SECURITIES AND EXCHANGE COMMISSION
FORM 10
GENERAL FORM REGISTRATION OF SECURITIES PURSUANT TO
SECTION 12(b) OR (g) OF THE SECURITIES ACT OF 1934
____________________________________________________________________
INTERACTIVE MULTIMEDIA NETWORK, INC.
(Exact name of issuer as specified in its charter)
_____________________________________________________________________
Delaware
(State or other jurisdiction of incorporation or organization)
____________________________________________________________________
3163 Kennedy Boulevard
Jersey City, New Jersey 07306
(201) 217-4137
(Address, including zip code, and telephone number, including
area code of issuer's principal executive offices)
______________________________________________________________________
VERDIRAMO & VERDIRAMO, P.A.
3163 Kennedy Boulevard
Jersey City, New Jersey 07306
(201) 798-7082
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
______________________________________________________________________
Standard Industrial Classification I.R.S. Employer Identification
Code Number
7392 65-0488983
_____________________________________________________________________
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock $.001 par value
(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Business. Page 2-22
Item 2. Financial Information. Page 23-24
Item 3. Properties. Page 25-29
Item 4. Security Ownership of Certain
Beneficial Owners and Management. Page 30
Item 5. Directors and Executive Officers. Page 31-33
Item 6. Executive Compensation. Page 34-36
Item 7. Certain Relationships and
Related Transactions. Page 37
Item 8. Legal Proceedings. Page 37
Item 9. Market Price of and Dividends on
the Registrant's Common Equity
and Related Stockholder Matters. Page 37
Item 10. Recent Sales of Unregistered
Securities. Page 38
Item 11. Description of Registrant's
Securities to be Registered. Page 39
Item 12. Indemnification of Directors
and Officers. Page 40-43
Item 13. Financial Statements and
Supplementary Data. Page 43
Item 14. Changes in and Disagreements
With Accountants on Account-
ing and Financial Disclosure. Page 43
Item 15. Financial Statements and
Exhibits. Page 44-45
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ITEM 1. BUSINESS
Overview
The Company was incorporated in the State of New Jersey on March 4, 1994
and in Delaware, June 13, 1995. On June 13, 1995, the New Jersey corporation
merged with the Delaware corporation formed for that purpose.
The Company, a computer enhanced marketing company, utilizing the
Information Highway as it relates to the Internet, other computer online
services, broadcast, cable and satellite television; has created multiple
channels of distribution for the introduction of new products, new services,
inventions and concepts. The Company specializes in the application of
multimedia marketing tools and selected channels of distribution, determined
by online computer modeling of product, computer buying habits and market
demographics. This is accomplished by listing products and services on the
Internet and television simultaneously. See - "INTERACTIVE CONVERGENCE".
The Company is divided into four (4) operating groups, (for operational
and marketing efficiency and not for accounting purposes).
A. Internet Group - actively monitors and interacts with all major
computer online services as well as the Internet. The Company has established
a World Wide Web site on the Internet called "Shop-The-Net™," an
electronic home shopping marketplace. The Company's web site can be found on
the Internet at the following URL (a location on the Internet) -
http://www.shop-the-net.com
B. Marketing Group - product introduction and distribution.
C. Multimedia Group - will, in the future, develop, manufacture and
market proprietary CD-ROM interactive multimedia computer software for use
with new product introduction, small business development, and the educational
market.
D. Entertainment Group -
*presently is producing and directing Shop-the-Net an interactive
television home shopping sitcom or sit-commercial. The sit-commercial is
produced in half hour segments, and is made available to any interested party
wishing to broadcast same. At present, no agreements exist with any cable
companies to broadcast the sit-commercial. Air time is purchased at
prevailing rates on an as needed basis.
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*develops market strategy and original programming for broadcast
television, cable, satellite, and interactive home shopping as well as
original software for the computer game market, including representation and
distribution of third party developers software.
*development of 30 minute product infomercials and 1 and 2 minutes
direct response television commercials for clients.(See Business-
Entertainment Group)
The Company's administrative office is located at 3163 Kennedy Boulevard,
Jersey City, New Jersey 07306. The telephone number is 201.217.4137. Facsimile
number is 201.798.4627 and E-mail - [email protected]
General
The Company was incorporated in the State of New Jersey March 4, 1994. On
June 13, 1995, the New Jersey corporation merged with a Delaware corporation
formed for that purpose. The Company was formed by its principals Vincent L.
Verdiramo and William J. Auletta for the purpose of introducing and marketing
new products, services, inventions and concepts, by using multiple channels of
distribution including but not limited to the Internet, print media, cable
television, broadcast television and satellite television. While the Internet
is presently considered "cutting edge technology," in the opinion of the
Company, it is best used in conjunction with the more familiar types of
marketing distribution such as print media and various types of television
including cable. The Company's principal operating officers are Vincent L.
Verdiramo and William J. Auletta. Messrs. Auletta and Verdiramo have had
various business enterprises since the late 1960's and have successfully
operated businesses in areas of the importation of motorcycles, a seed
company, real estate development, and the marketing of numerous products and
inventions.
The Company presently conducts its technical operations in Boca Raton,
Florida and maintains its administrative offices in Jersey City, New Jersey.
The business operations are divided into four marketing groups delineated
solely for informational and marketing purposes and not for accounting
purposes. The four groups were established to better educate clients as to
the range of marketing services available through the Company. In effect the
Company is a one stop shop for all of the marketing needs of its clients. The
Companies has the capability of producing infomercials, print media
advertisements and the contracting with broadcast and cable television media
and cable
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television. To best utilize all channels of product distribution, the Company
has established a marketing program known as "Interactive Convergence."
"Interactive Convergence" allows clients and advertisers to
simultaneously market products and services on television and the Internet
including CD-ROM interactive multimedia software. In addition, the Company
intends to develop, manufacture and market, original proprietary CD-ROM
interactive multimedia marketing software for use with new product
introduction, including concepts & inventions, and small business
development. See "THE INTERNET."
The Internet is projected to reach $4 billion in advertising revenues by
the year 2000, and to sell $250 billion in goods and services over the next 15
years. (This number includes advertising revenue.) (Source: Interviews of
Nicholas Negroponte and subsequent articles written by Nicholas Negroponte and
other authors in various subsequent issues of Wired Magazine).
The Internet
The Internet has evolved from a computer curiosity into, arguably, the
most powerful channel of distribution since the advent of television. It has
become part of the mainstream of consumer awareness - growing at a rate of 10%
per month. Projections place the Internet subscriber base at around 40 million
consumers world wide and growth is projected to reach 100 million subscribers
within two years. (Source: WebWeek, April 1996). The Internet is a system of
networks connecting millions of computers in more than 147 countries, with
estimated daily use at 30 million people.
The World Wide Web
The World Wide Web (known as WWW or simply the Web), is part of the vast
network of computers around the world that form a part of the Internet. The
Web consists of individual documents or pages which are linked by a computer
language called Hyper Text Markup Language (HTML). This computer language
enables users of the Web to transmit or access sound, graphics, and text
simultaneously; in effect making information available on the Web multimedia.
These linked pages form a web of documents that is worldwide in scope and is
the fastest growing part of the Internet.
Accessing the Internet Today
Accessing the Internet is getting easier -- at least in terms of the
number of access providers that a user can choose from. The major commercial
online services (Services that provide an environment of carefully formulated
information areas that only subscribers can access) now include, among
others, AOL (American online), CompuServe, Delphi,
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Genie, MCI, MSN (Microsoft Network), Netcom, and Prodigy. Smaller commercial
services like the WELL and Women's Life are also growing in number. The
growth of such smaller services indicates, in the opinion of the Company, a
growing market for the establishment of unique electronic communities in
addition to providing Internet access. There are also tens of thousands of
Internet providers around the world who provide direct Internet access.
(Please note that throughout this document references are made to various
statistical data and other general industry information. The Company has not
conducted any market surveys or independent analysis regarding such
information and no assurances are made by The Company regarding the accuracy
of the data or the methodology utilized to create such data. The investor is
strongly encouraged to conduct their own research and analysis and to utilize
the services of investment professionals before making any investment in The
Company).
Who uses the Web?
Millions of people around the world presently use the Web. When the
Internet was first created, unlike today, it was solely the domain of
scientists and the military. Now, however, the number of diverse individuals
and corporations using the Internet is rapidly growing with the most expansive
area of growth occurring on the World Wide Web. While the rest of the world is
catching up to the web revolution, usage and production of web sites remains
the highest in the United States.
Interactive Convergence
The Company has introduced its 'sit-commercial', a merger of two of
television's most venerable formats - the situation comedy and home shopping
programs. Created as a part of the "Shop-The-Net"™ convergence package,
the 'sit-commercial' merges entertainment-oriented storylines with
advertising-oriented content. The shows, each 30 minutes in length, are aired
on major cable networks, as well as numerous broadcast television stations,
via satellite uplink and reach millions of households nationwide. (Television
and cable fact book - 1996 editions). (See -Business - "Sales and Marketing" -
"Networks"). The first episode of "Shop-the-Net"TM was aired on Cable
television in January 1997. Presently, the Company does not have any formal
agreements with any of the listed networks for the future airing of the
sit-commercial. Formal agreements are negotiated upon the completion of the
½ hour segments of the sit-commercial. The air time is purchased by the
Company at published cable television rates as determined by the networks.
The Company's use of the Internet as a marketing tool for the exchange of
information, utilizing such channels of distribution as broadcast television,
cable/satellite;
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innovative programming, including the home shopping sitcom, direct response
commercials and infomercials are each purposely designed to correspond
directly to the cost of conventional advertising rates.
The Company's interactive convergence strategy works by allowing
consumers to easily access interactive multimedia shopping options at their
convenience, browse the Company's family oriented Internet shopping site,
Shop-The-Net™, watch the interactive television shopping broadcasts of
"Shop-The-Net"™ and/or use of the Company's proposed interactive
multimedia CD-ROM. And they can order products or services from each.
Products, Services and Operations
For informational and marketing efficiency and not for accounting
purposes, the Company is operated through the four groups described below.
Management believes this exchange of product knowledge via computer access to
the Internet may provide profit potential for the Company.
The four marketing groups are as follows:
1. Internet Group:
This group is divided into two marketing areas. The first, focuses on the
creation of a marketing presence for the Company in the Internet. The Company
has developed its own World Wide Web virtual reality shopping mall - called
"Shop-The-Net"™ on the Internet. This allows the Company to rent
"Showrooms" within the mall to clients.
In effect, "Shop-The-Net"™ can be likened or compared to an actual
shopping mall as we know it. In this mall which is presented on the Internet,
the Company rents space to companies and individuals and this space is known
as a showroom within the mall. A showroom is a section of the mall wherein a
client's product and/or services are highlighted and sold.
Consumers can purchase the products or services of the Company's clients
by utilizing the Internet, television and print, (catalogues, newspapers and
magazines including trade publications). Within the Internet a consumer may
order products in any of three ways, fill in the order form and e-mail it to
the Company within "Shop-The-Net"™ or the order form can be printed on
any printer attached to the computer being used to access the Internet and
faxed to the Company or lastly the consumer can dial the Company's 800 number
and place the order. A consumer who is interested in ordering a product from
television (from a direct response television commercial, a 30 minute
infomercial or soon from the Company's own home shopping sit-commercial,
"Shop-the-Net"™) has basically
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the same options because the Company's web site address is given along with
the Company's 800 number. In addition, the Company has been approved to accept
credit cards for purchases of products made by customers from the showrooms.
The Company itself has no inventory. Orders are forwarded to the clients
who have rented space on "Shop-The-Net"™ by virtue of their showrooms
and them in turn fill the orders. After fulfillment the Company remits the
necessary funds to the renter of the showroom less commissions payable to the
Company.
_________________________________________________________
"Shop-The-Net"™ can be found on the Internet
at the following location http://www.shop-the-net.com
__________________________________________________________
The mall locations currently operated by the Company within
"Shop-The-Net"™ are as follows:
The Grand Bazaar: A display of products from all over the world,
products intended to make life more enjoyable.
* The Romance Shoppe: A selection of gifts of a romantic nature that
husbands, wives and couples can buy for each other. It complements a new game
which is being licensed by the Company called, "The Art of Romance, The
Ultimate Seduction."
* Small Green Planet: A meeting place where families on the Internet can
discuss the ecological preservation of our planet.
* KIDSMALL: A special place to create a wonderful experience and
entertainment for children.
* Marketing, Etc.: This area specializes in the introduction of new
products and services.
* By Invitation Only: The finest wines, exotic automobiles, rare antiques
and oil paintings will be introduced into this area "By Invitation Only" as a
silent auction.
* "In Your Neighborhood"™ is licensed in various areas of the
country and provides local residents with information on movies, ratings,
restaurants, menus, book stores, concerts, entertainment, shopping plazas,
specialty shops, local merchants and special events. This service also
provides users
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with discount coupons which can be printed in the home when offered by
advertisers in this section.
2. Marketing Group:
The Marketing Group specializes in the introduction of new products and
services by creating visual tools that work interactively with the marketing
strategy of the product.
The Company's computer network and online access allow the Company to
analyze the multiple channels of distribution that are available to the client
and to achieve product "direct response" through the following:
Internet World Wide Web
Broadcast television
Interactive Television Home Shopping
Cable & Satellite Television Infomercials
Computer Online services
Print, radio & retail advertisements
Mail order & direct mails consumer solicitation
3. Multimedia Group:
The Company intends to develop, manufacture and market to the public,
original proprietary CD-ROM interactive multimedia marketing software. The
CD-ROM format software will enable the individual user of the product to
access information in the following areas: new product introduction, including
concepts and inventions, and small business development. The CD-ROM format
allows entrepreneurs direct connectivity to the Internet and allows them to
interact with the software by category (see following menu) to develop and
introduce their products to the marketplace.
The Company has expended to date approximately $175,000 in the
development of the applicable CD-ROM software. The Company has presently
suspended the research and development necessary to complete this product.
(SEE RISK FACTOR number 9).
CD-ROM Multimedia Software Menu
1. Introduction to key marketing concepts
a. Including what is multimedia and interactive communication
and how to implement same
2. Preparation of a multimedia business plan
a. Sample Forms of business plans
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b. Sample financial statements, criteria, ratios and formulas
utilized by the financial community in reviewing the financial
data of prospective borrowers.
c. Legal protection of product environment including: Incorporation,
patent, copyright and trademark protection
3. Promotional marketing
a. Packaging and design
b. Electronic media, (how to use)
c. Public relations - preparation and placement of information
4. Channels of distribution - Television, prints, radio, direct
mail, etc.
5. Products & services to help new businesses - Small Business
Association, National Association of Retired Persons, etc.
6. Marketing audits - How to conduct an audit and analyze the
results
7. How to register patents and trademarks
CD-ROM Background
Since its introduction in 1984, CD-ROM technology has enabled a rapidly
increasing number of organizations to distribute and provide access to large
amounts of electronic information using a cost-effective, portable medium.
According to industry estimates, since 1985 the number of CD-ROM titles has
grown rapidly to more than 11,000 with growth rates in excess of 40% in each
of the past three years. The installed base of CD-ROM drives has had an
estimated growth rate in excess of 100% in each of the past three years.
Industry sources estimate that during 1995 most software will be published on
CD-ROM. The Company believes that only a small fraction of the applications
suitable for CD-ROMS have been implemented to date.
CD-ROMS permit the storage, retrieval and dissemination of vast amounts
of information. Each CD-ROM has a capacity of more than 650 megabytes of
storage. In terms of data, that capacity is roughly the equivalent of 200,000
to 300,000 pages of text or 450 high density floppy disks. More often than
not, the amount of data contained in a typical CD-ROM application can involve
tens or even hundreds of thousands of individual records. A means of finding
and retrieving specific information is, therefore, an essential
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component. Effective retrieval software makes all of the data contained on a
CD-ROM easily and quickly accessible in a manner which the Company believes to
be far superior to that currently available on paper, microfiche or any other
alternative medium.
Moreover, once desired data is retrieved from a CD-ROM, it may be
incorporated directly into appropriate computer applications such as a word
processor, spreadsheet or statistical analysis package. No relying, scanning,
digitizing or redrawing is required.
Multimedia is the newest dimension of personal computing and one that is
rapidly gaining in popularity. On a computer, multimedia is any application
that employs more than one medium to convey information. Multimedia merges
text, music, voice narratives, recorded sounds, graphics, animation, and
full-motion video together on CD-ROM. Multimedia is not a new idea, but needed
higher speed personal computers with greater memory for implementation.
Currently available high speed personal computers, coupled with the huge
capacity of CD-ROM, make full-blown multimedia presentations possible and
affordable. As CD-ROM software continues to evolve, the applications and
programs available in this medium will continue to become larger and more
complex. At the end of 1993, the multimedia market share, as it relates to
CD-ROM drives and the installed base, was dominated by the professional
market, followed by business, education and home-computer users. Market
Vision, an industry research group based in Santa Cruz, California, is
predicting that the home-computer-user market will surpass the professional
market in 1997. Its research also indicates that the business and education
markets will grow significantly.
4. Entertainment Group:
The Entertainment group writes, directs and produces the interactive
television home shopping "sit-commercial" in America. The first episode of
"Shop-the-Net"™ aired on Cable Television January 1997.
The "sit-commercial," "Shop-the-Net"™ combines two television
formats - the situation comedy and the infomercial. The "sit-commercial"
format was created to promote the Company's family Internet shopping site
"Shop-The-Net"™.
To date, the Company has produced television commercials and
infomercials for clients with products ranging from small kitchen appliances
and pesticides to de-addiction programs and educational videos.
Sales and Marketing
The Company presently markets products/services in the following
categories.
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Accounting Services Lingerie
Architecture Limousines
Automotive Services Marketing of New Products
Children/Toys/Games Medical Services
Educational Products Personal Security
Food Real Estate
Educational Videos Romance
Gifts Self-Help Smoking De-Addiction
Graffiti Removal Singles Scene
Home Furnishings Sports Instruction
Home and Gardens Sportswear
Home Improvements Telecommunications
Hotels Weddings
Jewelry Wines of the World
The Company has no clients with whom the majority of its business is
conducted. The loss of anyone or several clients would not be detrimental
however. There can be no assurance that this will continue to be the case.
The Company is currently conducting a national promotional campaign in an
effort to raise the awareness level of potential clients and consumers of said
clients' products, of the Company, its services, and its web site
"Shop-The-Net"™. This campaign utilizes the following media and
television to achieve this increased awareness of the Company, its services
and its clients' products or services.
The following is the current and proposed Media Schedule for
"Shop-The-Net"™
NEWSPAPERS - The Company has placed (or plans to place) advertisements
designed to solicit clients in the following newspapers:
Wall Street Journal
New York Times
USA Today
Newark Star Ledger
Bergen Record
Miami Herald
Ft. Lauderdale Sun Sentinel
Boca Raton News
TRADE PUBLICATIONS - (Advertising Content and Press Releases) The Company has
placed (or plans to place) advertisements designed to solicit clients in the
following trade publications
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Online Access
Internet World
Interactive Age
Web Week
Web Master
Web Techniques
Boardwatch
Multimedia
Wired
Inside the Internet
New Media
T.V. Cable Systems and Cable Networks - The Company has placed (or plans to
place) advertisements / commercials designed to solicit clients in the
following broadcast, cable systems and cable networks
TCI Corporate
Adelphia Cable Corporate
Comcast Corporate
Discovery Channel
Family Network Channel
Nostalgia Channel
CNN
CNBC
ESPN
USA
The Company negotiates with the following Broadcast, Cable and Satellite
Networks for the broadcast of the Company's Interactive Home Shopping Sitcom
(Shop-The-Net) on an as needed basis
Nostalgia (20 million households)
Family Network (17 million households)
Network One (24 million households)
TV Stations Affiliates and Independents
WTWB - Pittsburgh, PA WNJU CH 47 - New York, NY
WJJA TV - Oak Circle Creek, MI WTTA - Tampa, FL
KYUS TV - Miles City, MT WADL CH 38 - Clinton Township, MI
WWIN TV - Burlington, VT WAOH CH 29 - Kent, OH
WFHL TV - Decatur, IL WGCB - Red Lion, PA
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WAZ TV - Evansville, IN WAQ TV CH 46 - North Park Beach, FL
WEVU TV - Ft. Meyers, FL WBEK TV - Augusta, GA
KKAG TV - Porterville, CA WBTR TV - Baton Rouge, LA
KXLI - Big Lake, MN WGTW TV - Philadelphia, PA
WFAY TV - Lumber Bridge, NC WTCN TV - West Palm Beach, FL
KGLR TV - Lubbock, TX KWHY TV - Los Angeles, CA
KMCI TV - Lawrence, KS WOWL TV - Florence, AL
WTXX TV - Prospect, CT
Online Services
American Online
Microsoft Network
Prodigy
Compuserve
The Company is currently not actively soliciting business internationally.
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ITEM 2. FINANCIAL INFORMATION
<TABLE>
SELECTED FINANCIAL INFORMATION
The fiscal years' data are derived from audited financial statements
<CAPTION>
Statement of Operations March 31, 1996 March 31, 1997 December 31, 1997
Operations (Nine months ended)
<S> <C> <C> <C>
Revenue $ 95,299 $409,343 $119,055
Net Income (Loss) (169,450) (6,654) (243,881)
Net Income (Loss) ($0.03) ($0.05) (.05)
per Weighted NIL
Average Share
Earnings (Losses) (169,450) (58,830) (243,881)
Before provision for
Tax on Earnings
Net Earnings
(Losses) (169,450) (6,664) (243,881)
BALANCE SHEET
Working Capital 10,419 12,013
Total Assets 161,563 191,943 387,575
Total Liability 26,405 43,444 6,916
Shareholder Equity 135,158 148,504 380,116
Shareholder Equity per Share $0.03 $0.03 $0.08
</TABLE>
Management Discussion and Analysis of Certain Relevant Factors
The Company has experienced losses from operations since its inception.
Operating losses for fiscal 1997 was $6,654. In fiscal 1996 they were
$169,450. In the nine months ended December 31, 1996, the operating loss was
$243,881.
The Company has addressed these losses by taking steps to increase the
profit margin on sales by decreasing marketing and production costs associated
with these sales. Operationally, the Company has greatly reduced its reliance
on outside consultants for computer programming and research work. The
Company has internalized the majority
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of its programming and has presently eliminated all of its research and
development expenditures.
The development costs of programming the web site and CD ROM products
incurred by the Company have inherent in them a large amortization expense
which accounted for 46% of the operational loss for fiscal 1996 and 74% of the
operational loss in fiscal 1997. In the seven months ended December 31, 1997,
the operational loss associated with amortization expense was 12%. As the
revenues increase, the operational loss associated with this amortization
expense will decrease.
Gross margins for the year 1997 were 58% of sales versus 36% for fiscal
1996. This increase was due primarily to an increase of Internet related
services being provided to clients. In the nine months ending December 31,
1997, the gross margin was 38%.The decrease in overall revenues for the nine
months ended December 31, 1997 was due to a management decision to seek other
types of revenues and projects that were not as labor intensive as those
produced in 1995.
The Company knows of no trends in the marketing industry that will impact
its operations.
ITEM 3. PROPERTIES AND EQUIPMENT
Executive Headquarters
The Company`s corporate headquarters are located at 3163 Kennedy
Boulevard, Jersey City, New Jersey 07306, in a three story, brick
office-residential building located on a main thoroughfare in Jersey City, New
Jersey. The Company occupies approximately 900 square feet on the ground
floor, all of which space is devoted to clerical, administrative and sales
purposes.
Boca Raton Facility
The Company currently leases a 1,000 sq. ft. office in Boca Raton,
Florida, which houses the operational and marketing areas of the Company.
This lease is for a term of 2 years commencing May 13, 1996. The monthly
payment for this lease is $940.00 per month.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
The following table sets forth information with respect to the share
ownership, both before and after the prospective closing of the offering made
hereby, of the Company's common stock by its officers and directors, both
individually and as a group, and by the record and/or beneficial owners of
more than 5 percent of the outstanding amount of such stock:
Shares Owned Beneficially and of Record
__________________________________________
Percent of Class
__________________________________________
Amount & Nature
of Beneficial Percent of Ownership
Name and Address Ownership as of December 31, 1997
_________________________________________________________________________
Marion H. Verdiramo (1) 3,400,930 68.6%
_________________________________________________________________________
Small Business
Development Group (2) 1,115,750 22.8%
_________________________________________________________________________
(1) Vincent L. Verdiramo, chairman of the board of directors and
president of the Company, is the husband of Marion H. Verdiramo.
(2) William J. Auletta, an officer and director of the Company is the
sole stockholder of Small Business Development Group, Inc.
Marion H. Verdiramo presently owns 3,400,930 shares of its common stock.
Shares presently held by Marion H. Verdiramo constitute 68.6% of the Company's
outstanding stock. Accordingly, Marion H. Verdiramo is in a position to
continue to control, manage and direct the business and operations of the
Company. See "DILUTION."
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Security Ownership of Management
The following table sets forth information with respect to the share
ownership, as of December 31, 1997, of the Company's common stock, $.001 par
value, by its executive officers and directors and related parties, both
individually and as a group:
Amount and
Name of Nature of
Beneficial Beneficial Percent
Owner Ownership of class
____________________________________________________________________________
Vincent L. Verdiramo
3163 Kennedy Blvd
Jersey City, NJ 07306 0 0%
William J. Auletta (1)
Small Business Development Group
5581-B Coach House Circle
Boca Raton, Florida 33433 1,115,750 22.5%
Maureen Hogan
881 Kennedy Boulevard
Bayonne, New Jersey 07002 0 0
All officers, directors, 0 0
nominees and related parties
(3 persons) 1,115,750 22.5%
(1) William J. Auletta, an Officer and Director of the Company is the
sole stockholder of Small Business Development Group, Inc.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES DIRECTORS
The following sets forth the directors of the Company as of December 31,
1997 their respective ages, the year in which each was first elected or
appointed a director, and any other office in the Company held by each
director.
Directors and Executive Officers
Directors and executive officers of the Company are as follows:
Name of Director / Age Position Held Position held
Officer Since
______________________________________________________________________________
Vincent L. Verdiramo Age 60 President and May 5, 1995
Chairman of the
Board of Directors
William J. Auletta Age 54 CEO and Vice Pres. March 4, 1994
Maureen Hogan Age 38 Secretar March 4, 1994
Family Relationships
No family relationship exists between or among any of the directors,
executive officers, and significant employees, as defined below, of the
Company or any person contemplated to become such, except that Vincent L.
Verdiramo and Marion H. Verdiramo are husband and wife, respectively.
Business Experience
Mr. Vincent L. Verdiramo, 60, has been engaged in the practice of law
since 1965. More recently he was engaged as General Counsel for several
publicly traded Companies from 1986 to 1994. Mr. Verdiramo has also enjoyed
teaching affiliations with several colleges and universities within the New
York - New Jersey area where he taught various courses in business and law.
Since the Company's incorporation, Mr. Verdiramo has been functioning as its
corporate counsel, Chairman and President, and has worked full time for the
Company since its inception and will continue to do so.
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Mr. William J. Auletta, 54, has worked as founder, president and sole
stockholder of Small Business Development Group, as a marketing consultant
from 1990 to 1994. Mr. Auletta has created and implemented marketing plans for
clients in over 100 different industries. Since the incorporation of the
Company, Mr. Auletta has worked full time for the Company and will continue to
do so.
Ms. Maureen Hogan, 38, has worked as a legal secretary from 1990 to 1995.
She has extensive experience in property management. She is president of
Bishop Property Management, Inc., as a part of which Ms. Hogan has managed
numerous properties for more than 10 years. Ms. Hogan will work approximately
10 to 15 hours per week for the Company.
ITEM 6. EXECUTIVE COMPENSATION
Cash Compensation
No executive officer of the Company has received or accrued cash
compensation in excess of $60,000 during the last fiscal year. The following
tables sets forth all cash compensation paid by the Company or its
predecessors during the nine months ending December 31, 1997 to all executive
officers of the Company as a group:
CASH COMPENSATION TABLE
Remuneration
Name of individual or identity of Capacities in which
group remuneration Remuneration was received Aggregate
______________________________________________________________________________
Vincent L. Verdiramo (1) President and Chief $ 0.00
Executive Officer
William J. Auletta (1) CEO $ 5,033.00
Maureen Hogan Secretary $ 1,800.00
(1) William J. Auletta and Vincent L. Verdiramo have each entered into
employment agreements with the Company effective upon the completion of its
maximum public offering for a three year term. Each of these agreements
provides for an annual salary of $70,000 plus health benefits.
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<PAGE>
Other Compensation
No individual executive officer of the Company received or accrued
compensation by way of personal benefits or securities or property valued at
$25,000 or more and neither any individual executive officer nor all executive
officers as a group, received or accrued, such compensation equal in value to
10% or more of such individual's or such group's aggregate cash compensation
as reported in the "Cash Compensation Table" hereinabove.
Compensation of Directors
The directors of the Company are not compensated for their services as
such.
Change in Control
The Company is not aware of any arrangements which may at a subsequent
date result in a change in control of the Company, except as set forth above
in the Agreement.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The initial funding for the Company was provided by Marion H. Verdiramo
and William J. Auletta. The total amounts of the funding in both time and
actual expenditure by both parties equaled $468,493. A payment was made during
fiscal 1995 by the Company to Small Business Development Group, Inc., in the
amount of $16,825. The balance of $451,668 was acknowledged pursuant to the
resolution of the Company, to be the amount of long term debt then owed by the
Company to the two principal stockholders, Marion H. Verdiramo and Small
Business Development Group, Inc. This debt was converted into 4,516,680 shares
of common stock at $0.10 cents per share, by board resolution.
During its development stage the Company engaged Dyna A.B., to begin the
process of programming the Company's web site "Shop-The-Net"™. The
Company was unable to meet its obligation to pay the invoices for the services
provided by Dyna A. B., so the Company's principal stockholder, Marion H.
Verdiramo assumed the responsibility for these invoices and paid Dyna A.B.
directly for the programming of the Company's web site, "Shop-The-Net"™.
The amount of the invoices from Dyna A.B. for this programming and the related
computer consulting was $250,208. Ms. Verdiramo also lent to the Company as
working capital $38,885 and $25,000 in the fiscal years 1995 and 1996,
respectively. Also in fiscal 1995, the Company had signed a note to Vincent L.
Verdiramo, (President of the Company) in the amount of $25,000 in lieu of
payment for services rendered and expenses incurred by the law firm of
Verdiramo & Verdiramo, P.A. of which he is a partner. Of the $25,000, legal
fees and expenses were $22,500 and $2,500
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were organizational costs for the Company. This note was transferred to Marion
H. Verdiramo on May 31, 1995, thus bringing the total owed Ms. Verdiramo to
$340,093. This loan amount owed by the Company to Ms. Verdiramo, was converted
as described in the preceding paragraph for 3,400,930 shares of common stock
at $0.10 per share.
Mr. Auletta, as president of Small Business Development Group, conducted
significant market research in order to validate the feasibility of the
proposed business enterprise for the Company. This research was conducted
over a period of eighteen months beginning January 1993 and ending June 1994.
The Company's Board by resolution, on May 31, 1994, adopted the expenses
incurred by Small Business Development Group and its principal William J.
Auletta resulting from Small Business' research and feasibility studies which
lead to the formation of the Company in March 1994. The Company was thereby
obligated for $128,400 to Small Business Development Group, Inc. for this
research and development. No subsequent research and development work was
performed in 1996 as the initial research and development performed for the
Company was for the purpose of determining the viability of the enterprise.
This indebtedness was converted to a formal note and carried as a long
term debt to a stockholder by the Company. Subsequently the board of directors
of the Company, by resolution, elected to convert this note in the amount of
$111,575 to 1,115,750 shares of stock. (representing the original amount of
$128,400 minus the payment made of $16,825 equaling $111,575).
On March 15, 1996, the Company advanced to Vincent L. Verdiramo a loan in
the amount of $8,900. Said note was made at the applicable federal interest
rate and was paid in full, ahead of schedule, on October 25, 1996. At that
time, Mr. Verdiramo advanced $5,100 to the Company to be paid upon demand at
no interest. The balance owed Mr. Verdiramo as of December 31, 1997 is
$21,653.00. As of December 31, 1998, the company shows receivable from offices
in the amount of $5,033. This amount is due from Mr. Auletta. Should Mr.
Auletta not pay the balance by the end of the fiscal year this amount will be
reclassified as Officers Compensation.
ITEM 8.LEGAL PROCEEDINGS
There is no litigation currently pending and the Company is not aware of
any disputes that may lead to litigation.
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ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Market Information
The Company's common stock, is traded in the over-the-counter market.
The following table sets forth the range of high and low bid quotations as
reported by the, during the two most recent fiscal years. Bid quotations
represent prices between dealers, do not include retail markup, mark down or
other fees or commissions, and do not necessarily represent actual
transactions.
Calendar Quarter Bid Prices
Ended Low High
_______________________________________________________________
November 23, 1997 8 8
December 31, 1997 8 8
March 31, 1998 3/8 3 3/8
As of December 1997, the number of holders of record of the common stock,
$.001 par value, of the Company was 53.
Dividend Policy
The Company has paid no cash dividends and has no present plan to pay
cash dividends, intending instead to reinvest its earnings, if any. However,
payment of future cash dividends will be determined from time to time by its
board of directors, based upon its future earnings, financial condition,
capital requirements and other factors. The Company is not presently subject
to any restriction on its present or future ability to pay such dividends.
ITEM 10.RECENT SALES OF UNREGISTERED SECURITIES
On November 20, 1997, the Company issued 10,000 shares of common stock to
Gino Zeppettini in exchange for consulting services.
On December 3, 1997, the Company issued 2,000 shares of common stock to
Marston Webb International in exchange for public relations services.
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On February 23, 1998, the Company issued 5,000 shares of common stock to
Kenton Prescott in exchange for consulting services.
With respect to the issuance of securities claimed to have been exempt
from registration under the Act pursuant to Section 4(2) thereof as
hereinabove described:
(i) The Company did not engage in general advertising or general
solicitation and paid no commission or similar remuneration, directly or
indirectly, with respect to such transaction.
(ii) The Company made reasonable inquiry to determine the investment
intent of the persons acquiring the securities and for whose account the
securities would be acquired (i.e. to determine that such shares were
purchased for investment and without a view to their resale or distribution),
informed all recipients thereof regarding the restrictions on resale and
caused an appropriate legend to be placed on certificates or documents
evidencing such securities reciting the absence of their registration under
the Act and referring to the restrictions on their transferability and resale.
(iii) All persons who acquired these securities were provided with all
information requested by them and with what the Company believes to be all
relevant information concerning the Company. These persons are afforded
continuing access to all such information. All such persons are either
officers, directors or persons otherwise doing business with the Company or
are relatives or close friends of such persons who, the Company believes, are
otherwise knowledgeable with respect to the affairs of the Company.
(iv) All persons who acquired these securities have such knowledge and
experience in financial and business matters that they are capable of
evaluating the merits and risks of such investment and are able to bear the
economic risk thereof.
Accordingly, the Company claims the transaction hereinabove described in
paragraphs i through iv of this Item 10, to have been exempt from the
registration requirements of Section 5 of the Act by reason of Section 4(2)
thereof (as to those transactions so indicated) in that such transaction did
not involve a public offering of securities.
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ITEM 11. DESCRIPTION OF THE COMPANY'S SECURITIES TO BE REGISTERED
General
The Company is authorized to issue 25,000,000 shares of common stock
($.001 par value per share), and 5,000,000 non cumulative preferred, ($.001
par value per share). These are the only classes of stock authorized to be
issued. The common and preferred stock have no conversion, preemptive or
subscription rights as to any securities of the Company and are not liable to
assessments or further calls. Each share of common stock of the Company, when
fully paid for, will be validly issued and outstanding, is entitled to one
vote on all matters to be voted on by shareholders, is entitled to equal
dividends when and as declared by the board of directors from funds legally
available therefor, and is entitled to a pro rata share of the Company's net
assets in the event of dissolution, liquidation or winding up of the Company.
Common Stock
The holders of shares of Common Stock are entitled to dividends when and
as declared by the Board of Directors from funds legally available therefore
and, upon liquidation, are entitled to share pro rata in any distribution to
common shareholders. Holders of the Common Stock have one non-cumulative vote
for each share held. There are no preemptive, conversion or redemption
privileges, nor sinking fund provisions, with respect to the Common Stock.
All of the outstanding shares of Common Stock are validly issued, fully paid
and non-assessable.
Redeemable Warrants
The Redeemable Warrants were issued in registered form under, governed
by, and subject to the terms of a warrant agreement (the "Warrant Agreement")
between the Company and Jersey Transfer and Trust Co. of New Jersey, 201
Bloomfield Avenue, Verona, New Jersey 07044, as warrant agent (the "Warrant
Agent"). The following statements are brief summaries of certain provisions
of the Warrant Agreement and are subject to the detailed provisions thereof,
to which reference is made for a complete statement of such provisions. The
Warrant Agreement has been filed as an exhibit hereto. See ADDITIONAL
INFORMATION.
Each Redeemable Warrant entitles the registered owner to purchase one
share of Common Stock at any time for a period of one year commencing one year
from the effective date of issuance at an exercise price of $12.00 per share.
The exercise price of the Redeemable Warrants may be reduced and the
expiration date for the exercise of the
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<PAGE>
Redeemable Warrants may be extended at the discretion of the board of
directors of the Company. The Company has authorized and reserved for
issuance that number of shares of Common Stock equal to the number of shares
of Common Stock purchasable upon exercise of the Redeemable Warrants. Such
shares of Common Stock, when issued, shall be fully paid and non-assessable.
The common stock underlying these amended redeemable warrants have not
been qualified for sale in this offering and the warrants cannot be exercised
until an exemption is found for the underlying stock or the stock is
registered.
The exercise price and the number of shares of Common Stock purchasable
upon exercise of the Redeemable Warrants are subject to adjustment upon
occurrence of certain events including payment of stock dividends on the
Common Stock, stock splits, subdivisions, consolidations or reclassification
of the Common Stock and any merger or consolidation of the Company or a sale
of all or substantially all of the Company's assets. The Redeemable Warrants
do not contain provisions protecting against dilution resulting from the sale
of additional shares of Common Stock at a price less than the exercise price
of the Redeemable Warrants. In the event of the complete liquidation and
dissolution of the Company, the Redeemable Warrants terminate. If certain of
the events, including payment of stock dividends on the Common Stock, stock
splits, subdivisions, consolidations or reclassification of the Common Stock
and any merger or consolidation of the Company or a sale of all or
substantially all of the Company's assets, holders of the Redeemable Warrants
will be given advance notice in order to be able to exercise the Redeemable
Warrants before the event. No adjustments as to dividends (except stock
dividends paid on the Common Stock) will be made upon an exercise of
Redeemable Warrants. Holders of Redeemable Warrants, as such, do not have any
voting or other rights as shareholders of the Company.
Each Redeemable Warrant is redeemable at the option of the Company at a
redemption price of $.10 per Redeemable Warrant on 30 days prior written
notice if the closing bid price for the Common Stock for any ten trading days
during the twenty trading days ended three days before the notice of
Redemption is at least $15.00 per share. In the event of the forwarding of a
notice of Redemption, Redeemable Warrant holders will be able to exercise
their Redeemable Warrants until the close of business on the redemption date.
In the event the Redeemable Warrant exercise price is reduced, such Redeemable
Warrant may be redeemed at the above redemption price if the above described
closing price is at least equal to the reduced exercise price for any ten
trading days during the above described twenty day period.
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At any time when the Redeemable Warrants are exercisable, the Company is
required to have a Current Offering Circular on file with the Commission and
to effect appropriate qualifications under the laws and regulations of the
states in which the holders of Redeemable Warrants reside in order to comply
with applicable laws in connection with the exercise of the Redeemable
Warrants and the resale of the Common Stock issued upon such exercise. So long
as the Redeemable Warrants are outstanding, the Company has undertaken to file
all post-effective amendments to the Offering Circular required to be filed
under the Securities Act, and to take appropriate action under federal and
state securities laws to permit the issuance and resale of Common Stock
issuable upon exercise of the Redeemable Warrants. However, there can be no
assurance that the Company will be in a position to effect such action under
the federal and applicable state securities laws, and the failure of the
Company to effect such action may cause the exercise of the Redeemable
Warrants and the resale or other disposition of the Common Stock issued upon
such exercise to become unlawful. The Company may amend the terms of the
Redeemable Warrants but only by extending the termination date or lowering the
exercise price thereof. The Company has no present intention of amending such
terms to include redemption of the redeemable warrants before they are
registered or exempted. Should the Company decide to amend the redeemable
warrants as heretofore stated a post filing amendment will be filed with the
SEC and said amendment must be declared effective or qualified before the
amended warrant may be traded. The holders of the redeemable warrants shall be
notified of any proposed amendment to the redeemable warrants by regular mail
upon submission of the amendment to the SEC.
Noncumulative Voting
Since the common stock of the Company does not have cumulative voting
rights, the holders of more than 50 percent of the outstanding shares can
elect all of the directors, if they choose to do so, in which event the
holders of the remaining shares cannot elect any directors. Accordingly, since
the present shareholders own, and may in the foreseeable future continue to
own more than 50 percent of the outstanding shares, they will continue to be
able to elect all of the directors.
Dividend Policy
The payment by the Company of dividends, if any, in the future rests on
the discretion of its board of directors, and will depend, among other things,
upon the Company's earnings, its capital requirements, and its financial
condition, as well as other relevant factors. The Company has not paid or
declared any dividends upon its common stock since its inception, and by
reason of its contemplated financial requirements, does
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not contemplate or anticipate paying any dividends upon its common stock in
the foreseeable future. SEE "RISK FACTORS."
Reports to Shareholders
The Company intends to furnish its shareholders with annual reports of
its operations, containing financial statements. The Company will also file
quarterly reports as required by Regulation 12R of the Act of 1934.
Transfer Agent
The Company has contracted with Jersey Transfer and Trust Co. of New
Jersey, 201 Bloomfield Avenue, Verona, New Jersey 07044.
ITEM 12. INDEMNIFICATION OF DIRECTOR AND OFFICERS
Interactive Multimedia Network, Inc. (the "Delaware Corporation") was
incorporated under the laws of the State of Delaware June 13, 1995 (see Item
I. Business). As of the date of the Merger into the Delaware Corporation,
the Company was incorporated in the State of Delaware. Section 145 of the
Delaware General Corporation laws as set forth below defines the powers of the
Company to indemnify officers, directors, employees and agents. Section 145
provides as follows:
Sec. 145. Indemnification of Officers, Directors, Employees and Agents:
Insurance
(a) A corporation will have power to indemnify any person, who as or is a
party, or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reasons of the fact that he is, or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, will not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably
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believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had reasonable cause
to believe that his conduct was not unlawful.
(b) A corporation shall have power to indemnify any person who was or is
a party, or is threatened to be made a party to any threatened, pending or
completed action, or suit by, or in the right of the corporation to procure a
judgment in its favor, by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses, (including attorneys' fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification will be made in respect of any claim, issue or matter as to
which such person will have been adjudged to be liable for misconduct in the
performance of his duty to the corporation unless and only to the extent that
the Court of Chancery or the Court in which such action or suit was brought
will determine upon application that, despite the adjudication of liability
but in view of all circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court will deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b), or in defense
of any claim, issue or matter therein, he will be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection therewith.
(d) Any indemnification under subsections (a) or (b) (unless ordered by
a Court) will be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination will be made (1) by the board of directors by a majority vote of
a quorum consisting of directors who were not parties of such action, suit or
proceeding, or (2) if such quorum is not obtainable, or even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in
a written opinion, or (3) by the stockholders.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of the director, officer, employee
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or agent to repay such amounts unless it will ultimately be determined that he
is entitled to be indemnified by the corporation as authorized in this
section.
(f) The indemnification and advancement of expenses provided by this
section will not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and will continue as to a person
who has ceased to be a director, officer, employee, or agent and will inure to
the benefit of the heirs, executors and administrators of such a person.
(g) A corporation will have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of this section.
(h) For the purposes of this section, reference to "the corporation"
will include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, will stand in the same position under the provisions of this
section with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence
had continued. (As amended by Ch. 437, L. '74, eff. 7-1-74).
(i) For purposes of this section, references to "other enterprises" will
include employee benefit plans; references to "fines" will include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" will include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit
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plan will be deemed to have acted in a manner "not opposed to the best
interests of the corporation" as referred to in this section.
(j) "The indemnification and advancement of expenses provided by, or
granted pursuant to this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person".
Except to the extent herein above set forth, there is no charter
provision, by-law, contract, arrangement or statute pursuant to which any
director or officer of the Company is indemnified in any manner against any
liability which he may incur in his capacity as such.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, (the "Act"), may be permitted to directors, officers
and controlling persons of the Company pursuant to the foregoing provisions,
or otherwise, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the"Act" and will be governed by the final adjudication of such
issue.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The financial statements of the Company, itemized in the subtopic,
"Financial Statements" under Item 15 hereof, are set forth below.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
The Company has engaged the firm of Terrence J. Dunne, to audit its
financial statements and schedules for its fiscal years ended March 31, 1998,
and 1997 and December 31, 1986 and 1985. There has been no disagreement
between the Company and its accountants on any matter of accounting principles
or practice or financial statement disclosure.
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ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements
The financial statements filed as a part of this report are as follows:
Reports of independent accountants
Balance sheets as of March 31, 1996, and 1995 and December 31, 1997.
Statement of operations - Years ended March 31, 1997 and 1996 and for
the nine months ended December 31, 1997.
Statements of stockholders' equity/(deficiency) - Years ended March 31,
1996 and 1997 and for the nine months ended December 31, 1997.
Statements of changes in financial position - Years ended March 31, 1996
and 1997 and for the nine months ended December 31, 1997.
Notes to financial statements
Financial Statement Schedules
The financial statement schedules filed as a part of this registration
statement are as follows:
Report of independent accountants as to schedules
Schedules other than those listed above are omitted for the reason that
they are not required or are not applicable, or the required information is
shown in the financial statement or notes thereto.
Exhibits
The exhibits required to be filed as a part of this registration
statement have been previously filed with the Securities and Exchange
Commission as a part of the Company's Regulation filing qualified on February
21, 1997.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Interactive Multimedia Network, Inc.
(Registrant)
Date: April 14, 1998 BY: /s/ Vincent L. Verdiramo
VINCENT L. VERDIRAMO, President
BY:/s/ Maureen Hogan
MAUREEN HOGAN, Secretary
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Interactive Multimedia Network, Inc.
FINANCIAL STATEMENTS
Audited
March 31, 1997 and 1996
Unaudited
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Interactive Multimedia Network, Inc.
TABLE OF CONTENTS
March 31, 1997
===================================================================
PAGE
------
ACCOUNTANT'S AUDIT REPORT 1
FINANCIAL STATEMENTS
Statement of Financial Position For the Years Ended
March 31, 1997 and March 31, 1996 2
Statement of Operations For the Years Ended
March 31, 1997 and March 31, 1996 4
Statement of Changes in Stockholders' Equity For
the Years Ended March 31, 1997 and March 31, 1996 5
Statement of Cash Flows For the Years Ended
March 31, 1997 and March 31, 1996 6
NOTES TO FINANCIAL STATEMENTS 8-12
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TERRENCE J. DUNNE, MBA, MST
Certified Public Accountant
Suite 1100 Washington Trust
Spokane, Washington 99201-3915
Tel: (509) 747-6752
Fax: (509) 455-8483
To The Board of Directors of
Interactive Multimedia Network, Inc.
"INDEPENDENT AUDITOR'S REPORT"
----------------------------
I have audited the accompanying balance sheets or Interactive Multimedia
Network, Inc. as of March 31, 1997 and the related statements of operations,
changes in stockholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit. The financial statements of Interactive Multimedia Network, Inc. as
of March 31, 1996, were audited by other auditors whose report dated October
28, 1996, expressed an unqualified opinion on those statements.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Interactive Multimedia
Network, Inc., as of March 31, 1997 and the results of operations changes in
stockholders' equity and cash flows for the year then ended, in conformity
with generally accepted accounting principles.
/s/ Terrence J. Dunne
Certified Public Accountant
Spokane, Washington
December 18, 1997
Page 36 of 59
<PAGE>
INTERACTIVE MULTIMEDIA NETWORK, INC.
Statement of Financial Position as of
March 31, 1997 and March 31, 1996
______________________________________________________________________________
ASSETS
1997 1996
________________________________
CURRENT ASSETS
Cash $ 43,107 $ 19,024
Accounts Receivable (Note 1) 12,850 17,800
-------------------------------
Total current assets $ 55,957 $ 431,906
-------------------------------
PROPERTY AND EQUIPMENT (Note 1)
Equipment 8,310 8,310
Furniture & Fixtures 4,449 1,537
Computer Equipment 20,763 10,063
Software 197,938 196,043
-------------------------------
231,460 215,953
Less: Accumulated Depreciation ( 176,406) (103,206)
-------------------------------
Net property and equipment 55,054 112,747
-------------------------------
OTHER ASSETS
Deferred Offering Costs (Note 1 and 3) 26,257
Organizational Costs, net of amortization
$1,417 and $917 respectively (Note 1) 1,083 1,583
Trademark, Net of Amortization of $164
and $76 respectively (Note 1) 1,141 1,229
Loan to Officer (Note 3) 8,900
Deposits 280 280
Deferred tax asset (Note 4) 52,176
-------------------------------
Total Other Assets 80,937 11,992
-------------------------------
TOTAL ASSETS $ 191,948 $ 556,645
===============================
The accompanying notes are an integral part of these financial statements.
Page 37 of 59
<PAGE>
INTERACTIVE MULTIMEDIA NETWORK, INC.
Statement of Financial Position as of
March 31, 1997 and March 31, 1996
__________________________________________________________________________
LIABILITIES AND STOCKHOLDERS' EQUITY
1997 1996
____________________________________
CURRENT LIABILITIES
Accounts Payable $ 40,555 $ 9,032
Accrued Expenses 236 11,273
Note payable to officer (Note 3) 2,653
Notes Payable (Note 2) 6,000
State Income Tax Payable 100
--------------------------------
Total current liabilities 43,444 26,405
--------------------------------
STOCKHOLDERS' EQUITY
Preferred Stock - Non Cumulative
par value $.001, Authorized 5,000,000
shares, no shares issued and
outstanding
Common Stock - $.001 par value,
25,000,000 shares authorized; 4,893,680
shares issued and outstanding at March
31, 1997 and March 31, 1996 4,894 4,894
Additional paid-in capital (Note 3) 591,824 571,824
Accumulated deficit (448,214) (441,560)
Total stockholders' equity 148,504 135,158
--------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 191,948 $ 161,563
================================
The accompanying notes are an integral part of these financial statements.
Page 38 of 59
<PAGE>
INTERACTIVE MULTIMEDIA NETWORK, INC.
Statement of Operations For the Years Ended
March 31, 1997 and March 31, 1996
____________________________________________________________________________
1997 1996
SALES $ 409,343 $ 95,299
COST OF SALES 168,944 60,860
--------------------------------
GROSS PROFIT 240,399 34,439
================================
OPERATING EXPENSES
Amortization Expense 66,561 65,924
Advertising and promotion 43,394 16,169
Outside Service 40,266 11,382
Office Expense 39,050 9,881
Compensation 38,224 45,808
Communications 16,874 13,449
Rent 13,908 12,528
Travel and entertainment 13,512 9,461
Insurance 8,249 2,220
Depreciation Expense 7,228 4,957
Legal and accounting 6,668 3,249
Freight and delivery 4,498 2,780
Interest Expense 400 1,928
Bad debt expense 3,850
Taxes 396 303
--------------------------------
Total operating expenses 299,229 203,889
(LOSS) BEFORE INCOME TAXES (58,830) (169,450)
INCOME TAX BENEFIT 52,176
================================
NET (LOSS) $ (6,654) $ (169,450)
================================
NET (LOSS) PER SHARE $ (NIL) $ 0
================================
Weighted Average Number of Shares $ 4,893,680 $ 4,615,603
================================
The accompanying notes are an integral part of these financial statements.
Page 39 of 59
<PAGE>
INTERACTIVE MULTIMEDIA NETWORK, INC.
Statement of Changes in Stockholders' Equity for the
Years Ended March 31, 1997 and March 31, 1996
<TABLE>
<CAPTION>
____________________________________________________________________________________________
Common Stock Additional
Shares Amount Paid-In Accumulated
Capital Deficit Total
____________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Balance at
March 31, 1995 4,306,680 $ 4,307 $ 462,361 $ (272,110) $ 194,558
Sale of common stock at
amounts between
$.50 to $1.00 per
share 92,000 92 55,908 56,000
Common stock issued in
exchange for services
at amounts between
$.01 and $.10 per
share 495,000 495 33,555 34,050
Management services
contributed by
related party
(Note 3) 20,000 20,000
Net Loss (169,450) (169,450)
_______________________________________________________________________________________________________
Balance at
March 31, 1996 4,893,680 4,894 571,824 (441,560) 165,158
________________________________________________________________________________________________________
Management services
contributed by related
party (Note 3) 20,000 20,000
Net Loss (6,654) (6,654)
________________________________________________________________________________________________________
Balance at
March 31, 1997 4,893,680 $4,894 $ 591,824 $(448,214) $148,504
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 40 of 59
<PAGE>
INTERACTIVE MULTIMEDIA NETWORK, INC.
Statement of Cash Flows for the Year Ended
March 31, 1997 and March 31, 1996
________________________________________________________________________________
<TABLE>
<CAPTION>
1997 1996
________________________________
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (6,654) $ (169,450)
Add items not requiring the use of cash:
Depreciation and amortization 73,788 70,881
Management services contributed by related party 20,000 20,000
Decrease in accounts receivable 4,950 4,200
Decrease in prepaid expense 355
(Increase) in deferred offering costs (26,257)
Decrease in loans to shareholders 6,453
(Increase) in deferred income taxes, net (52,176)
(Decrease) increase in accounts payable 31,523 (9,263)
(Decrease) in accrued expenses (11,037)
(Decrease) in state income taxes payable (100)
_______________________________
NET CASH FLOWS PROVIDED (USED)
FROM OPERATING ACTIVITIES
40,490 (83,277)
_______________________________
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets and software (15,507) (10,063)
Purchase of trademark (1,305)
________________________________
NET CASH USED BY INVESTING ACTIVITIES (15,507) (11,368)
CASH FLOWS FROM BY FINANCING ACTIVITIES
Proceeds from the issuance of common stock 90,050
Proceeds from notes payable officer 5,100
Payments on note payable (6,000) (23,900)
________________________________
NET CASH FLOWS PROVIDED (USED)
FROM FINANCING ACTIVITIES (900) 66,150
________________________________
NET INCREASE (DECREASE) IN CASH 24,083
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 41 of 59
<PAGE>
INTERACTIVE MULTIMEDIA NETWORK, INC.
Statement of Cash Flows for the Year Ended
March 31, 1997 and March 31, 1996 (Continued)
_____________________________________________________________________________
<TABLE>
<CAPTION>
1997 1996
__________________________
<S> <C> <C>
CASH AT BEGINNING OF YEAR 19,024 47,519
__________________________
CASH AT END OF YEAR 43,107 47,519
==========================
SUPPLEMENTAL INFORMATION
Interest paid in cash $ 400 $ 1,928
==========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 42 of 59
<PAGE>
NOTE 1 - ORGANIZATION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Interactive Multimedia Network Inc. ("Interactive" or "The Company") was
incorporated in the State of New Jersey on March 4, 1994 and reincorporated in
the State of Delaware on June 13, 1995. The Company's primary business
activity is marketing through multiple media channels. The Company has
acquired computer software specifically developed for the purpose of
facilitating on-line purchases of a variety of products and services. The
corporate offices of the Company are located in the State of New Jersey and
the operational office in the State of Florida. The Company's fiscal year end
is March 31st.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and the
reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Certain accounts in the prior year's financial statements have been
reclassified for comparative purposes to conform to the presentation in the
current year's financial statements.
For the purpose of the statement of cash flows, the Company considers time
deposits and all liquid debt instruments with original maturities of three
months or less to be cash equivalents.
The carrying amounts reported in the statement of financial position for cash
equivalents, receivables, accounts payable, interest payable and notes payable
approximate fair value because of the immediate or short-term maturity of
these financial instruments.
The Company considers all accounts receivable to be fully collectible:
accordingly, no allowance for doubtful accounts is required. When an account
becomes uncollectible, it is charged to operations when that determination is
made.
Property and equipment are stated at cost. Depreciation is computed on the
straight-line method over the estimated lives of the assets for both financial
statement and federal income tax purposes. The categories of computer
equipment and software have estimated lives of three years. Equipment and
furniture and fixtures have estimated lives of five and seven years
respectively.
Intangible assets subject to amortization include organization costs and
trademark costs. Amortization is computed on the straight-line basis over the
estimated lives of these assets. Organizational costs and trademarks are
amortized over five and seventeen years respectively.
Costs directly associated with the raising of capital through the sale of
common stock are capitalized when incurred. These costs are charged to the
additional paid in capital account if the Company is successful in raising
such capital. If the Company is unsuccessful in raising such capital these
costs are charged to operations.
Earnings (losses) per share are calculated using the weighted average number
of shares outstanding during the year.
Page 43 of 59
<PAGE>
NOTE 1 - ORGANIZATION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
The Company accounts for income taxes in accordance with the requirements of
Financial Accounting Standards #109, which states that the objectives for
income taxes are to recognize the amount of income taxes refundable or payable
for the current year and to recognize deferred tax assets and liabilities for
future tar consequences of events that have been recognized in a corporation's
financial statements or Income tar returns.
NOTE 2 - LONG TERM DEBT
Long Term Debt consists of the following: 1997 1996
____________________
Convertible Promissory Note - Borrowed
from an individual, principal and
accrued interest of 8.0% per annum payable
December 31, 1995. This note may be
convertible in whole at any time prior
to its maturity or prepayment into a number
of shares of borrower's common stock,
no par value equal to principal and accrued
interest divided by .50 (the "conversion Price"). $0 $1,400
Convertible Promissory Note - Borrowed
from a corporation, principal and accrued
interest of 8.0% per annum payable December
31, 1995. This note may be convertible in
whole at any time prior to its maturity or
prepayment into a number of shares or
borrower's common stock, no par value
equal to principal and accrued interest
divided by .50 (the "conversion price"). 0 1,400
Convertible Promissory Note - Borrowed
from an individual, principal and accrued
interest of 8.0% per annum payable December
31, 1995. This note may be convertible in
whole at any time prior to its maturity or
prepayment into a number of shares of bor-
rower's common stock, no par value equal
to principal and accrued interest divided
by .50 (the "conversion price"). 0 1,400
Convertible Promissory Note -Borrowed from
an individual, principal an accrued interest
of 8.0% per annum payable December 31, 1995.
This note may be convertible in whole at any
time prior to its maturity or prepayment into
a number of shares of borrower's common stock,
no par value equal to principal and accrued
interest divided by .50 (the "conversion
price"). 0 900
Page 44 of 59
<PAGE>
NOTE 2 - LONG TERM DEBT (CONTINUED): 1997 1996
____________________
Convertible Promissory Note - Borrowed
from an individual, principal and accrued
interest of 8.0% per annum payable December
31, 1995. This note may be convertible in
whole at any time prior to its maturity or
prepayment into a number of shares of
borrower's common stock, no par value
equal to principal and accrued interest
divided by .50 (the "conversion price"). 0 900
____________________
Total 0 6,000
____________________
NOTE 3 - RELATED PARTY TRANSACTIONS
Legal services to Interactive Multimedia Network, Inc. are performed by
Verdiramo & Verdiramo. P.A.. This professional association is owned by Vincent
L. Verdiramo, President of Interactive Multimedia Network, Inc. and his son
Vincent S. Verdiramo. Legal fees of $10,000, which are included in deferred
offering costs (see Note 1), were incurred for the offering circular of
February 21, 1997. Verdiramo & Verdiramo, P.A. is providing limited use of
office space for the benefit of the Company, with no charge for rent.
The Company has been involved in periodic transactions, whereby moneys have
been advanced to the President of the Company and the President has advanced
moneys to the Company. The Company made an unsecured loan of $8,900 on March
15, 1996, to the President. This note was due on demand and had an interest
rate equal to the prevailing Federal Reserve Rate. This note was satisfied in
fiscal 1997 and additional funds were advanced by the President to the
Company. As of March 31, 1997, the Company was obligated to the President for
a total of $2,653. This amount is non-interest bearing and is due on demand.
Space leased in the name of William J. Auletta, Vice President of Interactive
Multimedia Network, Inc. is used by the Company to conduct business in
Florida. The Company pays the lessor directly.
The Company routinely sends funds to Small Business Development Group, Inc., a
corporation owned solely by William J. Auletta. These funds are used to pay
expenses on behalf of the Company's office in Florida.
The board of directors by resolution has provided employment agreements to the
President and Vice President of the Company conditional upon completion of its
maximum public offering for a three-year term. Each of these agreements
provides for an annual salary of $70,000. Had the agreements been in effect,
the net losses would have been ($146,654) and ($309,450) for the years ended
1997 and 1996 respectively.
The Company recorded officer compensation for the President of the Company in
the amounts of $20,000 and $20,000 during the fiscal years ending March 31,
1997 and 1996, respectively. Compensation was paid as additional paid-in
capital in exchange for services performed at the fair market value of such
services.
Page 45 of 59
<PAGE>
NOTE 4 - INCOME TAXES:
The deferred tax asset, net in the accompanying statement of financial
position, includes the following components:
<TABLE>
<CAPTION>
March 31, 1997 March 31, 1996
________________________________________
<S> <C> <C>
Deferred Tax Asset - Federal $129,213 $120,536
Deferred Tax Asset - State 44,707 39,649
Less: Deferred tax asset
valuation allowance - Federal (90,449) (120,536)
Less: Deferred tax asset
valuation allowance - State (31,295) (39,649)
_________________________________________
Deferred tax asset, net $ 52,176 $ 0
==========================================
The following temporary differences
gave rise to the deferred tax asset:
March 31, 1997 March 31, 1996
_________________________________________
Net operating loss carryforward $173,921 $160,186
_________________________________________
Deferred tax asset $173,921 $160,186
=========================================
The following temporary differences
gave rise to the income tax benefit:
March 31, 1997 March 31, 1996
_________________________________________
Net operating loss carryforward $173,921 $160,186
Less: Valuation Allowance (121,745) (160,186)
_________________________________________
Income tax benefit 52,176 0
=========================================
</TABLE>
The Company has available at March 31, 1997 a net operating loss carryforward
of $496,746 which will begin to expire in the year 2009.
Page 46 of 59
<PAGE>
NOTE 5 - LEASE COMMITMENTS
The company leases its office Space for its Florida operations under an
operating lease agreement. (See Note 3). This lease requires monthly lease
payments of $990 and expires May 13, 1998.
The following is a schedule of minimum lease payments under this lease:
March 31, 1998 $ 11,280
==========
NOTE 6 - SUBSEQUENT EVENT
During 1997, the Company raised approximately $500,000 through the sale of
common stock in conjunction with an offering circular (See Note 3), which was
exempt from registration under the Securities Act of 1933. This stock offering
is still open, with a maximum offering of 625,000 units for a total of
$5,000,000 (less broker-dealer commissions, if any).
Page 47 of 59
<PAGE>
Interactive Multimedia Network, Inc.
FINANCIAL STATEMENTS
December 31, 1997
Page 48 of 59
<PAGE>
Interactive Multimedia Network, Inc.
TABLE OF CONTENTS
December 31, 1997
==================================================================
PAGE
----
ACCOUNTANT'S REPORT 1
FINANCIAL STATEMENTS
Statement of Financial Position
as of December 31, 1997 2
Statement of Operations For
the Nine Months Ended December 31, 1997 3
Statement of Changes in Stockholders'
Equity For the Nine Months Ended December 31, 1997 4
Statement of Cash Flows For the
Nine Months Ended December 31, 1997 5
NOTES TO FINANCIAL STATEMENTS 6-9
Page 49 of 59
<PAGE>
TERRENCE J. DUNNE, MBA, MST
Certified Public Accountant
Suite 1100 Washington Trust
Spokane, Washington 99201-3915
Tel: (509) 747-6752
Fax: (509) 455-8483
To The Board of Directors of
Interactive Multimedia Network, Inc.
"ACCOUNTANT'S REPORT"
-------------------
The accompanying statement of financial position of Interactive Multimedia
Network, Inc. as of December 31, 1997 and the related statements of
operations, changes in stockholders' equity and cash flows for the nine month
period ended December 31, 1997, were not audited by me and, accordingly, I do
not express any opinion on them.
/s/ Terrence J. Dunne
Certified Public Accountant
Spokane, Washington
February 19, 1997
Page 50 of 59
<PAGE>
INTERACTIVE MULTIMEDIA NETWORK, INC.
Statement of Financial Position as of
December 31, 1997
______________________________________________________________________________
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
CURRENT ASSETS
Cash $ 190,208
Accounts Receivable (Note 1) 51,250
Receivable from Officer (Note 3) 5,033
Note Receivable (Note 2) 54,000
__________
Total current assets $ 300,491
__________
PROPERTY AND EQUIPMENT (Note 1)
Equipment 12,449
Furniture & Fixtures 4,449
Computer Equipment 29,153
Software 197,938
__________
243,989
Less: Accumulated Depreciation (211,695)
__________
Net property and equipment 32,294
OTHER ASSETS
Security Deposit 280
Organizational Costs, net of amortization
$1,792 (Note 1) 708
Trademark, Net of Amortization of $222 (Note 1) 1,083
Deferred tax asset (Note 4) 52,176
__________
Total Other Assets 54,247
__________
TOTAL ASSETS $ 387,032
==========
</TABLE>
The accompanying notes are an integral part of these financial statement.
Page 51 of 59
<PAGE>
INTERACTIVE MULTIMEDIA NETWORK, INC.
Statement of Financial Position as of
March 31, 1997 and March 31, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------
1997
_________
CURRENT LIABILITIES
Accounts Payable $ 4,027
Accrued Expenses 236
Note payable to officer (Note 3) 2,653
_________
Total current liabilities 6,916
_________
STOCKHOLDERS' EQUITY
Preferred Stock - Non Cumulative
par value $.001, Authorized 5,000,000
shares, no shares issued and outstanding
Common Stock - $.001 par value,
25,000,000 shares authorized; 4,956,505 4,957
Additional paid-in capital (Note 3) 1,067,254
Accumulated deficit (692,095)
Total stockholders' equity 380,116
__________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 387,032
==========
The accompanying notes are an integral part of these financial statement.
Page 52 of 59
<PAGE>
INTERACTIVE MULTIMEDIA NETWORK, INC.
Statement of Operations For The Nine Months
Ended December 31, 1997
1997
_____________
SALES $ 119,055
COST OF SALES 73,759
_____________
GROSS PROFIT 45,296
_____________
OPERATING EXPENSES
Advertising and promotion 61,691
Consulting 50,000
Outside Service 46,087
Amortization Expense 29,815
Legal and accounting 23,079
Office Expense 19,630
Travel and entertainment 14,160
Communications 10,372
Rent 9,010
Dues and subscriptions 6,229
Depreciation Expense 5,907
Insurance 2,915
Freight and delivery 1,749
Clerical 11,271
Taxes _____________
Total operating expenses 292,540
_____________
(LOSS) FROM OPERATIONS (247,244)
_____________
OTHER INCOME
Interest Income 3,363
_____________
NET (LOSS) $ (243,881)
=============
NET (LOSS) PER SHARE $ (0.05)
=============
The accompanying notes are an integral part of these financial statement.
Page 53 of 59
<PAGE>
INTERACTIVE MULTIMEDIA NETWORK, INC
Statement of Changes in Stockholders' Equity for
The Nine Month Period Ended December 31, 1997
<TABLE>
<CAPTION>
_________________________________________________________________________________________
Common Stock Additional
Shares Amount Paid-In Accumulated
Capital Deficit Total
__________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Balance
4,306,680 $ 4,894 $ 591,824 $(448,214) $ 148,504
Issuance of common
stock for $8.00 per
share in cash 62,825 63 50,253 502,600
Direct costs of common
stock offering (27,107) (27,107)
Net Loss (243,881) (243,881)
____________________________________________________________________________________________
Balances at
December 31, 1997 4,956,505 4,957 $1,067,254 $(692,095) $ 380,116
==========================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 54 of 59
<PAGE>
INTERACTIVE MULTIMEDIA NETWORK, INC.
Statement of Cash Flow for the Nine Month Period
December 31, 1997
1997
_______
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $(243,881)
Add items not requiring the use of cash:
Depreciation and amortization 35,722
(Increase) in accounts receivable (38,400)
(Increase) in notes receivable (54,000)
(Increase) in receivable from officer (5,033)
Decrease in accounts payable (36,528)
__________
NET CASH FLOWS PROVIDED FROM OPERATING
ACTIVITIES (342,120)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (12,529)
__________
CASH FLOWS FROM BY FINANCING ACTIVITIES
Proceeds from the issuance of common stock 501,750
__________
NET INCREASE (DECREASE) IN CASH 147,101
CASH AT BEGINNING OF PERIOD 43,107
__________
CASH AT END OF PERIOD 190,208
==========
The Accompanying notes are an integral part of these financial statements.
Page 55 of 59
<PAGE>
Interactive Multimedia Network, Inc.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - ORGANIZATION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Interactive Multimedia Network Inc. ("Interactive" or "The Company") was
incorporated in the State of New Jersey on March 4, 1994 and reincorporated in
the State of Delaware on June 13, 1995. The Company's primary business
activity is marketing through multiple media channels. The Company has
acquired computer software specifically developed for the purpose of
facilitating on-line purchases of a variety of products and services. The
corporate offices of the Company are located in the State of New Jersey and
the operational office in the State of Florida. The Company's fiscal year end
is March 31st.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and the
reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
For the purpose of the statement of cash flows, the Company considers time
deposits and all liquid debt instruments with original maturities of three
months or less to be cash equivalents.
The carrying amounts reported in the statement of financial position for cash
equivalents, receivables, accounts payable, approximate fair value because of
the immediate or short-term maturity of these financial instruments.
The Company considers all accounts receivable to be fully collectible:
accordingly, no allowance for doubtful accounts is required. When an account
becomes uncollectible, it is charged to operations when that determination is
made.
Property and equipment are stated at cost. Depreciation is computed on the
straight-line method over the estimated lives of the assets for both financial
statement and federal income tax purposes. The categories of computer
equipment and software have estimated lives of three years. Equipment and
furniture and fixtures have estimated lives of five and seven years
respectively.
Intangible assets subject to amortization include organization costs and
trademark costs. Amortization is computed on the straight-line basis over the
estimated lives of these assets. Organizational costs and trademarks are
amortized over five and seventeen years respectively.
Costs directly associated with the raising of capital through the sale of
common stock are capitalized when incurred. These costs are charged to the
additional paid in capital account if the Company is successful in raising
such capital. If the Company is unsuccessful in raising such capital these
costs are charged to operations.
Earnings (losses) per share are calculated using the weighted average number
of shares outstanding during the year.
Page 56 of 59
<PAGE>
Interactive Multimedia Network, Inc.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - ORGANIZATION SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued):
The Company accounts for income taxes in accordance with the requirements of
Financial Accounting Standards #109, which states that the objectives for
income taxes are to recognize the amount of income taxes refundable or payable
for the current year and to recognize deferred tax assets and liabilities for
future tax consequences of events that have been recognized in a corporation's
financial statements or income tax returns.
NOTE 2 - NOTE RECEIVABLE
ON November 15, 1997, THE Company made a $54,000 unsecured loan to a client
corporation. The note is due upon demand and bears interest at the prevailing
federal prime rate.
NOTE 3 - RELATED PARTY TRANSACTIONS
Legal services to Interactive Multimedia Network, Inc. are performed by
Verdiramo & Verdiramo. P.A.. This professional association is owned by Vincent
L. Verdiramo, President of Interactive Multimedia Network, Inc. and his son
Vincent S. Verdiramo. Legal fees of $10,000, which are included in deferred
offering costs (see Note 1), were incurred for the offering circular of
February 21, 1997. Verdiramo & Verdiramo, P.A. is providing limited use of
office space for the benefit of the Company, with no charge for rent.
The Company has been involved in periodic transactions, whereby moneys have
been advanced to the President of the Company and the President has advanced
moneys to the Company. The Company made an unsecured loan of $8,900 on March
15, 1996, to the President. This note was due on demand and had an interest
rate equal to the prevailing Federal Reserve was satisfied in
fiscal 1997 and additional funds were advanced by the President to the
Company. As of December 31, 1997, the Company was obligated to the President
for a total of $2,653. This amount is non-interest bearing and is due on
demand.
Space leased in the name of William J. Auletta, Vice President of Interactive
Multimedia Network, Inc. is used by the Company to conduct business in
Florida. The Company pays the lessor directly.
The Company routinely sends funds to Small Business Development Group, Inc., a
corporation owned solely by William J. Auletta. These funds are used to pay
expenses on behalf of the Company's office in Florida. In addition, moneys
have been personally advanced to Mr. Auletta during the nine month period
ended December 31, 1997. The amount owed to the Company at December 31, 1997
was $5,033. This amount is non-interest bearing and is due upon demand.
The board of directors by resolution has provided employment agreements to the
President and Vice President of the Company conditional upon completion of its
maximum public offering for a
Page 57 of 59
<PAGE>
Interactive Multimedia Network, Inc.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
three-year term. Each of these agreements provides for an annual salary of
$70,000. Had the agreements been in effect, the net losses would have been
($348,881) for the nine month period ended December 31, 1997. There have not
been any salaries or other forms of compensation paid to any directors or
officers form the inception of the Company through December 31, 1997.
NOTE 4 - INCOME TAXES:
The deferred tax asset, net in the accompanying statement of financial
position, includes the following components:
December 31, 1997
_________________
Deferred Tax Asset - Federal $129,213
Deferred Tax Asset - State 44,707
Less: Deferred tax asset
valuation allowance - Federal (90,449)
Less: Deferred tax asset
valuation allowance - State (31,295)
_______________
Deferred tax asset, net $52,176
===============
The following temporary differences
gave rise to the deferred tax asset:
December 31, 1997
___________________
Net operating loss carryforward $173,921
___________________
Deferred tax asset $173,921
===================
The Company has available at December 31, 1997 a net operating loss
carryforward of $496,746 which will begin to expire in the year 2009.
NOTE 5 - LEASE COMMITMENTS
The company leases its office Space for its Florida operations under an
operating lease agreement. (See Note 3). This lease requires monthly lease
payments of $990 and expires May 13, 1998.
The following is a schedule of minimum lease payments under this lease:
December 31, 1998 $ 4,950
=========
Page 58 of 59
<PAGE>
Interactive Multimedia Network, Inc.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 6 - CONCENTRATION OF RISK
The Company maintains a cash balance in a commercial money market account,
which exceeds the $100,000 ceiling insured by the Federal Deposit Insurance
Corporation.
Page 59 of 59
<PAGE>
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<PERIOD-END> DEC-31-1997 MAR-31-1997 MAR-31-1996
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<DEPRECIATION> (211695) (176406) (103206)
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<INCOME-CONTINUING> (243881) (6654) (169450)
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<CHANGES> 0 0 0
<NET-INCOME> (243881) (6654) (169450)
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