sites pursuant to AdCast's e-E-Billboard
Exchange program.
<PAGE>16
In 1999, indirect costs were substantially higher as the Company
strengthened its marketing, operational and engineering resources in order to
launch its AdCast and associated products. Marketing expense increased to
$527,935 as compared to marketing expense of $0 during the comparable period in
1998. Research and development expenses were $168,510 in fiscal year 1999 as
compared to $3,774 in 1998. Administrative expenses increased to $977,979 in
fiscal year 1999 compared to $39,116 in the comparable period in 1998. This
increase was due to preparations for the operational roll out of AdCast and
related Company products, and costs associated with the transition to a public
corporation.
Fiscal Year Ended June 30, 1998 Compared to Fiscal Year Ended June 30, 1997
In the fiscal year ended June 30, 1998, the Company had no revenue from
business operations. In the fiscal year ended June 30, 1997, the Company had
only incidental revenue derived from consulting activities unrelated to the
continuing business of the Company. During both years the Company incurred
administrative costs and costs arising from the development of various technical
and business concepts which did not reach fruition during either period. As
such, no accurate and comprehensive comparison between the Company's 1998 and
1997 operating results is available.
The following table provides a summary of selected financial data for
the Company's statement of operations:
<PAGE>17
<TABLE>
<S> <C> <C> <C>
FISCAL YEAR END,
(in US$ thousands except per share data)
Fiscal Year Ended Fiscal Year Ended Fiscal Year Ended
June 30, 1999 June 30, 1998 June 30, 1997
Operative Revenue $143,591 $0 $14,275
Income(loss) from operations ($7,700,999) ($272,569) ($379,280)
Income (loss) per share ($0.26) ($0.01) ($0.04)
Total Assets $4,458,559 $51,586 $14,279
Long term debt, less current $200,000 $0 $0
portion
Stockholder equity (Deficicency) ($1,155,641) ($1,726,543) ($1,453,974)
</TABLE>
Liquidity and Capital Resources
The Company's operations in future periods will be dependent upon the
availability of adequate liquid funds for capital expenditures and to meet
income deficits associated with the operational roll-out of the AdCast
advertising service. In order to meet its need for sufficient liquid funds, the
Company has made the following arrangements.
On January 29, 1999, the Company completed an offering of 2,350,000
shares of its common stock for an aggregate sales price of $3,687,500 to
investors located outside the United States through Asia Pacific Finance Group
Ltd., a British Virgin Island Corporation, pursuant to Regulation S of the
Securities Act. A further 1,350,000 shares were sold to non-United States
residents prior to the formal Regulation S offering, at a total price of
$485,000. Of the combined total number of shares sold to non-residents,
subscriptions for 300,000 shares were subsequently canceled because of the delay
in arranging for the Company's stock to be traded on the OTC-BB. Consequently,
as of June 30, 1999, the final Regulation S offering included 2,050,000 shares
sold for $2,948,064. Subsequent to the fiscal year end, an additional 72,000
shares (aggregating $129,600 after costs) previously sold in the Regualtion S
offering were canceled. As a result of these, the net amount raised by the
Regulation S offering, after costs, was $2,818,464.
On July 29, 1999 the Company entered into a subscription agreement with
Giacomo Torrente, an accredited investor. The agreement provided for the sale of
1,250,000 shares of the Company's common stock for a total price of $2,500,000.
The agreement provided for the sale price to be held in escrow, and conditioned
release of the funds and completion of the sale upon the Company's stock being
listed for trading on the NASD OTC-BB.
During the fiscal year the Company sold a total of 213,680 shares of
common stock to other accredited investors for aggregate consideration of
$88,417, an average price of $0.41 per share.
<PAGE>18
On February 12, 1999, the Board of Directors of the Company authorized
issuance of up to $5,000,000 of Convertible Subordinated Promissory Notes for
the purpose of raising liquid funds for working capital. These notes, payable in
full two years after issue, with annual interest of 6%, bear the right to
convert to shares of the Company's common stock at a conversion price of $2.00
for one share of common stock. To date, $1,323,500 has been invested by way of
purchases of these promissory notes by individuals who qualify as accredited
investors as defined by the Securities And Exchange Commission. Notes totaling
$1,187,422, including accrued interest, had been converted into 593,711 shares
of common stock as of June 30, 1999. As of September 23, 1999 all the notes
issued have been converted to common stock. The sale and conversion of these
Notes was made pursuant to exemption provided by Section 4(2) and 4(6) of the
Securities Act.
The Company considers that existing commitments and indications of
intent of equity and debenture financing will be adequate to meet the Company's
operational funding requirements for the next 12 months. However, we cannot
guarantee that these sources of funding will be realized, nor that internally
generated funds will be developed sufficiently quickly to meet the Company's
needs when externally generated funds are exhausted. The Company continues to
incur liability for payment of goods and services supplied to the Company which
are not met in full within normal credit terms, and is thus reliant on the
continued goodwill and confidence of those vendors.
Through June 30, 1999, the Company funded its operations primarily
through private placements of it securities. As of June 30, 1999, June 30, 1998
and June 30, 1997, the Company's working capital (deficit) was ($2,776,554),
($1,741,377) and ($1,458,870), respectively. Proceeds from private placements
were used for working capital.
IMPACT OF THE YEAR 2000 ISSUE
Overview. Currently installed computer systems and software products
are coded to accept or recognize only two digit entries in the date code field.
These systems and software products will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result computer
systems and/or software used by many companies and governmental agencies may
need to be upgraded to comply with such Year 2000 requirements or risk system
failure or miscalculations causing disruptions of normal business activities.
State of readiness. Americom USA has substantially completed its
initial assessment of the Year 2000 readiness of its information technology
("IT") systems, including the hardware and software that enable it to provide
and deliver its solutions, and its non-IT systems. AmeriCom's assessment plan
consists of (i) quality assurance testing of its internally developed
proprietary software incorporated in its solutions ("Solutions Software"); (ii)
contacting third-party vendors and licensors of material hardware, software and
services that are both directly and indirectly related to the delivery of
Americom USA's solutions to its Web publisher and advertiser customers; (iii)
contacting vendors of material non-IT systems; (iv) assessment of repair or
replacement requirements; (v) repair or replacement; (vi) implementation; (vi)
implementation of contingency plans in the event of Year 2000 failures which
include backup systems for both on and off site locations, 24 hour watch using
various software and trained personnel, and ensuring proper emergency procedures
are in place for handling situations we have no control over such as loss of
utility services.
Americom USA is conducting quality assurance testing to ensure Year
2000 compliance of all new internally developed proprietary code incorporated
into its Solutions Software. The Company plans to perform a Year 2000 simulation
on its Solutions Software during the fourth quarter of 1999, following the
implementation of revisions to the Solutions Software planned for the third
<PAGE>19
quarter of 1999. Based on the results of its Year 2000 simulation test, the
Company intends to revise the code of its Solutions Software as necessary to
improve the Year 2000 compliance of its Solutions Software.
Americom USA has been informed by many of its vendors of material
hardware and software components of its IT systems that the products used by the
Company are currently Year 2000 compliant. Americom USA is in the process of
requiring vendors of the other material hardware and software components in its
IT systems to provide written assurances of their Year 2000 compliance. The
Company plans to complete this process during the second half of 1999. Americom
USA has completed an assessment of the materiality of its non-IT systems and is
in the process of seeking written assurances of Year 2000 compliance from
providers of its material non-IT systems. The Company is also dependent on the
continued functioning of basic services such as electrical utilities, telephony,
mail delivery and transportation in order to conduct its business. While
Americom USA is taking steps to ensure that the third parties on which it is
reliant are Year 2000 compliant, it cannot predict the probability of such
compliance nor the costs to the Company of non-compliance by those third parties
or of securing alternate services from Year 2000 compliant parties.
Pending completion of its planned Year 2000 simulation test of its Solutions
Software and its program of requesting Year 2000 assurances from vendors and
licensors of material IT and non-IT systems, Americom USA has not yet completed
its Year 2000 compliance repair or replacement analysis, or its contingency
plans. The Company plans to complete all Year 2000 planning and analysis before
the end of the fourth quarter.
Costs. Americom USA has not incurred any material expenditures in
connection with identifying or evaluating Year 2000 compliance issues. Most of
its expenses have related to, and are expected to include, the operating costs
associated with time spent by employees in the evaluation process and Year 2000
compliance matters generally. The Company does not now possess the information
necessary to estimate the potential costs of revisions to its Solutions Software
should such revisions be required or the replacement of third-party software,
hardware or services that are determined not to be Year 2000 compliant. Although
Americom USA does not anticipate that such expenses will be material, such
expenses, if higher than estimated, could have a material adverse effect on the
Company's business, results of operations and financial condition.
Risks. Americom USA believes that it has established an effective
program to resolve material Year 2000 issues in its sole control in a timely
manner. As aforementioned, however, the Company has not yet completed all phases
of its program and is dependent on third parties whose progress is not within
its control. The failure by such third parties to be Year 2000 compliant could
result in a systematic failure beyond the control of Americom USA from
delivering its services to its customers, decrease the use of the Internet or
prevent users from accessing the Web sites of its Web publisher customers, which
could have material adverse effect on the Company's business, results of
operations and financial condition. There can also be no assurance that Americom
USA will not discover Year 2000 compliance problems in our Solutions Software
that will require substantial revisions which could be costly and time-consuming
to remedy. If the Company does not complete any of its currently planned
additional remediation prior to the Year 2000, the Company could experience
significant difficulty in producing and delivering solutions and conducting its
business in the Year 2000 as it has in the past, which could result in lost
revenues, increased operating costs, loss of customers and other business
interruptions, any of which could have a material adverse effect on Americom
USA's business, results of operations and financial condition. Moreover, the
failure to adequately solve Year 2000 compliance issues could result in claims
of mismanagement, misrepresentation or breach of contract and related
<PAGE>20
litigation, which could be costly to defend. This potential liability and lost
revenue can not be reasonably estimated at this time.
Contingency Plan. As aforementioned Americom USA is engaged in an
ongoing Year 2000 assessment and has not yet developed any contingency plans.
The results of the Company's Year 2000 simulation testing and the responses
received from third party vendors and service providers will be taken into
account in determining the nature and extent of any contingency plans.
Forward-Looking Statements. The foregoing Year 2000 discussion and the
information contained herein is provided as a "Year 2000 Readiness Disclosure"
as defined in the Year 2000 Information and Readiness Disclosure Act of 1998
(Public Law 105-271, 112 Stat. 2386) enacted on October 19, 1998 and contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements, including without limitation,
anticipated costs and the dates by which Americom USA expects to complete
certain actions, are based on management's best current estimates, which were
made using assumptions about future events, including the continued availability
of certain resources, third party representations and other factors. However,
there can be no guarantee or assurance that these estimates will be achieved,
and actual results could differ materially. Specific factors that could cause
such material differences include, but are not limited to, the ability to
identify and remediate all relevant systems; results of Year 2000 testing;
adequate resolution of Year 2000 issues by governmental agencies, businesses and
other third parties who are outsourcing service providers, suppliers and vendors
of the Company; unanticipated system costs; and the adequacy of and ability to
implement contingency plans. The "forward-looking statements" made in the
foregoing Year 2000 discussion speak only to the date on which such statements
were made, and the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement was made or to reflect the occurrence of unanticipated
events.
FACTORS AFFECTING FUTURE OPERATING RESULTS
The Company's income will be heavily dependent upon sales of
advertising inventory on AdCast e-Billboards and the successful delivery of that
advertising. The Company did not sell or deliver paid advertising through its
AdCast e-Billboard until July 1999, after the end of the fiscal year and the
Company cannot be sure that such sales will increase or even continue.
Prospective sales of AdCast advertising are dependent upon both the ability of
the Company to sell and deliver AdCast services and the continued development of
the overall market for Internet advertising
<PAGE>21
services and Internet related commerce. Similarly, sales by the Company's Kiosk
Software and DigiCities subsidiaries may not increase or continue.
Future prospects for the Company's financial condition and results of
operations will be overwhelmingly dependent on factors which were not present
during the 1998 fiscal year and were only present in the second half of fiscal
1999. In particular, the speed and success of development of the AdCast
advertising e-Billboard service, which only commenced in August 1999, will
determine the bulk of the Company's revenues and costs in fiscal year 2000 and
beyond. Additionally, the Company's wholly owned subsidiaries Kiosk Software
(which is engaged in the development of software for public access computer
terminals), and DigiCities (which develops and maintains business Web sites)
will generate significant and growing revenues and costs in fiscal year 2000 and
beyond. To date Kiosk Software has incurred operating losses and DigiCities has
generated a profit. All the Company's main business operations are relatively
new, are growing rapidly and have an insufficient track record from which future
financial results can be predicted.
The market for Internet advertising has only recently begun to develop, is
rapidly evolving and is characterized by an increasing number of market
entrants, although Internet advertising continues to be dominated by the larger
Web sites. As is typical in the case of a new and rapidly evolving industry,
demand and market acceptance for recently introduced products and services are
subject to a high level of uncertainty.
AmeriCom's ability to generate advertising revenue will depend on, among other
factors:
o the continued development of the Internet as an advertising medium,
o pricing of advertising on other Web sites,
o the Company's ability to achieve and demonstrate user demographic
characteristics that are attractive to advertisers,
o the development and expansion of the AmeriCom's advertising sales
force, and
o the establishment and maintenance of desirable sales relationships.
Rapid growth in use of and interest in the Internet in the North
American market is a recent phenomenon and there is no assurance that acceptance
and use of the Internet will continue to develop or that a sufficient base of
users will emerge to support AmeriCom's business. We believe this growth will
slow, but this will not affect the growth in advertising on the Internet which
is in its infancy.
Virtually all of AmeriCom's Web advertising revenues are derived from
short-term contracts from a limited number of advertisers. Consequently, many of
AmeriCom's advertising customers can cease advertising on AmeriCom's Web site
quickly and without penalty, thereby increasing AmeriCom's exposure to
competitive pressures. There is no assurance that AmeriCom's current advertisers
will continue to purchase advertisements or that AmeriCom will be able to secure
new advertising contracts from existing or future customers at attractive rates
or at all. Any failure of AmeriCom to achieve sufficient advertising revenue
could have a material adverse effect on AmeriCom's business, results of
operations and financial condition.
The market for Internet information delivery is characterized by extensive
<PAGE>22
research and development and rapid technological change, frequent new product
introductions and technological innovation, resulting in short product life
cycles and evolving industry standards. Development by others of new or improved
products, processes or technology may render AmeriCom's products and services
less competitive or obsolete. The emerging character of these products and
services and their rapid evolution will require AmeriCom to effectively use
leading technologies, continue to develop its technological expertise, enhance
its current services and continue to improve the performance, features and
reliability of its network infrastructure.
AmeriCom's future success depends in large part upon its ability to obtain
rights to and deliver content of sufficient interest to users of the Internet.
AmeriCom does not create its own content. Rather, AmeriCom relies on third party
content providers, such as Web site publishers. AmeriCom's ability to maintain
its existing relationships with such content providers and to build new
relationships with additional content providers is critical to the success of
its business.
AmeriCom anticipates that significant expansion of its operations will be
required in order to address potential market opportunities. AmeriCom expects
that it will need to increase its personnel significantly in the near future.
The anticipated substantial growth is expected to place a significant strain on
its managerial, operational and financial resources and systems. To manage its
growth, AmeriCom must implement, improve and effectively use its operational,
management, marketing and financial systems and train and manage its employees.
Despite the implementation of security measures, AmeriCom's networks may be
vulnerable to unauthorized access, computer viruses and other disruptive
problems. A party who is able to circumvent security measures could
misappropriate proprietary information or cause interruptions in AmeriCom`s
Internet operations. ISPs and OSPs have in the past experienced, and may in the
future experience, interruptions in service as a result of the accidental or
intentional actions of Internet users, current and former employees or others.
AmeriCom may be required to expend significant capital or other resources to
protect against the threat of security breaches or to alleviate problems caused
by such breaches.
AmeriCom will face intense competition in every aspect of its business,
including competition for advertisers, providers of banner advertising and
vendors of advertising services. The business of providing data and other
products using the Internet is currently experiencing explosive growth and is
characterized by extremely rapid technological development, rapid changes in
consumer habits and preferences, massive infusions of capital and the emergence
of a large number of new and established companies with aspirations to control
as much of the distribution process as possible. A relatively small number of
these companies, including America On Line and Yahoo! currently control primary
or secondary access of a significant percentage of all Internet users and
therefore have a competitive advantage in marketing to those users.
AmeriCom and its subsidiaries must be considered to be in the early stages of
development similar to other young companies, particularly those in new and
rapidly evolving markets, including Internet content, electronic commerce
("e-commerce") Internet advertising and merchandising. To achieve and sustain
profitability, AmeriCom must, among other things:
o Provide diverse content of interest to Internet users by attracting
Internet web sites to participate in the AdCast program.
o Effectively develop new and maintain existing relationships with
advertisers, advertising brokers, advertising agencies and content
providers.
<PAGE>23
o Continue to develop and upgrade its technology and network infrastructure.
o Respond to competitive developments.
o Successfully introduce enhancements to its existing products and services
to address new technology standards and developments on the Internet.
o Attract, retain and motivate qualified personnel.
ITEM 7. FINANCIAL STATEMENTS
The financial statements for the Company are attached beginning on page
F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Directors and Officers of the Company are as follows:
<TABLE>
<S> <C> <C>
Name Age Title
-------------------- ------ --------------------------
Robert M. Cezar 57 Director, President, Chief
Executive Officer
David H. Loomis 61 Director, Chief Financial
Officer, Treasurer, Vice
President of Finance
Gary M. Hogue 59 Chief Operating Officer
Helen E. Cooper 58 Secretary, Vice President of
Administration
Craig D. Machado 53 Director, Vice President, Sales
and Marketing
Winston Lee 44 Vice President, International
Corporate Development
</TABLE>
There are no agreements or understandings for any officer or director
to resign at the request of another person and none of the above-named officers
or directors is acting on behalf of or will act at the direction of any other
person.
<PAGE>24
Set forth below are the names of the directors and officers of the
Company, all positions and offices held with the Company held, the period of
service, and business experience during at least the last five years:
ROBERT M. CEZAR, 57, has served as Chairman, Chief Executive Officer
and a director of the Company since 1994. From 1994 to 1999, Mr. Cezar served as
a director, chief executive officer and president of RMC Diversified Associates
International Ltd., a California company. From 1996 to 1998, Mr. Cezar was vice
president of engineering for Enhanced Service Providers, a telecommunications
company.
DAVID H. LOOMIS, 61, has served as Chief Financial Officer, Treasurer,
Vice President of Finance and a director of the Company since 1994. From 1963 to
1991, Mr. Loomis served in various positions at Loomix, a $23 million
agri-business company culminating as chief financial officer and a director.
From 1996 to 1998, Mr. Loomis served as chief financial officer and a director
of RMC Diversified Associates International Ltd., a California company. Mr.
Loomis received his Bachelor of Science degree in Social Science from California
Polytechnic State University in 1961.
GARY M. HOGUE, 59, has served as Chief Operating Officer of the Company
since 1998. From 1994 to 1998, Mr. Hogue was the Administrative Manager for
Torch Operating Company, Santa Maria District, an oil production company
operating facilities both offshore and onshore in California. From 1969 to 1992,
Mr. Hogue served in a number of positions with Atlantic Richfield Co. (ARCO),
the last of which was Personnel Director for ARCO Oil and Gas, Western District.
Mr. Hogue received his Bachelor of Science degree in Economics from Sonoma State
College in 1972 and his Masters of Business Administration in 1982 from
Pepperdine University, Malibu, California.
HELEN E. COOPER, 58, has served as Secretary and Vice President of
Administration of the Company since 1994. From 1993 to 1994, Ms. Cooper served
as a director, corporate secretary and vice president of administration of RMC
Diversified Associates International Ltd., a California company. From 1996 to
1998, Ms. Cooper served as an administrative assistant at Enhanced Service
Providers, a telecommunications company. Since April 1998, Ms. Cooper has been
employed by the Company. Ms. Cooper received her teaching degree in 1962 from
Oxford University and the Froebel Institute, United Kingdom.
CRAIG D. MACHADO, 53, has served as Vice President, Sales and Marketing
and as a director of the Company since 1998. From 1991 to 1995, Mr. Machado
served as vice president, marketing and merchandising at Calgene Fresh, Inc., a
genetically engineered fresh tomato company. From 1995 to 1998, Mr. Machado was
the director of marketing for APIO, Inc., an agricultural distribution and
processing company located in Guadalupe, California. Mr. Machado has served as
president of the Northern California Produce Council in 1976 and 1977 and was
recognized by the Sacramento Bee as the Creative Advertiser of the Year for
1987. Mr. Machado received his Bachelor of Science degree in Architectural
Engineering from California State University, Sacramento, California in 1966.
WINSTON LEE, 44, has served as Vice President of International
Corporate Development since October 1998. In 1987 Mr. Lee founded Gateway
Communications Limited, Taipei, Taiwan, an international direct dial rate
arbitrage company which developed an automatic aggregation system. From 1994 to
1998, Mr. Lee was managing director of Strait Venture Inc., Taiwan, which
represents several large telecommunications companies in the Far East, including
<PAGE>25
China. Mr. Lee received his Bachelor of Architecture degree in 1977 from Rice
University and his Master of Business Administration from New York University in
1982.
Family Relationship
There are no family relationship between any director and executive
officer.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's executive officers and directors, and persons who own more than 10% of
the Company's Common Stock, to file reports of ownership on Form 3 and changes
in ownership on Form 4 or 5 with the Securities and Exchange Commission (the
"SEC"). Such executive officers, directors and 10% stockholders are also
required by SEC rules to furnish the Company with copies of all Section 16(a)
forms they file. Based solely upon its review of copies of such forms received
by it, or on written representations from certain reporting persons that no
other filings were required for such persons, the Company believes that, during
the year ended June 30, 1999, all Section 16(a) filing requirements applicable
to its executive officers, directors and 10% stockholders were complied with
except as follows: Mr. Winston Lee filed three late reports representing one
stock transaction each in April, May and July 1999; and subsequent to the
Company's fiscal year end, Mr. Robert Cezar filed one late Form 4 reporting two
stock transactions in August, 1999.
<PAGE>26
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued
by the Company on behalf of the Chief Executive Officer and President of the
Company for last three completed fiscal years and the only officer who received
a salary in excess of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long Term Compensation
-----------------------
Annual Compensation Awards Payout
-------------------- ------- -------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Compensation Award(s) Options Payout Compen-sation
Position Year Salary ($) Bonus ($) ($) ($) (#) ($) ($)
- ---------------------- -------- ---------- ---------- ------------ ----------- ----------- -------- -------------
Robert M Cezar, Chief 1999 $137,500 0 0 0 935,000 0 0
Executive Officer 1998 $ 11,150 0 0 0 0 0 0
1997 0 0 0 0 0 0 0
David Loomis, C.F.O. 1999 $ 96,000 $ 40,000* 0 0 675,000 0 $192,165**
1998 0 0 0 0 0 0 0
1998 0 0 0 0 0 0 0
</TABLE>
* A bonus of the Company's shares was given on 2/18/99 to 5 individuals.
** Previously accrued salaries for 1997 and 1998.
The Company and its subsidiaries do not currently have employment agreements
in place with its executive officers. All executive officers serve at the
pleasure of the Board.
Stock Option Plan
On March 26, 1999, the Company established the 1999 Stock Option Plan (the "1999
Plan") to serve as a vehicle to attract and retain the services of key employees
and to help such key employee realize a direct proprietary interest in the
Company. The 1999 Plan requires approval by shareholders within one year of its
creation. The 1999 Plan provides for grants of up to 15,000,000 shares of Common
stock as non-statutory and incentive stock options. Under the 1999 Plan,
officers, directors, consultants and employees of the Company are eligible for
participation. The exercise price of any incentive stock option granted under
the 1999 Plan may not be less than 100% of the fair market value of the Class A
Common Stock of the Company on the date of grant. The fair market value for
which an optionee may be granted incentive stock options in any calendar year
may not exceed $100,000. Shares subject to options under the 1999 Plan may be
purchased for cash. Unless otherwise provided by the Board, an option granted
under the 1999 Plan is exercisable for a term of ten years (or for a shorter
period up to ten years). The 1999 Plan is administered by the Board of Directors
and its Compensation Committee, which has discretion to determine optionees, the
number of shares to be covered by each option, the exercise schedule, and other
<PAGE>27
terms of the options. The 1999 Plan may be amended, suspended, or terminated by
the Board, but no such action may impair rights under a previously granted
option. Each option is exercisable only so long as the optionee remains employed
by the Company. No option is transferable by the optionee other than by will or
the laws of descent and distribution. As of June 30, 1999, options to acquire
10,282,581 shares of Common Stock were outstanding.
Options Granted in Last Fiscal Year
The following table sets forth options granted by the Company during the last
fiscal year to the executives listed in the summary compensation table.
<TABLE>
<S> <C> <C> <C> <C>
Option/SAR Grants in Last Fiscal Year
Percentage of Total
Options/SARs Granted
Options/SARs Granted to Employees in
Name Fiscal Year (1) Exercise Price $/sh Expiration Date
- ----------------------- ---------------------- ---------------------- ---------------------- ----------------------
Robert M Cezar 935,000 9.1% 2.20 2009
- ----------------------- ---------------------- ---------------------- ---------------------- ----------------------
David Loomis 675,000 6.7% 2.00 2009
- ----------------------- ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>
(1) Reflected as a percentage of the total number of options to purchase common
shares granted (10,282,581) during the most recently fiscal year ended June 30,
1999.
<PAGE>28
No incentive stock options were exercised by the Named Executive Officers during
the most recently fiscal year ended June 30, 1999.
Director Compensation
At this time, the Company does not pay its directors compensation for their
attendance at board meetings. Further, at this time, the Company does not
provide pension, retirement or similar benefits to its officers and directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of August 31, 1999 each director and officer
of the Company and each person known by the Company to be the beneficial owner
of five percent or more of the Company's Common Stock and except if noted, the
holder thereof has sole voting and investment power with respect to the shares
shown.
<TABLE>
<S> <C> <C>
Percentage
Number of Beneficially
Name and Address Shares Owned
- ---------------------------------- ---------------- ------------------
Robert Cezar 16,504,679(1) 45.0%
1303 Grand Avenue, Suite 221
Arroyo Grande, California 93420
David Loomis, Director 2,260,684 6.2%
1303 Grand Avenue, Suite 221
Arroyo Grande, California 93420
Helen Cooper 993,919(3) 2.6%
1303 Grand Avenue, Suite 221
Arroyo Grande, California 93420
<PAGE>29
Gary Hogue 100,000(2) 0.3%
1303 Grand Avenue, Suite 221
Arroyo Grande, California 93420
Craig Machado 556,120 1.5%
21 La Gaviota
Pismo Beach, California 93449
All directors and executive officers ----------- -----
as a group (6 persons) 20,415,402 55.7%
</TABLE>
(1) Of which 4,548,370 is held in the Robert M. Cezar trust.
(2) Includes 100,000 shares issuable under stock options exercisable within 60
days of June 30, 1999.
(3) Of which 665,690 is held in the Helen E. Cooper trust.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 1, 1999, the Company signed an agreement to merge with Telespace Ltd. Mr
Winston Lee is the Chief Executive Officer and majority shareholder of Telespace
Ltd. The merger transaction was terminated by mutual consent on September 8,
1999.
In July 1998 the Company acquired, as a wholly-owned subsidiary, RMC
Diversified Associates International, Ltd. ("RMC Intl."). At the time of this
transaction Robert Cezar, David Loomis, Craig Machado and Helen Cooper were
officers, directors and principal shareholders of RCM Intl.
As of June 30, 1999, officers and relatives of officers had outstanding loans to
the Company of $638,145 which represents approximately 48% of the total notes
and loans owed by the Company. $475,000 of this amount bears interest at 10% per
annum and is due March 27, 2000. $3,145 of this amount bears interest at 14% per
annum. The remaining loan amounts are non-interest bearing. All of the loans
from affiliates are unsecured and, except for the $475,000 loan, are payable on
demand.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following documents are being filed as part of this report:
<TABLE>
<S> <C> <C>
PAGE
(1) Financial Statements
Report of Independent Auditors - Weinberg & Company, P.A.........................F-1
Consolidated Balance sheet as of June 30, 1999............................F-2 to F-3
Consolidated Statements of Operations for the years ended
June 30, 1999 and 1998...........................................................F-4
Consolidated Statements of Stockholders' Equity for the
Years ended June 30, 1999 and 1998........................................F-5 to F-6
Consolidated Statements of Cash Flows for the years ended
June 30, 1999 and 1998....................................................F-7 to F-8
Notes to Consolidated Financial Statements................................F-9 to F-34
(2) Exhibits
</TABLE>
<PAGE>30
3.1* Certificate of Incorporation filed as an exhibit to the Company's
registration statement on Form 10-SB (filed on February 11, 1998 and
incorporated herein by reference.)
3.2* By-Laws filed as an exhibit to the Company's registration statement on Form
10-SB filed on February11, 1998 incorporated herein by reference.
10.3* Stock Option Plan.
10.4+ Stock Exchange Agreements dated July 15, 1998 between shareholders of
RMC Diversified Associates International, Ltd. And AmeriCom USA, Inc.
10.5** Agreement and Plan of Merger dated November 23, 1998 between Chatsworth
Acquisition Corporation and AmeriCom USA, Inc.
10.6** Agreement and Plan of Reorganization dated January 24, 1999 between Kiosk
Acquisition, Inc. and AmeriCom USA, Inc.
10.7** Agreement and Plan of Reorganization dated February 26, 1999 between
Jim and Jan Tech and AmeriCom USA, Inc.
10.8** Agreement of Purchase and Sale and Exclusive Licensing of Technology
dated March 11, 1999 between AmeriCom Ltd. and AmeriCom USA, Inc.
- ------------------------------------------------------------------------------
* Previously filed with Form 10-KSB for the fiscal year ended December
31, 1998.
** Previously filed with Form 8-K
+ Filed herewith
(b) Reports on Form 8-K:
Form 8-K filed December 18, 1998 reporting item 1, 2, 4, 6 and 9 and
amended February 18, 1999 reporting item 7, financial statements dated
January 29, 1999.
Form 8-K filed February 23, 1999 reporting acquisition of Kiosk Software,
Inc.
Form 8-K filed April 26, 1999 reporting financial statement of Kiosk
Software, Inc.
Form 8-K filed May 17, 1999 reporting item 2, reporting acquisition of the
MyLine technology.
Form 8-K filed July 12, 1999 reporting item 2, merger of with Telespace,
Ltd.
Form 8-K filed July 19, 1999 reporting item 2, merger with DigiCities Inc.
Form 8-K filed September 22, 1999 reporting cancellation of Telespace, Ltd.
merger.
<PAGE>31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: September 24, 1999 AMERICOM USA, INC.
/S/ ROBERT CEZAR
---------------------------------
By: Robert Cezar
Chief Executive Officer, Chairman
of the Board of Directors and
Principal Executive Officer
/S/ DAVID LOOMIS
---------------------------------
By: David Loomis
Chief Financial Officer, Principal
Financial Officer and Principal
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Name Office Date
- ---- ------ -----------
/S/ROBERT CEZAR
- --------------------
Robert Cezar Director September 24, 1999
/S/ DAVID LOOMIS
- -------------------
David Loomis Director September 24, 1999
/S/ CRAIG MACHADO
- -------------------
Craig Machado Director September 24, 1999
<PAGE>32
AMERICOM USA, INC. AND SUBSIDIARIES
CONTENTS
PAGE 1 - INDEPENDENT AUDITORS' REPORT
PAGES F-2 - F-3 - CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1999
PAGE F-4 - CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
YEARS ENDED JUNE 30, 1999 AND 1998
PAGES F-5 - F-6 - CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' DEFICIENCY FOR THE YEARS ENDED
JUNE 30, 1999 AND 1998
PAGES F-7 - F-8 - CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
YEARS ENDED JUNE 30, 1999 AND 1998
PAGES F-9 - F-34 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<PAGE>F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
AmeriCom USA, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of AmeriCom USA,
Inc. and Subsidiaries as of June 30, 1999 and the related consolidated
statements of operations, changes in stockholders' deficiency, and cash flows
for each of the two years in the period ended June 30, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above, present
fairly, in all material respects, the financial position of AmeriCom USA, Inc.
and Subsidiaries as of June 30, 1999 and the results of their operations and
their cash flows for each of the two years in the period ended June 30, 1999, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 20 to the
financial statements, the Company's significant operating losses and working
capital deficiency of $2,776,554 raise substantial doubt about its ability to
continue as a going concern. Management's Plan in regards to these matters is
also described in Note 20. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
September 3, 1999
<PAGE>F-2
AMERICOM USA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,497
Accounts receivable, net 33,819
Due from officer 46,414
Due from employees 7,516
Other assets 10,338
-----------
Total Current Assets 103,584
PROPERTY AND EQUIPMENT, NET 537,223
-----------
OTHER ASSETS
Advances pursuant to merger- cash and common stock 520,000
Deposits 20,534
Kiosk computer software costs, net 1,441,134
MyLine software cost, net 1,452,556
Goodwill, net 383,528
------------
Total Other Assets 3,817,752
-----------
TOTAL ASSETS $ 4,458,559
- ------------ ===========
See accompanying notes to consolidated financial statements.
<PAGE>F-3
AMERICOM USA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1999
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,371,503
Payroll taxes payable 150,917
Accrued salaries and wages 228,673
Deferred revenue 2,463
Obligation under capital lease 2,484
Notes and loans payable - current portion 335,951
Notes and loans payable - related parties 638,145
Convertible promissory notes 150,000
-----------
Total Current Liabilities 2,880,136
-----------
Notes and loans payable 200,000
-----------
TOTAL LIABILITIES 3,080,136
-----------
REFUNDABLE COMMON STOCK
Common stock - refundable (1,889,000 shares issued
and outstanding) 189
Common stock subscribed - refundable (161,000 shares) 16
Additional paid in capital 2,947,859
Less due from investors for issued common stock (124,200)
Less subscriptions receivable (289,800)
-----------
TOTAL REFUNDABLE COMMON STOCK 2,534,064
-----------
STOCKHOLDERS' DEFICIENCY
Preferred stock $.0001 par value, 10,000,000 shares
authorized, none issued and outstanding -
Common stock $0.0001 par value, 100,000,000 shares
authorized, 32,519,284 issued and outstanding 3,252
Additional paid-in capital 8,416,156
Accumulated deficit (9,575,049)
-----------
TOTAL STOCKHOLDERS' DEFICIENCY (1,155,641)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 4,458,559
- ---------------------------------------------- ===========
See accompanying notes to consolidated financial statements.
<PAGE>F-4
AMERICOM USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
1999 1998
---------- -----------
REVENUES $ 143,591 $ -
COST OF SALES 121,873 -
----------- ----------
GROSS PROFIT 21,718 -
----------- ----------
OPERATING EXPENSES
Salaries, wages and other compensation 1,612,659 163,289
Contract services 717,623 -
Amortization expense 353,206 455
Depreciation expense 54,624 4,738
Consulting expense 3,417,418 2,000
Legal fees 487,310 28,100
Other general and administrative expenses 977,979 39,116
----------- ----------
TOTAL OPERATING EXPENSES 7,620,819 237,698
----------- ----------
LOSS FROM OPERATIONS (7,599,101) (237,698)
----------- ----------
OTHER INCOME (EXPENSE)
Gain on debt forgiveness 5,000 8,938
Other income 1,752 -
Interest expense (97,448) (37,154)
Vendor finance charges (1,505) (2,553)
Payroll tax penalties and interest (8,097) (4,102)
----------- ----------
NET OTHER EXPENSES (100,298) (34,871)
----------- ----------
Income Tax expense 1,600 -
----------- ----------
NET LOSS $(7,700,999) $ (272,569)
- -------- =========== ==========
Weighted average number of shares
outstanding during period -
basic and diluted 29,227,076 25,296,320
=========== ===========
Net loss per common
share and equivalents -
basic and diluted ($0.26) ($.01)
=========== ===========
See accompanying notes to consolidated financial statements.
<PAGE>F-5
AMERICOM USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
RMC DIVERSIFIED
ASSOCIATES
COMMON STOCK INTERNATIONAL
ISSUED INC.
-------------- ------------------
ADDITIONAL
NUMBER NUMBER PAID-IN ACCUMULATED
OF SHARES AMOUNT OF SHARES AMOUNT CAPITAL DEFICIT TOTAL
------------ -------- ---------- --------- ---------- ------------- -----------
Balance, June 30, 1997 11,982,548 $ 1,198 13,313,800 $ 1,331 $ 144,978 $ (1,601,481) $(1,453,974)
Acquistion of Diversified
Associates by
AmeriCom USA, Inc. 13,313,800 1,331 (13,313,800) (1,331) - - 0
Net loss 1998 - - - - - (272,569) (272,569)
---------- -------- ----------- -------- ----------- ------------ -----------
Balance, June 30, 1998 25,296,348 2,529 - - 144,978 (1,874,050) (1,726,543)
Conversion of promissory
notes into common stock 208,699 22 - - 78,433 - 78,455
Stock sold prior to merger 2,044,981 204 - - 541,561 - 541,765
Reverse merger with
Chatsworth Acquisition
Corporation 350,000 35 - - 833 - 868
Issuance of common stock
as compensation 2,100,000 210 - - 3,149,790 - 3,150,000
Acquisition of Kiosk
Software, Inc. by
AmeriCom USA, Inc. 1,000,000 100 - - 1,499,900 - 1,500,000
Issuance of common stock
as compensation 180,000 18 - - 359,982 - 360,000
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>F-6
AMERICOM USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
FOR THE YEAR ENDED JUNE 30, 1999 AND 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
RMC DIVERSIFIED
ASSOCIATES
COMMON STOCK INTERNATIONAL
ISSUED INC.
-------------- ------------------
ADDITIONAL
NUMBER NUMBER PAID-IN ACCUMULATED
OF SHARES AMOUNT OF SHARES AMOUNT CAPITAL DEFICIT TOTAL
------------ -------- ---------- --------- ---------- ------------- -----------
Issuance of common stock
for services 2,000 $ 1 - $ - $ 3,999 $ - $ 4,000
Stock options exercised 43,545 4 - - 49,388 - 49,392
Conversion of promissory
notes into common stock 593,711 59 - - 1,187,362 - 1,187,421
Acquisition of
My Line Software 500,000 50 - - 999,950 - 1,000,000
Common stock advanced
for acquisition 200,000 20 - - 399,980 - 400,000
Net loss 1999 - - - - - (7,700,999) (7,700,999)
---------- -------- --------- -------- ---------- ----------- ------------
BALANCE, JUNE 30, 1999 32,519,284 $ 3,252 - $ - $8,416,156 $(9,575,049) $ (1,155,641)
- ---------------------- ========== ======== ========= ======== =========== =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>F-7
AMERICOM USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
1999 1998
------------ -------------
Cash flows from operating activities:
Net loss $(7,700,999) $ (272,569)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation 54,624 4,738
Amortization 352,751 455
Provision for doubtful accounts 21,679 -
Issuance of common stock for services 3,514,000 -
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable (25,453) 638
Employee receivable (7,516) 1,779
Other assets (9,138) (1,200)
Deposits (20,079) -
Increase (decrease) in:
Accounts payable and accrued expenses 813,725 53,067
Deferred revenue 2,463 -
Payroll taxes payable 97,303 12,116
Accrued salaries and wages $ (337,069) $ 140,321
---------- ----------
Net cash used in operating activities (3,243,709) (60,655)
---------- ----------
Cash flows from investing activities:
Due from officer (39,647) -
Purchase of property and equipment (562,384) (8,014)
Proceeds from return of deposits - 498
Advances related to merger and acquisition (173,000) -
Cash acquired in acquisition of Kiosk 3,171 -
---------- -----------
Net cash used in investing activities (771,860) (7,516)
---------- ----------
Cash flows from financing activities:
Proceeds from stock subscription 2,534,062 -
Proceeds from stock issuance 1,820,401 -
Payment of capital lease obligation (6,163) -
Payment of notes and loans payable (54,457) 59,239
Proceeds from notes and loans payable 150,000 37,500
See accompanying notes to consolidated financial statements.
<PAGE>F-8
AMERICOM USA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 1999 AND 1998
Payment of related party notes
and loans payable (611,544) -
Proceeds from related party notes
and loans payable 160,000 -
--------- ---------
Net cash provided by
financing activities 3,992,299 96,739
--------- --------
Net increase (decrease) in cash (23,270) 28,568
Cash and cash equivalents at
beginning of year 28,767 199
--------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 5,497 $ 28,767
- ---------------------------------------- ========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
CASH PAID DURING THE YEAR FOR INTEREST $ 39,388 $ -
========= ========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
During 1999 the Company converted $78,455 of convertible notes payable and
accrued interest into 208,699 shares of common stock.
During 1999, the Company issued 1,000,000 shares of common stock valued at $1.50
a share to acquire Kiosk.
During 1999, the Company issued 500,000 shares of common stock valued at $2.00 a
share to acquire My Line.
During 1999, the Company converted 1,187,422 of convertible notes payable
and accrued interest into 593,711 shares of common stock.
During 1999, the Company advanced 200,000 shares of common stock to an entity in
anticipation of closing on a pending acquisition.
During 1999, the Company issued 13,313,800 shares (retroactively adjusted for
recapitalization) of common stock to acquire Diversified.
During 1999, the Company issued 350,000 shares of common stock in a reverse
merger with Chatsworth.
See accompanying notes to consolidated financial statements.
<PAGE>F-9
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Description of Business
AmeriCom USA, Inc. ("AmeriCom") has developed proprietary technologies
known as Adcast, e-CommPlus, TrueManagement, and My-Channel. The
Company develops and markets software technology products that provide
advertisers, web site owners, sponsors and affiliates with advanced
Internet technology, revenue sharing, commercial efficiency, commercial
effectiveness and operating savings. AmeriCom positions itself in the
marketplace as an Internet Advertising Service Provider.
In July 1998 AmeriCom acquired its commonly controlled affiliate,
RMC Diversified Associates International ("Diversified").
Diversified subsequently became inactive. (See Note 14(A))
On November 23, 1998, effective December 4, 1998, AmeriCom entered into
an Agreement and Plan of Merger with Chatsworth Acquisition
Corporation, a Delaware corporation and public shell ("Chatsworth")
whereby the stockholders of AmeriCom exchanged all of their common
stock in AmeriCom for shares of Chatsworth in a transaction accounted
for as a recapitalization of AmeriCom. (See Note 14(B))
Kiosk Software, Inc. ("Kiosk"), a wholly-owned subsidiary of AmeriCom,
was acquired by AmeriCom on February 8, 1999 (see Note 14(C)). Kiosk
specializes in complete kiosk development services including custom
cabinet design and multimedia software development for a wide variety
of applications using its proprietary Kiosk Operating Suite.
On April 30, 1999, the Company acquired tangible and intangible assets
relating to technology developed and marketed by the seller under the
names "MyLine" and "InstAccount".
Adcast Inc., Adcast Canada, LTD., and Diversified are inactive
wholly-owned subsidiaries of AmeriCom USA, Inc. AmeriCom USA, Inc. and
its subsidiaries are hereinafter collectively referred to as the
"Company".
(B) Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
<PAGE>F-10
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)
(C) Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of
the financial statements and revenues and expenses during the reported
period. Actual results could differ from those estimates.
(D) Cash and Cash Equivalents
For purposes of the cash flow statements, the Company considers all
highly liquid investments with original maturities of three months or
less at time of purchase to be cash equivalents.
(E) Property and Equipment
Property and equipment are stated at cost, less accumulated
depreciation. Expenditures from maintenance and repairs are charged to
expense as incurred. Depreciation is provided using the straight-line
method over the estimated useful life's of the assets from three to
five years.
(F) Computer Software Costs
(i) Software To Be Sold Leased Or Otherwise Marketed
The Company accounts for the research and development costs and
production costs of computer software to be sold, leased, or otherwise
marketed in accordance with Statement of Financial Accounting Standards
No. 86 "Accounting for the Costs of Computer Software to Be Sold,
Leased, or Otherwise Marketed" ("Statement No.86"). Under Statement No.
86 all costs incurred to establish the technological feasibility of a
computer software product to be sold, leased, or otherwise marketed are
considered research and development expenses that are expensed as
incurred. Costs of producing product masters which include coding and
testing performed subsequent to establishing technological feasibility
but before the product is available for general release to customers
are capitalized and amortized on a straight-line basis over three
years. Kiosk computer software costs at June 30, 1999 represents an
allocation of the purchase price differential related to the
acquisition of Kiosk (see Notes 5 and 14(C)).
<PAGE>F-11
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)
(F) Computer Software Costs - (CONT'D)
(ii) Software Obtained For Internal Use
The Company accounts for software obtained for internal use in
accordance with the Accounting Standards Executive Committee Statement
of Position No. 98-1 "Accounting For the Costs of Computer Software
Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1
generally requires the capitalization of all internal or external
direct costs incurred in developing or obtaining internal use software.
The Company generally amortizes software developed or obtained for
internal use over an estimated life of three years. MyLine computer
software costs at June 30, 1999 represent the external purchase price
paid on April 30, 1999. (See Notes 5 and 14(D))
(G) Goodwill
Goodwill arising from the acquisition of Kiosk (see Note 14(C)) is
being amortized on a straight-line basis over five years.
(H) Income taxes
The Company accounts for income taxes under the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 109.
"Accounting for Income Taxes" ("Statement No.109"). Under Statement No.
109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered
or settled. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(I) Stock Options
In accordance with Statement of Financial Accounting Standards
No. 123 ("SFAS 123") the Company has elected to account for Stock
Options under Accounting Principles Board Opinion No. 25 ("APB
Opinion No. 25") and related interpretations.
<PAGE>F-12
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)
(J) Revenue Recognition
The Company recognizes revenues from advertising sales as earned.
The Company sells its Kiosk Operating Suite as a stand alone product or
under development contracts with customers whereby the Company develops
customized software applications or turnkey systems which include
software, hardware, and custom cabinets. The contracts generally
contain multiple elements with specified milestones and delivery dates
and stipulated fees for each element. The time to completion and
delivery of the development portion of the contracts generally does not
exceed three to six months.
The Company recognizes revenue under its kiosk development contracts in
accordance with the Accounting Standards Executive Committee Statement
of Position 97-2 "Software Revenue Recognition" ("SOP 97-2"). Under SOP
97-2 the Company recognizes revenue from the sale of stand alone
products upon delivery and recognizes revenue for each element under
development contracts at the time of delivery of that functioning
element.
(K) Advertising Expense
In accordance with Accounting Standards Executive Committee Statement
of Position 93-7, ("SOP 93-7") costs incurred for producing and
communicating advertising of the Company, are recorded as operating
expenses as incurred.
(L) Cost of Sales
The Company purchases hardware for specific customer requirements under
development contracts for turnkey kiosk systems. Hardware purchases are
recorded as cost of sales. The Company did not maintain inventory at
June 30, 1999.
The Company purchases advertising space for resale to customers on
various web sites and accounts and produces advertisements for
customers. These costs are included in the cost of sales in 1999.
<PAGE>F-13
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)
(M) Per Share Data
Net loss per common share for the year ended June 30, 1999 and 1998 is
required to be computed based on the weighted average common stock and
dilutive common stock equivalents outstanding during the year as
defined by Statement of Financial Accounting Standards, No. 128;
"Earnings Per Share". For 1999, under Generally Accepted Accounting
Principles, the shares outstanding for the period from July 1, 1998
through the recaptialization date of November 23, 1998 (see Note
14(B)), are deemed to be that amount issued to the stockholders of
AmeriCom on the recapitalization date. For the period from the
recapitalization date through June 30, 1999, the shares used in the
weighted average computation are the actual shares outstanding for that
period. For 1998, the weighted average shares have been retroactively
restated to reflect the quantity of shares of AmeriCom issued to the
Company's stockholders at the date of the recapitalization. The assumed
exercise of common share equivalents was not utilized since the effect
was anti-dilutive.
(N) Long-Lived Assets
During 1995, Statement of Financial Accounting Standards No.121,
"Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed Of" ("SFAS 121"), was issued. SFAS 121 requires
the Company to review long-lived assets and certain identifiable assets
related to those assets for impairment whenever circumstances and
situations change such that there is an indication that the carrying
amounts may not be recoverable. If the undiscounted future cash flows
of the enterprise are less than their carrying amounts, their carrying
amounts are reduced to fair value and an impairment loss is recognized.
The adoption of this pronouncement did not have a significant impact on
the Company's financial statements as of June 30, 1999 and 1998.
NOTE 2 - ACCOUNTS RECEIVABLE
Accounts receivable were as follows at June 30, 1999:
Accounts receivable $ 72,648
Allowance for doubtful accounts (38,829)
---------
$ 33,819
=========
<PAGE>F-14
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 2 - ACCOUNTS RECEIVABLE - (CONT'D)
For the year ending June 30, 1999, the Company recorded a provision for
doubtful accounts of $21,679 on its statement of operations. At June
30, 1999, the allowance for doubtful accounts includes this amount plus
the allowance attributable to the Kiosk accounts receivable at the date
of acquisition. (see Note 14(C))
At June 30, 1999 approximately 34% and 41% of gross accounts receivable
was due from two customers, respectively. The 41% amount was fully
reserved.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment at June 30, 1999 consisted of the following:
Office equipment $ 4,893
Office furniture 34,485
Computer equipment 476,502
Computer software 53,962
Trade Show Booth 5,303
Demonstration units 985
Automobiles 23,349
---------
599,479
Less accumulated depreciation (62,256)
---------
$ 537,223
=========
Depreciation expense for the year ended June 30, 1999 and 1998 was
$54,624 and $4,738, respectively.
NOTE 4 - ADVANCES PURSUANT TO MERGER
The Company has entered into an acquisition agreement where advances
have been made by the Company to the sellers as of June 30, 1999.
Under an agreement and Plan of Reorganization ("Reorganization Plan")
entered into on February 26, 1999, the Company has agreed to merge an
unrelated company (the "Target") into the Company, with the Company as
the surviving corporation. The purpose of the merger is to allow the
Company to acquire certain human resources and operational computer
software held by the Target. The two principals and the sole
stockholders of the Target shall become officers of the Company.
Pursuant to the Reorganization Plan, the Company shall pay $200,000
cash
<PAGE>F-15
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 4 - ADVANCES PURSUANT TO MERGER - (CONT'D)
to the Target stockholders and shall issue 200,000 shares of its common
stock valued at $2.00 per share to the Target stockholders in exchange
for all issued and outstanding common stock of the Target. All common
and preferred stock of the Target shall then be cancelled. In addition,
the Company shall issue 200,000 fully vested options to purchase common
stock at an exercise price of $2.00 per share and 400,000 options to
purchase common stock at an exercise price of $2.00 per share, which
shall vest at a rate of 200,000 at the end of each subsequent year of
employment of the two principals. The stock options shall be deemed
issued under the employee stock option plan.
In anticipation of closing the transaction, the Company advanced
$120,000 in cash and issued the 200,000 shares of its common stock to
Target stockholders as of June 30,1999. Pursuant to the Agreement, all
cash and stock advanced to the Target's stockholders is non-refundable
if the merger does not close, and the $520,000 value of these advances
will be considered fully-earned access and use fees for the software.
The $120,000 in cash and the $400,000 value of the 200,000 shares
issued is recorded as an asset entitled Advances Pursuant to Merger -
Cash and Common Stock. If it is determined the merger will not close
the asset will be charged to operations in the period the determination
is made. No amortization has been recorded in 1999 since the
transaction is pending.
NOTE 5 - COMPUTER SOFTWARE COSTS
The Company accounts for Kiosk computer software costs in accordance
with Statement No. 86. Computer software costs are reported at the
lower of unamortized costs or net realizable value. Commencing upon
initial product release, these costs are amortized based on the
straight-line method over the estimated life, generally three years.
Although technology is subject to change, the Company believes that
based on its projections the computer software costs are stated at net
realizable value and fully recoverable.
Kiosk computer software costs at June 30, 1999 represent the
unamortized portion of the allocation of the Kiosk acquisition purchase
price differential pursuant to Accounting Principles Board Opinion No.
16. (see Note 1(F) and 14(C))
<PAGE>F-16
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 5 - COMPUTER SOFTWARE COSTS - (CONT'D)
Kiosk computer software costs at June 30, 1999 was as follows:
Computer software costs $ 1,673,575
Less accumulated amortization (232,441)
-----------
$ 1,441,134
===========
Amortization expense on Kiosk Software, based on an estimated useful
life of three years for the year ended June 30, 1999 was $232,441.
MyLine computer software costs at June 30, 1999 represent the
unamortized cost of the software acquired on April 30, 1999 (see Notes
1(F) and 14(D)) as follows:
MyLine computer software costs $1,538,000
Less accumulated amortization 85,444
----------
$1,452,556
==========
Amortization expense on My-Line software, based on an estimated useful
life of three years, for the year ended June 30, 1999 was $85,444.
NOTE 6 - GOODWILL
Goodwill arising from the acquisition of Kiosk (see Note 14(C)) is
being amortized on a straight-line basis over five years.
Goodwill at June 30, 1999 was as follows:
Goodwill $ 418,394
Less accumulated amortization (34,866)
----------
$ 383,528
==========
Amortization expense for the year ended June 30, 1999 was $34,866.
NOTE 7 - PAYROLL TAXES PAYABLE
At June 30, 1999 the Company owed $150,917 in payroll taxes, interest
and penalties for prior tax periods of fiscal year 1999. Such amounts
were accrued in payroll taxes payable at June 30, 1999.
NOTE 8 - ACCRUED SALARIES AND WAGES
Accrued salaries and wages represent current and certain unpaid prior
year salaries from September 1994 through June 1999:
<PAGE>F-17
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 8 - ACCRUED SALARIES AND WAGES - (CONT'D)
Accrued salaries and wages payable $ 228,673
In January 1999 $490,742 of the accrued salaries existing prior to that
date were paid in cash with funds received from a private placement.
(see Note 15(F)) A total of $75,500 included in accrued salaries as of
June 30, 1999 represents accrued wages from prior periods.
NOTE 9 - NOTES AND LOANS PAYABLE
The following schedule reflects notes and loans payable to non-related
parties at June 30:
Note payable, interest at 8% per annum,
$200,000 due on April 30, 2000 and
$200,000 plus all accrued interest due
April 30, 2001, unsecured $ 400,000
Note payable, non-interest bearing, due monthly through September 30,
1999, unsecured, Company to issue 7,500 shares of stock in lieu of first
payment of $15,000 that was due on June 15, 1999 85,000
Note payable, interest at 10% per annum,
due on demand, unsecured 6,821
Note payable, non-interest bearing,
due on demand, unsecured 25,624
Note payable interest at 10% per annum,
due on demand, unsecured 18,506
-----------
535,951
-----------
Less current portion 335,951
-----------
$ 200,000
===========
The following schedule reflects notes and loans payable to related
parties at June 30:
<PAGE>F-18
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 9 - NOTES AND LOANS PAYABLE - (CONT'D)
Note payable to officer, non-interest bearing through March 26, 1998,
interest at 10% per annum from March 27, 1998, due
on March 27, 2000, unsecured $ 475,000
Note payable, interest at 14% per annum,
due on demand, unsecured 3,145
Note payable to employee, non-interest
bearing, due on demand, unsecured 20,000
Note payable, to director and officer,
non-interest bearing, due on demand, unsecured 25,000
Loan payable to officer, non-interest bearing,
unsecured 85,000
Note payable, non-interest bearing
due on demand, unsecured 30,000
----------
$ 638,145
==========
Required payments of principal on notes and loan payable at June 30,
1999, including current maturities, are summarized as follows:
2000 974,096
2001 200,000
----------
1,174,096
==========
Interest expense for the year ended June 30, 1999 and 1998 was $97,448
and $37,154, respectively.
Accrued interest of $104,460 on the notes and loans payable has been
included in accrued expenses at June 30, 1999.
NOTE 10 - CONVERTIBLE PROMISSORY NOTES
During 1999 and 1998, the Company issued $1,361,000 and $37,500
respectively, of convertible promissory notes to investors. Six notes
totaling $75,000 and related interest of $3,455 was converted to common
stock in October 1998 at $1.00 per share. Thirty-eight notes
aggregating $1,173,500 and related accrued interest of $13,922 were
converted on June 30, 1999 at a price of $2.00 per share. Two remaining
<PAGE>F-19
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 10 - NOTES AND LOANS PAYABLE - (CONT'D)
notes of $100,000 and $50,000 issued to one investor during 1999 bear
interest at 6% per annum. The holder can convert the amounts due
(including interest calculated to the conversion date) to common stock
of the Company at a price of $2.00 per share at any time during the
term of the note. Interest accrued to June 30, 1999 aggregated $1,981.
Subsequent to year end, both of the outstanding convertible notes were
converted. (See Notes 15(C), 15(D) and 21(A))
NOTE 11 - RELATED PARTIES
Certain notes and salaries are owed to related parties at June 30,
1999. (See Notes 8 and 9). Certain related parties took part in the
acquisition of Diversified. (See Note 14(A))
As discussed in the supplemental disclosure to the consolidated cash
flow statements, and Note 15, certain non-cash issuances of common
stock to related parties occurred during 1999.
NOTE 12 - COMMITMENTS AND CONTINGENCIES
(A) Year 2000 Issue
The Company is aware of the issues associated with the programming code
in existing computer systems as the millennium (year 2000) approaches.
The "year 2000" problem is pervasive and complex as virtually every
computer operation will be affected in some way by the rollover of the
two-digit year to 00. The issue is whether computer systems will
properly recognize date-sensitive information when the year changes to
2000. Systems that do not properly recognize such information could
generate erroneous data or cause a system to fail.
Although management believes that none of the Company's systems are
affected by this problem, the Company could be impacted by the failure
of other companies to timely correct their computer systems. The
Company's operations are dependent on the world wide telecommunications
networks including computer systems, telephone systems, and delivery
systems. If any of these systems become inoperational, the Company will
be directly and significantly affected. Management has not assessed the
potential effect on the Company's earnings.
<PAGE>F-20
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 12 - COMMITMENTS AND CONTINGENCIES - (CONT'D)
(B) Capital Lease Agreement
The Company leases "Kiosk equipment" under a lease agreement dated May
26, 1994. Prior to the acquisition of Kiosk by the Company, Kiosk wrote
down the Kiosk equipment to its net realizable value of zero pursuit to
SFAS 121.
Future minimum lease payments under the capital lease are as follows at
June 30, 1999:
Minimum lease payments $ 2,512
Less: interest (28)
-----------
Obligation under capital
lease - current $ 2,484
===========
The Company made its last payment required under its lease obligation
in April 1999. The Company subsequently financed its purchase option on
the capital lease for six months at 12% annually.
(C) Operating Lease Agreement
The Company leases various corporate office spaces, office equipment
and furniture and three automobiles under operating leases. The leases
have remaining terms varying from the years 2000 through 2003.
Future minimum lease payments for the operating leases are as follows
at June 30, 1999:
Years
Ending Amount
2000 119,054
2001 79,017
2002 61,597
2003 141
---------
$ 259,809
=========
Rent expense for the year ended June 30, 1999 and 1998 aggregated
$73,303 and $ 2,318, respectively.
<PAGE>F-21
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 12 - COMMITMENTS AND CONTINGENCIES - (CONT'D)
(D) Employment Agreements
The Company entered into an employment agreement with the former
principal shareholder of Kiosk Software, Inc. on January 24, 1999. The
agreement calls for the shareholder to become the President, Chief
Operating Officer, and Director of KAI at an annual salary of $100,000.
(E) Consulting Agreements
On January 1999 the Company entered into a consulting agreement with a
Canadian corporation relating to the acquisition of American Website
Customers. The Agreement was terminated in July 1999 after payments to
the consultant of $84,000.
The Company entered into two agreements for financial consulting
services. The Company issued 1,200,000 and 900,000 shares of common
stock to Asia Pacific Finance Group, LTD. and P.T. International, LTD.,
respectively for these services.
NOTE 13 - REFUNDABLE COMMON STOCK
Pursuant to the common stock subscription agreements under the Private
Placement (see Note 15(F)), the investor may, at their option, request
a full refund if the Company does not become quoted on the OTC Bulletin
Board by a stipulated date of January 31, 1999 for original
subscription agreements and September 30, 1999 for amended subscription
agreements. Pursuant to the Securities and Exchange Commission
Codification of Financial Reporting Policies Section 211, the
refundable common stock is presented as a separate item between
liabilities and equity. As of the date of this report, the Company has
received cancellations on stock subscriptions for 72,000 shares
resulting in a total reduction of proceeds after offering costs of
$129,600.
NOTE 14 - BUSINESS COMBINATIONS AND RECAPITALIZATION
(A) Acquisition of Diversified
On July 15, 1998 the Board of Directors of Diversified and AmeriCom
elected to execute a stock swap, whereby six stockholders, three of
whom were related parties at that date, representing 100% of the
outstanding stock of Diversified, exchanged their common stock for
common stock of
<PAGE>F-22
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 14 - BUSINESS COMBINATIONS AND RECAPITALIZATION - (CONT'D)
(A) Acquisition of Diversified - (CONT'D)
AmeriCom at a ratio of 500 for 1. Diversified then issued 10,000 shares
of its common stock to AmeriCom resulting in Diversified becoming a
wholly owned subsidiary of AmeriCom. Since both entities were under
common control the exchange was accounted for at historical cost in a
manner similar to that in a pooling of interests.
(B) Merger and Recapitalization
On November 23, 1998 AmeriCom USA, Inc. entered into an Agreement and
Plan of Merger (the "Agreement") with Chatsworth Acquisition
Corporation, a public shell ("Chatsworth") whereby all of the
stock-holders of AmeriCom USA, Inc. exchanged all of their common stock
in AmeriCom USA, Inc. for 27,550,000 shares or 91.83% of the common
stock of Chatsworth. The merger was effective on December 4, 1998 and
Chatsworth changed its name to AmeriCom USA, Inc. Under Generally
Accepted Accounting Principles, a company whose stockholders receive
over fifty percent of the stock of the surviving entity in a business
combination is considered the acquirer for accounting purposes.
Accordingly, the transaction is accounted for as an acquisition of
Chatsworth by AmeriCom USA, Inc. and a recapitalization of AmeriCom
USA, Inc. The financial statements subsequent to the acquisition
include the following: (1) the balance sheet consists of the net assets
of Chatsworth at historical costs and the net assets of the Company at
historical costs; (2) the statement of operations consists of the
operations of the Company for the period presented and the operations
of Chatsworth from the acquisition date. As a result of the merger,
2,100,000 shares of common stock of the surviving entity were issued to
certain consultants. The consultants' shares were recorded as
compensation expense in 1999, the period the services were provided, at
a fair market value of $3,150,000 or $1.50 per share. (see Note 12(E)).
In addition, 350,000 shares were issued to the prior shareholders of
Chatsworth, resulting in a total of 30,000,000 common shares issued and
outstanding, just subsequent to consummation of the merger.
(C) Acquisition of Software Company
On January 24, 1999, the effective date, the Company entered
into an Agreement and Plan of Reorganization (the "Agreement")
by and among the Company, Kiosk Acquisition, Inc. ("KAI"), Kiosk
Software, Inc.("Kiosk") and the principal shareholder of Kiosk (the
"Kiosk shareholder"). KAI is
<PAGE>F-23
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 14 - BUSINESS COMBINATIONS AND RECAPITALIZATION - (CONT'D)
(C) Acquisition of Software Company - (CONT'D)
a wholly owned subsidiary of the Company formed specifically for the
purpose of acquiring Kiosk. Under the terms of the Agreement, which
closed on February 8, 1999, KAI acquired one hundred percent of the
issued and outstanding common stock of Kiosk through the issuance of
1,000,000 shares of the Company's common stock to the stockholders of
Kiosk. All unexercised options of Kiosk at the effective date were also
converted to options of the Company at a similar ratio as the common
stock exchange discussed above. The Agreement contained a purchase
price contingency provision that expired on August 8, 1999 without any
additional shares being issued. At completion of the merger, all shares
of Kiosk were retired and the corporate existence of Kiosk was
terminated. KAI then changed its name to Kiosk Software, Inc. Pursuant
to the Agreement, the principal shareholder of Kiosk is employed by KAI
subsequent to the merger as its President and Chief Operating Officer
at an annual salary of $100,000 and as a director of KAI.
The Kiosk acquisition was recorded under the purchase method of
accounting and accordingly, the results of operations of Kiosk from the
acquisition date of February 8, 1999 are included in the accompanying
consolidated financial statements. The purchase price of $1,500,000,
which was based upon a $1.50 fair market value of the Company's common
stock issued, was allocated to the assets acquired and liabilities
assumed based on fair market values at the date of acquisition. The
fair market value of assets acquired and liabilities assumed is
summarized as follows:
Current assets $ 33,215
Property and equipment 15,084
Computer software 1,673,575
Goodwill 418,394
Current liabilities 640,268
The following unaudited pro forma financial information for the Company
gives effect to the Kiosk acquisition as if it occurred on July 1,
1997. These pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of the results of
operations which actually would have resulted had the acquisition
occurred on the date indicated, or which may result in the future.
<PAGE>F-24
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 14 BUSINESS COMBINATIONS AND RECAPITALIZATION - (CONT'D)
(C) Acquisition of Software Company - (CONT'D)
YEAR ENDED
JUNE 30,
1999 1998
----------- -----------
Net revenue $ 345,990 $ 346,269
Net loss (8,176,989) (411,319)
Net loss per share - basic and diluted ($.27) ($.02)
Shares used in per share calculation -
basic and diluted 29,816,117 26,296,320
(D) Acquisition of Technology
Under an agreement of Purchase and Sale and Exclusive Licensing of
Technology, (the "Agreement") dated March 11, 1999 and closed on April
30, 1999, the Company acquired all tangible and intangible assets
relating to technology marketed by the seller under the names "MyLine"
and "InstAccount" ("Products"). The MyLine product was originally
developed by Diversified under contract to the seller. The products
provide enhanced communication services.
The Company paid a deposit on the Agreement date of $38,000, and on the
closing date paid $15,000 in cash, $485,000 in promissory notes, issued
500,000 shares of the Company's common stock valued at $2.00 per share
and re-conveyed all Enhanced Service Provider shares of common stock
held by the Company which was written down in a prior year to its net
realizable value of zero for a total purchase price of $1,538,000. The
acquisition was recorded under the purchase method of accounting at its
fair value of $1,538,000. (See Note 5)
NOTE 15 - STOCKHOLDERS' EQUITY
(A) Retroactive Application of Recapitalization
Pursuant to the merger and recapitalization (see Note 14(B)) all
capital stock shares and amounts and per share data in the accompanying
consolidated financial statements for the years ended June 30, 1999 and
1998 have been retroactively restated.
<PAGE>F-25
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 15 - STOCKHOLDERS' EQUITY - (CONT'D)
(B) Authorized Common and Preferred Stock - (CONT'D)
AmeriCom has authorized 100,000,000 shares of common stock, par value
$0.0001, and 20,000,000 shares of preferred stock, par value $0.0001.
No preferred stock has ever been issued. The preferred stock may be
issued from time to time in one or more series, each such series to
have such distinctive designation or title as may be fixed by the Board
of Directors. Preferred stockholders have preference over common
stockholders as to cash dividends and liquidations.
(C) Conversion of Promissory Notes to Common Stock
In October 1998 six of the convertible promissory notes issued by the
company during 1999 and 1998 aggregating $75,000 were converted to
common stock of the Company at a price of $1.00 per share. The shares
issued aggregated 78,455 including 3,455 shares issued for accrued
interest. (see Note 10)
(D) Conversion of Promissory Notes to Common Stock
On June 30, 1999, thirty-eight of the convertible promissory notes
issued by the company during 1999 aggregating $1,173,500 were converted
to common stock of the Company at a price of $2.00 per share. The
shares issued aggregated 593,711 including 6,961 shares issued for
accrued interest. (see Note 10)
(E) Stock Issued As Compensation
Although the Company has not yet established any formal stock
compensation plans, during 1999 AmeriCom issued under what would be
considered a nonvariable compensatory stock issuance, 180,000 shares of
common stock to certain key officers and employees. The fair market
value of the stock was considered to be equal to the private placement
price of $2.00 per share and accordingly $360,000 was recorded as
compensation expense in 1999.
The Company issued 1,200,000 (see Note 18(B)) and 900,000 (see Note
12(E)) shares of common stock to Asia Pacific Finance Group, LTD. and
P.T International, LTD., respectively for consulting services.
Accordingly, the Company recorded $3,150,000 in consulting expense in
1999.
<PAGE>F-26
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 15 - STOCKHOLDERS' EQUITY - (CONT'D)
(F) Private Placements
In December 1998 the Company issued a Private Placement Memorandum,
pursuant to Regulation S of the Securities Act of 1933, as amended, to
offer 152 units each consisting of 10,000 shares of the Company's Class
A Common Stock at a purchase price of $20,000 per unit or $2.00 per
share. A discount of $0.50 per share was offered to subscribers who
paid 100% with their subscription agreement. In January 1999 the
Company amended such Private Placement Memorandum to increase the units
offered to 452. As of January 29, 1999 the Company has received
subscriptions for 2,050,000 shares aggregating $3,207,500, at which
point the offering was closed. The Company's net proceeds after
placement discount, commissions, and offering expenses were $2,948,064
including related receivables of $414,000. Certain subscriptions were
refunded as of June 30, 1999 (see Note 13)
(G) - Stock Option Plan
On March 26, 1999 the Board of Directors adopted a Stock Option Plan
(the "Plan"), as amended on the same date. The Plan was developed to
provide a means whereby key employees, directors, associates and
consultants of the Company and its subsidiary corporations may be
granted stock options to purchase common stock of the Company.
The Company applies APB Opinion No. 25 and related interpretations in
accounting for its Plan. Accordingly, no compensation cost has been
recognized for options issued under the plan as of June 30, 1999. Had
compensation cost for the Company's stock-based compensation plan been
determined on the fair value at the grant dates for awards under that
plan, consistent with Statement of Accounting Standards No 123,
"Accounting for Stock Based Compensation" (Statement No. 123) the
Company's net loss for the year ended June 30, 1999 would have been
increased to the pro-forma amounts indicated below.
Net loss As reported $ (7,700,999)
Pro forma $(10,218,905)
Net loss per share As reported $ (0.26)
Pro forma $ (0.35)
The effect of applying Statement No. 123 is not likely to be
representative of the effects on reported net loss for future years due
to, among other things, the effects of vesting.
<PAGE>F-27
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 15 - STOCKHOLDERS' EQUITY - (CONT'D)
(G) - Stock Option Plan - (CONT'D)
The Plan authorizes options up to an aggregate of 15,000,000 shares of
the Company's common stock. The Company grants incentive and
nonqualified stock options. Incentive stock options are only granted to
employees of the Company or any affiliate thereof while nonqualified
stock options are granted to individuals who are not employees.
Furthermore, stock options granted to employees might qualify as
nonqualified stock options in case the stock option terms do not
qualify as incentive stock options. The exercise price which is
established by the plan administrator may not be less than 100% of the
fair market value of the common stock at the time of the grant and may
not be less than 110% of the fair market value of the common stock at
the time of the grant if granted to employees owning more than ten
percent of the total voting power or value of all classes of stock of
the Company. The term of the Stock Option Plan shall be ten years from
the earlier of the date of adoption by the Board of Directors of the
Company or approval by the shareholders. In the case of incentive stock
options which are granted to employees owning more than ten percent of
the total voting power or value of all classes of stock of the Company,
the term may not exceed five years. Stock options are exercisable in
one or more installments during its term, and the right to exercise may
be cumulative as determined by the Plan Administrators. Stock options
issued vest over a period of up to four years.
Holders of options to purchase common stock of Kiosk, to the extent
outstanding and unexercised immediately prior to the Merger (see Note
14(C)), pursuant to the Kiosk Stock Incentive Plan, receive options to
purchase shares of common stock of the Company in substitution of their
options to purchase Kiosk common stock.
For financial statement disclosure purposes the fair market value of
each stock option grant is estimated on the date of grant using the
minimum value method in accordance with Statement No. 123 using the
following weighted-average assumptions: expected dividend yield 0%,
risk-free interest rate of 5.636%, and expected term of four years.
<PAGE>F-28
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 15 - STOCKHOLDERS' EQUITY - (CONT'D)
(G) - STOCK OPTION PLAN - (CONT'D)
A summary of the Company's Plan as of June 30, 1999 and changes during
the year is presented below:
Weighted-
Number of Average
Shares Exercise Price
------------ -------------
Stock Options
Balance at beginning of period - $ -
Granted 10,326,126 1.96
Exercised (43,545) 1.13
Forfeited - -
---------- ---------
Balance at end of period 10,282,581 $ 1.96
========== =========
Options exercisable at end of period 1,210,081 1.55
Weighted average fair value of
options granted during the period $ .37
=========
The following table summarizes information about options outstanding at
June 30, 1999:
Options Outstanding Options Exercisable
------------------- --------------------
Weighted-
Number Average Weighted Number Weighted
Range of Outstanding Remaining Average Exercisable Average
Exercise at June 30, Contractual Exercise At June 30, Exercise
Price 1999 Life Price 30, 1999 Price
-------- -------- ------------ -------- ------------ --------
$ 2.20 935,000 Years 4.71 $ 2.20 - $ -
2.00 810,000 9.05 2.00 - -
2.00 140,000 9.38 2.00 - -
2.00 1,615,000 9.55 2.00 292,000 2.00
$ 0.35 - 2.00 1,724,092 9.63 1.69 605,092 1.11
1.04 - 2.00 4,295,489 9.71 2.00 312,989 1.96
2.00 272,000 9.80 2.00 - -
2.00 3,000 9.88 2.00 - -
2.00 488,000 9.96 2.00 - -
---------- ---------
0.35 - 2.20 10,282,581 9.17 1.96 1,210,081 1.55
========== =========
Through the date of this report outstanding stock options totaled
13,791,581.
<PAGE>F-29
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 16 - CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS
During fiscal 1999, 97% of the Company's total revenues were derived
from sales to five customers.
At June 30, 1999, 98% of accounts receivable were due from four
customers. (See Note 2). Financial instruments, which potentially
subject the Company to concentrations of credit risk, consist of
accounts receivable. The Company's allowance for doubtful accounts is
based upon management's estimates and historical experience. The
Company performs ongoing credit evaluations of its customers and
generally does not require collateral.
NOTE 17 - INCOME TAXES
Income tax expense (benefit) for the years ended June 30, 1999 and 1998
is summarized as follows:
1999 1998
---------- ----------
Current:
Federal $ - $ -
State 1,600 -
Deferred
- -
----------- ---------
$ 1,600 $ -
=========== =========
The Company's tax expense differs from the "expected" tax expense for
the years ended June 30, 1999 and 1998 (computed by applying the
Federal Corporate tax rate of 34 percent to income (loss) before
taxes), as follows:
1999 1998
------------ -----------
Computed "expected" tax expense(benefit) $(2,618,340) $ (92,674)
State income tax 1,600 -
Change in valuation allowance 2,618,340 92,674
---------- ---------
$ 1,600 $ -
=========== =========
<PAGE>F-30
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 17 - INCOME TAXES - (CONT'D)
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities at June 30, are as
follows:
1999 1998
-------- --------
Deferred tax assets:
Net operating loss carryforward $ 3,549,073 $ 637,176
Total gross deferred tax assets 3,549,073 637,176
Less valuation allowance 3,549,073 637,176
----------- ---------
Net deferred tax assets $ - $ -
=========== =========
At June 30, 1999, the Company had net operating loss carryforwards of
approximately $10,438,450 for income tax purposes, available to offset
future taxable income expiring on various dates beginning in 2009
through 2024. The net operating loss carryfowards include approximately
$863,400 of acquired net operating loss carryfowards subject to an
annual usage limitation of $70,650.
The valuation allowance at July 1, 1998 was approximately $637,176. The
net change in the valuation allowance during the year ended June 30,
1999 was an increase of approximately $2,911,897 including an increase
of $293,556 attributable to acquired net operating loss carryforwards.
NOTE 18 - OPERATING AGREEMENTS
(A) Agreement with Internet Store
On September 3, 1998 the Company entered into a non-binding memorandum
of understanding (the "memorandum") with a large chain storefront and
Internet retailer of sporting goods (the "Store").
The memorandum stipulates that the Company shall receive 30% of the
Store's net margin on sales as defined in the agreement, generated by
consumers who have "clicked" through to the Store's Web site from the
Company internet billboards. In addition, the Company leases billboard
space, paid on a per visitor basis, on the Store's Web site. The
Company has also agreed to allow the Store to be the preferred sponsor
on all of its customer's sports and school related Web sites and all of
its customer's Web sites where the Store's vendors advertise.
<PAGE>F-31
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 18 - OPERATING AGREEMENTS - (CONT'D)
(B) Business Services Agreement
On September 8, 1998 the Company entered into a twelve month agreement,
subject to renewal, with a British Virgin Islands Corporation (the
"Corporation") for services generally related to financial and
management advisory services for the arrangement of a United States
stock market listing through a reverse acquisition with a United States
publicly held company and for assisting the Company in connection with
a private placement offering (See Note 15). Under terms of the
agreement, the Company shall pay to the Corporation: (i) five percent
management success fees for the services of the private placement upon
the execution of each subsequent agreement (see below), (ii) four
percent of the Company's common stock payable for the United States
stock market listing services, payable upon execution of the reverse
merger with a United States publicly held company.
Per management of the Company, the five percent fee as noted in (i)
above was verbally amended to ten percent. The Company has been paying
the ten percent fees to the Corporation as new subscription agreements
are received. Upon closing of the reverse merger (See Note 14(B)) the
Corporation was issued 1,200,000 shares of the Company's common stock
equivalent to four percent of the then total outstanding common stock
of the Company. (See Note 15(E))
(C) Software Development Agreement
In August 1998 the Company entered into an agreement with System Spa
(the "Developer"), an Italian company engaged in information
technology, consulting, software development, software support and
related matters. Under the terms of the agreement the Developer has
contracted to provide continued, ongoing development and support of the
Company's AdCast, e-CommPlus, TrueManagement, and My-Channel technology
("Technology"). In consideration the Company has agreed to pay an
annual royalty equal to eight percent (8%) of the world-wide net
revenues of the Company for a period of ten (10) years, renewable for
successive ten (10) year terms provided the Developer continues to
develop, implement, support and upgrade the Technology and Licensed
Software during such periods. The Company has agreed to guarantee a
minimum royalty payment in the amount of $250,000 in the first calendar
year and advance another $250,000 against future royalties, subject to
the completion of the development of Phase I of the Licensed Software
which was completed and accepted by the company on January 3, 1999. The
Company has paid $40,000 and has
<PAGE>F-32
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 18 - OPERATING AGREEMENTS - (CONT'D)
(C) Software Development Agreement - (CONT'D)
$85,000 of minimum royalty payments due included in accrued expenses at
June 30, 1999.
(D) Software License Agreements
The Company enters into agreements with various customers whereby the
customer acquires the right and license to use and market Kiosk's
programs and materials. The agreements were established for terms of
twelve months and eighteen months, respectively, and continuing
thereafter on a yearly basis and month to month basis, respectively.
Under the terms of the agreements, the Company agrees, (i) to provide
to the customer its "Value Added Reseller Starter Kit", (ii) to advise
the customer of its software enhancements and, at the customer's
request offer these enhancements to the customer for additional
compensation, (iii) to provide technical support and training. The
customer agrees to purchase from the Company a "Value Added Reseller
Starter Kit" and to provide (i) marketing to end-users, (ii)
application software development, (iii) support to end-users,(iv)
software licensing to end-users and (v) accounting records. The Company
retains all ownership rights, title and interest in and to all current
and future revisions or enhancements of the licensed software.
(E) Customer Software Development Agreements
The Company sells its Kiosk Operating Suite under software development
agreements to various customers. Under the terms of the agreements the
Company develops customized software applications or turnkey systems
which include software, hardware, and custom cabinets. The agreements
generally contain multiple elements with specified milestones and
delivery dates and stipulated fees for each element. The time to
completion and delivery of the development portion of the contracts
generally does not exceed three to six months.
NOTE 19 - BUSINESS SEGMENTS
The operations of the Company are divided into two segments, software
sales and Internet advertising. The software segment includes operating
systems, hardware, and consulting operations. The Internet segment
provides web site advertising, content development and marketing
support. No allocation of general corporate expenses has been allocated
between the segments. Inter-company transactions have been eliminated
<PAGE>F-33
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 19 - BUSINESS SEGMENTS - (CONT'D)
between the Company's revenues, operating income, assets, capital
expenditures and depreciation and amortization pertaining to the
industries in which the Company operates are presented below.
1999 Software Internet Consolidated
------------------------------- ---------- --------- ------------
Revenue $ 143,217 $ 374 $ 143,591
Operating Loss 549,683 7,151,316 7,700,999
Assets employed at end of year 1,893,244 2,565,315 4,458,559
Depreciation and Amortization 269,495 138,335 407,830
Capital Expenditures 14,765 2,085,619 2,100,384
NOTE 20 - Going Concern
As reflected in the accompanying financial statements, the Company has
had continuing losses, a working capital deficiency of $2,776,554, and
has been delayed in introducing its proprietary technologies. The
ability of the Company to continue as a going concern is dependent on
the Company's ability to raise additional capital and implement its
business plan. The financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.
The Company anticipates significant revenues beginning in the second
quarter of fiscal 2000 due to the implementation of its business plan.
The company has received a commitment for $2.5 million from an
accredited investor contingent upon the Company obtaining a trading
status on the NASD OTC Bulletin Board. (see Note 21(D)). The Company
anticipates raising additional working capital through the issuance of
debt or equity securities or other vehicles such as partnerships and
joint ventures. Management believes that actions presently being taken
to obtain additional funding provide the opportunity for the Company to
continue as a going concern.
<PAGE>F-34
AMERICOM USA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1999
NOTE 21 - SUBSEQUENT EVENTS
(A) Convertible Notes Payable
At June 30, 1999 there were two convertible promissory notes
outstanding aggregating $150,000 (See Note 10). In July 1999 both of
the convertible promissory notes were converted to common stock of the
Company at a price of $2.00 per share. The shares issued approximated
75,990 including 990 shares issued for accrued interest.
(B) Cancelled merger
On July 1, 1999 the Company entered into a Merger Agreement and Plan of
Reorganization ("Merger") with a trading public shell. The merger was
subsequently terminated by mutual consent of the parties.
(C) Merger Agreement
On August 2, 1999 as amended, the Company entered into a Merger
Agreement and Plan of Reorganization to acquire an Internet Services
Provider. ("Target") Pursuant to the Merger, the Company will (i)
increase authorized capital stock to 120,000,000 of which 99,000,000
shares shall be Class A common stock, 1,000,000 shall be Class B common
stock, and 20,000,000 shall be preferred stock (ii) issue 3,500,014
shares of the Company `s Class A common stock in exchange for all of
the issued and outstanding common stock of Target and (iii) issue
1,500,000 options to purchase Class A common stock. As of the date of
this report, the Merger has not closed.
(D) Subscription Agreement
On July 29, 1999 the Company entered into a subscription agreement with
an accredited investor providing for the sale of 1,250,000 shares of
the Company's common stock for a total price of $2,500,000. The
Agreement provided for the sales price to be held in escrow, and
conditioned release of the funds and completion of the sale upon the
Company's stock being listed for trading on the NASD OTC Bulletin
Board.
THIS AGREEMENT dated as at the 15th day of July, 1998.
BETWEEN:
ROBERT M. CEZAR, of Arroyo Grande, California, U.S.A.
(hereinafter called the "Exchanger")
PARTY OF THE FIRST PART,
-and-
AMERICOM USA, INC., a corporation incorporated under the laws of the
State of Delaware, in the United States of America,
(hereinafter called the "Exchangee")
PARTY OF THE SECOND PART:
WHEREAS the Exchanger is the owner of FIVE THOUSAND SIX HUNDRED (5,600)
shares of RMC DIVERSIFIED ASSOCIATES INTERNATIONAL, LTD., (hereinafter called
the "Corporation") a corporation incorporated under the laws of the State of
California, in the United States of America (hereinafter called the "Exchanged
Shares").
AND WHEREAS the Exchanger has agreed to exchange and the Exchangee has
agreed to exchange the Exchanged Shares owned by the Exchanger for shares at
near or equal value;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants herein contained and for other good and valuable consideration
(the adequacy, sufficiency and receipt of which is hereby acknowledged by each
of the parties hereto), the parties hereto hereby covenant and agree as follows:
1. Exchange - Subject to the terms and conditions hereof, the Exchanger hereby
conveys and transfers to the Exchangee and the Exchangee hereby conveys and
transfers to the Exchanger the number of shares set forth in paragraph 2 hereof.
2. Exchange Value - The Exchange Value of each block of shares shall be equal to
the value of the shares for which they are exchanged.
3. Satisfaction of Exchange - The Exchange Value shall be recognised and
satisfied by the issuance to the Exchanger of TWO MILLION EIGHT HUNDRED THOUSAND
(2,800,000) shares in the capital of the Exchangee, which shares shall have a
fair market value equal to the shares of the Exchanger. The said Shares shall be
issued forthwith by the Exchangee as fully paid and non-assessable.
<PAGE>
4. Debts, Claims and Payables - It is agreed and understood between the parties
that as part of the exchange herein the Exchangee does hereby undertake to
assume, settle and retire all outstanding debts, claims and payables currently
owed to the Exchanger by the Corporation.
5. Exchanger's Representations and Warranties - the Exchanger hereby represents
and warrants to the Exchangee that:
(a) the Exchanger is the beneficial owner of the Exchanged Shares free of
all liens, charges, security interests, adverse claims, pledges and
other encumbrances whatsoever;
(b) no person, firm or corporation other than under this agreement has any
agreement or option or right capable of becoming an agreement or option
for the purchase from the Exchanger of the Exchanged Shares; and
6. Exchangee's Representations, Warranties and Covenants - The Exchangee hereby
represents, warrants and covenants to the Exchanger that:
(a) the Exchangee is duly incorporated and subsisting under the laws of the
State of Delaware;
(b) the Shares to be issued to the Exchanger pursuant hereto have been duly
authorised;
(c) the issuance to the Exchanger of the Shares does not result in a breach
of any term or provision of, or constitute a default under any
indenture, agreement, instrument, licence or permit to which the
Exchangee is a party or by which it is bound or any unanimous
shareholder agreement; and
7. Survival of Representations, Warranties and Covenants - The representations,
warranties and covenants of the Exchanger and the Exchangee contained in this
agreement shall survive the completion of the transaction contemplated by this
agreement and, notwithstanding such completion, shall continue in full force and
effect for the benefit of the Exchangee and the Exchanger as the case may be.
8. Sections and Headings - headings are for convenience of reference only and
shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to a section or a Schedule refers to
the specified section of or Schedule to this Agreement.
9. Number, Gender or Persons - In this Agreement, words importing the singular
number only shall include the plural and vice versa, words importing gender
shall include all genders and words importing persons shall include individuals,
corporations, partnerships, associations, trusts, unincorporated organisation,
governmental bodies and other legal or business entities.
10. Entire Agreement - This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether written or
oral. There are not any conditions, covenants,
<PAGE>
agreement representations, warranties or other provisions, expressed or implied,
collateral, statutory or otherwise, relating to the subject matter hereof except
as herein provided.
11. Time of Essence - Time shall be of the essence of this Agreement;
12. Applicable Law - This Agreement shall be construed, interpreted and enforced
in accordance with, and the respective rights and obligations of the parties
shall be governed by, the laws of the State of California applicable therein,
and each party hereby irrevocably and unconditionally submits to the exclusive
jurisdiction of the courts of the State of California and all courts competent
to hear appeals therefrom.
13. Severability - If any provisions of this Agreement is determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
14. Successors and Assigns - This Agreement shall enure to the benefit of and
shall be binding on and enforceable by the parties and, where the context so
permits, their respective legal representatives, successors and permitted
assigns.
15. Amendments and Waivers - An amendment or waiver of any provisions of this
Agreement shall not be binding on any party unless consented to in writing by
such party. A waiver of any provisions of this Agreement shall not constitute a
waiver of any other provision, nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided.
16. Interpretation - There will be no application of the rule interpreting an
agreement against its drafter, because all parties played a joint role in
drafting it.
IN WITNESS WHEREOF the parties hereto have executed the within
agreement.
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
- -------------------------------------- ) ---------------------------
Witness as to the signature of Robert M. Cezar) ROBERT M. CEZAR
AMERICOM USA, INC.
Per: ________________________
Authorized Signing Officer
THIS AGREEMENT dated as at the 15th day of July, 1998.
BETWEEN:
ROBERT M. CEZAR, of Arroyo Grande, California, U.S.A.
(hereinafter called the "Exchanger")
PARTY OF THE FIRST PART,
-and-
AMERICOM USA, INC., a corporation incorporated under the laws of the
State of Delaware, in the United States of America,
(hereinafter called the "Exchangee")
PARTY OF THE SECOND PART:
WHEREAS the Exchanger is the owner of ONE THOUSAND NINE HUNDRED (1,900)
shares of RMC DIVERSIFIED ASSOCIATES INTERNATIONAL, LTD., (hereinafter called
the "Corporation") a corporation incorporated under the laws of the State of
California, in the United States of America (hereinafter called the "Exchanged
Shares");
AND WHEREAS the Exchanger has agreed to exchange and the Exchangee has
agreed to exchange the Exchanged Shares owned by the Exchanger for shares at
near or equal value;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants herein contained and for other good and valuable consideration
(the adequacy, sufficiency and receipt of which is hereby acknowledged by each
of the parties hereto), the parties hereto hereby covenant and agree as follows:
1. Exchange - Subject to the terms and conditions hereof, the Exchanger hereby
conveys and transfers to the Exchangee and the Exchangee hereby conveys and
transfers to the Exchanger the number of shares set forth in paragraph 2 hereof.
2. Exchange Value - The Exchange Value of each block of shares shall be equal to
the value of the shares for which they are exchanged.
3. Satisfaction of Exchange - The Exchange Value shall be recognised and
satisfied by the issuance to the Exchanger of NINE HUNDRED FIFTY THOUSAND
(950,000) shares in the capital of the Exchangee, which shares shall have a fair
market value equal to the shares of the Exchanger. The said Shares shall be
issued forthwith by the Exchangee as fully paid and non-assessable.
<PAGE>
4. Debts, Claims and Payables - It is agreed and understood between the parties
that as part of the exchange herein the Exchangee does hereby undertake to
assume, settle and retire all outstanding debts, claims and payables currently
owed to the Exchanger by the Corporation.
5. Exchanger's Representations and Warranties - the Exchanger hereby represents
and warrants to the Exchangee that:
(a) the Exchanger is the beneficial owner of the Exchanged Shares free of
all liens, charges, security interests, adverse claims, pledges and
other encumbrances whatsoever;
(b) no person, firm or corporation other than under this agreement has any
agreement or option or right capable of becoming an agreement or option
for the purchase from the Exchanger of the Exchanged Shares; and
6. Exchangee's Representations, Warranties and Covenants - The Exchangee hereby
represents, warrants and covenants to the Exchanger that:
(a) the Exchangee is duly incorporated and subsisting under the laws of the
State of Delaware;
(b) the Shares to be issued to the Exchanger pursuant hereto have been
duly authorised;
(c) the issuance to the Exchanger of the Shares does not result in a breach
of any term or provision of, or constitute a default under any
indenture, agreement, instrument, licence or permit to which the
Exchangee is a party or by which it is bound or any unanimous
shareholder agreement; and
7. Survival of Representations, Warranties and Covenants - The representations,
warranties and covenants of the Exchanger and the Exchangee contained in this
agreement shall survive the completion of the transaction contemplated by this
agreement and, notwithstanding such completion, shall continue in full force and
effect for the benefit of the Exchangee and the Exchanger as the case may be.
8. Sections and Headings - headings are for convenience of reference only and
shall not affect the interpretation of this Agreement. Unless otherwise
indicated, any reference in this Agreement to a section or a Schedule refers to
the specified section of or Schedule to this Agreement.
9. Number, Gender or Persons - In this Agreement, words importing the singular
number only shall include the plural and vice versa, words importing gender
shall include all genders and words importing persons shall include individuals,
corporations, partnerships, associations, trusts, unincorporated organisation,
governmental bodies and other legal or business entities.
10. Entire Agreement - This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether written or
oral. There are not any conditions, covenants,
<PAGE>
agreement representations, warranties or other provisions, expressed or implied,
collateral, statutory or otherwise, relating to the subject matter hereof except
as herein provided.
11. Time of Essence - Time shall be of the essence of this Agreement;
12. Applicable Law - This Agreement shall be construed, interpreted and enforced
in accordance with, and the respective rights and obligations of the parties
shall be governed by, the laws of the State of California applicable therein,
and each party hereby irrevocably and unconditionally submits to the exclusive
jurisdiction of the courts of the State of California and all courts competent
to hear appeals therefrom.
13. Severability - If any provisions of this Agreement is determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
14. Successors and Assigns - This Agreement shall enure to the benefit of and
shall be binding on and enforceable by the parties and, where the context so
permits, their respective legal representatives, successors and permitted
assigns.
15. Amendments and Waivers - An amendment or waiver of any provisions of this
Agreement shall not be binding on any party unless consented to in writing by
such party. A waiver of any provisions of this Agreement shall not constitute a
waiver of any other provision, nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided.
16. Interpretation - There will be no application of the rule interpreting an
agreement against its drafter, because all parties played a joint role in
drafting it.
IN WITNESS WHEREOF the parties hereto have executed the within
agreement.
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
- -------------------------------------- ) ---------------------------
Witness as to the signature of Robert M. Cezar ) ROBERT M. CEZAR
AMERICOM USA, INC.
Per: ________________________
Authorized Signing Officer
THIS AGREEMENT dated as at the 15th day of July, 1998
BETWEEN:
KELKE INVESTMENTS LTD., a corporation incorporated under the laws
of the Turks and Caicos Islands, B.W.I.
(hereinafter called the "Exchanger")
PARTY OF THE FIRST PART,
-and-
AMERICOM USA. INC., a corporation incorporated under the laws of
the State of Delaware, in the United States of America,
(hereinafter called the "Exchangee")
PARTY OF THE SECOND PART:
WHEREAS the Exchanger is the owner of FIVE HUNDRED (500) shares
(hereinafter called the "Exchanged Shares") of RMC DIVERSIFIED ASSOCIATES
INTERNATIONAL, LTD., (hereinafter called the "Corporation") a corporation
incorporated under the laws of the State of California, in the United States of
America
AND WHEREAS the Exchanger has agreed to exchange and the Exchangee has
agreed to exchange the Exchanged Shares owned hy the Exchanger for shares at
near or equal value;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants herein contained and for other good and valuable consideration
(the adequacy, sufficiency and receipt of which is hereby acknowledged by each
of the parties hereto), the parties hereto hereby covenant and agree as follows:
1. Exchange - Subject to the terms and conditions hereof, the Exchanger hereby
conveys and transfers to the Exchangee and the Exchangee hereby conveys and
transfers to the Exchanger the number of shares set forth in paragraph 2 hereof.
2. Exchange Value - The Exchange Value of each block of shares shall be equal to
the value of the shares for which they are exchanged.
3. Satisfaction of Exchange - The Exchange Value shall be recognized and
satisfied by the issuance to the Exchanger of TWO HUNDRED FIFTY THOUSAND
(250,000) shares in the capital of the Exchangee, which shares shall have a fair
market value equal to the shares of the Exchanger. The said Shares shall be
issued forthwith by the Exchangee as fully paid and non-assessable.
4. Debts, Claims and Payables - It is agreed and understood between the parties
that as part of the exchange herein the Exchangee does hereby undertake to
assume, settle and retire all outstanding debts, claims and payables currently
owed to the Exchanger by the Corporation.
<PAGE>
5. Exchanger's Representations and Warranties - the Exchanger hereby represents
and warrants to the Exchangee that:
The Exchanger solely represents and warrants to the Exchangee as follows
and acknowledges that the Exchangee is relying on such representations and
warranties in connection with the exchange by the Exchangee of the Shares and
that the Exchangee would not have entered into this Agreement without such
representations and warranties:
a) Organization The Exchanger is duly incorporated and organized under the
laws of the Turks and Caicos Islands, B.W.I. and has the corporate power
to own, lease or operate its properties and to conduct its business as
now being conducted by them. The Exchanger has the corporate power and
authority to execute this Agreement and to perform its obligations
hereunder. The Exchanger is duly qualified as a corporation to do
business in each jurisdiction in which the nature of their business or
the property and assets owned or leased by each of them makes such
qualification necessary.
b) Authorization. This Agreement has been duly authorized, executed and
delivered by the Exchanger and is a legal, valid and binding obligation
of the Exchanger.
c) No Other Agreements to Purchase. No person other than the Exchangee has
any written or oral agreement or option or any right or privilege
(whether by law or contractual) capable of becoming an agreement or
option for the purchase or acquisition from the Exchanger of the
Exchanged Shares.
d) Ownership of Exchanged Shares. The Exchanger is the beneficial owner and
holder of record of the Exchanged Shares of the Corporation, with good
and marketable title thereto, free and clear of all Encumbrances and,
without limiting the generality of the foregoing, none of the Exchanged
Shares are subject to any voting trust, shareholder agreement or voting
agreement. Upon completion of the transactions contemplated by this
Agreement, all of the Exchanged Shares will be owned by the Exchangee as
the beneficial owner and holder of record, with good and marketable
title thereto.
e) No Violation. The execution and delivery of this Agreement by the
Exchanger and the consummation of the transactions contemplated herein
will not result in either:
(a) the breach or violation of any of the provisions of, or
constitute a default under, or conflict with or cause the
acceleration of any obligation of any of the Exchanger or the
Corporation under:
(i) any Contract to which any of the Exchanger or the
Corporation are a party or by which any of them is, or
their properties are bound;
(ii) any provision of the constating documents, by-laws or
resolutions of the board of directors or shareholders of
the Corporation;
<PAGE>
(iii) any judgment, decree, order or award of any court,
governmental body or arbitrator having jurisdiction over
any of the Exchanger or the Corporation;
(iv) any license, permit, approval, consent or authorization
held by any of the Exchanger, or the Corporation or
necessary to the ownership of the Exchanged Shares; or
(v) to the knowledge of the Exchanger, any applicable law,
statute, ordinance regulation or rule; or
(b) the creation or imposition of any Encumbrances on any of the
Exchanged Shares or any property or assets of the Corporation.
6. Exchangee's Representations, Warranties and Covenants - The Exchangee hereby
represents, warrants and covenants to the Exchanger that:
(a) the Exchangee is duly incorporated and subsisting under the laws of the
State of Delaware;
(b) the Shares to be issued to the Exchanger pursuant hereto have been duly
authorized;
(c) the issuance to the Exchanger of the Shares does not result in a breach
of any term or provision of, or constitute a default under any
indenture, agreement, instrument, licence or permit to which the
Exchangee is a party or by which it is bound or any unanimous
shareholder agreement; and
7. Survival of Representations, Warranties and Covenants - The representations,
warranties and covenants of the Exchanger and the Exchangee contained in this
agreement shall survive the completion of the transaction contemplated by this
agreement and, notwithstanding such completion, shall continue in full force and
effect for the benefit of the Exchangee and the Exchanger as the case may be.
8. Sections and Headings - The division of this Agreement into sections and the
insertion of headings are for convenience of reference only and shall not affect
the interpretation of this Agreement. Unless otherwise indicated, any reference
in this Agreement to a section or a Schedule refers to the specified section of
or Schedule to this Agreement.
9. Number, Gender or Persons - In this Agreement, words importing the singular
number only shall include the plural and vice versa, words importing gender
shall include all genders and words importing persons shall include individuals,
corporations, partnerships, associations, trusts, unincorporated organization,
governmental bodies and other legal or business entities.
10. Entire Agreement - This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether written or
oral. There are not any conditions, covenants, agreement representations,
warranties or other provisions, expressed or implied, collateral, statutory or
otherwise, relating to the subject matter hereof except as herein provided.
11. Time of Essence - Time shall be of the essence of this Agreement;
<PAGE>
12. Applicable Law - This Agreement shall be construed, interpreted and enforced
in accordance with, and the respective rights and obligations of the parties
shall be governed by, the laws of the State of California applicable therein,
and each party hereby irrevocably and unconditionally submits to the exclusive
jurisdiction of the courts of the State of California and all courts competent
to hear appeals therefrom.
13. Severability - If any provisions of this Agreement is determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
14. Successors and Assigns - This Agreement shall enure to the benefit of and
shall be binding on and enforceable by the parties and, where the context so
permits, their respective legal representatives, successors and permitted
assigns.
15. Amendments and Waivers - An amendment or waiver of any provisions of this
Agreement shall not be binding on any party unless consented to in writing by
such party. A waiver of any provisions of this Agreement shall not constitute a
waiver of any other provision, nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided.
16. Interpretation - There will be no application of the rule interpreting an
agreement against its drafter, because all parties played a joint role in
drafting it.
IN WITNESS WHEREOF the parties hereto have executed the within
agreement.
SIGNED, SEALED AND DELIVERED )
in the presence of: )
KELKE INVESTMENTS LTD.
Per: ___________________________
Authorized Signing Officer
AMERICOM USA. INC.
Per: ___________________________
Authorized Signing Officer
THIS AGREEMENT dated as at the 15th day of July, 1998.
BETWEEN:
DAVID H. LOOMIS, of Arroyo Grande, California, U.S.A.
(hereinafter called the "Exchanger")
PARTY OF THE FIRST PART,
-and-
AMERICOM USA, INC., a corporation incorporated under the laws of the
State of Delaware, in the United States of America,
(hereinafter called the "Exchangee")
PARTY OF THE SECOND PART:
WHEREAS the Exchanger is the owner of FIVE HUNDRED (500) shares
(hereinafter called the "Exchanged Shares") of RMC DIVERSIFIED ASSOCIATES
INTERNATIONAL, LTD., (hereinafter called the "Corporation") a corporation
incorporated under the laws of the State of California, in the United States of
America
AND WHEREAS the Exchanger has agreed to exchange and the Exchangee has
agreed to exchange the Exchanged Shares owned by the Exchanger for shares at
near or equal value;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants herein contained and for other good and valuable consideration
(the adequacy, sufficiency and receipt of which is hereby acknowledged by each
of the parties hereto), the parties hereto hereby covenant and agree as follows:
1. Exchange - Subject to the terms and conditions hereof, the Exchanger hereby
conveys and transfers to the Exchangee and the Exchangee hereby conveys and
transfers to the Exchanger the number of shares set forth in paragraph 2 hereof.
2. Exchange Value - The Exchange Value of each block of shares shall be equal to
the value of the shares for which they are exchanged.
3. Satisfaction of Exchange - The Exchange Value shall be recognised and
satisfied by the issuance to the Exchanger of TWO HUNDRED FIFTY THOUSAND
(250,000) shares in the capital of the Exchangee, which shares shall have a fair
market value equal to the shares of the Exchanger. The said Shares shall be
issued forthwith by the Exchangee as fully paid and non-assessable.
<PAGE>
4. Debts, Claims and Payables - It is agreed and understood between the parties
that as part of the exchange herein the Exchangee does hereby undertake to
assume, settle and retire all outstanding debts, claims and payables currently
owed to the Exchanger by the Corporation.
5. Exchanger's Representations and Warranties - the Exchanger hereby represents
and warrants to the Exchangee that:
(a) the Exchanger is the beneficial owner of the Exchanged Shares free of
all liens, charges, security interests, adverse claims, pledges and
other encumbrances whatsoever;
(b) no person, firm or corporation other than under this agreement has any
agreement or option or right capable of becoming an agreement or option
for the purchase from the Exchanger of the Exchanged Shares; and
6. Exchangee's Representations, Warranties and Covenants - The Exchangee hereby
represents, warrants and covenants to the Exchanger that:
(a) the Exchangee is duly incorporated and subsisting under the laws of the
State of Delaware;
(b) the Shares to be issued to the Exchanger pursuant hereto have been duly
authorised;
(c) the issuance to the Exchanger of the Shares does not result in a breach
of any term or provision of, or constitute a default under any
indenture, agreement, instrument, licence or permit to which the
Exchangee is a party or by which it is bound or any unanimous
shareholder agreement; and
7. Survival of Representations, Warranties and Covenants - The representations,
warranties and covenants of the Exchanger and the Exchangee contained in this
agreement shall survive the completion of the transaction contemplated by this
agreement and, notwithstanding such completion, shall continue in full force and
effect for the benefit of the Exchangee and the Exchanger as the case may be.
8. Sections and Headings - The division of this Agreement into sections and the
insertion of headings are for convenience of reference only and shall not affect
the interpretation of this Agreement. Unless otherwise indicated, any reference
in this Agreement to a section or a Schedule refers to the specified section of
or Schedule to this Agreement.
9. Number, Gender or Persons - In this Agreement, words importing the singular
number only shall include the plural and vice versa, words importing gender
shall include all genders and words importing persons shall include individuals,
corporations, partnerships, associations, trusts, unincorporated organisation,
governmental bodies and other legal or business entities.
10. Entire Agreement - This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings,
<PAGE>
negotiations and discussions, whether written or oral. There are not any
conditions, covenants, agreement representations, warranties or other
provisions, expressed or implied, collateral, statutory or otherwise, relating
to the subject matter hereof except as herein provided.
11. Time of Essence - Time shall be of the essence of this Agreement;
12. Applicable Law - This Agreement shall be construed, interpreted and enforced
in accordance with, and the respective rights and obligations of the parties
shall be governed by, the laws of the State of California applicable therein,
and each party hereby irrevocably and unconditionally submits to the exclusive
jurisdiction of the courts of the State of California and all courts competent
to hear appeals therefrom.
13. Severability - If any provisions of this Agreement is determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
14. Successors and Assigns - This Agreement shall enure to the benefit of and
shall be binding on and enforceable by the parties and, where the context so
permits, their respective legal representatives, successors and permitted
assigns.
15. Amendments and Waivers - An amendment or waiver of any provisions of this
Agreement shall not be binding on any party unless consented to in writing by
such party. A waiver of any provisions of this Agreement shall not constitute a
waiver of any other provision, nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided.
16. Interpretation - There will be no application of the rule interpreting an
agreement against its drafter, because all parties played a joint role in
drafting it.
IN WITNESS WHEREOF the parties hereto have executed the within
agreement.
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
- -------------------------------------- ) ---------------------------
Witness as to the signature of David H. Loomis) DAVID H. LOOMIS
AMERICOM USA, INC.
Per: ________________________
Authorized Signing Officer
THIS AGREEMENT dated as at the 15th day of July, 1998.
BETWEEN:
CRAIG D. MACHADO, of Pismo Beach, California, U.S.A.
(hereinafter called the "Exchanger")
PARTY OF THE FIRST PART,
-and-
AMERICOM USA, INC., a corporation incorporated under the laws of the
State of Delaware, in the United States of America,
(hereinafter called the "Exchangee")
PARTY OF THE SECOND PART:
WHEREAS the Exchanger is the owner of FIVE HUNDRED (500) shares
(hereinafter called the "Exchanged Shares") of RMC DIVERSIFIED ASSOCIATES
INTERNATIONAL, LTD., (hereinafter called the "Corporation") a corporation
incorporated under the laws of the State of California, in the United States of
America
AND WHEREAS the Exchanger has agreed to exchange and the Exchangee has
agreed to exchange the Exchanged Shares owned by the Exchanger for shares at
near or equal value;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants herein contained and for other good and valuable consideration
(the adequacy, sufficiency and receipt of which is hereby acknowledged by each
of the parties hereto), the parties hereto hereby covenant and agree as follows:
1. Exchange - Subject to the terms and conditions hereof, the Exchanger hereby
conveys and transfers to the Exchangee and the Exchangee hereby conveys and
transfers to the Exchanger the number of shares set forth in paragraph 2 hereof.
2. Exchange Value - The Exchange Value of each block of shares shall be equal to
the value of the shares for which they are exchanged.
3. Satisfaction of Exchange - The Exchange Value shall be recognised and
satisfied by the issuance to the Exchanger of TWO HUNDRED FIFTY THOUSAND
(250,000) shares in the capital of the Exchangee, which shares shall have a fair
market value equal to the shares of the Exchanger. The said Shares shall be
issued forthwith by the Exchangee as fully paid and non-assessable.
<PAGE>
4. Debts, Claims and Payables - It is agreed and understood between the parties
that as part of the exchange herein the Exchangee does hereby undertake to
assume, settle and retire all outstanding debts, claims and payables currently
owed to the Exchanger by the Corporation.
5. Exchanger's Representations and Warranties - the Exchanger hereby represents
and warrants to the Exchangee that:
(a) the Exchanger is the beneficial owner of the Exchanged Shares free of
all liens, charges, security interests, adverse claims, pledges and
other encumbrances whatsoever;
(b) no person, firm or corporation other than under this agreement has any
agreement or option or right capable of becoming an agreement or option
for the purchase from the Exchanger of the Exchanged Shares; and
6. Exchangee's Representations, Warranties and Covenants - The Exchangee hereby
represents, warrants and covenants to the Exchanger that:
(a) the Exchangee is duly incorporated and subsisting under the laws of the
State of Delaware;
(b) the Shares to be issued to the Exchanger pursuant hereto have been duly
authorised;
(c) the issuance to the Exchanger of the Shares does not result in a breach
of any term or provision of, or constitute a default under any
indenture, agreement, instrument, licence or permit to which the
Exchangee is a party or by which it is bound or any unanimous
shareholder agreement; and
7. Survival of Representations, Warranties and Covenants - The representations,
warranties and covenants of the Exchanger and the Exchangee contained in this
agreement shall survive the completion of the transaction contemplated by this
agreement and, notwithstanding such completion, shall continue in full force and
effect for the benefit of the Exchangee and the Exchanger as the case may be.
8. Sections and Headings - The division of this Agreement into sections and the
insertion of headings are for convenience of reference only and shall not affect
the interpretation of this Agreement. Unless otherwise indicated, any reference
in this Agreement to a section or a Schedule refers to the specified section of
or Schedule to this Agreement.
9. Number, Gender or Persons - In this Agreement, words importing the singular
number only shall include the plural and vice versa, words importing gender
shall include all genders and words importing persons shall include individuals,
corporations, partnerships, associations, trusts, unincorporated organisation,
governmental bodies and other legal or business entities.
10. Entire Agreement - This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings,
<PAGE>
negotiations and discussions, whether written or oral. There are not any
conditions, covenants, agreement representations, warranties or other
provisions, expressed or implied, collateral, statutory or otherwise, relating
to the subject matter hereof except as herein provided.
11. Time of Essence - Time shall be of the essence of this Agreement;
12. Applicable Law - This Agreement shall be construed, interpreted and enforced
in accordance with, and the respective rights and obligations of the parties
shall be governed by, the laws of the State of California applicable therein,
and each party hereby irrevocably and unconditionally submits to the exclusive
jurisdiction of the courts of the State of California and all courts competent
to hear appeals therefrom.
13. Severability - If any provisions of this Agreement is determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
14. Successors and Assigns - This Agreement shall enure to the benefit of and
shall be binding on and enforceable by the parties and, where the context so
permits, their respective legal representatives, successors and permitted
assigns.
15. Amendments and Waivers - An amendment or waiver of any provisions of this
Agreement shall not be binding on any party unless consented to in writing by
such party. A waiver of any provisions of this Agreement shall not constitute a
waiver of any other provision, nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided.
16. Interpretation - There will be no application of the rule interpreting an
agreement against its drafter, because all parties played a joint role in
drafting it.
IN WITNESS WHEREOF the parties hereto have executed the within
agreement.
SIGNED, SEALED AND DELIVERED )
in the presence of: )
)
- -------------------------------------- ) ---------------------------
Witness as to the signature of Craig D. Machado) CRAIG D. MACHADO
AMERICOM USA, INC.
Per: ________________________
Authorized Signing Officer
THIS AGREEMENT dated as at the 16th day of November, 1998.
BETWEEN:
STRAIT VENTURE, INC., a corporation incorporated under the laws of the
British Virgin Island.
(hereinafter called the "Exchanger")
PARTY OF THE FIRST PART,
-and-
AMERICOM USA, INC., a corporation incorporated under the laws of the
State of Delaware, in the United States of America,
(hereinafter called the "Exchangee")
PARTY OF THE SECOND PART:
WHEREAS the Exchanger is the owner of FIVE HUNDRED (500) shares
(hereinafter called the "Exchanged Shares") of RMC DIVERSIFIED ASSOCIATES
INTERNATIONAL, LTD., (hereinafter called the "Corporation") a corporation
incorporated under the laws of the State of California, in the United States of
America
AND WHEREAS the Exchanger has agreed to exchange and the Exchangee has
agreed to exchange the Exchanged Shares owned by the Exchanger for shares at
near or equal value;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
mutual covenants herein contained and for other good and valuable consideration
(the adequacy, sufficiency and receipt of which is hereby acknowledged by each
of the parties hereto), the parties hereto hereby covenant and agree as follows:
1. Exchange - Subject to the terms and conditions hereof, the Exchanger hereby
conveys and transfers to the Exchangee and the Exchangee hereby conveys and
transfers to the Exchanger the number of shares set forth in paragraph 2 hereof.
2. Exchange Value - The Exchange Value of each block of shares shall be equal to
the value of the shares for which they are exchanged.
3. Satisfaction of Exchange - The Exchange Value shall be recognised and
satisfied by the issuance to the Exchanger of TWO HUNDRED FIFTY THOUSAND
(250,000) shares in the capital of the Exchangee, which shares shall have a fair
market value equal to the shares of the Exchanger. The said Shares shall be
issued forthwith by the Exchangee as fully paid and non-assessable.
<PAGE>
4. Debts, Claims and Payables - It is agreed and understood between the parties
that as part of the exchange herein the Exchangee does hereby undertake to
assume, settle and retire all outstanding debts, claims and payables currently
owed to the Exchanger by the Corporation.
5. Exchanger's Representations and Warranties - the Exchanger hereby represents
and warrants to the Exchangee that:
(a) the Exchanger is the beneficial owner of the Exchanged Shares free of
all liens, charges, security interests, adverse claims, pledges and
other encumbrances whatsoever;
(b) no person, firm or corporation other than under this agreement has any
agreement or option or right capable of becoming an agreement or option
for the purchase from the Exchanger of the Exchanged Shares; and
6. Exchangee's Representations, Warranties and Covenants - The Exchangee hereby
represents, warrants and covenants to the Exchanger that:
(a) the Exchangee is duly incorporated and subsisting under the laws of the
State of Delaware;
(b) the Shares to be issued to the Exchanger pursuant hereto have been duly
authorised;
(c) the issuance to the Exchanger of the Shares does not result in a breach
of any term or provision of, or constitute a default under any
indenture, agreement, instrument, licence or permit to which the
Exchangee is a party or by which it is bound or any unanimous
shareholder agreement; and
7. Survival of Representations, Warranties and Covenants - The representations,
warranties and covenants of the Exchanger and the Exchangee contained in this
agreement shall survive the completion of the transaction contemplated by this
agreement and, notwithstanding such completion, shall continue in full force and
effect for the benefit of the Exchangee and the Exchanger as the case may be.
8. Sections and Headings - The division of this Agreement into sections and the
insertion of headings are for convenience of reference only and shall not affect
the interpretation of this Agreement. Unless otherwise indicated, any reference
in this Agreement to a section or a Schedule refers to the specified section of
or Schedule to this Agreement.
9. Number, Gender or Persons - In this Agreement, words importing the singular
number only shall include the plural and vice versa, words importing gender
shall include all genders and words importing persons shall include individuals,
corporations, partnerships, associations, trusts, unincorporated organisation,
governmental bodies and other legal or business entities.
10. Entire Agreement - This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings,
<PAGE>
negotiations and discussions, whether written or oral. There are not any
conditions, covenants, agreement representations, warranties or other
provisions, expressed or implied, collateral, statutory or otherwise, relating
to the subject matter hereof except as herein provided.
11. Time of Essence - Time shall be of the essence of this Agreement;
12. Applicable Law - This Agreement shall be construed, interpreted and enforced
in accordance with, and the respective rights and obligations of the parties
shall be governed by, the laws of the State of California applicable therein,
and each party hereby irrevocably and unconditionally submits to the exclusive
jurisdiction of the courts of the State of California and all courts competent
to hear appeals therefrom.
13. Severability - If any provisions of this Agreement is determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct.
14. Successors and Assigns - This Agreement shall enure to the benefit of and
shall be binding on and enforceable by the parties and, where the context so
permits, their respective legal representatives, successors and permitted
assigns.
15. Amendments and Waivers - An amendment or waiver of any provisions of this
Agreement shall not be binding on any party unless consented to in writing by
such party. A waiver of any provisions of this Agreement shall not constitute a
waiver of any other provision, nor shall any waiver constitute a continuing
waiver unless otherwise expressly provided.
16. Interpretation - There will be no application of the rule interpreting an
agreement against its drafter, because all parties played a joint role in
drafting it.
IN WITNESS WHEREOF the parties hereto have executed the within
agreement.
STRAIT VENTURE, INC.
Per: ________________________
Authorized Signing Officer
AMERICOM USA, INC.
Per: ________________________
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-KSB
FOR THE YEAR ENDED JUNE 30, 1999, FOR AMERICOM USA, INC., AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Jun-30-1999
<PERIOD-END> Jun-30-1999
<CASH> 5,497
<SECURITIES> 0
<RECEIVABLES> 126,578
<ALLOWANCES> 38,829
<INVENTORY> 0
<CURRENT-ASSETS> 103,584
<PP&E> 599,479
<DEPRECIATION> 62,256
<TOTAL-ASSETS> 4,458,559
<CURRENT-LIABILITIES> 2,880,136
<BONDS> 0
0
0
<COMMON> 3,252
<OTHER-SE> (1,158,893)
<TOTAL-LIABILITY-AND-EQUITY> 4,458,559
<SALES> 143,591
<TOTAL-REVENUES> 150,343
<CGS> 121,873
<TOTAL-COSTS> (7,620,819)
<OTHER-EXPENSES> (107,050)
<LOSS-PROVISION> (21,679)
<INTEREST-EXPENSE> (97,448)
<INCOME-PRETAX> (7,699,399)
<INCOME-TAX> (1,600)
<INCOME-CONTINUING> 7,700,399)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,700,999)
<EPS-BASIC> 0.26
<EPS-DILUTED> 0.26
</TABLE>
