As filed with the Securities and Exchange Commission on June 9, 1999
Registration No._______________
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934
NETGEN 2000, INC.
(Name of Small Business Issuer in its charter)
Florida 65-0873448
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
224 Datura Street, Suite 402
West Palm Beach, Florida 33401
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(Address of principal executive offices) (zip code)
(Registrant's telephone number, including area code) (561) 655-5351
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Securities to be registered pursuant to 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
n/a n/a
--- ---
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock; $.01 per share and Warrants
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(Title of Class)
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TABLE OF CONTENTS
PART I
ITEM 1. DESCRIPTION OF BUSINESS .......................................... 1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION ............................................. 8
ITEM 3. DESCRIPTION OF PROPERTY .......................................... 10
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT ............................................ 10
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS .............................................. 12
ITEM 6. EXECUTIVE COMPENSATION ........................................... 14
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ................... 15
ITEM 8. DESCRIPTION OF SECURITIES ........................................ 16
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS ...................... 17
ITEM 2. LEGAL PROCEEDINGS ................................................ 17
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS .................... 17
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES .......................... 17
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS ........................ 18
PART F/S
FINANCIAL STATEMENTS ...................................................... F1
PART III
ITEM 1. INDEX TO EXHIBITS ................................................ 20
Explanatory Note:
Unless otherwise indicated or the context otherwise requires, all
references herein to the "Company", "we" and "our" are to Netgen 2000 Inc., a
Florida corporation. The Company is filing this Form 10-SB voluntarily. The
Company's Common Stock has not traded on the OTC Bulletin Board but the Company
intends to apply for listing. The Company believes the market for its stock will
be enhanced by being a reporting company.
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL DEVELOPMENT OF THE COMPANY'S BUSINESS.
Company Overview
Netgen 2000, Inc. was incorporated in Florida in October 1998. We are
an internet marketing services company that specializes in designing, creating
and marketing cost-effective Internet web and image sites, products and custom
software. We strive to provide businesses, of all sizes (our clients), with
interactive Internet image sites along with marketing services, to create
exposure to vast audiences of prospective consumers. Our marketing services, by
first offering an array of free information to visitors to our web site, assists
clients in enhancing their business enterprise by directing these Internet
visitors to the clients' image site - be it health care, legal services, or
business - in their local area. In addition, we intend to provide visitors to
our web-site with "shopping-cart" access to a variety of health care consumer
products.
We will also assist clients in improving their Internet presence in the
event they offer products, in addition to, services. We use technology for the
creation of our web site which increases the chances that the our clients' image
sites are seen by an Internet user irrespective of the search engine used. The
majority of our current revenues will be derived from custom web and image site
design, servicing fees and product advertising.
We were initially capitalized with a $30,000 investment by our founder,
for which 3,000,000 shares of common stock were issued. On March 25, 1999, we
commenced a Rule 504 offering of a maximum of 300,000 units, each Unit
consisting of one (1) share of common stock , $.01 par value, and one (1)
warrant at an offering price of $1.00 per Unit. As part of the offering we also
converted an outstanding convertible debt of $39,000 into 390,000 shares of
common stock. We also issued 830,000 options to purchase common stock to certain
consultants and authorized the issuance of up to 1,000,000 B warrants for future
consultants or broker-dealers from which $8500 has been raised. In total, gross
proceeds from the offering as of the date of this filing are $237,000.
Web Site
Between January 31, 1999 and March 27, 1999, our web site,
Netgen2000.com, experienced more than eighty-three thousand (83,000) visitor
hits to its entire site. The user profile report was prepared on March 27, 1999
by Webtrends, an internet marketing analysis company.
Business Strategy
Our mission is to become a predominant service provider within our
market niche. The critical success factors are: understanding, developing and
applying information technology to the Internet, interactive media markets, and
data access and software tools; narrowing market focus while consummating
strategic alliances to complement product and service offerings;
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investing in strategic Internet or interactive media investments or acquisitions
and, most importantly, a continued understanding of clients' needs.
We expect to utilize our expertise in database design/development and
project management to create a suite of product and service offerings, that will
enable sophisticated direct interactive marketing environments. We believe these
new products will enable us to take advantage of the demand for data management
services created from the Internet and interactive media, while continuing to
grow and invest in the design and development of web sites. Additionally, in
fiscal year 1999, the Company plans to continue to develop and refine the
products and services of its business, with the goal of increasing revenue as
new products are commercially introduced.
Additionally, we will seek to expand our participation in Internet, and
interactive media industries, and increase market share. Key elements of this
strategy include:
* Utilize the Latest Technology Available to the Internet,
Including Java, Java Script, Neoweb Script, Tcl/tk and
Shockwave, to Achieve Optimum Internet Presence. We will build
web sites without the use of HTML editors. While editors often
don't support many new additions to the web and use codes
designed for one particular kind of web server that could
present problems, the Company is adding to the HTML code to
enhance its versatility for the web server. We will constantly
increase our technological capabilities through the
enhancement of existing software and the re-engineering of our
proprietary database software in order to allow the our
clients greater ability to access, analyze and update their
own databases through the use of our services and software.
* Continue to Enhance And Expand The Company's Products And
Services. We intend to invest resources in new business ideas
or investments which seek to capitalize on opportunities
surrounding the growth of the Internet and the interactive
marketing industry. We intend to continue to pursue the growth
and development of our technologies and services and continue
to introduce products commercially. Additionally, we intend to
evaluate new opportunities to further our investment
opportunities and also to seek out opportunities to realize
increased stockholder value through the acquisition of
compatible companies.
* Provide The Highest Level of Customer Service. We plan to
create an Internet presence that adds value to our clients'
organizations.
* Pursue Innovative Advertising Solutions. We are actively
seeking to develop innovative ways for advertisers to
effectively reach their target audiences through the Internet.
We will design and offer customized packages which include the
ability to change advertisements quickly and frequently, to
link a specific search term to an advertisement, to conduct
advertising test campaigns with rapid result delivery and to
track daily usage statistics. We are continuing our
development
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of software that will provide it with the ability to target
ads based on demographics and usage patterns.
* Cross-sell Products And Services. We are involved in many
aspects of the direct marketing sales cycle.
Custom Image Site Development
We develop high-end custom image sites, encompassing original graphics
and innovative layouts. Our business strategy is to develop and design consumer
friendly image sites that achieve growth and organizational optimization for our
clients by creating more efficient navigation, utilizing interactive databases,
and by using technology to increase the likelihood of being found at or near the
top of search engines. Activity on our clients' image sites are to be enhanced
initially by attracting visitors to the our web site and providing specific and
detailed information in the fields of medicine, law and business, at no charge
to the visitor. Visitors are then linked, by professional or business specialty,
to the individual sites of the Company's clients--doctors, health care
professionals, lawyers business advisors, etc. in their local area. Visitors
attracted by the latest intelligence in these various fields will be directed to
the client's comprehensive profile on their specially designed site. Clients may
include pictures, biographical data and personal messages explaining distinctive
elements of the client's business (for eg. physicians may include information
regarding individuals procedures, new treatments medications, etc.) Only one
client image site per specialty per zip code is created. Prospective consumers
seeking services in the client's local area will be referred only to that
client.
Divisions
The Company provides medical and legal information free but does not
hold itself out as offering nor does it intend to provide legal or medical
advise.
Legal. We develop image sites and products for attorneys and law
firms. We expect attorneys and law firms to utilize this division to increase
their exposure to prospective clients who are in need of specific
specializations. We believe this will also increase likelihood of
placement/selection of these legal specializations on search engines.
Medical. This site is designed to assist visitors in locating
quality healthcare providers or specialists in the visitors local or specified
area. It will provide valuable information on the practice and will link the
visitor to the physician's office to make an appointment for further
consultation. Our site covers sixteen (16) different health topics with over one
hundred eighty (180) categories of resource information.
Business. Our Business Guide is a reference guide designed to
furnish visitors with easy to use resource information on local businesses in
various business categories. Visitors will discover, locate and identify
businesses ready to serve them in their local market area by being offered
relevant information about the business, including photos of the business, its
history, specializations and maps to their location.
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The Market
There are twenty-eight thousand (28,000) zip codes in the United
States. There are approximately one hundred eighty (180) health topics, one
hundred twenty (120) legal areas and twenty (20) business categories. Currently
we offer sixteen (16) medical specialities; eleven (11) law related topics; and
seventeen (17) business topics. The practitioner or business is offered
exclusivity for his/her/its particular area or speciality in the zip code of his
choosing. In addition, we plan to offer products or product lines associated
with these various enterprises.
Growth
Our growth will largely be influenced by the growth of the Internet.
Although estimates vary widely, we are of the opinion that more than three
hundred million (300,000,000) persons will be using the Internet by the year
2002 for the purpose of purchasing goods and services.
Products
Research And Development. We intend to develop and market a variety of
Internet related products. This will include both proprietary and
non-proprietary products typically associated with our three divisions. We are
presently exploring the feasibility of offering health related products such as
holistic vitamins and supplements, legal forms and software related products. In
addition, we believe additional sources of revenue can be derived from
advertising and business brokerage. These areas are all characterized by rapid
technological development. We believe that our future success will largely
depend upon our ability to continue the enhancement of our existing products and
services and the development of other products and services which complement
existing ones. To date, we have incurred nominal research and development
expenses. In order to respond to rapidly changing competitive and technological
conditions, we expect to incur significant research and development expenses
during the initial development phase of new products and services as well as on
an on-going basis with established products.
Web Server. We intend to develop a proprietary internet server which
will provide our clients immediate, constant and efficient access to a web site
other than the internet's alternative servers. In time, we intend to become an
internet service provider to our clients by providing them with discs or
diskettes to access the internet at no additional cost. We are hopeful that this
type of offering will help maintain a loyal client base.
Intellectual Property and Proprietary Rights. The Company regards its
technology as proprietary and attempts to protect it by relying on common law
trademark, service mark, copyright and trade secret laws and restrictions on
disclosure and transferring title and other methods. However we currently have
no patents or patents pending and have not filed for patent protection. Nor do
we anticipate that patents will become a significant part of our intellectual
property in the future. We intend to enter into confidentiality agreements with
respect to our proprietary technology and limit access to, and distribution of
our proprietary information.
Marketing Strategy
Marketing ourselves involves the use of Internet technology. We utilize
"search engines", such as IMAST, which has included us on 1300 search engines. A
"search engine" is
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the primary computerized technique used to locate and identify particular web
sites or their subject-matter. In addition, we intend to market ourselves
through "banner ads" (advertisements which appear on other web sites) and
"reciprocal links" (shortcuts enabling the visitor to travel from one web site
to another). In addition to the Internet exposure, we will use direct marketing
and direct mail, to promote our products particularly to new residents in their
local areas. We will also use TV, newspapers ads and target mailers.
Employees
The Company employs a total of six (6) full-time persons, and two
commissioned employees. None of the Company's employees or commission-based
personnel are represented by a union and the Company believes its relationship
with its employees is very good.
The Company intends to enter into non-disclosure and non-competition
agreements with its key personnel which provide that upon the termination of
employment with the Company for any reason, the individual will not compete with
the Company for two years. With the exception of two senior officers, salaries
are not yet fixed. We intend to offer only modest salaries along with incentives
based upon revenues.
Impact of Year 2000
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of our
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure 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. We believe our operations are Year
2000 compliant. However, variability of definitions of "compliance" with the
Year 2000 and of different combinations of software, firmware, and hardware may
lead to lawsuits against us. The outcomes of any such lawsuits and the impact
are not estimable at this time. The Year 2000 may affect our internal systems,
however we believe the effect will be minimal as we have purchased the majority
of our hardware systems within the last year and a half. We believe out of
pocket costs associated with Year 2000 will be minimal. We intend to assess the
readiness of our systems and those of our licensees for handling the Year 2000.
Although the assessment has not been initiated, we currently believe that
resolving these matters will not have a material adverse impact on our 's
financial position or results of operations. There can be no guarantee that the
systems of other companies on which our operations rely will be timely converted
and will not have an adverse effect on our operations. Any Year 2000 compliance
problems affecting us could have a material adverse effect on our business,
results of operations and financial condition.
Government Regulation and Legal Uncertainties
There are currently few laws or regulations directly applicable to
access to or commerce on the Internet. Due to the increased popularity and the
use of the Internet, it is possible that laws and regulations may be adopted,
covering issues such as user privacy, defamation, pricing, taxation, content
regulation, quality of products and services, and intellectual property
ownership and infringement. Such legislation could
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expose us to substantial liability. Such legislation could also dampen the
growth in use of the web, decrease the acceptance of the web as a communications
and commercial medium, or require us to incur significant expense in complying
with any new regulations. Other nations, including Germany, have taken actions
to restrict the free flow of material considered to be objectionable on the web.
The European Union has recently adopted privacy and copyright directives that
may impose additional burdens and costs on international operations. In
addition, several telecommunication carriers, including America's Carriers
Telecommunications Association, are seeking to have telecommunications over the
web regulated by the FCC in the same manner as other telecommunication services.
In addition, because the growing popularity and use of the Internet have
burdened the existing telecommunications infrastructure and many areas with high
web use have begun to experience interruptions in phone service, certain local
telephone carriers have petitioned governmental bodies to regulate Internet
service providers ("ISPs") and online service providers ("OSPs") in a manner
similar to long distance telephone carriers and to impose access fees on ISPs
and OSPs. If any of these petitions or the relief sought therein is granted, the
costs of communicating on the Internet could increase substantially, potentially
adversely affecting the growth in use of the Internet. Further, due to the
global nature of the Internet, it is possible that, although transmissions
relating to our solutions originate in the State of Florida, the governments of
other states or foreign countries might attempt to regulate our transmissions or
levy sales or other taxes relating to our activities. There can be no assurance
that violations of local laws will not be alleged or charged by state or foreign
governments, that we might not unintentionally violate such laws or that such
laws will not be modified, or new laws enacted, in the future. Any of the
foregoing developments could have a material adverse affect on our business,
results of operations and financial condition. A number of proposals have been
made at the federal, state, and local level that would impose additional taxes
on the sale of goods and services through the Internet. Such proposals, if
adopted, could substantially impair the growth of electronic commerce and could
adversely affect opportunity to derive financial benefit from such activities.
Also, Congress recently passed, and the President has signed into law, the
Digital Millennium Copyright Act, which is intended to reduce the liability of
online service providers for listing or linking to third party web sites that
include materials that infringe copyrights or rights of others. Congress also
recently passed, and the President has signed into law, the Children's Online
Protection Act and Children's Online Privacy Act, which will restrict the
distribution of certain materials deemed harmful to children and to impose
additional restrictions on the ability of online services to collect user
information from minors. We do not believe this legislation will have any
adverse affect on us. However, there can be no assurance that such legislation
will not impose significant additional costs to our business or subject it to
additional liabilities. In addition a number of other countries are considering
additional regulation.
Environmental Impact
The Company believes that none of its activities utilize any hazardous
materials or result in the discharge of any pollutants into the environment. The
Company believes it complies fully with all state and federal environmental laws
and regulations.
Competition
The market for clients, visitors and related products and services are
intensely competitive and such competition is expected to continue to increase.
There are no substantial
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barriers to entry in this market and we believe that our ability to compete
depends upon many factors within and beyond its control, including the timing
and market acceptance of new solutions and enhancements to existing solutions
developed by us and our competitors, customer service and support, sales and
marketing efforts, and the ease of use, performance, price and reliability of
the Company's solutions. We also compete with many Internet content providers
and ISPs, including web directories, search engines, shareware archives, content
sites, commercial online services and sites maintained by Internet service
providers, as well as thousands of Internet sites operated by individuals and
government and educational institutions. These companies have longer operating
histories, longer customer relationships, and substantially greater financial,
management, technical development, sales, marketing, and other resources. Many
nationally known companies and regional local companies across the country are
involved in Internet and Intranet applications, including the development and
support of web sites and Internet applications, and the number of these
companies is increasing. The companies that offer competitive products or
services, include, among others:
- web site service boutique firms;
- communications, telephone and telecommunication companies;
- computer hardware and software companies;
- established online service companies;
- advertising agencies;
- direct access Internet and Internet-services and access providers;
- specialized integrated marketing communications firms;
- internal information technologies departments of prospective and
current clients; and
- web site "yellow pages".
We know of at least one directly competitive company - Medconsult.com,
which specializes in the location of medical professionals.
We believe that our principal methods of competition in attracting
clients include the volume of traffic on our web site, brand recognition,
customer service, the demographics of our clients and viewers, our ability to
offer our clients targeted audiences, and the overall cost-effectiveness of the
products and services we offer. We believe that the principal competitive
factors in attracting search engines to a customer's web site include our
design, title, meta tags descriptions and key words. We also offer marketing
support to our clients in assisting the client in obtaining exclusivity in its
market area. Finally, by directing prospective consumers to an exclusive image
site, we will give our clients a limited ability to block competition in their
specialized area.
We believe that the number of Internet companies relying on revenues
from their web site will increase substantially in the future. In turn, we will
likely face increased competition, resulting in increased pricing pressures on
our web site design rates which could in turn have a material, adverse effect on
our business, results of operations and financial condition.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We are an internet marketing services company specializing in the
design, creation and marketing of advertising sites for service oriented
companies and service professionals (our clients) and cost-effective Internet
products and custom software. We strive to provide our clients, with interactive
Internet image sites along with marketing services. In addition, we provide a
subscription service to clients for the servicing and publication of their image
sites in strategic zip code locations. This assists clients in enhancing their
Internet presence and advertising their services. We began to achieve limited
revenues from operations in June, 1999.
In January, 1999, bridge loans necessary for the expenses of this
Offering, and for other immediate working capital needs in the approximate sum
of $39,000, were advanced by five (5) lenders ("Lenders"). The Lenders received
convertible notes which required the loans be repaid within twelve (12) months
or, at the option of the Lenders, be converted into the Company's common shares
at the rate of $.10 per share for a maximum 390,000 shares. These loans were
converted on April 2, 1999. Capital of $190,000 was raised pursuant to a private
placement of our securities in April, 1999. Finally, certain of the Company's B
Warrants were also purchased, resulting in an additional $8,500 paid to the
Company.
We plan to establish a marketing operation in the following markets by
the end of the 1999 fiscal year.-
*Florida: West Palm Beach, Ft. Lauderdale, Orlando, Jacksonville,
Tampa, Gainesville
*North Carolina: Charlotte, Raleigh
*Pennsylvania: Pittsburgh, Philadelphia
*Ohio: Columbus
*Tennessee: Memphis, Nashville
*Illinois: Chicago
*Michigan: Detroit
*Texas: Austin, Dallas, Houston
*Massachusetts: Boston
*New York: Long Island
There can be no assurance that this goal will be timely achieved, if at
all. Currently, we have established our marketing in the West Palm Beach area,
and expect to be up and running in Charlotte and Gainesville by the end of June,
1999. It is anticipated that the Company's capital along with revenues generated
from the sale of subscriptions to local businesses in these markets, will be
sufficient to satisfy overhead demands plus yield a small profit. If this plan
is successful, we expect to file an initial public offering sometime during the
year 2000, the funds from which will be employed to expand our markets, increase
marketing and take advantage of improving technology.
The development of Internet products and services is in constant flux.
We are constantly reviewing our services. For example, we continuously revamp
our web-site in order to improve
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its marketability, accessibility to visitors and speed of operation. On the
technical side of our business, it is imperative that we maintain a vigil on all
new developments which may affect our operations.
One of our largest capital expenditures involves the purchase of state
of the art computer equipment. Enhancements and replacements of equipment is
necessary if we are to maintain a competitive force in this sector of the
Internet market. While we have no current plans to make significant equipment in
the near future, the changing technology may require unanticipated purchases.
As we explore and expand into new markets, it will be necessary for us
to increase our sales force and operations staff. Currently, there are three (3)
employees involved in sales. This will increase by seven (7) employees by the
time we establish the twenty-one targeted markets.
Inflation has not had a material effect upon our operations to date. In
the event the rate of inflation should accelerate in the future, it is expected
that costs in connection with the provision by the Company of its services and
products will increase, and, to the extent such increased costs are not offset
by increased revenues, the operations of the Company may be adversely affected.
The Year 2000 problem concerns the inability of certain computer
systems to appropriately recognize the Year 2000 when the last two digits of the
year are entered in the date field. The Company's date critical functions
related to the Year 2000 and beyond, such as sales, purchasing, inventory
control, merchandise, planning and replenishment, facilities, and financial
systems, may be adversely affected unless these computer systems are or become
Year 2000 compliant. Moreover, variability of definitions of "compliance" with
the Year 2000 and of different combinations of software, firmware, and hardware
may lead to lawsuits against the Company. The outcomes of any such lawsuits and
the impact on the Company are not estimable at this time. The Year 2000 may
affect the Company's internal systems, however management believes the effect
will be minimal as the Company purchased the majority of its hardware systems
within the last year and a half. Management believes out of pocket costs
associated with Year 2000 will be minimal. The Company intends to assess the
readiness of its systems and those of its licensees for handling the Year 2000.
Although the assessment has not been initiated, management currently believes
that resolving these matters will not have a material adverse impact on the
Company's financial position or its results of operations. There can be no
guarantee that the systems of other companies on which the Company's operations
rely will be timely converted and will not have an adverse effect on the
Company's operations. Any Year 2000 compliance problems of the Company could
have a material adverse affect on the Company's business, results of operations
and financial condition.
The Company's Year 2000 compliance is partially dependent upon key
third parties also being Year 2000 compliant on a timely basis. The Company
could be adversely affected by the Year 2000 problem if computer systems of
third parties such as banks, suppliers and others with whom the Company does
business fail to address the Year 2000 problem successfully. For example, the
Company may be adversely affected by, among other things, warranty and other
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claims made by the Company's suppliers related to product failures caused by the
Year 2000 problem, the disruption or inaccuracy of data provided to the Company
by non - Year 2000 compliant third parties, and the failure of the Company's
service providers to become Year 2000 compliant.
The Company's management believes that the purchasing patterns of
customers and prospective customers might be affected by Year 2000 issues. Many
companies may need to modify or upgrade their information systems to address the
Year 2000 problem. The effects of this issue and of the efforts by other
companies to address it are unclear. Many companies are expending significant
resources to correct their current software systems for Year 2000 compliance.
These expenditures might result in reduced funds available to purchase services
and products such as those that the Company offers.
The Company has no reason to believe that its exposure to the risks of
lack of supplier and customer Year 2000 readiness is any greater than the
exposure to such risks that affect its competitors generally. However, if a
significant number of the Company's key suppliers and customers experience
business disruptions as a result of their lack of Year 2000 readiness, their
problems could have a material adverse effect on the financial position and
operations of the Company. In addition, if all Year 2000 issues within the
Company's business are not properly identified, there can be no assurance that
the Year 2000 issue will not have a material adverse effect on the Company's
results of operations or financial position.
The Company is not exposed to material risk based on interest rate
fluctuation, exchange rate fluctuation, or commodity price fluctuation.
ITEM 3. DESCRIPTION OF PROPERTY
The Company currently maintains its executive and administrative
offices at 224 Datura Street, Suite 402, West Palm Beach, Florida 33401. The
premises are leased from a non-affiliated party. It consists of approximately
six hundred (600) square feet under a one (1) year lease ending October 31, 1999
at an annual rental of $4,134 with no right of renewal. The Company also leases
approximately 2,400 square feet on a month to month basis from a non-affiliate
at 324 Datura Way for $1,800 per month. These premises are used for its
marketing activities. In the event these locations are not renewed, the Company
does not expect difficulty in relocating to suitable space. The Company believes
that these facilities are adequate for its current needs and anticipated future
needs.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information, as of May 3, 1999, with
respect to the number of shares of Common Stock (the only class of stock issued
by the Company) beneficially owned by individual directors, by all directors and
officers of the Company as a group, and by persons known to own more than 5% of
the Company's Common Stock. The Company has no other class of voting stock
outstanding.
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<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENTAGE OF CLASS
OF BENEFICIAL OWNER OF BENEFICIAL OWNER --------------------
- ------------------- -------------------
(All security holders) Shares prior to Shares after Prior to After
exercise of exercise of exercise of exercise of
Warrants Warrants Warrants Warrants(3)
-------- -------- -------- -----------
<S> <C> <C> <C> <C>
Derek Dunn and Millie Dunn(4)
6252 Moneile Dr.
Austin, TX 78729 500,000 11.34
Julien S. Ferretti (1)
8994 Wendy Lane
West Palm Beach, FL 33411 30,000 280,000 .68 5.14
Jennifer Dunn(4)
1111 New Parkview Place
West Palm, Beach, FL 350,000 7.94
Christopher Dunn(4)
113 Cortes Ave.
Royal Palm Beach, FL 350,000 7.94
Jeanette Dunn(4)
1111New Parkview Place
West Palm Beach, FL 1,100,000 24.94
Kevin Dunn(4)
1111 New Parkview Place
West Palm, Beach, FL 350,000 7.94
Lynn Dunn, Jr.(4)
196 McGregor Drive
McMurray, PA 350,000 7.94
Fidelity MFG Inc.(1)
8994 Wendy Lane
West Palm Beach, FL 400,000 9.07
Regal Advisors Inc.(2)
PO Box 3174
Tortola, British Virgin Isds. 300,000 450,000 6.8 8.26
STJ Trust c/o Selma Dresner, Tee.(2)
PO Box 15515
West Palm Beach, FL 150,000 3.4
U.S. Realty Group, Inc.(2)
PO Box 15515
West Palm Beach, FL 220,000 4.99
EZ Mortgage Finance(2)
PO Box 15515
West Palm Beach, FL 250,000 5.67
</TABLE>
- --------------------------------------------------------------------------------
-11-
<PAGE>
(1) Fidelity MFG, Inc. is controlled and its securities are beneficially owned
by Julian Ferritti.
(2) STJ Trust, U.S. Realty Group, Inc. and EZ Mortgage Finance, Inc. are under
the common control of Edward Muller. STJ Trust and U.S. Realty are owned by
members of Mr. Muller's family. EZ Mortgage is 80% owned by U. S. Realty Group,
Inc.
(3) The Warrants may not be exercised until July 23, 2000, and shall expire on
or before the close of business two years thereafter, July 23, 2002 , unless
extended.
(4) Jennifer, Christopher, Kevin and Lynn Dunn Jr. are siblings to Derek Dunn,
the Company's president. Millie Dunn is Derek's wife. Jeanette Dunn is their
mother.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENTAGE OF CLASS
OF BENEFICIAL OWNER OF BENEFICIAL OWNER -------------------
- ------------------- -------------------
(Management) Shares prior to Shares after Prior to After
exercise of exercise of exercise of exercise of
Warrants Warrants Warrants Warrants (2)
-------- -------- -------- ------------
<S> <C> <C> <C> <C>
Derek Dunn(3)
6252 Moneile Dr.
Austin, TX 78729 500,000 11.34
Julien S. Ferretti (1)
8994 Wendy Lane
West Palm Beach, FL 33411 430,000 680,000 9.75 12.48
Jennifer Dunn(3)
1111 New Parkview Place
West Palm Beach, FL 350,000 7.94
All Officers &Directors
as a Group
(six persons) 1,330,000 (4)(5) 30.16
</TABLE>
- -----------------
(1) Includes 400,000 shares owned by Mr. Ferritti's corporation, Fidelity MFG,
Inc.
(2)The Warrants may not be exercised until July 23, 2000, and shall expire on or
before the close of business two years thereafter, July 23, 2002 , unless
extended.
(3) Derek and Jennifer Dunn, Jr. are siblings.
(4) Includes 60,000 shares payable at 5000 shares per month to Arvind B.
Ajinkya, the CFO.
(5) Does not include 1,100,000 shares issued to Jeanette Dunn, the wife of Lynn
Dunn, for which the latter disclaims beneficial ownership.
The Company is not aware of any arrangement which might result in a
change in control in the future.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following sets forth certain information with respect to directors
and executive officers of the Company with the year in which each director's
term expires in parentheses.
<TABLE>
<CAPTION>
Position with
Name Age the Company Term
- ---- --- ----------- ----
<S> <C> <C> <C>
Derek G. Dunn 32 President, Director 1999-2000
Julian S. Ferretti 53 Chairman 1999-2000
-12-
<PAGE>
Position with
Name Age the Company Term
- ---- --- ----------- ----
James E. Devey 29 Vice-President
1999-2000
Jennifer Dunn 28 Secretary
1999-2000
Lynn Dunn 61 Vice-President-Operations, 1999-2000
Director
Arvind B. Ajinkya 54 Treasurer, CFO 1999-2000
</TABLE>
Derek G. Dunn has been the President of the Company since its
incorporation in 1998. Mr. Dunn has been a software engineer and programmer for
the past twelve years. He has performed computer related tasks with prior
employers since 1986. From 1986 to 1994 Mr. Dunn was employed as systems
administrator with Freedom Travel in West Palm Beach, Florida. From 1994 to
1996, he was an IBM software consultant and technical lead to Keane Inc. in Boca
Raton, Florida. In this capacity he provided on-line technical support for IBM
corporate and domestic accounts and supervised co-workers in solving
installation issues. Mr. Dunn was a systems analyst for AmSouth Hoover AL/CDI
Inc. in Atlanta from 1997 to April 1998. Presently he is a software engineer an
programmer for Healthway Interactive in Austin, Texas. Mr. Dunn will be
responsible for the overall operations of the Company.
Julian S. Ferretti is the Company's Board Chairman. Since 1989 to the
present he has been the president of Fidelity Manufacturing Co., a wholesale
food broker. In addition to being Board Chairman, Mr. Feretti will be involved
with corporate acquisitions.
James E. Devey is Vice-President of the Company and will be in charge
of sales. Prior to joining the Company, Mr. Devey was employed as a commodity
salesman for Infinity Trading Group for a period of three months. From 1996 to
1998 he was in the restaurant business as an owner/operator.
Jennifer A. Dunn is the Company's Secretary and is the sister of the
Company's president, Derek Dunn. Prior to joining the Company, Ms. Dunn was
employed by Freedom Travel from 1987 to 1990 as its office manager where she
also created graphic designs for promotional work. From 1990 to 1992 she was
employed by Sign-A-Rama as manager. Ms. Dunn was educated at South College in
West Palm Beach, Florida but did not receive a degree. In 1992 and 1990 she
attended the ITT Institute and System One respectively, for computer studies.
Ms. Dunn will be responsible for maintaining corporate records and minutes at
Board of Director meetings.
Lynn Dunn is the father of Derek and Jennifer Dunn. Mr. Dunn is a
Vice-President in charge of the Company's operations. For the past 28 years he
has been involved with businesses involving new technologies and marketing
concepts. From 1990 to 1998 he has acted as an independent marketing consultant.
In 1986, Mr. Dunn founded Freedom Travel Network, which established the first
full-service computer linked travel network, and was involved in the management
of the company until 1990. From 1978 to 1985, Mr. Dunn was president of Cordaq
-13-
<PAGE>
Marketing Group, a company which managed trade shows for U.S. owned technology
companies in Taiwan, pursuant to a U.S government contract.
Arvind B. Ajinkya is the Company's Treasurer and Chief Financial
Officer. From 1986 to the present, Mr. Ajinkya owned and operated A.J.'s
International Inc., a public accounting firm. Between 1981 and 1986 he was a
vice-president with Fidelity Federal Savings of Florida and acted in the
position of internal auditor. In 1964 he graduated from Bombay University in
India with a Bachelor of Commerce degree. He was licensed as a Chartered
Accountant in 1964 by the Institute of Chartered Accountants of India, and holds
other professional certificates as well.
Directors serve for a term of one year or until their successors are
elected and qualified.
Executive officers are appointed by and serve at the will of the Board
of Directors. As described above, there are family relationships among the
directors and executive officers of the Company.
ITEM 6. EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid by the
Company to the chief executive officer and the most highly compensated executive
officers and key employees whose total remuneration exceeded $100,000 for
services rendered in all capacities to the Company during the last three
completed fiscal years.
<TABLE>
<CAPTION>
(a) (b) (c) (d)
Name and principal position Year Salary % Bonus for Revenues
- ---------------------------- ---- ------ Derived from Merchant
Services
---------------------
<S> <C> <C> <C>
Derek G. Dunn 1999 30,000 5% of 1,000,000;
President/Director 4% of $1,000,001-2,000,000;
3% of $2,000,001-3,000,000;
2% of $3,000,001-4,000,000;
1% over $4,000,000
Lynn Dunn 1999 30,000 5% of $1,000,000;
Vice President/Director 4% of $2,000,001-2,000,000;
3% $2,000,001-3,000,000;
2% $3,000,001-4,000,000;
1% over $4,000,000
Jennifer Dunn 1999 -0- -0-
Arvind B. Ajinkya 1999 (1) -0-
</TABLE>
- --------------------------------------------------------------------------------
(1)compensation under April 14, 1999 written employment agreement to be 5000
shares of restricted common stock per month for one year.
There are no employment agreements with any other executive officer or employee.
-14-
<PAGE>
Director Compensation
Directors currently receive no cash compensation for their services in
that capacity. Reasonable out of pocket expenses may be reimbursed to directors
in connection with attendance at meetings.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In January, 1999, bridge loans of $39,000 were obtained from five (5)
non-affiliated lenders ("Lenders") which were used for the expenses relating to
our private placement, and for other immediate working capital needs. The
Lenders received convertible notes which required the loans be repaid within
twelve (12) months or, at the option of the Lenders, be converted into the
Company's common shares at the rate of $.10 per share for a maximum 390,000
shares. These notes were converted in April 1999.
In January 1999, we engaged U.S. Realty Group, Inc. as a consultant
regarding the management and operations of the Company, future financings, and
for potential acquisitions. The consultant is to devote up to one day per month
at the request of the Company for advice and assistance. In exchange for the
consultant's services we have granted the consultant options to purchase four
hundred thousand (400,000) shares of our common stock at a price of $.01 per
share An identical consulting agreement was entered with Fidelity MFG, Inc. for
400,000 options. Fidelity MFG, Inc. is wholly-owned by Julien Ferretti, the
Company's board chairman. Mr. Ferretti received an additional 30,000 options
also exercisable at $.01 per share, upon joining the Company. These 830,000
options were exercised in April, 1999.
In addition, the Company has agreed to pay these consultant(s)
additional compensation, if by virtue of consultant's introduction, the Company
consummates a financing transaction. Consultant(s) shall be entitled to a
finder's fee of 3% on the first $1,000,000, 2% of the next $1,000,000 and 1% of
the next $1,000,000. Fidelity MFG and U.S. Realty disclaim any relationship as
"promoter".
On April 5, 1999, the Company issued B Warrants in the following
amounts at $0.01 per warrant to consultants and to others for services rendered
to the Company:
David Brandes 200,000
E-Z Mortgage Finance Co. 300,000(1)
Julian Ferretti 250,000
Doug Meyers 50,000
Sherri Simpson 50,000
________________________________________________
(1)E-Z Mortgage is 80% owned by U.S. Realty Group, Inc.
The Company has issued a total of 1,040,000 warrants and B warrants.
-15-
<PAGE>
ITEM 8. DESCRIPTION OF SECURITIES
The Company is authorized to issue six million (6,000,000) shares of
Common Stock, $.01 par value per share of which 4,410,000 are outstanding as of
May 3, 1999. The holders of Common Stock have one vote per share on all matters
(including election of directors) without provision for cumulative voting. Thus,
except as is otherwise required by law, holders of more than 50% of the shares
voting for the election of directors can elect all of the directors, and approve
any matter required to be voted on by the shareholders. The Common Stock is not
redeemable and has no conversion or preemptive rights. There are no sinking fund
provisions. In the event of liquidation of the Company, the holders of Common
Stock will share equally in any balance. Common stockholders are entitled to
receive dividends, as and when declared by the Board of Directors from funds
legally available therefrom. The Company has paid no cash or other dividends on
its Common Stock to date. The common shareholders are entitled to receive the
Company's assets remaining after payment of liabilities, proportionate to their
pro rata ownership of the outstanding Common Stock. All common shares now
outstanding are, and the shares to be outstanding following completion of this
Offering, will be fully paid and non-assessable.
We have issued Warrants to investors in our private placement, and B
Warrants to certain consultants and others in exchange for services. The
warrants are redeemable by the Company, on 30 days written notice at a price of
$.0001 per Warrant, beginning one year from the Extended Termination Date of
this Offering, subject to prior exercise, should the common stock trade at a
closing bid price of at least $3.00 per share for twenty (20) consecutive
trading days. The notice of redemption may not be given prior to July 23, 2000.
In the event that the Company gives notice of redemption of the Warrants, the
holder would be forced to either exercise his Warrants or accept the redemption
price. The Warrants may not be exercised for one (1) year from July 23, 2000,
and shall expire on or before the close of business two (2) years thereafter,
July 23, 2002 , unless extended. The Company may also offer up to one million
(1,000,000) B Warrants to consultant(s), service providers and/or registered
broker-dealers at a per warrant price of $.01. The B Warrants are exercisable
and redeemable under the same terms as the Warrants.
The warrants will be issued in registered form. The warrants do not
confer upon the holders any voting, preemptive or other rights as shareholders
of the Company.
The exercise price of the warrants and the number and kind of shares of
Common Stock to be obtained upon exercise of the warrants are subject to
adjustment under certain circumstances, including stock-splits, stock dividends,
any subdivision, combination or recapitalization of the Company's common stock,
or the sale of all or substantially all of the Company's assets or the merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving Company.
No fractional shares will be issued upon the exercise of the warrants.
If, however, a Warrant Holder exercised all of such holder's warrants, the
Company will pay to such Warrant Holder an amount in cash based upon the then
fair value of the fractional interest of the
-16-
<PAGE>
Company's common stock as determined by the Company in lieu of issuing any
fractional shares.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS
There is no public market for our common shares. The Company has
twenty-six (26) total common shareholders. Holders of Common Stock are entitled
to dividends when, as, and if declared by the Board of Directors, out of funds
legally available therefor. The Company has never paid cash dividends on its
Common Stock. The Board of Directors does not anticipate paying cash dividends
in the foreseeable future as it intends to retain future earnings to finance the
growth of the Company's businesses. The payment of future cash dividends will
depend on such factors as earnings levels, anticipated capital requirements, the
operating and financial condition of the Company and its subsidiaries and such
other factors that the Board of Directors of the Company may deem relevant.
ITEM 2. LEGAL PROCEEDINGS
There are no legal proceedings presently pending or threatened against
the Company.
ITEM3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes or disagreements with accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
At the time of the Company's formation in October 1998, we issued
3,000,000 shares of common stock to Derek Dunn in exchange for $30,000 and
services rendered. This transaction was in reliance on Section 4(2) of the
Securities Act of 1933 as it did not involve a public offering.
In January 1999, $39,000 of bridge loans were advanced by five (5)
lenders ("Lenders"). The Lenders received convertible notes which required the
loans be repaid within twelve (12) months or, at the option of the Lenders, be
converted into the Company's common shares at the rate of $.10 per share for a
maximum 390,000 shares. On April 2, 1999, the Lenders exercised their conversion
rights. This transaction was in reliance on Regulation D, Rule 504.
In January 1999, we engaged U.S. Realty Group, Inc. as a consultant
regarding the management and operations of the Company, as well as future
financings, and acquisitions. The consultant is to devote up to one day per
month at the request of the Company for advice and assistance. In exchange for
the consultant's services, we have granted the consultant options to purchase
four hundred thousand (400,000) shares of our common stock at a price of $.01
per
-17-
<PAGE>
share. These options were exercised on March 31,1999. An identical consulting
agreement was entered with Fidelity MFG, Inc. for 400,000 options. Fidelity MFG
is solely owned by Julien Ferretti, the Company's board chairman. We also issued
Mr. Ferretti an additional 30,000 options exercisable at $.01 per share, upon
joining the Company. These options were exercised on April 2, 1999. These
transactions were in reliance on Regulation D, Rule 504.
On March 25, 1999, we commenced a private placement of 300,000 Units,
Each Unit consists of one (1) share of common stock, $.01 par value, and one (1)
redeemable Warrant, which when exercised entitles the holder to one (1) share of
common stock at an exercise price of one ($1.00) dollar, subject to adjustment
under certain circumstances. The Warrants are redeemable by the Company at any
time after one year from July 23, 2000, on thirty (30) days written notice
(which notice may not be given prior to the one year period) at a price of
$.0001 per Warrant, subject to prior exercise, should the common stock trade at
a closing bid price of at least three ($3.00) dollars per share for twenty (20)
consecutive trading days. The Warrants may not be exercised for one (1) year
from July 23, 2000, and shall expire on or before the close of business two (2)
years thereafter, July 23, 2002 , unless extended. To date we have sold 190,000
Units resulting in net proceeds to the Company of $190,000. This private
placement was in reliance on Regulation D, Rule 504.
On April 5, 1999, the Company issued B Warrants in the following
amounts at $0.01 per warrant and for services rendered to the Company, in
reliance on Regulation D, Rule 504:
David Brandes 200,000
E-Z Mortgage Finance Co. 300,000
Julian Ferretti 250,000
Doug Meyers 50,000
Sherri Simpson 50,000
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation of the Company allow for the
indemnification of directors and officers to the fullest extent permitted by
Florida law. Under a provision in the Articles of Incorporation, the Company
will indemnify and pay the expenses of any person who is or was made, or
threatened to be made, a party to an action or proceeding by reason of the fact
that such person is or was a director or officer of the Company or is or was
serving at the request or with the prior approval of the Company as a director
or officer of another corporation, against any liability asserted against such
person and incurred by such person in any capacity arising out of that person's
status as such.
Insofar as indemnification for liabilities arising out of the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provision, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director,
-18-
<PAGE>
officer or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with any securities being registered, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
-19-
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibit
Number Description
====== ===========
2-a Articles of Incorporation
2-b Articles of Amendment to Articles of Incorporation
2-c By-laws
6-a Employment Agreement between Netgen 2000 and Arvind Ajinkya
6-b Financial Consulting Agreement between
Netgen 2000 and US Realty Group
6-c Financial Consulting Agreement between Netgen 2000 and
Fidelity MFG
SIGNATURES
In accordance with 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.
NETGEN 2000, INC.
a Florida corporation
Date: June 3 , 1999 By: /s/ Derek G. Dunn
------------------------
Derek G. Dunn, President
Chief Executive Officer
-20-
<PAGE>
PART F/S
FINANCIAL STATEMENTS
The following financial statements are filed as part of this
registration statement on Form 10-SB.
Index to Financial Statements:
Independent Auditors Report for the period
October 22, 1998 (inception) to December 31, 1998 ...................F2
Table of Contents ...................................................F3
Balance Sheet as of December 31, 1998 ...............................F4
Statement of Operations for the period
October 22, 1998 (inception) to December 31, 1998 ...................F5
Statement of Stockholders' Equity for the period
October 22, 1998 (inception) to December 31, 1998 ...................F6
Statement of Cash Flows for the period
October 22, 1998 (inception) to December 31, 1998 ...................F7
Notes to Financial Statements, December 31, 1998 ....................F8
Table of Contents to Unaudited Financial Statements
For the period January 1, 1999 to May 31, 1999 ......................F9
Balance Sheet as of May 31, 1999 ...................................F10
Statement of Operations for the period
January 1, 1999 to May 31, 1999.....................................F12
Statement of Stockholders' Equity for the period
January 1, 1999 to May 31, 1999 ....................................F13
Statement of Cash Flows for the period
January 1, 1999 to May 31, 1999 ....................................F14
Notes to Financial Statements May 31, 1999 .........................F15
F1
<PAGE>
JOHN R MULDOWNEY
CERTIFIED PUBLIC ACCOUNTANT
4524 Gun Club Road, suite 102,West Palm Beach, Florida 33415
Telephone [561]471-0400 * Fax [561] 471-2771
Independent Auditor's Report
To The Board Of Directors and Stockholders
Netgen 2000 Inc.
224 Datura Street, Suite 402
West Palm Beach, Fl 33401
I have audited the accompanying Balance Sheet of Netgen 2000 Inc. As of December
31,1998, and related Statement Of Operations, Stockholders' Equity, and Cash
Flows for the period October 22,1998 [Inception] to December 31,1998. 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 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 Netgen 2000 Inc. As of December
31,1998, and the results of its operations and its cash flows for the period
then ended in conformity with generally accepted accounting principles.
/s/ John R. Muldowney
John R. Muldowney
Certified Public Accountant
March 2,1999
MEMBER:
American Institute Of Certified Public Accountants. Near York Society Of
Certified Public Accountants. New Jersey Society Of Certified Public
Accountants. Foundation For Accounting Education
F2
<PAGE>
NETGEN 2000 INC.
FINANCIAL STATEMENTS
December 31,1998
TABLE OF CONTENTS PAGE
- ----------------- ----
INDEX 1
BALANCE SHEET 2
STATEMENT OF OPERATIONS 3
STATEMENT OF STOCKHOLDERS' EQUITY 4
STATEMENT OF CASH FLOWS 5
NOTES TO FINANCIAL STATEMENTS 6
F3
<PAGE>
NETGEN 2000 INC.
BALANCE SHEET
December 31,1998
ASSETS
------
CURRENT ASSETS
Cash In Bank $ -0-
TOTAL CURRENT ASSETS: $ -0
FIXED ASSETS
Computer Equipment $ 3,500
TOTAL FIXED ASSETS: $ 3,500
OTHER ASSETS
Organizational Costs, Net of
Accumulated Amortization $ 26,293
TOTAL OTHER ASSETS: $ 26,293
--------
TOTAL ASSETS: $ 29,793
========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRET LIABILITIES
TOTAL CURRENT LIABILITIES: $ -0-
OTHER LIABILITIES
TOTAL OTHER LIABILITIES: $ -0-
STOCKHOLDERS' EQUITY
Common Stock-- $ 0.01 Par Value
6,000,000 Shares Authorized,
3,000,000 Shares Issued & Outstanding $ 30,000
Paid In Capital 700
Retained Earnings [Deficit] [907]
TOTAL STOCKHOLDERS, EQUITY $ 29,793
--------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY: $ 29,793
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE FINANCIAL STATEMENTS
-2 -
F4
<PAGE>
NETGEN 2000 INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD OCTOBER 22,1998 [INCEPTION] TO DECEMBER 31,1998
REVENUES: $ -0-
TOTAL REVENUES: $ -0-
EXPENSES:
Amortization $ 907
-------
TOTAL EXPENSES: $ 907
-----
NET INCOME [LOSS]: $[907]
=====
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS
-3 -
F5
<PAGE>
NETGEN 2000 INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD OCTOBER 22,1998 [INCEPTION] TO DECEMBER 31,1998
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN EARNINGS
SHARES AMOUNT CAPITAL [DEFICIT] TOTAL
------ ------ ------- --------- -----
<S> <C> <C> <C> <C> <C>
Beginning Bal -0- $ -0- $ -0- $ -0- $ -0-
Issuance Of
Common Stock: 3,000,000 $ 30,000 $ 700 $ -0- $30,700
Net [Loss] -0- -0- -0- $ [907] $ [907]
--------- --------- ------ ------- -------
Balance at
End of Year 3,000,000 $ 30,000 $ 700 $ [907] $29,793
========= ========= ====== ======= =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS
-4-
F6
<PAGE>
NETGEN 2000 INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD OCTOBER 22,1998 [INCEPTION] TO DECEMBER 31,1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net [Loss] $ [907]
[Increase] in Organization Costs [27,200]
Increase in Accumulated Amortization 907
Increase in Fixed Assets [ 3,500]
--------
NET CASH USED BY OPERATING ACTIVITIES $[30,700]
NET CASH PROVIDED BY INVESTING ACTIVITIES $ -0-
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Issuance of Common Stock $ 30,700
--------
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 30,700
NET INCREASE IN CASH -0-
BEGINNING CASH $ -0-
--------
ENDING CASH $ -0-
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS
-5-
F7
<PAGE>
NETGEN 2000 INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31,1998
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature Of Business
------------------
Netgen 2000 Inc. [The "Company"] was incorporated on October
22,1998 to provide internet sevice informing the general consumer
about the Health, Medical and Legal fields.
Organizational Costs
--------------------
Organizational Costs of $ 27,200 are being amortized using the
straight line method amd are reported net of accumulated
amortization of $ 907.
-6-
F8
<PAGE>
NETGEN 2000 INC.
UNAUDITED FINANCIAL STATEMENTS
May 31,1999
TABLE OF CONTENTS PAGE
- ----------------- ----
1
INDEX
BALANCE SHEET 2
BALANCE SHEET 3
STATEMENT OF OPERATIONS 4
STATEMENT OF STOCKHOLDERS' EQUITY 5
STATEMENT OF CASH FLOWS 6
NOTES TO FINANCIAL STATEMENTS 7
F9
<PAGE>
NETGEN 2000 INC.
BALANCE SHEET
May 31,1999
ASSETS
------
CURRENT ASSETS
Cash In Bank $ 3,819
Investment Account 105,211
---------
TOTAL CURRENT ASSETS: $ 109,030
FIXED ASSETS
Computer Equipment $ 7,980
Furniture & Fixtures 405
---------
TOTAL FIXED ASSETS: $ 8,385
OTHER ASSETS
Deposit $ 2,000
Organizational Costs, Net of
Accumulated Amortization 24,026
---------
TOTAL OTHER ASSETS: $ 26,026
---------
TOTAL ASSETS: $ 143,441
=========
THE ACCOMPANYING NOTES ARE AN
INTEGRAL PART OF THE FINANCIAL STATEMENTS
-2-
F10
<PAGE>
NETGEN 2000 INC.
BALANCE SHEET
May 31,1999
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
TOTAL CURRENT LIABILITIES: $ -0-
OTHER LIABILITIES
TOTAL OTHER LIABILITIES: $ -0-
STOCKHOLDERS' EQUITY
Common Stock-- $ 0.01 Par Value
6,000,000 Shares Authorized,
4,410,000 Shares issued & Outstanding $ 44,100
Warrants-- $ 0.0 I Par Value
2,000,000 Warrants Authorized
1,040,000 Wanants Issued & Outstanding 10,400
Paid In Capital 193,200
Retained Earnings [ 907]
Current Earnings [103,352]
---------
TOTAL STOCKHOLDERS, EQUITY $ 143,341
---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY: $ 143,441
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS
-3-
F11
<PAGE>
NETGEN 2000 INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 01,1999 TO MAY 31,1999
REVENUES:
Dividends $ 54
TOTAL REVENUES: $ 54
EXPENSES:
Amortization $ 2,267
Office Supplies 1,965
Graphic Design. Exp. 6,858
Webbsite/Internet Service 6,787
Secretarial Services 6,590
Professional Fees 30,275
Consultation Fees 12,093
Rent 5,570
Telephone 3,499
Research/Production Exp. 3,480
Equipment Rental 431
Contract Labor 15,675
Telemarketing/Associate Prog. 7,492
Travel & Seminar 364
Dues 60
-------
TOTAL EXPENSES: $ 103,406
---------
NET INCOME [LOSS]: $[103,352]
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE FINANCIAL STATEMENTS
-4-
F12
<PAGE>
NETGEN 2000 INC.
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD JANUARY 01,1999 TO MAY 31,1999
ADDITIONAL
COMMON STOCK PAID-IN EARNINGS
SHARES AMOUNT CAPITAL [DEFICIT] TOTAL
------ ------ ------- --------- -----
Beginning Bal -0- $ -0- $ -0- $ -0- $ -0-
Issuance Of
Common Stock: 4,410,000 $ 44,100 $193,200 $ -0- $ 237,300
Issuance Of
Warrants 1,040,000 $ 10,400 -0- $ -0- $ 10,400
Net [Loss] -0- -0- -0- $[104,259] $[104,259]
--------- --------- --------- --------- ---------
Balance at
End of Year 5,450,000 $ 54,500 $ 193,200 $[104,259] $ 143,441
========= ========= ========= ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS
-5-
F13
<PAGE>
NETGEN 2000 INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 01, 1999 TO MAY 31, 1999
CASH FLOWS FROM OPERATION ACTIVITIES
Net [Loss] $[103,352]
[Increase] in Organization Costs [ 27,200]
Increase in Accumulated Amortization 2,267
[Increase] in Fixed Assets [ 8,385]
[Increase] in Deposits [ 2,000]
---------
NET CASH USED BY OPERATING ACTIVITIES $[138,670]
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES
Loans $ -0-
---------
NET CASH PROVIDED BY INVESTING ACTIVITIES $ -0-
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Issuance of Common Stock $ 237,300
Issuance of [A] Warrants 10,400
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES $ 247,700
NET INCREASE IN CASH $ 109,030
BEGINNING CASH $ -0-
---------
ENDING CASH $ 109,030
=========
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS
-6-
F14
<PAGE>
NETGEN 2000 INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31,1999
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature Of Business
------------------
Netgen 2000 Inc. [The "Company"] was incorporated on October
22,1998 to provide internet service, informing the general
consumer about the Health, Medical and Legal fields.
Organizational Costs
--------------------
Organizational Costs of $27,200 are being amortized using
the straight line method and are reported net of accumulated
amortization of $ 3,174.
Loans
-----
The Company had borrowed money in the amount of $ 39,000 to
meet the expenses of Stock Offering and has given the
creditors option to convert the loans to the shares of Stock
in the Company. As of this date the Creditors have exercised
their option to convert the loan amount of S 39,000 into
390,000 shares of Common Stock of the Company.
Investment Account
------------------
The Company has invested the capital received into Federal
Farm Credit Bonds earning dividends @ 5.50%, which can be
easily converted back into cash when needed.
-7-
F15
[Graph Omitted]
State of Florida
[LOGO]
Department of State
I certify the attached is a true and correct copy of the Articles of
Incorporation of NETGEN 2000, INC., a Florida corporation, filed on October 22,
1998, as shown by the records of this office.
The document number of this corporation is P98000090003.
Given under my hand and the
Great Seal of the State of Florida
at Tallahassee, the Capitol, this the
Twenty-second day of October, 1998
/s/ Sandra B. Mortham
Sandra B. Mortham
Secretary of State
<PAGE>
ARTICLES OF INCORPORATION
OF
NETGEN 2000, INC.
---------------------------------------------------------
WE, the undersigned, associate ourselves to become a Florida
corporation.
ARTICLE I:
----------
The name of the corporation shall be: NETGEN 2000, INC., and shall have
perpetual existence.
ARTICLE II:
-----------
The general nature of the business to be transacted is miscellaneous
and shall be any lawful business for the State of Florida and all acts properly
incidental thereto.
ARTICLE III:
------------
The magnum authorized capital stock of this corporation shall be One
Thousand (1,000) shares of the common e-rock of One ($1.00) dollar par value
each, fully paid and non-assessable.
ARTICLE IV:
-----------
The amount of capital with which this corporation shall commence
business shall not be less than $500.00.
ARTICLE V:
----------
The business of this corporation shall be conducted by a Board of
Directors consisting of one or more persons.
The officers of this corporation shall be a President, Secretary and
Treasurer, and such other officers as shad be appointed in accordance with the
By-Laws of this Corporation.
ARTICLE VI:
-----------
The names and addresses of the members of the first Board of Directors
who shall hold office from the organization of this corporation until their
successors are elected and have qualified are:
1
<PAGE>
NAME/OFFICE ADDRESS
----------- -------
Derek G. Dunn 224 Datura Street Suite 402
President West Palm Beach, FL 33401
James Devey 224 Datura Street, Suite 402
Vice President West Palm Beach, FL 33401
ARTICLE VII:
------------
The principal office of said corporation shall be: 224 Datura Street, Suite 402
West Palm Beach, FL 33401.
ARTICLE VIII:
-------------
The names and street addresses of the subscribers to these Articles of
Incorporation are:
NAME ADDRESS
---- -------
Derek G. Dunn 224 Datura Street, Suite 402
West Palm Beach, FL 33401
James Devey 5018 Palm Beach Canal Road
West Palm Beach, FL 33415
ARTICLE IX:
-----------
The Board of Directors shall initially have the power to enact By-Laws,
but upon By-Laws being enacted and adopted, no amendment to them shall
thereafter be made, except by the stockholders.
ARTICLE X:
----------
No amendment to these Articles of Incorporation can be made except upon
the affirmative vote of holders of record of Fifty-One (51%) percent of the
stock of the corporation.
ARTICLE XI:
-----------
In pursuance of Chapter 48.091, Florida Statutes, the following
Designatio of Resident Agent is by this Article, submitted in compliance with
said Act:
2
<PAGE>
First, that we, desiring to organize under the laws of the State of
Florida, with its principal office as indicated under Article VII of this
certificate, at the City of West Palm Beach, County of Palm Beach, has named
Derek G. Dunn, of NETGEN 2000, Inc., as its Resident Agent to accept service of
process within this State.
ACKNOWLEDGEMENT
---------------
Having been named to accept service of process for the above named
corporation at the place designated in this Certificate of Articles of
Incorporation, I, Derek G. Dunn, do hereby accept to act in this capacity, and
do agree to comply withy provision, - said Act relative to keeping open. said
office.
DATED 10-20-98 /s/ DEREK G. DUNN
DEREK G. DUNN
ARTICLE XII:
------------
Each of the original Incorporators of this corporation shall have the
right, after organization of same, to assign and deliver his subscription of
stock herein to any other person or persons who may hereafter become subscribers
to the capital stock of this corporation, who upon acceptance of such assignment
shall stand in lieu of said original incorporator and assume and carry out all
the rights, liabilities and duties entailed by said subscription subject to the
laws of the State of Florida, and the execution of this power.
IN WITNESS WHEREOF, WE have set our names at West Palm Beach, Florida,
this the 20th day of October, 1998.
WITNESSED BY:
/s/ MELISA SIEBERG /s/ DEREK G. DUNN
- --------------------- ----------------------
DEREK G. DUNN
/s/ L P Dunn /s/ JAMES DEVEY
- --------------------- ----------------------
JAMES DEVEY
STATE OF FLORIDA )
SS:
COUNTY OF PALM BEACH )
3
<PAGE>
BEFORE ME, the undersigned authority, personally appeared Derek G. Dunn
& James Devey, to me well known to be the persons who executed the foregoing
Articles of Incorporation of NETGEN 2000, Inc., and they acknowledged before me
that they executed the same for the purposes therein expressed.
WITNESS my hand and official seal at West Palm Beach, Florida, this the
20th day of October, 1998.
/s/ MELISA SIEBERG
----------------------
NOTARY PUBLIC
MELISA SIEBERG
(X) Personally known
____I.D. Provided MELISA D. SIEBERG
Type of I.D. Provided: [logo] COMMISSION # CC 54472
_____________________ EXPIRES APR 02, 2000
BONDED THRU
ATLANTIC BONDING CO., INC.
4
<PAGE>
[logo] [Aj's International] INC. 4524 Gun Club Road, # 102, W.P.B., FL 33415
407/471-0400 ACCOUNTING TAXES FINANCE
February 3,1999
Florida Department Of State
Division Of Corporations
P.O. Box 6327, Tallahassee, Fl 32314
Gentlemen:
Re: NETGEN 2000 INC.
# P98000090003
Please find enclosed two copies of Articles of Amendment to Articles of
Incorporation to be recorded in the permanent records. We would appreciate your
cooperation in processing these papers. We have enclosed a check for the amount
of $35.00 to cover the expenses.
If you need further information please let us know.
Sincerely,
/s/ Arvind B. Ajinkya
Arvind B. Ajinkya
Manager
5
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
____________________________________________________________
NETGEN 2000, INC.
____________________________________________________________
(present name)
Pursuant to the provisions of section 607.1006, Florida Statutes, this
corporation adopts the following articles of amendment to the articles of
incorporation:
FIRST: Amendment(s) adopted: (indicate article number(s) being amended, added or
deleted) ARTICLE III, AUTHORIZED CAPITAL STOCK, being amended as follows:
The maximum authorized capital stock of this corporation shall be:
Six Million ( 6,000,000) shares of the common stock of One Cent ($0.01 )
par value each.
SECOND: If an amendment provides for an exchange, reclassification or
cancellation of issued shares, provisions for implementing the
amendment if not contained in the amendment itself, are as follows:
N/A
THIRD: The date each amendment's adoption: February 3,1999
FOURTH: Adoption of Amendment(s) (check one)
___ The amendment(s) was/were adopted by the incorporators without
shareholder action and shareholder action was not required.
x The amendment(s) was/were adopted by the board of directors without
shareholder action and shareholder action was not required.
___ The amendment(s) was/were approved by the shareholders. The number of
Votes cast for the amendment(s) was/were sufficient for approval.
___ The amendment(s) was/were approved by the shareholders through voting
groups.
[The following statement must be separately provided for each
voting group entitled to vote separately on the amendment(s).]
The number of votes cast for the amendment(s) was/were sufficient
for approval by ______________________.
(voting group)
(continued)
1
<PAGE>
Signed this 3rd day of February, 1999.
By /s/ Derek Dunn
--------------------------------------------------------
(Chairman or Vice Chairman of the Board of Directors,
President or other officer if adopted by the
shareholders)
Or
(A director or incorporator if adopted by the directors
or incorporators)
Derek G. Dunn
--------------------------------------------------------
(Typed or printed name)
Director
--------------------------------------------------------
(Title)
2
CORPORATE BYLAWS
ARTICLE I. MEETINGS OF SHAREHOLDERS
-----------------------------------
Section 1. Annual Meeting. The annual shareholder meeting of thee above
named corporation will be held on the _______ day of _____________, of each year
or at such other time and place as designated by the Board of Directors of the
above named corporation provided that if said day falls on a Sunday or legal
holiday, then the meeting will be held on the first business day thereafter.
Business transacted at said meeting will include the election of directors of
the above named corporation.
Section 2. Special Meetings. Special meetings of the shareholders will
be held-when directed by the President, Board of Directors, or the holders of
not less than 10 percent of all the shares entitled to be cast on any issue
proposed to be considered at the proposed special meeting; provided that said
persons sign, date and deliver to the above named corporation one or more
written demands for the meeting describing the purposes(s) for which it is to be
held. A meeting requested by shareholders of the above named corporation will be
called for a date not less than 10 nor more than 60 days after the request is
made, unless the shareholders requesting the meeting designate a later date. The
call for the meeting will be issued by the Secretary, unless the President,
Board of Directors or shareholders requesting the meeting designate another
person to do so.
Section 3. Place. Meetings of shareholders will be held at the
principal place of business of the above named corporation or at such other
place as is designated by the Board of Directors.
Section 4. Record Date and List of Shareholders. The Board of Directors
of the above named corporation shall fix the record date; however, in no event
may a record date fixed by the Board of Directors be a date prior to the date on
which the resolution fixing the record date is adopted.
After fixing a record date for a meeting, the Secretary shall prepare
an alphabetical list of the names of all the above named corporations
shareholders who are entitled to notice of a shareholders, meeting, arranged by
voting group with the address of and the number and class and series, if any, of
shares held by each. Said list shall be available for inspection in accordance
with Florida Law.
1 of 11
<PAGE>
Section 5. Notice. Written notice stating the place, day and hour of
the meeting, and the purpose(s) for which said special meeting is called, will
be delivered not less than 10 nor more than 60 days before the meeting, either
personally or by first class mail, by or at the direction of the President, the
Secretary or the officer or persons calling the meeting to each shareholder of
record entitled to vote at such meeting. If mailed, such notice will be deemed
to be effective when deposited in the United States mail and addressed to the
shareholder at the shareholder's address as it appears on the stock transfer
books of the above named corporation, with postage thereon prepaid.
The above named corporation shall notify each shareholder, entitled to
a vote at the meeting, of the date, time and place of each annual and special
shareholders' meeting no fewer than 10 or more than 60 days before the meeting
date. Notice of a special meeting shall describe the purpose(s) for which the
meeting is called. A shareholder may waive any notice required hereunder either
before or after the date and time stated in the notice; however, the waiver must
be in writing, signed by the shareholder entitled to the notice and be delivered
to the above named corporation for inclusion in the minutes or filing in the
corporate records.
Section 6. Notice of Adjourned Meeting. When a meeting is adjourned to
another time or place, it will not be necessary to give any notice of the
adjourned meeting provided that the time and place to which the meeting is
adjourned are announced at the meeting at which the adjournment is taken. At
such an adjourned meeting, any business may be transacted that might have been
transacted on the original date of the meeting. If, however, a new record date
for the adjourned meeting is made or is required, then, a notice of the
adjourned meeting will be given on the new record date as provided in this
Article to each shareholder of record entitled to notice of such meeting.
Section 7. Shareholder Quorum and Voting. A majority of the shares
entitled to vote, represented in person or by proxy, will constitute a quorum at
a meeting of shareholders.
If a quorum, as herein defined, is present, the affirmative vote of a
majority of the shares represented at the meeting and entitled to vote on the
subject matter thereof will be the act of the
2 of 11
<PAGE>
shareholders unless otherwise provided by law.
Section 8. Voting of Shares. Each outstanding share will be entitled to
one vote on each matter submitted to a vote at a meeting of shareholders.
Section 9. Proxies. A shareholder may vote either in person or by proxy
provided that any and all proxies are executed in writing by the shareholder or
his duly authorized attorney-in-fact. No proxy will be valid after the duration
of 11 months from the date thereof unless otherwise provided in the proxy.
Section 10. Action by Shareholders Without a Meeting. Any action
required or permitted by law, these bylaws, or the Articles of Incorporation of
the above named corporation to be taken at any annual or special meeting of
shareholders may be taken without a meeting, without prior notice and without a
vote, provided that the action is taken by the holders of outstanding stock of
each voting group entitled to vote thereon having not less than the minimum
number of votes with respect to each voting group that would be necessary to
authorize or take such action at a meeting at which all voting groups and shares
entitled to vote thereon were present and voted, as provided by law. The
foregoing actions(s) shall be evidenced by written consents describing the
action taken, dated and signed by approving shareholders having the requisite
number of votes of each voting group entitled to vote thereon and delivered to
the above named corporation in accordance with Florida Law. Within 10 days after
obtaining such authorization by written consent, notice shall be given to those
shareholders who have not consented in writing or who are not entitled to vote.
Said notice shall fairly summarize the material features of the authorized
action and if the action requires the providing of dissenters' rights, said
notice will comply with the disclosure requirements pertaining to dissenters'
rights of Florida Law.
ARTICLE II. DIRECTORS
---------------------
Section 1. Function. All corporate powers, business, and affairs will
be exercised, managed and directed under the authority of the Board of
Directors.
Section 2. Qualification. Directors must be natural persons of 18 years
of age or older but need not be residents of this state and need not be
shareholders of the above named corporation.
3 of 11
<PAGE>
Section 3. Compensation. The Board of Directors will have authority to
fix the compensation for directors of the above named corporation.
Section 4. Presumption of Assent. A director of the above named
corporation who is present at a meeting of the Board of Directors at which
action on any corporate matter is taken will be presumed to have assented to the
action taken unless such director votes against such action or abstains from
voting in respect thereto because of an asserted conflict of interest.
Section 5. Number. The above named corporation will have ________
director(s).
Section 6. Election and Term. Each person named in the Articles of
Incorporation as a member of the initial Board of Directors will hold office
until said directors will have been qualified and elected at the first annual
meeting of shareholders, or until said directors earlier resignation, removal
from office or death.
At the first annual meeting of shareholders and at each annual meeting
thereafter, the shareholders will elect directors to hold office until the next
annual meeting. Each director will hold office for a term for which said
director is elected until said director's successor will have been qualified and
elected, said director's prior resignation, said director's removal from office
or said director's death.
Section 7. Vacancies. Any vacancy occurring in the Board of Directors
will be filled by the affirmative vote of a majority of the shareholders or of
the remaining directors even though less than a quorum of the Board of
Directors. A director elected to fill a vacancy will hold office only until the
next election of directors by the shareholders.
Section 8. Removal and Resignation of Directors. At a meeting of
shareholders called expressly for that purpose, any director or the entire Board
of Directors may be removed, with or without cause, by a vote of the holders of
a majority of the shares then entitled to vote at an election of directors.
A director may resign at any time by delivering written notice to the
Board of Directors or its chairman or to the above named corporation by and
through one of its officers. Such a resignation is effective when the notice is
delivered unless a later effective
4 of 11
<PAGE>
date is specified in said notice.
Section 9. Quorum and Voting. A majority of the number of directors
fixed by these Bylaws shall constitute a quorum for the transaction of business.
The act of a majority of the directors present at a meeting at which a quorum is
present will be the act of the Board of Directors.
Section 10. Executive and Other Committees. A resolution, adopted by a
majority of the full Board of Directors, may designate from among its members an
executive committee and/or other committee(s) which will have and may exercise
all the authority of the Board of Directors to the extent provided in such
resolution, except as is provided by law. Each committee must have two or more
members who serve at the pleasure of the Board of Directors. The board may, by
resolution adopted by a majority of the full Board of Directors, designate one
or more directors as alternate members of any such committee who may act in the
place and instead of any absent member or members at any meeting of such
committee.
Section 11. Place of Meeting. Special or regular meetings of the Board
of Director" will be held within or without the State of Florida.
Section 12. Notice, Time and Call of Meetings. Regular meetings of the
Board of Directors will be held without notice on such dates as are designated
by the Board of Directors. Written notice of the time and place of special
meetings of the Board of Directors will be given to each director by either
personal delivery, telegram or cablegram at least two (2) days before the
meeting or by notice mailed to the director at least five (5) days before the
meeting.
Notice of a meeting of the Board of Directors need not be given to any
director who signs a waiver of notice either before or after the meeting.
Attendance of a director at a meeting will constitute a waiver of notice of such
meeting and waiver of any and all objections to the place of the meeting, the
time of the meeting, or the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, any objection to
the transaction of business because the meeting is not lawfully called or
convened.
Neither the business to be transacted nor the purpose of, regular or
special meetings of the Board of Directors need be specified in the
5 of 11
<PAGE>
notice or waiver of notice of such meeting.
A majority of the directors present, whether or not a quorum exists,
may adjourn any meeting of the Board of Directors to another time and place.
Notice of any such adjourned meeting will be given to the directors who were not
present at the time of the adjournment.
Meetings of the Board of Directors may be called by the Chairman of the
Board, the President of the above named corporation or any two directors.
Members of the Board of Directors may participate in a meeting of such
board by means of a conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other at
the same time. Participation by such means shall constitute presence in person
at a meeting.
Section 13. Action Without a Meeting. Any action required to be taken
at a meeting of the Board of Directors, or any action which may be taken at a
meeting of the Board of Directors or a committee thereof, may be taken without a
meeting if a consent in writing, setting forth the action to be so taken, signed
by all the directors, or all the members of the committee, as the case may be,
is filed in the minutes of the proceedings of the board or of the committee.
Such consent will have the same effect as a unanimous vote.
ARTICLE III. OFFICERS
---------------------
Section 1. Officers. The officers of the above named corporation will
consist of a president, a vice president, a secretary and a treasurer, each of
whom will be elected by the Board of Directors. Such other officers and
assistant officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors from time to time. Any two or more offices
may be held by the same person.
Section 2. Duties. The officers of the above named corporation will
have the following duties:
The President will be the chief executive officer of the above named
corporation, who generally and actively manages the business and affairs of the
above named corporation subject to the directions of the Board of Directors.
Said officer will preside at all meetings of the shareholders and Board of
Directors. The Vice President will, in the event of the absence or inability of
the President to exercise his office, become acting president of
6 of 11
<PAGE>
the organization with all the rights, privileges and powers as if said person
had been duly elected president.
The Secretary will have custody~of, and maintain all of the corporate
records except the financial records. Furthermore, said person will record the
minutes of all meeting" of the shareholders and Board of Directors, send all
notices of meetings and perform such other duties as may be prescribed by the
Board of Directors or the President. Furthermore, said officer shall be
responsible for authenticating records of the above named corporation.
The Treasurer shall retain custody of all corporate funds and financial
records, maintain full and accurate accounts of receipts and disbursements and
render accounts thereof at the annual meetings of shareholders and whenever else
required by the Board of Directors or the President, and perform such other
duties as may be prescribed by the Board of Directors or the President.
Section 3. Removal and Resignation of Officers. An officer or agent
elected or appointed by the Board of Directors may be removed by the Board of
Directors whenever in the Board's judgment the best interests of the above named
corporation will be served thereby.
Any officer may resign at any time by delivering notice to the above
named corporation. Said resignation is effective upon delivery unless the notice
specifies a later effective date.
Any vacancy in any office may be filled by the Board of Directors.
ARTICLE IV. STOCK CERTIFICATES
------------------------------
Section 1. Issuance. Every holder of share(s) in the above named
corporation will be entitled to have a certificate representing all share(s) to
which he is holder. No certificate representing share(s) will be issued until
such share(s) is/are fully paid.
Section 2. Form. Certificates representing share(s) in the above named
corporation will be signed by the President or Vice President and the Secretary
or an Assistant Secretary and will be sealed with the seal of the above named
corporation.
Section 3. Transfer of Stock. The above named corporation will register
a stock certificate presented for transfer if the certificate is properly
endorsed by the holder of record or by his duly authorized agent.
Section 4. Lost, Stolen, or Destroyed Certificates. If a
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<PAGE>
shareholder claims that a stock certificate representing shares issued and
recorded by the above named corporation has been lost or destroyed, a new
certificate will be issued to said shareholder, provided that said shareholder
presents an affidavit claiming the certificate of stock to be lost, stolen or
destroyed. At the discretion of the Board of Directors, said shareholder may be
required to deposit a bond or other indemnity in such amount and with such
sureties, if any, as the board may require.
ARTICLE V. BOOKS AND RECORDS
----------------------------
Section 1. Books and Records. The above named corporation shall keep as
permanent records minutes of all meetings of its shareholders and Board of
Directors, a record of all actions taken by the shareholders or Board of
Directors without a meeting, and a record of all actions taken by a committee of
the Board of Directors in place of the Board of Directors on behalf of the above
named corporation. Furthermore, the above named corporation shall maintain
accurate accounting records. Furthermore, the above named corporation shall
maintain the following:
(i) a record of its shareholders in a form that permits preparation of a list of
the names and addresses of all shareholders in alphabetical order by class of
shares showing the number and series of shares held by each;
(ii) The above named corporation's Articles or Restated Articles of
Incorporation and all amendments thereto currently in effect;
(iii) The above named corporation's Bylaws or Restated Bylaws and all amendments
thereto currently in effect;
(iv) Resolutions adopted by the Board of Directors creating one or more classes
or series of shares and fixing their relative rights, preferences and
limitations if shares issued pursuant to those resolutions are outstanding;
(v) The minutes of all shareholders' meetings and records of all actions taken
by shareholders without a meeting for the past 3 years;
(vi) Written communications to all shareholders generally or all shareholders of
a class or series within the past 3 years including the financial statements
furnished for the past 3 years to shareholders as may be required under Florida
Law;
(vii) A list of the names and business street addresses of the above named
corporation's current directors and officers; and
8 of 11
<PAGE>
(viii) A copy of the above named corporation's most recent annual report
delivered to the Department of State.
Any books, records and minutes may be in written form or in any other
form capable of being converted into written form.
Section 2. Shareholder's Inspection Rights. A shareholder of the above
named corporation (including a beneficial owner whose shares are held in a
voting trust or a nominee on behalf of a beneficial owner) may inspect and copy,
during regular business hours at the above named corporation's principal office,
any of the corporate records required to be kept pursuant to Section 1, of this
Article of these Bylaws, if said shareholder gives the above named corporation
written notice of such demand at least 5 business days before the date on which
the shareholder wishes to inspect and copy. The foregoing right of inspection is
subject however to such other restrictions as are applicable under Florida Law,
including, but not limited to, the inspection of certain records being permitted
only if the demand for inspection is made in good faith and for a proper purpose
(as well a. the shareholder describing with reasonable particularity the purpose
and records desired to be inspected and such records are directly connected with
the purpose).
Section 3. Financial Information. Unless modified by resolution of the
shareholders within 120 days of the close of each fiscal year, the above named
corporation shall furnish the shareholders annual financial statements which may
be consolidated or combined statements of the above named corporation and one or
more of its subsidiaries as appropriate, that include a balance sheet as of the
end of the fiscal year, an income statement for that year, and a statement of
cash flow for that year. If financial statements are prepared on the basis of
generally accepted accounting principles, the annual financial statements must
also be prepared on that basis. If the annual financial statements are reported
on by a public accountant, said accountant's report shall accompany said
statements. If said annual financial statement" are not reported on by a public
accountant, then the statements shall be accompanied by a statement of the
president or the person responsible for the above named corporation's accounting
records (a) stating his reasonable belief whether the statements were prepared
on the basis of generally accepted accounting principles and if not, describing
the basis of preparation; and (b) describing any
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respects in which the statements were not prepared on a basis of accounting
consistent with the statements prepared for the preceding year. The annual
financial statements shall be mailed to each shareholder of the above named
corporation within 120 days after the close of each fiscal year or within such
additional time as is reasonably necessary to enable the above named corporation
to prepare same, if, for reasons beyond the above named corporation's control,
said annual financial statement cannot be prepared within the prescribed period.
Section 4. Other Reports to Shareholders. The above named corporation
shall report any indemnification or advanced expenses to any director, officer,
employee, or agent (for indemnification relating to litigation or threatened
litigation) in writing to the shareholders with or before the notice of the next
shareholders' meeting, or prior to such meeting if the indemnification or
advance occurs after the giving of such notice but prior to the time such
meeting is held, which report shall include a statement specifying the persons
paid, the amounts paid, and the nature and status, at the time of such payment,
of the litigation or threatened litigation.
Additionally, if the corportion issues or authorizes the issuance of
shares for promises to render services in the future, the above named
corporation shall report in writing to the shareholders the number of shares
authorized or issued and the consideration received by the above named
corporation, with or before the notice of the next shareholders meeting.
ARTICLE VI. DIVIDENDS
---------------------
The Board of Directors of the above named corporation may, from time to
time declare dividends on its shares in cash, property or its own shares, except
when the above named corporation is insolvent or when the payment thereof would
render the above named corporation insolvent, subject to Florida Law.
ARTICLE VII. CORPORATE SEAL
---------------------------
The Board of Directors will provide a corporate seal which will be in
circular form embossing in nature and stating "Corporate Seal", "Florida", year
of above named incorporation and name of said above named corporation.
ARTICLE VIII. AMENDMENT
-----------------------
These Bylaws may be altered, amended or repealed, and altered,
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amended or new Bylaws may be adopted by a majority vote of the full Board of
Directors.
ARTICLE IX. CORPORATE INDEMNIFICATION PLAN
------------------------------------------
The above named corporation shall indemnify any person:
(1) Who was or is a party, or is threatened to be made a party, to any
threatened, pending, or completed action, suit, or proceeding, whether civil,
criminal, administrative, or investigative (other than an action by, or in the
right of, the above named corporation) by reason of the fact that he is or was a
director, officer, employee, or agent of the above named corporation or is or
was serving at the request of the above named corporation as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise against such costs and expenses, and to the extent
and in the manner provided under Florida Law.
(2) 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 above
named 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 above named
corporation or is or was serving at the request of the above named corporation
as a director, officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise against such costs and expenses, and
to the extent and in the manner provided under Florida Law.
The extent, amount, and eligibility for the indemnification provided
herein will be made by the Board of Directors. Said determinations will be made
by a majority vote to a quorum consisting of directors who were not parties to
such action, suit, or proceeding or by the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such action, suit, or
proceeding.
The above named corporation will have the power to make further
indemnification as provided under Florida Law except to indemnify any person
against gross negligence or willful misconduct.
The above named corporation is further authorized to purchase and
maintain insurance for indemnification of any person at provided herein and to
the extent provided under Florida Law.
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EMPLOYMENT AGREEMENT
Employment Agreement, between Netgen 2000 (the "Company") and Arvind
Ajinkya (the "Employee").
1. For good consideration, the Company employs the Employee on the
following terms and conditions.
2. Term of Employment: Subject to the provisions for termination set
forth below this agreement will begin on April 1, 1999, [for a period of one (1)
year] LPD,AA
3. Salary: The Company shall pay Employee a salary of 60,000 shares of
restricted common stock per year payable to the employee 5,000 shares per month,
for the services of the Employee, payable on the 15th of each month during the
term of employment.
4. Duties and Position: The Company hires the Employee in the capacity
of CFO. The Employee's duties may be reasonably modified at the Company's
direction from time to time.
5. Employee to Devote 4 Full days per month to Company: The Employee
will devote full time, attention, and energies to the business of the Company
and during this employment, will not engage in any other business other than own
accounting practice. , Real Estate and Mortgage Company.Employee is not
prohitited from making personal investments in any other businesses provided
those investments do not require active involvement in thy operation of said
companies.
6. Confidentiality of Proprietary Information: Employee agrees, during
or after the term of this employment, not to reveal confidential information, or
trade secrets to any person, firm, corporation, or entity. Should Employee
reveal or threaten to reveal this information, the Company shall be entitled to
an injunction restraining the Employee from disclosing same, or from rendering
any services to any entity to whom said information has been or is threatened to
be disclosed. The right to secure an injunction is not exclusive, and the
Company may pursue any other remedies it has against the Employee for a breach
or threatened breach of this condition, including the recovery of damages from
the Employee.
7. Reimbursement of Expenses: The Employee may incur reasonable
expenses for furthering the Company's business, including expenses for
entertainment, travel, and similar items. The Company shall reimburse Employee
for all business expenses after the Employee presents an itemized account of
expenditures, pursuant to Company policy.
8. Disability: If Employee cannot perform the duties
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because of illness or incapacity for a period of more than 2 weeks, the
compensation otherwise due during said illness or incapacity will be reduced by
one hundred (100) percent. The Employee's full compensation will be reinstated
upon return to work. However, if the Employee is absent from work for any reason
for a continuous period of over 1 month, the Company may terminate the
Employee's employment, and the Company's obligations under this agreement will
cease on that date.
9. Termination of Agreement: Without cause, the Company may terminate
this agreement at any time upon 30 days' written notice to the Employee. If the
Company requests, the Employee will continue to perform his/her duties and be
paid his/her regular salary up to the date of termination. In addition, the
Company will pay the Employee on the date of termination a severance allowance
of [3 months compensation LPN, AA $______] less taxes and social security
required to be withheld. Without cause, the Employee may terminate employment
upon 30 days' written notice to the Company. Employee may be required to perform
his/her duties and will be paid the regular salary to date of termination but
shall not receive a severance allowance. Notwithstanding anything to the
contrary contained in this agreement, the Company may terminate the Employee's
employment upon 30 days [notice to the employee; however, the Company will pay
the employee full salary as agreed]
10. Death Benefit: Should Employee die during the term of employment,
the Company shall pay to Employee's estate any compensation due through the end
of the month in which death occurred.
11. Restriction on Post Employment Competition: For a period of one (1)
years after the end of employment, the Employee shall not control, consult to or
be employed by any business similar to that conducted by the Company, either by
soliciting any of its accounts or by operating within Employer's general trading
area.
12 Assistance in Litigation: Employee shall upon reasonable notice,
furnish such information and proper assistance to the Company as it may
reasonably require in connection with any litigation in which it is, or may
become, a party either during or after employment.Any expense for litigation
borne by the company.
13. Effect of Prior Agreements: This agreement supersedes any prior
agreement between the Company or any predecessor of the Company and the
Employee, except that this agreement shall not affect or operate to reduce any
benefit or compensation inuring to the Employee of a kind elsewhere provided and
not expressly provided in this agreement.
14. Settlement by Arbitration: Any claim or controversy that arises out
of or relates to this agreement, or the breach of
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it, shall be settled by arbitration in accordance with the rules of the American
Arbitration Association. Judgment upon the award rendered may be entered in any
court with jurisdiction.
15. Limited Effect of Waiver by Company. Should Company waive breach of
any provision of this agreement by the Employee, that waiver will not operate or
be construed as a waiver of further breach by the Employee.
16. Severability: If, for any reason, any provision of this agreement
is held invalid, all other provisions of this agreement shall remain in effect.
If this agreement is held invalid or cannot be enforced, then to the full extent
permitted by law any prior agreement between the Company (or any predecessor
thereof) and the Employee shall be deemed reinstated as if this agreement had
not been executed.
17. Assumption of Agreement by Company's Successors and Assignees: The
Company's rights and obligations under this agreement will inure to the benefit
and be binding upon the Company's successors and assignees.
18. Oral Modifications Not Binding: This instrument is the entire
agreement of the Company and the Employee. Oral changes shall have no effect. It
may be altered only by a written agreement signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
Signed ~ 14th day of April, 1999.
/s/ Lynn P. Dunn /s/ Arvind Ajinkya
----------------------------- ---------------------------
Company Employee
3
FINANCIAL CONSULTING AGREEMENT
This financial consulting agreement (hereinafter called the agreement)
made this day 8th of January 1999 by and between US Realty Group Inc. ( herein
called the consultant) and NetGen 2000, Inc. ( herein called the client)
Whereas (Client desires to obtain Consultant's services in connection
with Client's business and financial affairs, and Consultant is willing to
render such services as hereinafter more fully set forth.
Now, Therefore the parties hereby agree as follows;
1. Client hereby engages and retains Consultant and Consultant hereby
agrees to use its best efforts to render to client the consulting, services
hereinafter described for a period of one year commencing from the date of this
agreement
2. Consultant services hereunder shall consist of consultations with
client concerning the management and operations and the financing of clients
business as Client may from time to time require during the term of this
agreement. To assist the company in raising capital, to advise on potential
acquisitions.
3. Consultant shall devote up to one man day per month specifically to
Client on consultation, advice and assistance on such matters and in such form
as Client requests. Such services may include at the request of the client,
written reports, attendance at meetings of clients board of directors, review
proposed investment opportunities and to advise and review with respect to
future public or private financing.
4. Client agrees to grant Consultant or its designee for services the
option to purchase 400,000 ( four hundred thousand ) shares of common stock at a
subscription price of .01 (one cent) per share, delivered to Consultant free
trading via a 504 offering or registered through a SB 2 registration. Such
shares shall be issued within 25 days of signing. Client agrees to pay
consultant additional compensation if consultant introduces a party to client,
and client consummates a transaction. Consultant shall be entitled to a fee of
no more that 3% of the first $l, 000,000, 2% of the next $ l,000,000, 1% then on
after.
5. All final decisions with respect to consultations or services
rendered to client by consultant or transaction negotiated for or presented to
client by consultant shall be those of client, and their shall be no liability
on the part of the consultant in respect thereof. There are no representations
or warranties other than as shall be herein. No waiver
1
<PAGE>
or modifications hereof shall be valid unless in writing, waiver or the breach
of any terms or conditions hereof shall not be deemed a waiver of any other
subsequent breach, whether like or different in nature. Client agrees to Fully
indemnify US Realty Group its officers and director against any and all
liabilities which might arise.
6. This agreement shall be governed, construed and inforced in
accordance with the laws of Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Financial
Agreement to be signed as of this day and year first written above.
BY: /s/ Derek Dunn BY: /s/ Ed Muller
---------------------------- ----------------------------
ITS: President ITS: President
2
FINANCIAL CONSULTING AGREEMENT
This financial consulting agreement (hereinafter called the agreement)
made this day 8th of January 1999 by and between Fidelity MFG, Inc. ( herein
called the consultant) and NetGen 2000, Inc. ( herein called the client)
Whereas (Client desires to obtain Consultant's services in connection
with Client's business and financial affairs, and Consultant is willing to
render such services as hereinafter more fully set forth.
Now, Therefore the parties hereby agree as follows;
1. Client hereby engages and retains Consultant and Consultant hereby
agrees to use its best efforts to render to client the consulting, services
hereinafter described for a period of one year commencing from the date of this
agreement.
2. Consultant services hereunder shall consist of consultations with
client concerning the management and operations and the financing of clients
business as Client may from time to time require during the term of this
agreement. To assist the company in raising capital, to advise on potential
acquisitions.
3. Consultant shall devote up to one man day per month specifically to
Client on consultation, advice and assistance on such matters and in such form
as Client requests. Such services may include at the request of the client,
written reports, attendance at meetings of clients board of directors, review
proposed investment opportunities and to advise and review with respect to
future public or private financing.
4. Client agrees to grant Consultant or its designee for services the
option to purchase 400,000 ( four hundred thousand ) shares of common stock at a
subscription price of .01 (one cent) per share, delivered to Consultant free
trading via a 504 offering or registered through a SB 2 registration. Such
shares shall be issued within 25 days of signing. Client agrees to pay
consultant additional compensation if consultant introduces a party to client,
and client consummates a transaction. Consultant shall be entitled to a fee of
no more that 3% of the first $l, 000,000, 2% of the next $ l,000,000, 1% then on
after.
5. All final decisions with respect to consultations or services
rendered to client by consultant or transaction negotiated for or presented to
client by consultant shall be those of client, and their shall be no liability
on the part of the consultant in respect thereof. There are no representations
or warranties other than as shall be herein. No waiver
1
<PAGE>
or modifications hereof shall be valid unless in writing, waiver or the breach
of any terms or conditions hereof shall not be deemed a waiver of any other
subsequent breach, whether like or different in nature. Client agrees to Fully
indemnify US Realty Group its officers and director against any and all
liabilities which might arise.
6. This agreement shall be governed, construed and inforced in
accordance with the laws of Florida.
IN WITNESS WHEREOF, the parties hereto have caused this Financial
Agreement to be signed as of this day and year first written above.
BY: /s/ Derek Dunn BY: /s/ Julien S. Ferretti
---------------------------- ----------------------------
ITS: President ITS: President
<PAGE>
OPTION TO PURCHASE STOCK
In consideration of TEN dollars ($10.00). the receipt of which is
hereby acknowledged, the undersigned, NETGEN2000, hereby gives to Fidelity MFG'
Inc. for a period of 700 days from the date hereof, the right to purchase
400,000 shares of the common stock of Netgen2000 at the price of .01 cents
($.01) per share. This option can be exercised only by the payment of cash
before its expiration.
Date: January 26,1999
/s/ Lynn P.Dunn
----------------------------
Authorized Agent
2
