SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 000-29994
Anything Internet Corporation
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(Exact name of registrant as specified in its charter)
COLORADO 84-1425882
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
3020 North El Paso, Ste. 103, Colorado Springs, CO 80907
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 227-1903
Securities registered pursuant to Section
12(b) of the Act:
Title of each class Name of each exchange on which registered
NONE
Securities registered pursuant to Section
12(g) of the Act:
Common Stock, no par value
--------------------------
(Title of Class)
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [ ] No [X]
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Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB [X].
The Registrant's revenues for its fiscal year ended June 30, 1999 were
$3,503,822.
The aggregate market value of the voting stock on September 21, 1999 (consisting
of Common Stock, no par value per share) held by non-affiliates was
approximately $5,049,551 based upon the closing price for such Common Stock on
said date ($3.75), as reported by a market maker. On such date, there were
3,074,400 shares of Registrant's Common Stock outstanding.
PART I
Item 1. Description of Business
OVERVIEW
Anything Internet Corporation (the "Company") is an Internet e-commerce
holding company focused on building a network of successful e-commerce operating
companies, joint ventures, strategic alliances and partnerships. The
anticipated outcome of these various endeavors is the creation of the first true
e-commerce conglomerate.
Unlike most e-commerce businesses today, the Company is not limiting itself
to one specific area of e-commerce (ie. books, computers, CDs, etc.). Rather,
the Company is aggressively pursuing diversification into a variety of emerging
e-commerce venues. If successful, the Company will have:
- - minimized its exposure and risk to normal industry specific business down
cycles;
- - increased its chances of participating in one of the few expected "super
successful" Internet e-commerce ventures; and
- - created more site traffic and revenue generating opportunities by referring
potential customers to other Internet storefronts owned and operated by the
Company rather than by a third-party.
Currently the Company operates through two wholly-owned subsidiaries:
AnythingPC Internet Corporation ("AnythingPC") and Anything Coffee Corporation
("AnythingCoffee"). AnythingPC is a rapidly growing Internet based discount
retailer of over 201,000 different computer hardware, software and peripheral
products to end consumers and businesses. Through its Internet storefronts -
www.anythingpc.com, www.anythingmac.com and www.anythingunix.com - AnythingPC
offers one-stop shopping to its customers 24 hours a day, seven days a week. In
addition to its wide array of product offerings, AnythingPC's storefronts
feature competitively priced "Hot Products", an easy-to-use graphical interface,
a powerful search engine to locate any product desired, a unique "quote monkey"
for pricing assistance on hard-to-find products, and a special "notify me"
feature that automatically notifies customers when a backordered product arrives
in stock and keeps the customer appraised of the estimated time of arrival.
AnythingCoffee offers coffee drinkers the opportunity to purchase over 200
specialty coffees, including the difficult to find Jamaican Blue Mountain,
derived from coffee beans originating from more than 18 countries worldwide -
all from the comfort of their homes or offices. AnythingCoffee's Internet
storefront, www.anycoffee.com, presents customers with similar easy-to-use
navigation, search, and general functionality found at the AnythingPC Internet
storefronts.
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The Company also offers, through its AnythingBooks Internet storefront,
www.anythingbooks.com, a wide selection of books, magazines and music through an
affiliate partnership with barnesandnoble.com, Inc. (Nasdaq: BNBN). Through
this affiliation, the Company is able to utilize barnesandnoble.com's investment
in their distribution, warehousing and customer service support while receiving
a portion, typically 5 - 10% of the gross sale, on all product sales generated
through this affiliation.
Since its incorporation on August 15, 1997, under the laws of the state of
Colorado, the Company has experienced tremendous growth in both monthly revenues
and visitors to its various Internet storefronts. To continue with this rapid
pace of growth and to enhance brand awareness and monthly traffic to its
Internet storefronts, the Company has begun entering into strategic marketing
alliances with popular Internet content providers and sites of interest such as
C|Net's Shopper.com, mySimon.com, Priceline.com and bottomdollar.com as well as
technology enablers such as Digital River, Inc. (NASDAQ: DRIV). The Company is
currently in negotiations with several other popular content providers and sites
of interest to greatly expand the number of such strategic alliances to further
enhance its Internet storefronts' technology, expand brand awareness, monthly
traffic and subsequent revenues.
INDUSTRY/INTERNET OVERVIEW
Growth of the Internet and Online Commerce
The Internet has emerged as a significant global medium for communications,
information and commerce, enabling millions of people to share information and
conduct business electronically. The Company believes growth in Internet usage
and online commerce has been fueled by a number of factors including:
- - the large and growing installed base of advanced personal computers in the
home and office;
- - improvements in network infrastructure and bandwidth;
- - easier and cheaper access to the Internet;
- - increased awareness of the Internet among consumer and business users; and
- - the rapidly expanding availability of online content and commerce which
increases the value to users of being connected to the Internet.
Forrester Research, Inc., a market research firm, issued a report in December
1998 predicting U.S. business trade on the Internet will explode from $43
billion in 1998 to $1.3 trillion in 2003. Meanwhile, International Data
Corporation ("IDC"), another market research firm, estimated the number of
Internet users worldwide will grow from approximately 69 million at the end of
1997 to approximately 320 million by 2002. In addition, IDC estimates that the
percentage of such Internet users buying goods and services on the Internet will
increase from 26% in 1997 to 40% in 2002. The two largest segments of Internet
sales are expected to be computer hardware, software and consumer electronics
purchases and travel and vacation planning.
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Traditional Methods of Retailing
The traditional retail industry is comprised of both store- and
catalog-based companies. The Company believes that these retailers face
inherent structural limitations that may not allow them to take full advantage
of the growing worldwide retail marketplace and their customer's increasingly
complex and busy daily schedules.
Store-based retailers have limited shelf space due to costly inventory,
store personnel and real estate considerations that limit the number of stock
keeping units (SKUs) they can offer to their customers. The Company believes
that large store-based retailers, also called warehouses or superstores,
typically carry only about 4,000 SKUs. As a result, manufacturers compete for
scarce retail shelf space and access to the large distributors that supply these
store-based retailers. Thus, manufacturers incur a significant expense to gain
this access and retailers face the risk of carrying inventory that may quickly
become obsolete. In addition, the store-based retailers' merchandising process,
which requires that the retailer physically obtain, set up, and display product
limits the speed at which these retailers can change their merchandise mix and
offer new products. Furthermore, because store-based retailers must make
significant investments in inventory, real estate and on-site personnel, they
are not able to expand quickly into new geographic regions. Personnel costs
also limit the number of hours during which store-based retailers may operate,
thereby limiting customer access and convenience. Additionally, store-based
retailers face challenges in hiring, training and retaining knowledgeable sales
staff conversant and up-to-date on the broad array of hardware and software
products.
Catalog retailers offer their customers the convenience of shopping from
home or the office and more flexible hours of operation, but they are still
constrained by catalog mailing, printing and associated expenses as to the
number of SKUs they can feature and the amount of product information they can
provide. The Company believes that a typical catalog retailer carries up to
40,000 SKUs, but typically only features 2,000 - 3,000 SKUs in any single
catalog. Furthermore, the entire catalog shopping experience is, in general,
neither interactive nor personalized, yet requires extensive personnel support
and manual intervention on behalf of the retailer to take and process orders.
The Company also believes that many catalog retailers focus primarily on the
corporate marketplace.
The Company believes that the business model of the traditional retailer
results in inefficiencies that are exacerbated by, among other things, the broad
array of products and the rapidly changing world we live in. The Company
believes that Internet-based retailers are well positioned to solve and
capitalize on these inefficiencies.
ANYTHING INTERNET'S SOLUTION
The Company understands the key business challenges of the retailing industry
and has adapted to the unique environment of the Internet to address those and
anticipated future challenges. The Company believes that the key operating
advantages of its Internet storefronts and e-commerce in general are:
Attractive Economics of the Internet Storefront -- As an Internet-only retailer,
the Company is not constrained by the inherent limitations of store- and
catalog-based retailers. The Company enjoys structural economic advantages
relative to traditional retailers, including:
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- - low-cost and essentially unlimited shelf space;
- - flexible advertising and affordable merchandising opportunities;
- - lower personnel requirements;
- - scaleable technology and systems that can serve a fast-growing customer base;
and
- - the ability to serve a worldwide customer base from a single, domestic
location.
The Company intends to leverage its Internet storefronts, content provided,
marketing and technology over a growing global customer base resulting in
substantial economies of scale that the Company believes should enable it to
achieve greater operating margins, product diversification and, ultimately,
levels of profitability compared to tradition retailers.
Customer Convenience -- The Company provides enhanced customer convenience by
enabling customers to purchase products from either their home or office 24
hours a day, seven days a week. The Company believes that customers may buy
more items because they have more hours to shop, can act immediately upon
impulse, and can readily locate items that are difficult to find in retail
stores or catalogs.
Selection -- Because the Company's shelf space is low-cost and virtually
limitless, the Company is able to offer some of the most comprehensive
selections of products available. To offer such a large selection would be
economically and physically impractical to stock in a retail store or publish in
a mail-order catalog. For example, through its wholly-owned subsidiary
AnythingPC Internet Corporation, the Company currently offers more than 201,000
computer hardware, software and peripheral products.
Low-Cost Distribution Channel for Manufacturers -- Unlike traditional store or
catalog retailers that often charge manufacturers for "shelf space", the Company
can offer the same manufacturers electronic "shelf space" with no up-front cost.
This benefits the Company in better margins on certain products, the
manufacturer gains additional retail presence with no up-front costs, and the
buyer gets access to desired products at extremely competitive price.
Customer Service -- The inherent nature of the Internet allows for improved pre-
and post-sales support via both e-mail and telephone. Customers may inquire
about the status and tracking of their orders via the Company's Internet
storefronts. Also, customers can choose to be notified automatically when a
backordered product they desire has arrived in stock and is available for
shipment.
Worldwide Customer Base -- Because the Internet is worldwide in scope, the
Company can offer its entire product line to customers in domestic,
international, urban and rural locations where finding the product desired by
the customer is not always a simple task.
STRATEGY
The Company's objective is to become the first true e-commerce conglomerate.
The Company intends to capitalize on and extend its market position as one of
the first-mover e-commerce companies through the following key strategies:
Building Brand Awareness -- The Company believes that building brand awareness
of its Internet storefronts is critical to attracting and expanding its customer
base. The Company intends to continue building brand awareness and expanding
its customer base through various marketing methods, including:
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- - building strategic alliances with various Internet content providers and sites
of interest;
- - Internet marketing campaigns, including both general and direct advertising;
- - creating as many general and specific "links" to the Company's various
Internet storefronts as possible;
- - targeted non-Internet marketing programs aimed at generating sales from
consumers and businesses; and
- - specialized programs, including "personalization" features, directed towards
building repeat business from existing customers.
Promote Repeat Purchases -- The Company's strategy is to build customer loyalty
and thereby promote repeat buying by providing enhanced product information to
consumers, efficient site navigation and search capabilities, personalized
services and targeted communications and promotions, and a broad range of
immediately available products.
Leverage and Further Develop Strategic Relationships -- The Company intends to
continue to leverage its strategic marketing alliances with popular portals and
sites of interest such as C|Net's Shopper.com, mySimon.com, Priceline.com and
bottomdollar.com and technology enablers such as Digital River, Inc. (NASDAQ:
DRIV) to enhance its Internet storefronts' technology, expand brand recognition
and increase site traffic and subsequent customer sales. The Company also
intends to expand its online visibility and may enter into relationships with
additional Internet access providers, search engines and other high-traffic
Internet sites.
Maintain Technology Focus and Expertise -- The Company intends to continue
maximizing the unique efficiencies of the Internet, such as the ability to make
changes in merchandising and content in real-time and at low cost, to:
- - increase merchandising effectiveness;
- - personalize the customers' experiences; and
- - improve operating efficiencies.
The Company is currently developing systems and technologies to personalize
visitors' shopping and post-shopping experiences. By targeting content and
promotions such as e-mails, newsletters and store advertising, the Company can
deliver more compelling promotional programs. The Company also intends to use
such technology to lower transaction costs and improve the customer's online
shopping experience through:
- - the automation of customer service functions such as automated e-mail
responses and online in-stock status;
- - product management such as using automation to update the product databases
and create upsells and links to product reviews; and
- - communications with suppliers for purchasing and automating payment methods
for accounting.
Strengthen First-Mover Advantages -- The Company believes that significant
barriers exist that are making it increasingly difficult to enter the online
computer products marketplace in a cost-effective manner. These barriers
include:
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- - the necessary up-front investment in technology and technical infrastructure,
such as that required for real-time processing of both payment and order
fulfillment. International Data Corporation, a market research firm, recently
reported on average that it costs an average of $6 million to establish a new
e-commerce site plus an average of $13 million annually to maintain and promote
it;
- - the time and expense required to build a brand that effectively draws
customers to an Internet site;
- - the time, expense and expertise necessary to develop publisher and distributor
relationships; and
- - the need to develop strategic alliances with high-traffic, high-profile
Internet sites.
The Company intends to extend its first-mover advantages in each of these areas.
ANYTHINGPC INTERNET CORPORATION
AnythingPC Internet Corporation, a wholly-owned subsidiary of the Company,
is a rapidly growing Internet based discount retailer of over 201,000 different
computer hardware, software and peripheral products to end consumers and
businesses. Through its Internet storefronts - www.anythingpc.com,
www.anythingmac.com, and www.anythingunix.com - AnythingPC offers one-stop
shopping to its customers 24 hours a day, seven days a week. In addition to its
wide array of product offerings, AnythingPC's storefronts feature competitively
priced "Hot Products", an easy-to-use graphical interface, a powerful search
engine to locate any product desired, a unique "quote monkey" for pricing
assistance on hard-to-find products, and a special "notify me" feature that
automatically notifies customers when a backordered product arrives in stock and
keeps the customer appraised of the estimated time of arrival.
The growth and acceptance of selling computer hardware, software and
peripherals via Internet e-commerce has been surprisingly fast. AnythingPC made
its first e-commerce sale in December 1997.
AnythingPC's Storefronts
Customers access AnythingPC's Internet storefronts through
www.anythingpc.com, www.anythingmac.com or www.anythingunix.com and are
presented with a simple, intuitive and easy to use graphical interface.
AnythingPC has learned that customers entering the storefronts generally fall
into one of two categories:
- - they are looking for specific product and wish to purchase it quickly and at a
competitive price; or
- - they are browsing the store and seeking an entertaining and informative
shopping experience.
AnythingPC's Internet storefronts are designed to satisfy both types of
customers. Just like a physical retail store, customers can browse the
departments of the store, search for specific needs, view promoted products,
obtain product information, order products, and ask for customer service.
Unlike the traditional retail store, this can all be accomplished from the
comfort and convenience of the customer's home or office.
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Shoppers purchase products by simply clicking on a button to add products
to their "virtual" shopping baskets. Customers can add and/or subtract products
from their shopping baskets as they browse, prior to making a final purchasing
decision, just as in a physical retail store. To execute orders, customers
click on the buy button and are prompted to supply shipping and, in the case of
consumers, credit card details, either by e-mail or by telephone. The store
design enables purchasers to buy several products at once, rather than having to
repeat the same purchase process for each desired product. All customer
information is stored on the Company's secure server and is used to enhance
subsequent shopping experiences by the repeat customer and better enable the
AnythingPC to target special promotions. This process is highly automated, but
AnythingPC does accept orders, questions and requests for product information
via the telephone for those customers who are concerned about sending credit
card information over the Internet.
ANYTHING COFFEE CORPORATION
Building off of its technological infrastructure created at AnythingPC, the
Company created a new subsidiary, Anything Coffee Corporation, and launched its
first derivative Internet storefront, www.anycoffee.com, in August 1999. The
AnythingCoffee Internet storefront features easy-to-use navigation, search and
general functionality found at the AnythingPC Internet storefronts.
Through its Internet storefront, AnythingCoffee offers coffee drinkers the
opportunity to purchase over 200 specialty coffees derived from coffee beans
originating from more than 18 countries worldwide - all from the comfort of
their homes or offices. In addition, customers may purchase specialty accessory
items such as custom roasting machines and green beans (raw, unroasted coffee
beans).
According to Specialty Coffee Association of America, one out of every two
Americans is classified as a coffee drinker. Altogether, Americans alone spend
more than $7 billion annually on coffee consumption. The Internet market for
coffee is currently highly fractured and basically a series of "mom and pop"
outfits, thereby creating a significant first-mover opportunity for
AnythingCoffee.
ANYTHINGBOOKS.COM
In August 1999, the Company entered into an affiliate partnership with
barnesandnoble.com, Inc. (Nasdaq: BNBN) for the creation of the AnythingBooks
Internet storefront, www.anythingbooks.com. Through this affiliation, the
Company is able to its customers one of the largest selections of books,
magazines and music under one roof at almost no cost to the Company. The
Company is able to do this by utilizing barnesandnoble.com's sizeable investment
in their distribution, warehousing and customer service support in a profit
sharing enviornment. The Company typically receives 5 - 10% of the gross
proceeds on all product sales generated through this affiliation
MARKETING AND PROMOTION
The Company's marketing strategy is to promote, advertise and increase its
brand visibility to attract new customers through multiple channels, including:
- - developing strategic alliances with major portal sites;
- - advertising on leading Internet sites and other media worldwide;
- - expanding the Company's affiliates network and linking programs; and
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- - direct marketing to existing and potential customers.
The Company believes that the use of multiple marketing channels reduces
reliance on any one source of customers, lowers customer acquisition costs, and
maximizes brand awareness.
Strategic Alliances -- The Company pursues strategic relationships to expand the
Company's online presence, increase its access to online customers, expand brand
recognition, and enhance the underlying technology of its Internet storefronts.
In pursuing these relationships, the Company seeks exclusive or semi-exclusive
positioning for the sales of computer related products on key screens of major
Internet sites. To date, the Company has established successful strategic
alliances with companies such as C|Net's Shopper.com, mySimon.com,
Priceline.com, bottomdollar.com and Digital River, Inc. (NASDAQ: DRIV).
Online Advertising -- In addition to its primary strategic alliances, the
Company utilizes numerous online sales and marketing techniques to increase
brand recognition and drive traffic to the Company's Internet storefronts,
including banner advertising on various high-traffic Internet sites. Such
banner advertisements can be permanently displayed for designated periods of
time or displayed when a user searches for information relating to certain
keywords (ie. "printers" or "software").
Direct Marketing -- The Company believes that the demographics of Internet users
overlap one-to-one with the demographics of potential customers, especially
those seeking to purchase new computer hardware, software and peripheral
products. The Company believes that the Internet provides additional
opportunities for direct marketing to the Company's customers through a variety
of mechanisms, and is exploring such direct marketing opportunities to target
new and existing customers with customized offers such as an e-mail newsletter,
special product offers and preferred customer offers.
Linking -- The Company believes it is important to create as many Internet
"links" to its Internet storefronts as possible. The Company has begun an
aggressive program to increase the number of links from search engines,
manufacturers' Internet sites, community, affinity and basic home pages.
Customer Service -- The Company believes its ability to establish and maintain
long-term relationships with its customers and encourage repeat visits and
purchases depends, in part, on the strength of its customer support and service.
Customer support and service personnel are responsible for handling general
customer inquiries, answering customer questions about the ordering process, and
investigating the status of orders, shipments and payments. The Company has
automated some of the tools used by its customer support and service staff,
including the tracking screens that enable its support staff to track a
transaction by any of a variety of information sources. At any point in the
purchasing process, customers can access the Company's support staff by e-mail,
fax or telephone. Customers who are reluctant to enter their credit card
numbers through the Internet site are also invited to call the Company directly
for purchases. The Company currently employees a growing staff of dedicated
customer support and service personnel.
TECHNOLOGY AND SYSTEMS
The Company uses complex proprietary and commercially licensed technology
to make both the customer experience and the management reporting process as
seamless and simple as possible with minimal human intervention necessary. To
that end, the Company has developed technologies and systems to support
scaleable, flexible and seamless online reselling in a secure and easy to use
manner. By using a combination of proprietary and commercially available
technologies, the Company has deployed systems for online content dissemination,
online transaction processing, customer service, market analysis and electronic
data interchange.
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Scaleability and Flexibility -- The architecture of the Company's hardware and
software is built upon a distributed transaction-processing model which allows
the process load to be distributed among multiple parallel servers. This
architecture allows the Company to scale by either adding new servers or
increasing the capacity of existing servers. The Company's hardware and
software configuration is designed to scale to support growth while maintaining
user performance and minimizing the cost per transaction. In the rapidly
changing Internet environment, the ability to update this system in order to
stay current with new technologies is important. The system's template
technology and modular database design allow the addition or replacement of
software components, page layout templates, and search and retrieval engines
with minimal effort and disruption. This architecture also enables low-cost,
rapid deployment of additional, co-branded Internet sites that integrate with
the Company's other Internet storefronts.
Seamlessness -- The Company's multiple hardware and software systems integrate
seamlessly to manage real-time transactions with limited human intervention.
Orders for products are routed to the appropriate contact person or distributor
while the customer's credit card is charged. Orders requiring human
intervention are automatically routed for processing by a customer service
representative.
Store Engine Architecture -- The Company's hardware and software systems are
based upon a distributed transaction-processing model that allows applications
and data to be distributed among multiple parallel servers. Many of the
software components, and the pages of the Company's Internet storefronts, are
developed in a manner that enables the separation of the page look and feel from
the individual data elements and their associated database lookups. This
separation permits frequent changes to product pricing information, reduces
software and database updates for Internet site changes, and minimizes the
engineering required to maintain a growing number of items and content. The
Company utilizes technology that also enables Internet storefronts with
different formats to integrate various elements such as search, vendor and
product pages. This technology allows the Company to maintain several Internet
storefronts over a single order processing and customer service system.
Data Warehouse -- The Company utilizes a database management system to index,
retrieve and manipulate product information, content, product catalogs, orders
and transaction and customer information. This system allows for rapid
searching, sorting, viewing and distribution of a large volume of content. The
Company deploys a data warehouse that enables it to access detailed transaction
and customer interaction data and perform proprietary market analysis. The data
warehouse provides a unified platform for the store engine and other components.
This data warehouse system incorporates commercially available hardware and
software combined with proprietary software of the Company in a configuration
developed internally.
Customer Reassurance -- A critical issue to the success of online retailing is
maintaining the integrity of information, particularly the security of customer
information such as credit card numbers. The Company believes that its existing
security systems are at least as secure as those used for traditional retail
store transactions and that it has a comprehensive security strategy. The
Company's system automatically monitors each purchase and confirms each order by
e-mail to the customer within minutes after the order is placed.
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Fault Tolerance and Scaleable Internet Access -- The Company's systems are
designed for automatic transfer to "hot" spare systems in the event of failure
and are equipped with fully automated reporting tools. These tools provide
automated trouble notification and detailed event logging. A load distribution
system monitors traffic to each server. Should a system fail to respond to a
request, the automated distribution system will redistribute traffic among the
remaining machines with no loss of user functionality. In addition, the Company
maintains redundant servers in both California and Colorado to further minimize
the chance of loss or system disruption.
Notwithstanding these precautions, there can be no assurance that either
the security mechanisms of the Company's Internet provider, the Company, or the
Company's other suppliers will prevent security breaches or service breakdowns.
Despite the implementation of network security measures by the Company, its
servers may be vulnerable to computer viruses, physical or electronic break-ins,
and other disruptions that could lead to interruptions, delays, loss of data, or
the inability to accept and fulfill customer orders and could have a material
adverse effect on the Company's finances, prospects, financial condition and
results of operation.
COMPETITION
The realm of Internet e-commerce is new, rapidly evolving, and intensely
competitive. Current and new competitors can launch new sites at a relatively
low cost. At the present time, the Company primarily competes with other
companies at a divisional level. However, the Company currently or potentially
competes with the following companies sharing similar overall visions and
Internet strategies:
- - Amazon.com (NASDAQ: AMZN) is known, or branded, as a book seller has recently
expanded into videos, CDs, prescription drugs and auctioning products. They are
anticipated to continue growing and diversifying over the coming months and
years;
- - Buy.com, a closely held company, is primarily known for selling computer
hardware, software and peripheral products, but has recently expanded into
books, videos, games, and CDs; and
- - CMGI, Inc. (NASDAQ: CMGI) is a developer and operator of Internet and direct
marketing companies. CMGI takes strategic equity positions in Internet
businesses, including Lycos, Inc. (NASDAQ: LCOS), Amazon.com and Hollywood
Entertainment Corporation (NASDAQ: HLYW).
AnythingPC competes directly with the computer products retail industry
which is intensely competitive. Through AnythingPC, the Company currently or
potentially competes with a variety of other companies. These competitors
include:
- - various traditional computer retailers including CompUSA and MicroCenter;
- - various mail-order retailers including CDW, MircoWarehouse, Insight, PC
Connection and Creative Computers;
- - various Internet-focused computer retailers including Egghead.com, beyond.com,
Cyberian Outpost and BuyComp.com;
- - various manufacturers that sell directly over the Internet including Dell,
Gateway and Apple;
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- - a number of online service providers including America Online and the
Microsoft Network that offer computer products directly or in partnership with
other retailers;
- - some non-computer retailers such as Wal*Mart that sell a limited selection of
computer products in their stores; and
- - computer products distributors which may develop direct channels to the
consumer market.
AnythingCoffee competes directly with the highly competitive retail coffee
industry. Through AnythingCoffee, the Company currently or potentially competes
with a variety of other companies. These competitors include:
- - various traditional retailers including Starbucks (Nasdaq: SBUX),
supermarkets, specialty retailers and a growing number of specialty coffee
stores such as Second Cup;
- - various Internet-based coffee retailers, including gocoffee.com, Coffee
Wholesale USA and Coffee Connoisseurs.com; and
- - individual roasters competing through both traditional retail stores and
Internet storefronts.
Increased competition from these and other sources could require the
Company to respond to competitive pressures by establishing pricing, marketing
and other programs or seeking out additional strategic alliances or
acquisitions, any of which could have a material adverse affect on the business,
prospects, financial condition and results of operations of the Company.
The Company believes that the principal competitive factors in its market
are brand recognition, selection, price, variety of value-added services, ease
of use, site content, fulfillment, reliability, quality of search tools,
customer service and technical expertise. Many of the Company's current and
potential competitors have longer operating histories, larger customer bases,
greater brand recognition, and significantly greater financial, marketing and
other resources than the Company. In addition, online retailers may be acquired
by, receive investments from, or enter into other commercial relationships with
larger, well-established and well-financed companies as use of the Internet and
other online services increases. The Company is aware that certain of its
competitors have and may continue to adopt aggressive pricing or inventory
availability policies and devote substantially more resources to Internet site
and systems development than the Company. Increased competition may result in
reduced operating margins, loss of market share, and a diminished brand
franchise, any of which would have a material adverse effect on the Company.
Moreover, companies that control access to transactions through network access
or Web browsers currently promote, and will likely continue to promote,
competitors of the Company. There can be no assurance that the Company will be
able to respond effectively to increasing competitive pressures or to compete
successfully with current and future competitors.
INTELLECTUAL PROPERTY
The Company claims common law trademark for its logo, corporate name, and
Internet storefronts - AnythingPC, AnythingMAC, AnythingUNIX, AnythingCoffee and
AnythingBooks. The Company also has reserved the rights to hundreds of Internet
domain names, including www.anythinginternet.com, www.anythingpc.com,
www.anythingmac.com, www.anythingunix.com and www.anythingcellular.com.
12
<PAGE>
EMPLOYEES
The Company believes its success depends to a significant extent on its
ability to attract, motivate and retain highly skilled management and employees.
To this end, the Company focuses on incentive programs such as employee stock
options and competitive compensation and benefits packages for its employees to
foster a corporate culture which is challenging and rewarding, yet fun. As of
September 14, 1999, the Company, including its subsidiaries, had nine employees,
all full-time. Currently full-time employees receive health and dental plans
after 90 days of employment. The Company also employs, from time to time, a
limited number of independent contractors and temporary employees on a periodic
basis. None of the Company's employees are represented by a labor union and the
Company considers its labor relations to be good.
FORWARD-LOOKING STATEMENTS
Some of the information in this Form 10-KSB are forward looking statements
which are subject to risks and uncertainties. Actual future results and trends
may differ materially depending on a variety of factors, including, but not
limited to, obtaining product and raw materials at favorable prices, successful
execution of internal performance and expansion plans, impact of competition,
financing activities, possible legal proceedings, domestic and global economic
conditions, changes in federal or state tax laws, and other risks detailed in
the Company's Securities and Exchange Commission filings and the documents
incorporated by reference therein.
Item 2. Description of Property
At present the Company does not own any property. The Company maintains
its headquarters in Colorado Springs, Colorado at 3020 North El Paso in a 2,069
square foot office space through a one-year lease that commenced on June 3,
1999. The Company pays $1,300 a month, utilities included, for this leased
office space.
The Company also has a business-to-business sales and support office
located in Tampa, Florida. This facility encompasses approximately 1,093 square
feet and is secured by a one-year lease that commenced on February 1, 1999. The
Company pays $1,275.16 a month, utilities included, for this leased office
space.
As of June 30, 1999, the Company, through its subsidiaries, operated three
Internet storefronts: AnythingPC.com, AnythingMAC.com and AnythingUNIX.com.
Item 3. Legal Proceedings
There are no material legal proceedings pending or, to the Company's
knowledge, threatened against the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal year 1998.
13
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's Common Stock is quoted on the OTC Bulletin Board under the
symbol "ANYI". The Company's Common Stock began trading on July 15, 1999 with
an opening bid price of $4.00 a share. The following table sets forth the high
and low bid prices as reported by the National Association of Securities Dealers
(NASD) from the first day of trading through September 10, 1999. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commissions, and may not reflect actual transactions.
High Bid Low Bid
--------- --------
2000
- ----
First Quarter
(through September 21, 1999) $ 28.00 $ 3.25
The Company's Common Stock was not listed on any securities exchange on
June 30, 1999 or during the prior fiscal year. The closing bid price for the
Company's Common Stock on the OTC Bulletin Board on September 10, 1999 was $4.31
a share.
As of June 30, 1999, there were approximately 178 record holders of the
Company's outstanding Common Stock. Moreover, additional shares of the
Company's Common Stock are held for stockholders at brokerage firms and/or
clearing houses, and therefore the Company was unable to determine the precise
number of beneficial owners of Common Stock as of June 30, 1999.
The Company has never declared or paid cash dividends on its capital stock
and the Company's Board of Directors intends to continue its policy for the
foreseeable future. Earnings, if any, will be used to finance the development
and expansion of the Company's business. Future dividend policy will depend
upon the Company's earnings, capital requirements, financial condition and other
factors considered relevant by the Company's Board of Directors and may be
subject to limitations imposed by federal and state laws.
The remainder of information required by this item relating to Recent Sales
of Unregistered Securities is incorporated herein by reference to the Company's
Amended Form SB-2 filed with the SEC on June 15, 1999.
Item 6. Management's Discussion and Analysis or Plan of Operation
RESULTS OF OPERATIONS
Fiscal Year Ending June 30, 1999 Compared to Fiscal Year Ending June 30, 1998
Net sales for the fiscal year ending June 30, 1999 were $3,503,822, an
increase of 433% over $657,988 for the same period a year ago. All of these
sales were a result of sales generated through the Company's Internet
storefronts AnythingPC.com, AnythingMAC.com and AnythingUNIX.com.
Gross profits for the fiscal year ending June 30, 1999 were $84,436. This
represents an increase in gross profits of 89% over $44,666 for the same period
a year ago. Gross profit margins declined from 6.8% of sales to 2.4% of sales
as a result of increased competition among Internet retailers of computers,
software and peripheral devices. Historically, gross profit margins have been
significantly lower than traditional brick-and-mortar retailers as a result of
the deep price discounts typically offered to Internet customers.
14
<PAGE>
Selling, general and administrative (SG&A) expenses for the fiscal year
ending June 30, 1999 $672,293 which represents a 868% increase from $69,428 for
the same period a year ago. The major components of these expenses for the
fiscal year were the hiring of additional staff to satisfy increased sales
volumes, the opening of a business-to-business sales and support office in
Tampa, Florida, acquisition costs of office and computer equipment and software
development costs.
The net loss for the fiscal year ending June 30, 1999 amounted to
($591,688), or ($0.24) a share. This represents and increase of 2,290% compared
to ($24,762), or ($4.27) a share, for the same period a year ago. The increase
in net loss was the result of lower gross profit margins and increases cost of
operations from expansion activities. There were 3,074,400 shares issued and
outstanding as of June 30, 1999.
Liquidity and Capital Resources
The Company's operations to date have concentrated on developing its
Internet storefronts, building brand recognition and a loyal customer following,
and securing the financing necessary to fund the development, operations and
expansion of its business.
As of June 30, 1999, the Company had $1,454 cash on hand, accounts
receivable, including some "term" sales, of $188,689, and receivable notes of
$86,023. The Company also had bank credit lines aggregating $85,000 with
$55,946 available for immediate usage. In addition, the Company had several
supplier-based revolving lines of credit, including Tech Data, $150,000; Ingram
Micro, $150,000; Merisel, $65,000; and Pinacor, $5,000. Additionally, Reseller
Credit Corporation finances corporate purchase orders on behalf of the Company
for products supplied by Ingram Micro.
Net cash used by operating activities for the fiscal year ending June 30,
1999 totaled ($210,886) compared to ($11,091) for the same period a year ago.
The majority of the increase in cash flow used in these operating activities was
the result of higher SG&A expenses, namely with the opening of a
business-to-business sales and support office in Tampa, Florida and increased
staffing needs.
Net cash used by investing activities totaled ($98,341) for the fiscal year
ending June 30, 1999 compared to ($40,533) for the same period a year ago. The
increases in investing activities was the result of higher office equipment
acquisition costs and expanded software development activities relating to the
Company's Internet storefronts.
Net cash provided by financing activities totaled $246,516 for the fiscal
year ending June 30, 1999 compared to $93,738. The increase in cash provided
for by financing activities was the result of a private placement of 200,000
Units, each containing one share of common stock and one common stock purchase
warrant, that raised $200,000 in December 1998. The other financing was the
result of borrowing activities and utilizing existing credit facilities.
The Company expects to continue making significant investments in the
future to support its overall growth. Currently, it is anticipated that ongoing
operations will be sufficiently financed from the net proceeds of the
anticipated exercise of the warrants the common stock that were registered this
year, cash on hand, accounts receivable, the various credit facilities available
to the Company, and from internally generated funds. The Company is also
exploring expanded funding activities at the divisional level. However, as
indicated in the Company's most recent financial statements available herein,
while operating activities provide some cash flow, the Company is currently cash
flow negative. There can be no assurances that the Company's ongoing operations
will begin to generate a positive cash flow or that unforeseen events may not
require more working capital than the Company currently has at its disposal.
15
<PAGE>
Year 2000 Compliance
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. This could result in system failures or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities. As a result, many companies' software and computer systems
may need to be upgraded or replaced in order to comply with such "Year 2000"
requirements. The Company utilizes third-party equipment and software that it
believes is Year 2000 compliant. At this time, the Company does has not found
any material deficiencies in of its own or any third parties' computer
operations. However, failure of the Company's internal computer systems or of
such third-party equipment or software, or of systems maintained by the
Company's suppliers, to operate properly with regard to the Year 2000 and
thereafter could require the Company to incur unanticipated expenses to remedy
any problems, which could have a material adverse effect on the Company's
business, financial condition and results of operations.
Item 7. Financial Statements
The information required by this item is presented as a separate section
commencing on page F-1.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
On June 30, 1999, the Company engaged Ronald R. Chadwick, Certified Public
Accountants as its public accountants to handle all aspects of its SEC reporting
requirements.
Prior to engaging Ronald R. Chadwick, the Company used J. Paul Kenote, CPA,
P.C. as its independent public accountants. J. Paul Kenote resigned as the
Company's auditor when it discontinued conducting SEC audits altogether in
January 1999 to focus solely on performing IRS tax work. The Company had no
disagreements with J. Paul Kenote at the time of their resignation, and the
change was approved by the Board of Directors. J. Paul Kenote had issued a
going concern opinion against the Company during its developmental stage.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The directors, executive officers of the Company as of the date of
September 10, 1999 are as follows:
16
<PAGE>
<TABLE>
<CAPTION>
Name Age Position
- ----------------- --- --------------------------------------
<S> <C> <C>
J. Scott Sitra 27 President, Chief Executive Officer and
Director
Robert C. Schick 35 Chief Technology Officer and Director
Robie Blair 31 Manager of Information Systems
Alfred W. Delisle 34 Business Development Manager and
Director
Cameron B. Yost 45 Secretary, Treasurer and Director
Richard Baron 36 General Manager
</TABLE>
The Board of Directors of the Company is comprised of only one class of
director. Each director is elected to hold office until the next annual meeting
of shareholders and until his successor has been elected and qualified.
Officers are elected annually by the Board of Directors and hold office until
successors are duly elected and qualified. The following is a brief account of
the business experience of each director and executive officer of the Company.
There is no family relationship between any Director or Executive Officer of the
Company.
The Company has a compensation committee which was established on September
28, 1998, and consists of Alfred W. Delisle and J. Scott Sitra.
J. SCOTT SITRA, President, Chief Executive Officer and Director is also the
Chairman of AnythingPC Internet Corporation and is the Chairman and Chief
Executive Officer of Anything Coffee Corporation, concurrently is the President
and Chief Executive Officer of Sitra Enterprises, Inc., a privately held
international management and financial consulting firm specializing in assisting
emerging, high-growth companies evolve from the developmental stage into
profitable operating entities. Sitra Enterprises has actively participated in
the successful growth and development of several private and public companies.
Mr. Sitra has participated as a principal and executive officer in several
successful start-up and turn-around ventures, and has extensive experience
working directly with the investment community. Mr. Sitra has been a Director
since October 1998 and held his other positions since April 1999.
ROBERT C. SCHICK, Chief Technology Officer, Director is also the President,
Chief Executive Officer and Director of AnythingPC Internet Corporation and is
the President and Director of Anything Coffee Corporation, co-founded the
Company in August 1997. Mr. Schick has over 14 years experience with the
computer industry ranging from a computer operator in the U.S. Army to an Apple
Products Manager at Tech Data Corporation where he was responsible for over $50+
million dollars a year in revenue; he was also responsible for marketing to
Apple's internal sales force as well their 35,000+ resellers. Prior to joining
the Company, Mr. Schick was the Southeast Accounts Manager for Bendata, Inc., a
software company offering help-desk solutions to corporate MIS departments at
Fortune 1000 companies, manufacturers and educational and financial
institutions. Before joining Bendata in 1996, Mr. Schick worked at Tech Data, a
wholesale electronics distributor, where he was responsible for working with
Fortune 1000 companies, negotiating vendor contracts, and overseeing purchasing
to maintain an efficient inventory matrix. Throughout his tenure at Tech Data
Mr. Schick continually exceed all of his sales and performance quotas. Mr.
Schick was President of the Company from August 1997 to April 1999 when he moved
into his current positions; he has always been a Director of the Company.
ROBIE BLAIR, Manager of Information Systems, has over 10 years of
experience in the computer industry ranging from building integrated ceramic
capacitors with Kyocera Corporation, formerly AVX Corporation, to a Technical
Coordinator for Apple Computer Corporation. Prior to joining the Company, he
held the position of Customer Applications Support Engineer at MCI
Communications. Mr. Blair has held his position since November 1998.
17
<PAGE>
ALFRED W. DELISLE, Business Development Manager and Director is also a
Director of AnythingPC Internet Corporation and is a Director of Anything Coffee
Corporation, co-founded the Company in August 1997. Mr. Delisle has over 14
years of experience in the hardware and software industry and more than eight
years of experience in wholesale distribution with Tech Data Corporation, the
world's second largest distributor of personal computers, peripherals, software
and related components, where he has held a variety of positions within their
high-volume sales division. Prior to working for Tech Data, Mr. Delisle was
employed by Boston Micro, a reseller specializing in establishing channel sales
relationships between U.S. manufacturers and distributors in Western Europe.
Mr. Delisle left his position at Tech Data in December 1998 to focus his full
attentions to his duties at the Company. Mr. Delisle has held his positions
with the Company since August 1997 and with AnythingPC Internet Corporation
since April 1999.
CAMERON B. YOST, Secretary, Treasurer and a Director is also a Director of
AnythingPC Internet Corporation and is a Director of Anything Coffee
Corporation, is concurrently the President and Chief Executive Officer of Banyan
Corporation, a publicly traded corporation. Banyan designs, manufactures and
markets accessory products for personal computers with a focus on notebook
computers; Banyan also retains a significant equity position in the Company.
See "Principal Shareholders". Prior to joining Banyan in 1995, Mr. Yost worked
at Vornado Air Circulation Systems as a co-founder and vice president where he
helped generate $2.8 million and $5.7 million in sales during the first and
second years of operation, respectively. Prior to Vornado, Mr. Yost materially
participated as a principal and executive officer in other successful start-up
and turnaround ventures. Mr. Yost has held his positions with the Company since
October 1998 and with AnythingPC Internet Corporation since April 1999. Mr.
Yost is currently under indictment in the U.S. District Court for the Southern
District of New York for conspiracy to commit securities fraud, mail fraud and
commercial bribery in connection with the common stock of Banyan Corporation.
Mr. Yost has been, and plans on continuing to, vigorously deny any and all
charges brought against him.
RICHARD BARON, General Manager, has over eight years of
business-to-business sales in the personal computer and electronics industry.
Prior to joining the Company he was a Senior Sales Representative at Tech Data
Corporation (NASDAQ: TECD), a full-line distributor of technology products
worldwide with annual sales of approximately $11.5 billion. At Tech Data Mr.
Baron was responsible for generating sales to value added resellers (VARs) and
dealers in excess of $100 million annually. He also won Tech Data's coveted
President's Club Award twice while there. Mr. Baron has been with the Company
since March 1999.
DIRECTOR COMPENSATION
Directors are compensated $5,000 annually, which, as determined by the
Board, may be taken in the form of cash or securities of the Company.
Additionally, the Company reimburses its Directors for reasonable out-of-pocket
expenses incurred in attending meetings of the Board of Directors.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's officers and directors, and persons who own more than ten
percent (10%) of a registered class of the Company's equity securities
(collectively the "Reporting Persons") to file reports and changes in ownership
of such securities with the Securities and Exchange Commission and the Company.
Based solely upon a review of (i) Forms 3 and 4 and amendments thereto furnished
to the Company pursuant to Rule 16a-3(e), promulgated under the Exchange Act,
during the Company's fiscal year ended June 30, 1999 and (ii) Forms 5 and any
amendments thereto and/or written representations furnished to the Company by
any Reporting Persons stating that such person was not required to file a Form 5
during the Company's fiscal year ended June 30, 1999, it has been determined
that, other than disclosed below, no Reporting Persons were delinquent with
respect to such person's reporting obligations set forth in Section 16(a) of the
Exchange Act.
18
<PAGE>
The following table as of June 30, 1999, includes the name and positions of
each Reporting Person that failed to file on a timely basis any reports required
pursuant to Section 16(a) during the most recent fiscal year or prior years.
<TABLE>
<CAPTION>
Name Position Report Filed Late
- ------------------ ----------------------------------------------- -----------------
<S> <C> <C>
J. Scott Sitra President, Chief Executive Officer and Director Forms 3 and 5
Robert C. Schick Chief Technology Officer and Director Forms 3 and 5
Cameron B. Yost Secretary, Treasurer and Director Forms 3 and 5
Alfred W. Delisle Business Development Manager and Director Forms 3 and 5
Banyan Corporation Beneficial Owner Forms 3 and 5
</TABLE>
Item 10. Executive Compensation
The following table sets forth the compensation paid during the fiscal year
ending June 30, 1999 to the Company's Chief Executive Officer and each of the
Company's officers and directors. No executive officers received any
compensation in fiscal 1998, no person received compensation equal to or
exceeding $100,000 in fiscal 1998, no bonuses were awarded during fiscal 1998,
and no persons received compensation from the Company prior to fiscal 1998.
19
<PAGE>
<TABLE>
<CAPTION>
Annual Compensation Awards Payouts
--------------------------- ------------------------- --------
All
Other Restricted Securities Other
Name and Annual Stock Underlying LTIP Compen-
Principal Salary Bonus compen- Award(s) Options/SAR Payouts sation
Position Year ($) ($) sation ($) ($) (#) ($) ($)
- ----------------- ---- ------- ------ ---------- ----------- ------------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Scott Sitra
President,
CEO and
Director 1999 -0- 5,000 (1) 100,000
1998 -0- 200
Robert C. Schick
Chief
Technology
Officer and
Director
1999 30,887 5,000 (2) 205,000
1998 -0- 200 (2) 205,000
Alfred W. Delisle
Business
Development
Manager and
Director
1999 11,457 5,000 (2) 110,000
1998 -0- 200 (2) 110,000
Cameron B. Yost
Secretary,
Treasurer
And Director
1999 -0- 5,000
1998 -0- 200
<FN>
(1) Currently fully vested, exercisable into common stock: 50,000 at $40 a
share, 25,000 at $75 a share and 25,000 at $100 a share. The options expire
on April 1, 2002.
(2) Currently fully vested, exercisable into common stock at $1.00 a share, and
expire on February 29, 2000.
</TABLE>
Item 11. Security Ownership of Beneficial Owners and Management
The following table sets forth certain information known to the Company
regarding the beneficial ownership of common stock as of June 30, 1999, by (i)
each Director of the Company, (ii) each executive officer of the Company, (iii)
all directors and executive officers as a group, and (iv) each person known to
the Company to be the beneficial owner of more than 5% of its outstanding shares
of common stock. Percentage of ownership is based on 3,074,400 shares of common
stock issued and outstanding as of June 30, 1999.
20
<PAGE>
<TABLE>
<CAPTION>
Shares Percent of
Directors and Executive Officers Owned (1) Class (2)
- ------------------------------------ ------------- -----------
<S> <C> <C>
J. Scott Sitra
3020 North El Paso, Ste. 103
Colorado Springs, CO 80907 (3) 10,000 0.3%
Robert C. Schick
3020 North El Paso, Ste. 103
Colorado Springs, CO 80907 (4) 216,897 7.1%
Alfred W. Delisle
4525 S. Renellie Dr.
Tampa, FL 33611-2124 (5) 120,959 3.9%
Cameron B. Yost
4740 Forge Rd., Bldg. 112
Colorado Springs, CO 80907 38,880 1.3%
All current directors and executive
officers as a group (4 persons) (6) 386,736 12.6%
Five Percent Shareholders
- ------------------------------------
Raymond D. Schick and
Alice F. Schick 126,090 4.1%
Banyan Corporation
4740 Forge Rd., Bldg. 112
Colorado Springs, CO 80907 800,027 26.0%
- ------------------------------
<FN>
* Less than 1%
(1) Beneficial ownership is determined in accordance with the 13d-3 of the
Securities Exchange Act of 1934. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options held by that person that are
currently exercisable or become exercisable within 60 days following the
date of this report, but not included in the table above. Those shares
are not deemed outstanding for the purpose of computing the percentage
ownership of any other person.
(2) Based on 3,074,400 shares issued and outstanding as of June 30, 1999.
21
<PAGE>
(3) Does not include 100,000 vested options expiring on April 1, 2002. 50,000 options
exercisable at $40 a share, 25,000 options exercisable at $75 a share, and
25,000 options exercisable at $100 a share.
(4) Does not include 205,000 vested options expiring on February 29, 2000. All options
are exercisable at $1 a share.
(5) Does not include 110,000 vested options expiring on February 29, 2000. All options
are exercisable at $1 a share.
(6) Does not include 415,000 vested options having exercisable prices ranging from $1
to $100 a share.
</TABLE>
Item 12. Certain Relationships and Related Transactions.
On December 31, 1998 the Company loaned Robert C. Schick, an officer,
$18,023 at a rate of 3% per annum. The note matures and is payable in full on
December 31, 1999.
On June 16, 1999, the Company borrowed $75,000 from a related corporation
with an ownership interest in Anything Internet Corporation. The short-term
loan was made at a rate of 12% per annum, and comes due July 30, 1999.
Item 13. Exhibits and Reports on Form 8-K
Exhibits designated with an asterisk (*) have previously been filed with
the Securities and Exchange Commission and are incorporated herein by reference
to the document referenced in the parentheticals following the descriptions of
such exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<C> <S>
3.1* By-Laws (filed as Exhibit 3.4 to Registration Statement on Form SB-2,
File No. 333-71785).
4.1* Specimen copy of stock certificate for common stock, no par value
(filed as Exhibit 4.1 to Registration Statement on Form
4.2* Specimen copy of Stock Purchase Warrant Certificate underlying the
common shares registered in a Registration Statement (f
10.1*Lease Agreement for 3020 North El Paso, Ste. 103, Colorado Springs,
CO 80907, dated June 2, 1998 (filed as Exhibit 10.1 t
10.2 Amendment to Lease Agreement for 3020 North El Paso, Ste. 103,
Colorado Springs, CO 80907, dated May 20, 1999.
10.3*Lease Agreement for 111 N. Westshore Blvd., Ste. 408, Tampa, FL
33607, dated January 20, 1999 (filed as Exhibit 10.2 to
22
<PAGE>
10.4*Equity Exchange Agreement between Banyan Corporation and Anything,
Inc., dated August 19, 1998 (filed as Exhibit 10.3 to Amendment No. 1
to Registration Statement on Form SB-2, File No. 33
16.1 Letter on Change in Certifying Accountants
21.1 List of Subsidiaries
23.1 September 15, 1999 consent letter of Ronald R. Chadwick, P.C.
27.1 Financial Data Schedule for Fiscal Year Ending June 30, 1999
</TABLE>
Reports on Form 8-K
During the period commencing last quarter of the period covered by this
Report to date, there were no Form 8-Ks filed with the SEC.
SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Colorado Springs, State of Colorado on this 21st day of September,
1999.
Anything Internet Corporation
By: /s/ J. Scott Sitra
-------------------------------------
J. Scott Sitra
President, Chief Executive Officer and
Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ J. Scott Sitra
- ---------------------- President, Chief Executive
J. Scott Sitra Officer and Director September 21, 1999
/s/ Robert C. Schick
- ---------------------- Chief Technology Officer
Robert C. Schick and Director September 21, 1999
/s/ Cameron B. Yost
- ---------------------- Secretary, Treasurer and
Cameron B. Yost Director September 21, 1999
/s/ Alfred W. Delisle
- ---------------------- Business Development
Alfred W. Delisle Manager and Director September 21, 1999
</TABLE>
23
<PAGE>
FINANCIAL STATEMENTS
- --------------------
AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDING JUNE 30, 1999
CONTENTS
Independent Auditor's Report on
the Financial Statements . . . . F-2
FINANCIAL STATEMENTS
Balance Sheet. . . . . . . . . . . F-3
Statement of Operations. . . . . . F-5
Statement of Stockholders' Deficit F-6
Statement of Cash Flows. . . . . . F-7
Notes to Financial Statements. . . F-8
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Anything Internet Corporation
Colorado Springs, Colorado
I have audited the accompanying consolidated balance sheet of Anything Internet
Corporation as of June 30, 1999 and the related consolidated statements of
operations, stockholders' equity and cash flows for the period from August 15,
1997 (inception) to June 30, 1998, and for the year ended June 30, 1999. 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.
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 statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. 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 Anything Internet Corporation at
June 30, 1999 and the results of its operations and its cash flows for the
period from August 15, 1997 (inception) to June 30, 1998, and for the year ended
June 30, 1999 in conformity with generally accepted accounting principles.
/s/ Ronald R. Chadwick, P.C.
RONALD R. CHADWICK, P.C.
Aurora, Colorado
August 19, 1999
F-2
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
BALANCE SHEET
(audited)
June 30, 1999
ASSETS
<S> <C>
Current assets:
Cash $ 1,454
Accounts receivable 188,689
Inventory 12,277
Prepaid expenses 8,091
Notes receivable 18,023
Other 3,938
---------
232,472
---------
Furniture and fixtures:
Office furniture and equipment 63,162
Less accumulated depreciation (14,859)
---------
48,303
---------
Other assets:
Software development costs, net of
Accumulated amortization of $18,039 39,600
Deposits 2,741
---------
42,341
---------
$323,116
=========
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
BALANCE SHEET
(audited)
June 30, 1999
LIABILITIES AND STOCKHOLDERS' DEFICIT
<S> <C>
Current liabilities:
Accounts payable $ 400,721
Accrued expenses 52,840
Bank reserve 22,051
Notes payable - line of credit 29,054
Notes payable - related party 75,000
----------
579,666
----------
Stockholders' equity:
Common stock, Class A, no par value;
50,000,000 shares authorized;
3,040,400 issued and outstanding 359,900
Common stock subscribed (34,000) 68,000
Stock subscription receivable (68,000)
Accumulated deficit (616,450)
----------
(256,550)
----------
$ 323,116
==========
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
STATEMENT OF OPERATIONS
(audited)
- Fiscal Years Ending -
June 30, 1998 June 30, 1999
--------------- ---------------
<S> <C> <C>
Sales $ 657,988 $ 3,503,822
Cost of sales 613,322 3,419,386
--------------- ---------------
Gross profit 44,666 84,436
Selling, general and administrative expenses
69,428 672,293
(Loss) from operations (24,762) (587,857)
Other income (expense):
Interest expense - (3,831)
Income (loss) before provision for income taxes
(24,762) (591,688)
Provision for income tax - -
Net income (loss) (24,762) (591,688)
=============== ===============
Net income (loss) per share
(basic and fully diluted) ($4.27) ($0.24)
=============== ===============
Weighted average number of common shares outstanding
5,800 2,458,533
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
(audited)
For the period from August 15, 1997 (inception) to June 30, 1998,
And For The Year Ended June 30, 1999
Common Stock
----------------------
Stock Stock-
Subscrip. Accum. Holders'
Shares Amount Receivable Deficit Equity
---------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at - $ - $ - $ - $ -
August 15, 1997
Sales of 5,800 36,200 36,200
common stock
Net gain (loss) for
the period ended
June 30, 1998 (24,762)
--------- --------- --------- --------- ---------
Balances at
June 30, 1998 5,800 $ 36,200 $ - ($24,762) $ 36,200
Compensatory stock
Issuances 2,340,400 113,200 113,200
Debt retirement 1,950 10,500 10,500
Stock retirement and
reissuance (7,750)
500,000
Sales of
common stock 200,000 200,000 200,000
Common stock
subscribed (34,000
shares) 68,000 (68,000)
Net gain (loss) for
the period ended
June 30, 1999 (591,688) (591,688)
--------- --------- --------- --------- ---------
Balances at
June 30, 1999 3,040,400 $ 427,900 ($68,000) ($616,450) ($256,550)
========== ========== ============ =========== ===========
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(audited)
- For the Years Ended -
June 30, 1998 June 30, 1999
--------------- --------------
<S> <C> <C>
Cash flows from operating
activities:
Net income (loss) ($24,762) ($591,688)
Adjustments to
Reconcile net income to
Net cash provided by (used for)
operating activities:
Depreciation and
amortization 6,980 25,968
Compensatory stock
issuances - 113,200
Debt retirement - 10,500
Accounts receivable (14,591) (174,098)
Prepaids and other assets - (12,029)
Inventory - (12,277)
Deposits (1,380) (1,361)
Accounts payable
and accrued expenses 22,662 430,899
--------------- --------------
Net cash used by (used for)
Operations activities (11,091) (210,886)
--------------- --------------
Cash flows from investing
activities:
Acquisition of office equipment (14,461) (48,701)
Software development costs (26,072) (31,617)
Note receivable - (18,023)
--------------- --------------
Net cash used by (used for)
Investing activities (40,533) (98,341)
Cash flow from financing
activities:
Proceeds from borrowing 57,538 46,516
Sale of common stock 36,200 200,000
--------------- --------------
Net cash provided by (used for)
financing activities 93,738 246,516
Net increase (decrease)
in cash 42,114 (62,711)
Cash at beginning of the
Period - 42,114
--------------- --------------
Cash at end of the period $ 42,114 ($20,597)
=============== ==============
Schedule of Non-Cash Investing and Financing Activities:
- --------------------------------------------------------
During the year ended June 30, 1998, the Company issued 830 common
shares for software development services valued at $16,600.
Supplemental Disclosure:
- ------------------------
Cash paid in 1999 for interest: $3,831.
</TABLE>
F-7
<PAGE>
ANYTHING INTERNET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(audited)
For the year ended June 30, 1999
NOTE 1. ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
Anything Internet Corporation ("Anything Internet", the "Company"), was
incorporated in the State of Colorado on August 15, 1997. The Company markets
and distributes computers and related accessory products by using the Internet
as the exclusive distribution channel. On August 28, 1998, Anything, Inc.
changed its name to Anything Internet Corporation, which was made effective
through an amendment to its Articles of Incorporation filed with the Secretary
of State of Colorado on August 31, 1998.
Use of estimates
- ------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Income tax
- ------------
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss
carryforwards and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
Cash and cash equivalents
- ----------------------------
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
F-8
<PAGE>
Net income (loss) per share
- -------------------------------
The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon conversion of the Company's preferred
stock are not included in the computation if the effect of such inclusion would
be anti-dilutive and would increase the earnings or decrease loss per share.
Inventory
- ---------
Inventory consists of consigned finished goods. Inventories are valued at the
lower of cost or market using the first-in, first-out (FIFO) method.
Property and equipment
- ------------------------
Property and equipment are recorded at cost and depreciated under accelerated
methods over an estimated life of five to seven years.
Software development costs
- ----------------------------
It is the Company's policy to capitalize major software development activities
to reflect the value of the software over its anticipated useful life. The
Company amortizes this software over a three year period from the implementation
of the software.
Accounts receivable
- --------------------
The Company reviews accounts receivable periodically for collectibility and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed necessary.
Products and services, geographic areas and major customers
- ------------------------------------------------------------------
Company sales were derived from marketing and distributing computers and related
products over the Internet, were to external customers, and were domestic. The
Company had no one major customer accounting for over 10% of its sales. The
Company's long term assets are all held domestically.
Revenue Recognition
- --------------------
The Company recognizes revenue when a product is shipped to customers either
from the Company's inventory or when shipped from distributors' warehouses
directly to the customer. The Company assumes title to the product when it is
shipped either to the Company or directly to the Company's customer.
NOTE 2. RELATED PARTY TRANSACTIONS
On December 31, 1998 the Company loaned Robert C. Schick, an officer, $18,023 at
a rate of 3% per annum. The note matures and is payable in full on December 31,
1999.
F-9
<PAGE>
On June 16, 1999, the Company borrowed $75,000 from a related corporation with
an ownership interest in Anything Internet Corporation. The short-term loan was
made at a rate of 12% per annum, and comes due July 30, 1999.
NOTE 3. LEASE COMMITMENT
Effective June 3, 1999, the Company extended its lease agreement for office
space in Colorado Springs, Colorado, and effective March, 1999, entered into a
lease agreement for office space in Tampa, Florida. Both leases are for a
period of twelve-months and can be renewed at terms and conditions to be
established at expiration date. Lease expense incurred for the year ended June
30, 1999 was approximately $19,000. The remaining minimum future rental
payments, all in 1999, are $26,569.
NOTE 4. LINES OF CREDIT
To help finance the cost of inventory, Nations Credit Distribution Finance,
Inc., has extended the Company a credit line not to exceed $35,000. The
interest rate applicable to each transaction depends upon the vendor and the
timeliness of repayment, and ranges from 0% to 18%. The credit line is
unsecured. At June 30, 1999 the Company's outstanding balance on this credit
line was $1,292.
The Company has also established a $50,000 line of credit with US Bank of
Colorado Springs, Colorado. Payments are due on the 15th of each month and
interest accrues at the rate of 10.45% per annum. At June 30, 1999 the
Company's outstanding balance on this credit line was $27,762.
NOTE 5. INCOME TAXES
Deferred income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses. These loss
carryovers are limited under the Internal Revenue Code should a significant
change in ownership occur.
At June 30, 1999 the Company had approximately $615,000 of unused federal net
operating loss carryforwards, which begin to expire in the year 2019. A
deferred tax asset has been offset by 100% valuation allowance. The Company
accounts for income taxes pursuant to SFAS 109. The components of the Company's
assets and liabilities as follows:
<TABLE>
<CAPTION>
June 30,1998 June 30, 1999
-------------- ---------------
<S> <C> <C>
Deferred tax liability $ - $ -
Deferred tax asset arising from:
Net operating loss carryforwards 7,321 240,417
-------------- ---------------
7,321 240,417
Valuation allowance (7,321) (240,417)
-------------- ---------------
Net Deferred Taxes $ - $ -
The income tax (benefit) consists of the following:
Current:
Federal $ - $ -
State - -
-------------- ---------------
Deferred:
Federal ($6,382) ($209,595)
State (939) (30,822)
-------------- ---------------
($7,321) ($240,417)
</TABLE>
F-10
<PAGE>
No difference exists between these amounts and amounts computed at federal and
state statutory rates. The net change in 1999 in the total valuation allowance
was $233,096.
NOTE 6. STOCKHOLDERS' EQUITY
Common stock
- -------------
The Company as of June 30, 1999 had 50,000,000 shares of authorized common
stock, no par value, with 3,040,400 shares issued and outstanding.
In May, 1998 an officer provided the company with $1,400 in cash and web page
design and development valued at $16,600. In August, 1998 the Company exchanged
1,950 shares of common stock for debt cancellation by an officer in the amount
of $10,500. Later in August, 1998, the Company retired all its 7,750 currently
outstanding shares, in addition to 4,200 retired earlier in the year, in
exchange for 500,000 shares of new Class A common stock. Also in August, 1998,
the Company purchased 200,000 Class A common shares of Banyan Corporation valued
at $40,000 in exchange for 1,000,000 Class A common shares of the Company. In
addition the Company issued 1,300,000 shares of Class A common stock for
management consulting, legal and investor relations services valued at $52,000
to parties unrelated to the Company or Banyan Corporation. In September, 1998,
the Company issued to the members of its Board of Directors 20,000 shares of
Class A common stock for services. In December, 1998 and January, 1999 the
Company sold 200,000 shares of Class A common stock for $200,000 in a private
placement. In January, 1999 the Company issued 20,400 common shares to
directors and others for compensation valued at $20,400.
Warrants
- --------
As of June 30, 1999, the Company had 200,000 Common Stock Purchase Warrants
outstanding (the "Warrants"), issued in conjunction with a private placement
completed in January, 1999. Each Warrant entitles the holder to purchase one
share of the Company's Class A common stock at an exercise price of $3.00 per
share through January 15, 2000, at which time the Warrants expire. The Company
may redeem the Warrants at a price of $0.01 per Warrant, at any time through
January 15, 2000 upon not less than 30 days, nor more than 60 days, prior
written notice, provided that the closing bid quotation for the common stock as
reported by any quotation service on which the common stock is quoted is at
least $4.00 for ten consecutive trading sessions ending on the two days prior to
the day on which notice is given.
F-11
<PAGE>
Stock options
- --------------
As of June 30, 1999, the Company made a stock option award to directors and
others and adopted an employee stock benefit plan, which are described below.
The Company applies APB Opinion 25 and related Interpretations in accounting for
stock options.
Accordingly, no compensation cost has been recognized for its stock option award
to directors and its employee stock benefit plan, nor was any compensation cost
charged against income under the award or plan in 1999. Had compensation cost
for the Company's stock option award and employee stock benefit plan been
determined based on the fair value at the grant dates for awards under the stock
option award and employee stock benefit plan consistent with the method of FASB
Statement 123, the Company's net income and earnings per share would have been
reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
1999
------------
<S> <C> <C>
Net income (loss) As reported ($591,688)
Pro forma ($1,497,389)
Basic and fully diluted earnings per share
As reported ($0.24)
Pro form ($0.61)
</TABLE>
Stock option award
- --------------------
In August, 1998, the Company granted stock options, exercisable immediately
(except as noted below), to certain officers and directors as compensation for
services, to purchase common shares of the Company as follows:
<TABLE>
<CAPTION>
Amount Price/Share Expiration Date
- ------- ------------ -------------------
<C> <C> <S>
500,000 $ 1 February 29, 2000
50,000 $ 40 April 1, 2002
25,000 $ 75 April 1, 2002
25,000 $ 100 April 1, 2002
*10,000 $ 3 March 31, 2003
<FN>
* Option vests over 3 years.
</TABLE>
Employee stock option plan
- -----------------------------
On June 4, 1999 the Company awarded stock options to four employees under an
employee stock option plan. 200,000 common shares were reserved under the plan,
which expires in June, 2007. Each employee received options to purchase 2,500
common shares (10,000 shares total). The options vest at 500 shares per year
per employee, beginning June 4, 2000, at an exercise price of $3 per share.
A summary of the status of the Company's stock options as of June 30, 1999, and
changes during the year ending on that date is presented below:
F-12
<PAGE>
<TABLE>
<CAPTION>
June 30, 1999
-------------------------------
Weighted Avg.
Options Shares Exercise Price
- ---------------------------------- -------------- ---------------
<S> <C> <C>
Outstanding at beginning of period - $ -
Granted 620,000 $ 11.19
Exercised - -
Forfeited - -
-------------- ---------------
Outstanding at end of period 620,000 $ 11.19
Options exercisable at period end 603,333
Weighted average fair value of
Options granted during the
Period $ 1.48
</TABLE>
F-13
<PAGE>
The following table summarizes information about stock options outstanding at
June 30, 1999.
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------- ----------------------
Weighted Avg. Weighted Weighted
Range of Number Remaining Avg. Number Avg.
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices at 6/30/99 Life Price at 6/30/99 Price
- ------------- ----------- ------------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1.00-$100.00 620,000 13.2 months $ 11.19 603,333 $ 11.44
</TABLE>
F-14
<PAGE>
EXHIBITS
10.2 AMENDMENT TO LEASE AGREEMENT FOR 3020 NORTH EL PASO, STE. 103, COLORADO
SPRINGS, CO 80907, DATED MAY 20, 1999.
AMENDMENT #1 TO LEASE
LANDLORD: Lapham Enterprises
P.O. Box 7208
Colorado Springs, CO 80933
TENANT: Anything, Inc.
3020 N. El Paso Street
Colorado Springs, CO 80907
PREMISES: 3020 N. El Paso Street
Colorado Springs, CO 80907
LEASE DATE: June 2, 1998
This amendment made and entered into by and between Lapham Enterprises
(hereinafter referred to as the Landlord), and Anything, Inc. (hereinafter
referred to as the Tenant)
WITNESSETH: Anything, Inc. previously entered into a Lease dated June 2, 1998
("Lease") for the premises commonly referred to as 3020 N. El Paso Street, Suite
#103, Colorado Springs, Colorado. The term of the Lease commenced June 3, 1998
and ends on May 31, 1999.
NOW THEREFORE, IT IS AGREED AS FOLLOWS:
1. Term: The term of the Lease agreement shall be extended for Twelve (12)
additional months hence revising the Lease expiration date to May 31, 2000.
2. Rent Amount: In consideration of said Lease extension Tenant agrees to pay
Landlord as base rent for the premises an amount of Twelve Thousand, Three
Hundred Sixty Dollars ($12,360.00) payable in equal monthly installments of
$1,030.00.
Such monthly rental payments shall be payable in advance by the 1st day of
each and every calendar month at the office of the Landlord, or such other
place as the Landlord from time to time may designate in writing.
3. DISCLOSURE: Tenant understands that Robert J. Lapham is acting as agent of
the Landlord in this transaction with duty to respect the Landlord's best
interest. Furthermore, Tenant is advised to seek appropriate Legal and
Financial counsel prior to accepting this Amendment.
4. RATIFICATION: All terms and conditions of the original Lease except as
expressly modified herein, shall be unchanged, remain in full force and
effect, and are hereby ratified, confirmed, and approved by both the
Landlord and Tenant.
<PAGE>
IN WITNESS WHEREOF, the Landlord and Tenant have entered into this Lease
Amendment consisting of Four (4) provisions this 20th day of May, 1999.
TENANT:
ANYTHING, INC.
BY: /s/ J. Scott Sitra
TITLE President/CEO
LANDLORD:
LAPHAM ENTERPRISES
BY: /s/ Robert J. Lapham
TITLE: Manager
<PAGE>
16.1 LETTER ON CHANGE IN CERTIFYING ACCOUNTANTS
September 17, 1999
Securities and Exchange Commission
450 Fifth St., N.W.
Washington, D.C. 20549
Gentlemen:
This letter is to confirm that the reason I am no longer the auditor of record
for Anything Internet Corporation is due to the fact that I have redirected the
focus of my professional practice and as such I no longer perform audits of
publicly traded companies.
At no time have I ever had a disagreement with Anything Internet Corporation or
its management concerning financial statement auditing or presentation issues.
Sincerely,
J. PAUL KENOTE, CPA, P.C.
/s/ J. Paul Kenote, CPA
J. Paul Kenote, CPA
<PAGE>
21.1 LIST OF SUBSIDIARIES
As of September 10, 1999, Anything Internet Corporation owned:
100% - AnythingPC Internet Corporation
100% - Anything Coffee Corporation
<PAGE>
23.1 CONSENT LETTER OF RONALD R. CHADWICK, P.C.
Ronald R. Chadwick, P.C.
Certified Public Accountant
3025 S. Parker Road
Suite 109
Aurora, Colorado 80014
----------------------------
Telephone: (303) 306-1967
Telephone: (303) 306-1944
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
I hereby consent to the use in this Form 10-KSB filing by Anything Internet
Corporation, of my report dated August 19, 1999 relating to the financial
statements of Anything Internet Corporation which appear in said filing. I also
consent to the reference to my firm under the heading "Experts" in said filing.
/s/ Ronald R. Chadwick, P.C.
RONALD R. CHADWICK, P.C.
Aurora, Colorado
September 15, 1999
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 1454
<SECURITIES> 0
<RECEIVABLES> 188689
<ALLOWANCES> 0
<INVENTORY> 12277
<CURRENT-ASSETS> 232472
<PP&E> 63162
<DEPRECIATION> 14859
<TOTAL-ASSETS> 323116
<CURRENT-LIABILITIES> 579666
<BONDS> 0
0
0
<COMMON> 359900
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 323116
<SALES> 3503822
<TOTAL-REVENUES> 3503822
<CGS> 3419386
<TOTAL-COSTS> 672293
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3831
<INCOME-PRETAX> (591688)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (591688)
<EPS-BASIC> (.24)
<EPS-DILUTED> (.24)
</TABLE>
