SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of The Securities Exchange Act of 1934
ALLNETSERVICES.COM CORP.
3650 Coral Ridge Drive, Suite 101,Coral Springs, Florida 33065
954.346.7575
State of Incorporation: Florida EIN # 65-0755455
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under section 12 (g) of the Act:
Common Stock
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I
- ------
<S> <C> <C>
ITEM 1. DESCRIPTION OF BUSINESS................................................................................3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION...............................................................................7
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............................................................................11
ITEM 6. EXECUTIVE COMPENSATION................................................................................11
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS ..................................................................................12
ITEM 8. DESCRIPTION OF SECURITIES.............................................................................12
PART II
- -------
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS ...........................................................................13
ITEM 2. LEGAL PROCEEDINGS.....................................................................................13
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE............................................................13
ITEM 4. RECENT SALE OF UNREGISTERED SECURITIES................................................................14
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.............................................................14
PART F/S
- --------
PART III
- --------
ITEMS 1. & 2. INDEX TO AND DESCRIPTION OF EXHIBITS............................................................29
SIGNATURES......................................................................................................35
NOTE REGARDING FORWARD-LOOKING STATEMENTS
</TABLE>
2
<PAGE>
Certain matters discussed in this Registration Statement on
Form 10SB are "forward-looking statements" intended to qualify
for the safe harbors from liability established by the Private
Securities Litigation Reform Act of 1995. These
forward-looking statements can generally be identified as such
because the context of the statement will include words such
as the Company "believes," "anticipates," "expects,"
"estimates" or words of similar meaning. Similarly, statements
that describe the Company's future plans, objectives or goals
are also forward-looking statements. Such forward-looking
statements are subject to certain risks and uncertainties
which are described in close proximity to such statements and
which could cause actual results to differ materially from
those anticipated as of the date of this report. Shareholders,
potential investors and other readers are urged to consider
these factors in evaluating the forward-looking statements and
are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements
included herein are only made as of the date of this report
and the Company undertakes no obligation to publicly update
such forward-looking statements to reflect subsequent events
or circumstances.
PART I
- ------
ITEM 1 - DESCRIPTION OF BUSINESS:
- ---------------------------------
AllnetServices.com Corp. a Florida corporation (the "Company") is in
the business of Internet sales. The Company became operational in April 1997,
and is headquartered at 3650 Coral Ridge Drive, Suite 101, Coral Springs, FL
33065.
The Company has elected to file this Form 10-SB registration statement
on a voluntary basis in order to become a reporting company under the Securities
Exchange Act of 1934. The primary purpose for this is that the Company wants to
maintain its listing for its common stock on the OTC Electronic Bulletin Board.
Under the current NASD rules, in order to maintain such a listing on the OTC
Electronic Bulletin Board, a company now must be a reporting company under the
Securities Exchange Act of 1934.
History:
- --------
The Company, which became operational in April 1997 started with two
distinct revenue generating operations; the sales and marketing of high-end
copier parts and an interactive on-line auction site on the World Wide Web for
the purpose of auctioning new, refurbished and close-out computer hardware and
software products. Sales attributed to the Internet accounted for 14% of the
total revenues for the year ending December 31,1997. During the course of 1998,
sales attributed to the Internet increased to 35% of the total revenues for the
year ending December 31,1998. This increase in revenues related to the Internet
in 1998 is due to the launching of several new e-commerce web sites, and the
Company offering web site design and development services. Subsequent to
November 1998, the Company was no longer involved in its high-end
3
<PAGE>
copier part sales due to the restructuring of its largest customer and decreased
demand for these parts.
Business:
- ---------
The Company now focuses its efforts on the on-line marketing and
distribution of a broad range of products and services at wholesale prices to
both consumer and trade customers and offers Internet-related services to
businesses and end-users. The growth of the Internet and its emergence as an
effective new sales medium, combined with consumer enthusiasm generated by the
Company's interactive auction format, e-commerce shopping sites and Internet
services, creates a significant business opportunity. The Company intends to
leverage its position as an Internet retailer of new, refurbished and close-out
merchandise by enhancing its brand recognition, continuing to provide a
compelling shopping experience, developing incremental revenue opportunities and
building on its technology. E-commerce is defined as electronic commerce, or the
sale of goods and services on-line via the World Wide Web.
In its early stages of development, the Company spent seven months
designing proprietary, fully scalable systems architecture for the Internet
shopping marketplace. The Company's system is designed to fully integrate all
aspects of retail transaction processing including order placement, secure
payment verification, inventory control, order fulfillment and vendor invoicing
in one seamless and automated process. The Company believes that the principal
competitive factors in its market are price, speed of fulfillment, wide
selection, personalized services, ease of use, 24-hour accessibility,
convenience, reliability, and quality of editorial and other site content. The
Company has developed a creative auction format and e-tailing experience on the
Web that combines a highly automated infrastructure with a user-friendly
interface designed to enhance the convenience and ease of online shopping.
E-tailing is a term used to describe electronic retailing, or sales of goods via
the World Wide Web. The Company currently has eleven full time employees.
Products:
- ---------
The Company offers web hosting, professional graphics design and
animation, data base management and web site development.
Additionally, The Company currently owns and operates six Internet
sites: AllnetDirect.com, Allmonitors.com, GoingOnce.net, Allnotebooks.com,
Allnetvoice.com and AllnetServices.com. AllnetDirect.com is an electronic
computer mall on the World Wide Web, listing over 45,000 computer-related
products from IBM, Digital, Intel, NEC, 3Com, Cisco Systems, Microsoft, and many
more. Allmonitors.com is a Web site dedicated solely to offering monitor-related
merchandise, from refurbished 15" Viewsonic and brand new 21" NEC monitors to
large projection screens, projector equipment and LCD's (liquid crystal
display). GoingOnce.net, the Company's auction site, currently specializes in
selling new, refurbished and closeout desktop and notebook computers, monitors,
laser and inkjet printers, scanners, digital cameras, VCRs, camcorders,
telephones, copiers, software, and computer related accessories.
Allnotebooks.com specializes in notebook computers, PDA's (personal digital
assistants) and
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accessories. Allnetvoice.com offers voice and speech-related technology
products. The Company also maintains two additional web sites, Allcopiers.com
and Deviceline.com. in which the Company developed and maintains the web sites
and earns a commission for goods sold through them.
The Company promotes its e-commerce sites primarily through banner and
sponsorship advertisements on the World Wide Web. These advertisements are
targeted at individuals who are likely to visit specific sites and make a
purchase. A number of these sites can be best described as "what to buy and
where to buy it" sites. They include sites such as Shopper.com, Computers.com,
AOL.com, CompuServe.com and Techshopper.com. Most sites of this nature are
content-driven and provide product reviews, price comparisons, and buyer's tips.
Several of the Company's larger competitors advertise on this type of site. The
Company also employs several inside sales representatives to help customers and
to prospect business from leads generated from its web sites.
In the first 2 years of the Company's development, sales derived
directly from the Internet accounted for approximately 14% of the total sales
for 1997 and approximately 35% in 1998. After November 1998, the Company's
business model changed to its present form with 100% of revenue derived from
Internet related sales and services.
Market:
- -------
International Data Corporation (IDC) estimates that the number of users
accessing the Web will grow from 150 million today to over 325 million in 2001
and that the amount of commerce conducted over the Web will increase from
approximately $900 million in 1998 to more than $50 billion in 2001. Growth in
Internet usage has been fueled by a number of factors, including the large and
growing base of personal computers installed in the workplace and the increased
awareness of the Internet among consumer and trade customers.
According to Internet World, computers and computer equipment represent
the number one category on the Internet in terms of what consumers are
purchasing on line. The market for new and used computers is estimated at well
over $100 billion for 1999 worldwide and U.S. personal computer sales at more
than $50 billion, according to the Computer Almanac. Experts predict growth
rates in this market of 6% annually well into the twenty-first century. Industry
analysts agree, citing that changing technologies will continue to drive the
demand for newer and faster personal computers.
According to Dataquest, worldwide monitor sales have sustained
double-digit unit and sales growth the past four years. As technology for
computers and other accessories continue to drive prices downward, advancement
in monitors has been mostly stagnate keeping prices stable, and margins
attractive. Dataquest reports that sales of monitors across the globe exceeded
$28 billion in 1997 and that sales in North America alone totaled more than $10
billion. Unit and sales growth, both globally and in North America, are
projected to increase an average of 10% over the next four years, with prices
declining only slightly.
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Forrester Research Inc., which analyzes the impact of technology,
estimates that $8.7 billion worth of business-to-business goods will be
auctioned online this year, growing to $52.6 billion in 2002.
Internet services as well are seeing more and more business. Growing
demand for better performance and more useful content has driven many companies
to out-source their Web hosting resources, according to a report by Cambridge,
Mass-based Forrester Research. The Forrester report shows the market for Web
hosting services growing from $900 million in 1998 to $9 billion by 2002.
The Company currently has an extremely small portion of these markets
and there can be no assurances that it will be able to penetrate these markets
further in the future.
Competition:
- ------------
There are many competitors in the Internet commerce arena. Several
notable Internet retailers operate under a similar model as the Company. They
include Cyberian Outpost, (NASDAQ: COOL), Egghead (NASDAQ: EGGS), OnSale
(NASDAQ: ONSL), Buy.com, eBay (NASDAQ: EBAY) and Insight (NASDAQ: NSIT). Most of
these companies not only distribute solely through the Internet but also utilize
only one major supply channel for their source of new hardware, software and
other computer equipment. Further, some of these competitors have not
diversified their offerings beyond computer products.
Many of the Company's competitors have significant competitive
advantages. Internet search engines, and large traditional retailers have
significantly greater operating histories, customer bases and brand recognition
and/or e-commerce experience. In addition, certain competitors may be able to
devote significantly greater resources to marketing campaigns, attracting
traffic to their Web sites and attracting and retaining key employees. As we
expand the Company's business through the introduction of new products and
services, the Company will face competition from established providers of these
products and services.
The Company also potentially faces competition from a number of on-line
services that have expertise in developing on-line commerce and facilitating
Internet traffic. These potential competitors include Amazon.com, America
Online, Microsoft and Yahoo! who could choose to compete with the Company either
directly or indirectly through affiliations with other e-commerce companies.
Other large companies with strong brand recognition, technical expertise and
experience in on-line commerce and direct marketing could also seek to compete
in the buyer driven commerce market.
Technology/Year 2000:
- ---------------------
The Company has assessed its computerized systems to determine its
ability to correctly identify the Year 2000 and has determined that they will
correctly identify the Year 2000. The Company intends to implement an ongoing
program to review the status of its key suppliers to
6
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make sure they are Y2K compliant. Management does not expect the Year 2000 issue
to pose significant operational or financial problems for the Company.
During the Company's initial development phase, the network
infrastructure and proprietary technology evolvement was designed as the
foundation for the future. The custom software that operates the Company's
e-tailing sites, has automated many of the procedures, such as order generation,
vendor product listing, invoicing and inventory control necessary for a
successful Internet company. The Company now also has the capability to host
hundreds of web sites on its servers, with expansion capacity for thousands
more.
The Company's electronic commerce and data warehouse systems utilize a
hybrid of Microsoft and UNIX technologies. On the Microsoft side, the latest
version of NT Enterprise runs the Company's mission critical backoffice platform
applications while simultaneously supporting the UNIX front end on Hewlett
Packard and IBM Netfinity servers. Maintaining all data in a universal SQL
format, by way of an SQL server "farm", the data can be moved easily across
platforms, and tiered for the highest level of security. With a capacity quickly
approaching the 100-Gigabyte range, implementation of RAID and high capacity
backup systems across platforms is essential. The marriage of these systems is
accomplished by tools provided in Microsoft's Visual Development Studio 6.0 and
native, Proprietary Applications designed and compiled in-house, directly on the
UNIX hosts using both the C++ and PERL scripting languages.
Remote access, dial-up and hosting services are provided for the UNIX,
NT, Windows, and Mac clients via Microsoft Site Server Commerce edition and UNIX
systems running both Netscape FastTrack and Apache web servers. Supplemental
operations such as electronic mail, messaging, and collaboration services are
provided by both simple UNIX SMTP servers, and a primary Microsoft Exchange
Server.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
- -------------------------------------------------------------------
AND RESULTS OF OPERATIONS:
--------------------------
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Financial
Statements, including the Notes thereto, of the Company included elsewhere in
this registration statement. Forward-looking statements and comments in this
document are made pursuant to the safe harbor provision of Section 21E of the
Securities Exchange Act of 1934. Such statements relating to, among other
things, the prospects for the Company to increase the level of sales, maintain
current sales levels, add new products and services and develop new Web sites
are necessarily subject to risks and uncertainties, some of which are
significant in scope and nature, including risks related to the demand for the
Company's products and services, competition, and availability of capital.
Overview:
- ---------
7
<PAGE>
The Company specializes in the marketing and distribution of a broad
range of products and services at wholesale prices to both retail and business
customers and offers Internet-related services to businesses and end-users. The
Company intends to leverage its position as an Internet retailer of new,
refurbished and close-out merchandise by enhancing its brand recognition,
continuing to provide a compelling shopping experience, developing incremental
revenue opportunities and building on its technology.
Management believes that the key factor affecting the Company's
long-term financial success is its ability to attract and retain customers in a
cost-effective manner. Currently, the Company is seeking to expand its customer
base and encourage repeat buying through multiple domestic marketing programs.
Such programs include: (i) brand development, (ii) on-line and off-line
marketing and promotional campaigns (iii) direct marketing programs designed to
generate repeat sales from existing customers, and (iv) growth of the Company's
direct sales force concentrating on small to mid sized businesses. The Company
believes it can use its sales and marketing expertise along with the Internet as
a powerful marketing tool to develop revenues in a consistent manner.
The Company expects to experience fluctuations in its future operating
results due to a variety of factors, many of which are outside the control of
the Company. Factors that may affect the Company's operating results include the
frequency of new product releases, success of strategic alliances, mix of
product sales and seasonality of sales typically experienced by retailers. Sales
in the computer retail industry are significantly affected by the release of new
products. Infrequent or delayed new product releases, when they occur,
negatively impact the overall growth in computer retail sales. Gross profit
margins for hardware, software and peripheral products vary widely, with
computer hardware generally having the lowest gross profit margins. While the
Company has some ability to affect its gross margins by varying its product mix
with higher margin products such as refurbished copier products and pagers, the
Company's sales mix will vary from period to period and the Company's gross
margins will fluctuate accordingly.
Results of Operations: Calendar year 1997 and 1998:
- ---------------------------------------------------
Net sales are comprised of product sales, net of returns and
allowances. Net sales increased from $302,888 in 1997 to $380,306 in 1998. This
increase was due to 1997 being a partial year of operations offset by a decrease
in the sales of copier parts in 1998 due to the Company's decision to cease the
sale of those products and concentrate on its Internet related business.
Included in total sales were internet related sales of approximately $41,000 and
$132,000 in 1997 and 1998, respectively.
Cost of sales increased from $224,791 in 1997 to $270,208 in 1998. As a
percentage of net sales, the Company's gross margin was 25.7% in 1997 and 28.9%
in 1998. The increase was due to several factors as follows: more favorable
pricing from the Company's vendors, a slight increase in web site design work,
which has a higher profit margin than computer hardware and software, and a
slight change in product mix increasing the Company's refurbished product sales,
which have a higher profit margin than new products.
8
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Selling, general and administrative expense includes administrative,
finance and purchasing personnel and related costs, general office and
depreciation expenses, as well as professional fees and advertising costs.
Selling, general and administrative expenses were $558,909 for the year ended
December 31, 1997 as compared to $ 1,085,146 for the year ended December 31,
1998. This increase was due to calendar 1997 being a partial year of operations
and increased personnel, consulting and other operating expenses incurred in
1998 in connection to the change in the Company's business model from a seller
of high end copier parts to an Internet retailer. The Company does not expect
selling, general and administrative expenses to continue to grow at this rate.
Net cash used in operating activities was $525,512 for the year ended
December 31,1998. Net cash used in operating activities was primarily
attributable to net losses and partially offset by increases in trade payables
and amounts due to related parties.
Net cash used in investing activities was $ 12,713 for the year ended
December 31,1998.
Net cash used in investing activities was primarily related to
purchases of property and equipment.
Net cash provided by financing activities was $144,700 for the year
ended December 31,1998. Net cash provided by financing activities resulted from
the issuance of common stock in a Private Placement Offering.
Management believes that based upon the current operating plan,
existing cash and cash equivalents, and cash generated from operations will be
sufficient to fund operating activities, capital expenditures and other
obligations through December 31, 1999. However, if the Company is not successful
in generating sufficient cash flow from operations or in raising additional
capital when required in sufficient amounts and on acceptable terms, these
failures could have a material adverse effect on the Company's business, results
of operations and financial condition. If additional funds are raised through
the issuance of equity securities, the percentage ownership of the Company's
then-current stockholders would be diluted.
As of June 30, 1999, the Company had $210,879 of working capital. The
Company believes that its current working capital, and cash generated from
operations in 1999 will be sufficient to meet the Company's cash requirements
through December 31,1999. The Company's capital requirements will depend on
numerous factors, including the rates at which the Company expands its personnel
and infrastructure to accommodate growth and invests in new technologies. In
addition, as part of its strategy, the Company evaluates potential alliances
with businesses that extend or complement the Company's business. Future
alliances may be funded with alliance financing, institutional financing, or
additional equity offerings. There can be no assurance that future alliances, if
identified, will be consummated by the Company.
There can be no assurance that the Company will be able to raise any
required capital necessary to achieve its targeted growth rates and future
continuance on favorable terms or at all.
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The Company expects to continue with its current revenue growth plan as
experienced in the first two quarters of 1999 and believes that with current
available funds and funds generated from operations in 1999, there will be
sufficient capital resources to allow the Company to continue in existence as a
going concern.
ITEM 3 - DESCRIPTION OF PROPERTY:
- ---------------------------------
The Company's office is currently located at 3650 Coral Ridge Drive,
Suite 101, Coral Springs, FL 33065. Pursuant to a written lease, the Company
leases approximately 3,870 square feet at an annual rent of $ 36,000. The lease
is for a term of 3 years.
ITEM 4 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
- ------------------------------------------------------------------------
As of March 15, 1999, the Company had 8,950,700 shares of its Common
Stock issued and outstanding. The following table sets forth, as of March 15,
1999, the beneficial ownership of the Company's Common Stock (i) by the only
persons who are known by the Company to own beneficially more than 5% of the
Company's Common Stock; (ii) by each director of the Company; and (iii) by all
directors and officers as a group.
<TABLE>
<CAPTION>
Name and Amount
Address of of
Title of beneficial beneficial Percent of
Class owner owner class
<S> <C> <C> <C>
Common Robert Aubel, Director 600,000 6.3%
408 NW 120 Drive
Coral Springs, FL 33071
Jerry Aubel, Director 500,000 5.3%
489 Isaac Frye Highway
Wilton, NH 03086
Mark E. Merhab 500,000 5.3%
4521 Gorham Drive
Corona Del Mar, CA
92625
10
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All officers and
Directors as a
Group (2 persons) 1,100,000 11.6%
</TABLE>
ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
- ----------------------------------------------------------------------
Directors and Executive Officers. The following Directors and Executive
Officers have served in their respective capacities since the Company was
incorporated. None of the Directors hold similar positions in any reporting
company. The directors named below will serve until the next annual meeting of
the Company's stockholders. Thereafter, directors will be elected for one-year
terms at the annual stockholders' meeting.
Anthony Byrne, age 39, is the Chairman of the Board and has held this
position since May, 1999. Mr. Byrne was President and CEO of Seagil Software
prior from 1991 through 1998.
Robert J. Aubel, age 39, is a Director, Secretary and Treasurer and CEO
and President of the Company and has held these positions since May, 1997. Prior
to that, Mr. Aubel was director of operations for Computer Access International
from May 1994 to May 97, and before that he served as a regional sales manager
for Netcomm Services from March 1991 to May 1994.
Jerry Aubel, age 39, is a Director and Vice President of the Company
and has held these positions since May 1997. Prior to that, Mr. Aubel was
regional sales director for RSI Communications from January 1995 to May 1997,
and before that he was regional sales manager for Augat Communications from July
1991 to January 1995.
Jerry Aubel and Robert Aubel are brothers.
ITEM 6 - EXECUTIVE COMPENSATION:
- --------------------------------
The Company paid the following salaries to its executives:
1998 1997
---- ----
Robert Aubel, Pres. & CEO $ 104,000 $ 43,000
Jerry Aubel, VP $ 78,000 $ 32,000
Todd Talbot, IT Director $ 70,000 $ 7,500
None of the executives received any stock options or stock dividends.
The three above executives received reimbursement for health insurance as part
of their compensation. The directors were not compensated for any Board of
Directors meetings.
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ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
- --------------------------------------------------------
At December 31, 1997, the Company advanced $259,000 Computer Access
International, a company which supplies computer related products to
Allnetservices.com Corp. The Company recorded an allowance for uncollectibility
amounting to $189,000 related to these advances as of December 31, 1997. During
1998, the Company received inventory from Computer Access International which
reduced the advance amount to $189,000 at December 31, 1998 which amount is
fully reserved at December 31, 1998. The Company's president, Robert Aubel and
his mother Mary Aubel, are stockholders of this supplier.
At December 31, 1998, the Company owes approximately $109,000 to Going
South Investment Company and Avara Trading Company, Inc. which are both
controlled by David Aubel, brother of the Company's president and vice
president.
At December 31, 1997, the Company owed approximately $214,000 to Avara
Trading Company, Inc. In January 1998, the Company advanced $100,000 to its
president. This advance was subsequently assumed by Avara Trading Company, Inc.
In December 1998, $200,000 of these advances were repaid through the issuance of
500,000 common shares of the Company to this corporation.
ITEM 8- DESCRIPTION OF SECURITIES:
- ----------------------------------
The Company is authorized to issue up to 50,000,000 shares of Common
Stock, par value $.001 per share. Holders of Common Shares are entitled to one
vote per Common Share on all matters to be voted on by stockholders. The Common
Shares do not have cumulative voting rights. Therefore, holders of a majority of
the Common Shares can elect all the members of the Board of Directors. A
majority vote is also sufficient for most other actions requiring the vote or
concurrence of stockholders. The Company's Officers and Directors as a group
(two persons) own directly approximately 11.6% of the Issuer's capital stock.
All Shares are entitled to share equally in dividends when and if
declared by the Board of Directors out of funds legally available therefore. It
is anticipated that the Company will not pay cash dividends on its Shares in the
foreseeable future. In the event of liquidation or dissolution of the Company,
whether voluntary or involuntary, holders of the Shares are entitled to share
equally in all assets of the Company legally available for distribution to
stockholders. The holders of Shares have no preemptive or other subscription
rights to acquire authorized but unissued capital stock of the Company, and
there are no conversion rights or redemption or sinking fund provisions with
respect to such Shares. All of the outstanding Shares of the Company are fully
paid and non-assessable.
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PART II
- -------
ITEM 1 - MARKET FOR COMMON EQUITY AND OTHER SHAREHOLDER MATTERS:
- ----------------------------------------------------------------
The Company's Common Stock trades in the over-the-counter market under
symbol ANSC on the OTC Electronic Bulletin Board. There was no trading in the
Company's Common Stock prior to March, 1997. The following table shows the
quarterly high and low bid prices for the calendar year 1998 and the first half
of 1999 as reported by the National Quotations Bureau Incorporated. These prices
reflect inter-dealer quotations without adjustments for retail markup, markdown
or commission, and do not necessarily represent actual transactions.
<TABLE>
<CAPTION>
YEAR PERIOD HIGH LOW
---- ------ ---- ---
<S> <C> <C> <C>
1998 First Quarter 1.00 .37
Second Quarter 2.00 .43
Third Quarter .81 .25
Fourth Quarter 17.50 .43
1999 First Quarter 4.00 1.75
Second Quarter 3.87 1.25
</TABLE>
As of June 30, 1999, there were approximately 184 holders of record of
the Company's Common Stock.
Holders of the Company's Common Stock are entitled to dividends when,
as and if declared by the Board of Directors out of funds legally available
therefore. The Company does not anticipate the declaration or payment of any
dividends in the foreseeable future.
The Company intends to retain earnings, if any, to finance the
development and expansion of its business. Future dividend policy will be
subject to the discretion of the Board of Directors and will be contingent upon
future earnings, if any, the Company's financial condition, capital
requirements, general business conditions and other factors. Therefore, there
can be no assurance that any dividends of any kind will ever be paid.
The Company registrar and transfer agent is Interwest Transfer Co.,
Inc., which is located at 1981 East 4800 South, Suite 100, Salt Lake City, UT
84117 phone 801.272.9294.
ITEM 2 - LEGAL PROCEEDINGS
- --------------------------
The Company is not subject to any legal proceedings. The Company is
unaware of any governmental authority that is contemplating any procedure to
which the Company is a participant.
ITEM 3 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS:
- -------------------------------------------------------
The Company has never had any disagreements with its accountants.
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<PAGE>
ITEM 4 - RECENT SALES OF UNREGISTERED SECURITIES:
- -------------------------------------------------
In a series of transactions over the last three years, the Company sold
3,285,700 shares of its $.001 par value Common Stock at prices ranging from $
.125 to $ 2.00 per Common Share for an aggregate of approximately $1,998,200 to
92 investors. These investors purchased such securities pursuant to an exemption
from registration pursuant to Section (4)(20) of the Securities Act of 1933 (and
Regulation D, Rule 504 as promulgated thereunder) (the "Private Offering"). All
purchasers executed a Subscription Agreement indicating they have such knowledge
and experience in financial and business matters that either alone or with a
purchaser's representative, they are capable of evaluating the merits and risks
of the investment. No purchasers used a purchaser representative. None of the
Company's Officers, Directors or affiliates participated in the aforesaid sale
of securities.
No underwriters were involved in any of the offerings and all current
offerings of the Company's securities have been completed. The Company used the
proceeds from the offerings for general working capital.
ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS:
- ---------------------------------------------------
The Company's Amended Articles of Incorporation provide for the
indemnification of Directors in that Directors of this Corporation shall not be
personally liable for monetary damages to the Company or any other person for
any statement, vote, decision or failure to act, regarding corporate management
or policy, by a director unless the director breached or failed to perform his
duties as Director. Such indemnification is available to any person who was or
is a party to any proceeding (other than an action by, or in the right of, the
Company), by reason of the fact that he or she is or was a Director, officer,
employee or agent of the Company or is or was serving at the request of the
Company.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions, or otherwise, the small business
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
14
PART F/S
- --------
<PAGE>
ALLNETSERVICES.COM CORP.
FINANCIAL STATEMENTS
December 31, 1998 and 1997
15
<PAGE>
ALLNETSERVICES.COM CORP.
FINANCIAL STATEMENTS
December 31, 1998 and 1997
INDEX TO FINANCIAL STATEMENTS
Page
----
Independent Auditors' Report...............................................18
Balance Sheets..........................................................19-20
Statements of Operations ..................................................21
Statements of Shareholders' (Deficit) Equity...............................22
Statements of Cash Flows................................................23-24
Notes to Financial Statements...........................................25-31
16
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders
of Allnetservices.com Corp.
We have audited the accompanying balance sheets of Allnetservices.com
Corp. as of December 31, 1998 and 1997 and the related statements of operations,
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Allnetservices.com
Corp. as of December 31, 1998 and 1997, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
BERKOWITZ DICK POLLACK & BRANT, LLP
April 27, 1999Miami, Florida
17
<PAGE>
ALLNETSERVICES.COM CORP.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
---------------------
1998 1997
---- ----
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash $ 14,385 $407,910
Restricted cash 50,000 --
Trade receivables 34,661 64,121
Other receivables 10,000 --
Inventories 10,687 45,276
Advances to suppliers (net of $219,600 and
$189,000 allowance for uncollectibility at
December 31, 1998 and 1997, respectively) 10,197 70,000
--------- --------
TOTAL CURRENT ASSETS 129,930 587,307
PROPERTY AND EQUIPMENT, net 39,057 34,510
OTHER ASSETS 7,268 7,268
--------- --------
TOTAL ASSETS $ 176,255 $629,085
========= ========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
18
<PAGE>
ALLNETSERVICES.COM CORP.
BALANCE SHEETS--Continued
<TABLE>
<CAPTION>
December 31,
---------------------------------
1998 1997
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
EQUITY
CURRENT LIABILITIES
Accounts payable $ 275,074 $ 124,004
Due to related party, net 116,932 214,380
Accrued expenses 60,702 55,206
----------- -----------
TOTAL CURRENT LIABILITIES 452,708 393,590
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (Deficit) EQUITY
Common stock-$.0001 par value; authorized
50,000,000 shares, issued and outstanding,
7,815,700 shares in 1998 and 6,591,700 shares
in 1997 782 659
Additional paid-in capital 1,182,625 719,648
Accumulated deficit (1,459,860) (484,812)
----------- -----------
TOTAL SHAREHOLDERS'
(DEFICIT) EQUITY (276,453) 235,495
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
(DEFICIT) EQUITY $ 176,255 $ 629,085
=========== ===========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
19
<PAGE>
ALLNETSERVICES.COM CORP.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1998 1997
---- ----
<S> <C> <C>
Net sales $ 380,306 $ 302,888
Cost of sales 270,208 224,791
----------- -----------
GROSS PROFIT 110,098 78,097
Selling, general and administrative expenses 1,085,146 558,909
----------- -----------
LOSS FROM OPERATIONS BEFORE
INCOME TAX BENEFIT (975,048) (480,812)
Income tax benefit -- --
----------- -----------
NET LOSS $ (975,048) $ (480,812)
=========== ===========
LOSS PER SHARE:
Loss per share $ (.15) $ (.27)
=========== ===========
Weighted average number of common shares
outstanding 6,723,567 1,757,642
=========== ===========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
20
<PAGE>
ALLNETSERVICES.COM CORP.
STATEMENTS OF SHAREHOLDERS' (DEFICIT) EQUITY
<TABLE>
<CAPTION>
Common
Shares Common Additional Accumulated
Outstanding Stock Paid-in Capital Deficit Total
----------- ----- --------------- ------- -----
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 500,000 $ 50 $ 3,950 $ (4,000) $ --
Issuance of Shares - Note A 4,000,000 400 (400) -- --
Issuance of Shares - Note F 2,091,700 209 716,098 -- 716,307
Net Loss -- -- -- (480,812) (480,812)
----------- ------- ----------- ----------- -----------
Balance at December 31, 1997 6,591,700 659 719,648 (484,812) 235,495
Issuance of Shares - Note F 580,000 58 168,342 -- 168,400
Issuance of Shares - Note F 644,000 65 294,635 -- 294,700
Net Loss -- -- -- (975,048) (975,048)
----------- ------- ----------- ----------- -----------
Balance at December 31, 1998 7,815,700 $ 782 $ 1,182,625 $(1,459,860) $ (276,453)
=========== ======= =========== =========== ===========
</TABLE>
See accompanying independent auditors' report and notes to financial statements.
21
<PAGE>
ALLNETSERVICES.COM CORP.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (975,048) $ (480,812)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 8,166 1,724
Changes in assets and liabilities:
Decrease (increase) in trade receivables 29,460 (64,120)
Increase in other receivables (10,000) -
Decrease (increase) in inventories 34,588 (45,276)
Decrease (increase) in advances to suppliers 59,803 (70,000)
Increase in other assets - (7,268)
Increase in accounts payable 151,070 124,004
Increase in due to related party, net 102,552 214,380
Increase in accrued expenses 73,897 55,206
--------------- ----------------
Total adjustments 449,536 208,650
--------------- ----------------
NET CASH USED IN OPERATING
ACTIVITIES (525,512) (272,162)
--------------- ---------------
Cash flows from investing activities:
Expenditures for equipment (12,713) (36,235)
--------------- ---------------
NET CASH USED IN INVESTING
ACTIVITIES (12,713) (36,235)
--------------- ---------------
Cash flows from financing activities:
Increase in restricted cash (50,000) -
Issuance of common stock 198,200 1,000,000
Costs of raising capital (3,500) (283,693)
--------------- ----------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 144,700 716,307
--------------- ----------------
</TABLE>
22
<PAGE>
ALLNETSERVICES.COM CORP.
STATEMENTS OF CASH FLOWS--Continued
Years Ended December 31,
------------------------
1998 1997
---- ----
NET (DECREASE) INCREASE IN CASH (393,525) 407,910
CASH AT BEGINNING OF YEAR 407,910 --
--------- ---------
CASH AT END OF YEAR $ 14,385 $ 407,910
========= =========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 908 $ --
========= =========
Income taxes $ -- $ --
========= =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
During 1998, the Company issued 500,000 common shares to a corporation
controlled by a relative of the Company's president in payment of advances
previously made by the corporation to the Company amounting to $200,000.
During 1998, the Company issued 330,000 common shares, valued at $68,400, to
unrelated third parties for services provided to the Company.
In June 1997, the Company issued 7,000,000 common shares to Tasar Electronics
Ltd. and 1,000,000 common shares to Tasar Holding, Ltd., resulting in a change
in control of the Company.
See accompanying independent auditors' report and notes to financial statements.
23
<PAGE>
ALLNETSERVICES.COM CORP.
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization: Create-a-Basket, Inc. ("CAB") was incorporated in October 1992.
CAB had insignificant operations through December 31, 1996. Effective March
1997, CAB changed its name to Tasar Electronics Corp. ("Tasar"). In June 1997,
Tasar issued 7,000,000 common shares to Tasar Electronics, Ltd. and 1,000,000
common shares to Tasar Holdings, Ltd. resulting in a change in control of Tasar.
In June 1997, the Board of Directors of Tasar approved a reverse stock split of
the original shares of Tasar in which one share of newly issued common stock of
Tasar was exchanged for two existing outstanding shares. All share amounts
presented have been retroactively adjusted for the effects of the reverse stock
split. Effective March 1998, Tasar changed its name to Allnetservices.com Corp.
(the "Company").
Business: The Company is engaged in the marketing and distribution of electronic
consumer products in the United States and foreign markets through conventional
direct and indirect distribution channels and the Internet. In connection with
its Internet sales, the Company owns and operates an Internet auction site
through which it sells its products to consumers and conducts several Internet
related businesses including web hosting services, Internet site design,
graphics design and data base management. Internet related sales amounted to
approximately 35% and 14% of total sales, in 1998 and 1997, respectively.
Inventories: Inventories, consisting primarily of new and used computer
equipment and copier parts, are valued at the lower of cost (first-in, first-out
method) or market.
Property and equipment: Property and equipment is recorded at cost. Expenditures
for major betterments and additions are capitalized. Repairs and maintenance
which do not extend the useful life of the applicable assets are charged to
expense as incurred. Depreciation is provided using the straight-line method
over the estimated useful lives of the assets. Depreciation expense was $8,166
and $1,724 for the years ended December 31, 1998 and 1997, respectively.
Advertising Costs: The Company expenses all advertising costs as they are
incurred. Total advertising costs for the years ended December 31, 1998 and 1997
were approximately $3,300 and $1,300, respectively.
24
<PAGE>
ALLNETSERVICES.COM CORP.
NOTES TO FINANCIAL STATEMENTS--Continued
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--Continued
Income Taxes: Deferred income taxes are recorded based on the future tax effects
of the difference between the tax and financial reporting bases of the Company's
assets and liabilities. In estimating future tax consequences, expected future
events are considered except for potential income tax law or rate changes.
Comprehensive Income: The Company has no components of other comprehensive
income. Accordingly, net income equals comprehensive income for all periods
presented.
Net Loss Per Share: Net loss per common share is based on the weighted average
number of common shares and common share equivalents outstanding during the
year. There were no common share equivalents outstanding at December 31, 1998
and 1997.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported amounts of
revenue and expenses. Actual results could differ from those estimates.
Reclassifications: Certain reclassifications of 1997 amounts have been made to
conform with the current year presentation.
NOTE B--RELATED PARTY TRANSACTIONS
At December 31, 1997, the Company advanced $259,000 to a company which supplies
computer related products to Allnetservices.com Corp. The Company recorded an
allowance for uncollectibility amounting to $189,000 related to these advances
as of December 31, 1997. During 1998, the Company received inventory from this
supplier which reduced the advance amount to $189,000 at December 31, 1998 which
amount is fully reserved at December 31, 1998. Certain members of the Company's
management are common shareholders of this supplier.
At December 31, 1998, the Company owes approximately $109,000 to two
corporations controlled by a relative of the Company's president.
NOTE B--RELATED PARTY TRANSACTIONS--Continued
At December 31, 1997, the Company owed approximately $214,000 to a corporation
controlled by a relative of the Company's president. In January 1998, the
Company advanced $100,000 to
25
<PAGE>
ALLNETSERVICES.COM CORP.
NOTES TO FINANCIAL STATEMENTS--Continued
its president. This advance was subsequently assumed by the affiliated
corporation. In December 1998, $200,000 of these advances were repaid through
the issuance of 500,000 common shares of the Company to this corporation.
During 1997, approximately $62,000 of commissions on the sale of the Company's
common stock was paid to a relative of the Company's president.
NOTE C--PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
December 31,
------------
1998 1997
---- ----
<S> <C> <C>
Office equipment $ 42,828 $ 30,115
Furniture and fixtures 6,119 6,119
------------- -------------
48,947 36,234
Less: accumulated depreciation 9,890 1,724
------------- -------------
$ 39,057 $ 34,510
============= =============
</TABLE>
NOTE D--FACTORING AGREEMENT
In November 1998, the Company entered into a factoring agreement in which the
Company agrees to sell certain accounts receivable to a corporation acting as a
factor ("Factor") at 98% of face value. In the event certain accounts are not
acceptable to the Factor due to, among other things, credit worthiness or the
nature of the product sold, the Factor may agree to accept the account at a
lower percentage of face value. All accounts must be approved by the Factor, are
sold with recourse, and the total amount of accounts purchased and outstanding
cannot exceed $350,000. No accounts receivable have been sold pursuant to this
agreement as of December 31, 1998. The agreement expires in November 1999. The
president of the Factor was issued 250,000 restricted common shares of the
Company for $100,000 in December 1998.
NOTE E--LINE OF CREDIT
In November 1998, the Company also entered into a revolving line of credit
agreement with the Factor which allows for borrowings up to $100,000. The
revolving credit agreement expires on December 1, 1999 and bears interest at the
prime rate (7.75% at December 31, 1998) plus 1% per annum. Interest is paid
monthly. A minimum payment amounting to 1% of the ending principal balance of
the preceding month is due monthly. Any borrowings against the line of credit
are
26
<PAGE>
ALLNETSERVICES.COM CORP.
NOTES TO FINANCIAL STATEMENTS--Continued
collateralized by a $50,000 certificate of deposit which is reflected as
restricted cash on the Balance Sheet. There were no borrowings against the line
of credit as of December 31, 1998.
NOTE F--STOCKHOLDERS' EQUITY
In fiscal 1997, the Company sold 2,091,700 shares of common stock to certain
suitable investors pursuant to a Regulation D Rule 504 Offering Memorandum. The
shares of common stock were sold at prices ranging from $.125 to $1.00 per
share. Gross proceeds of the Offering amounted to $1,000,000 which was collected
by the Company in 1997. The related common shares of the Company were issued in
1998 and accounted for as issued and outstanding as of December 31, 1997.
Commissions and other expenses of the Offering, including 99,000 shares of
Company common stock (fair value of $49,500) issued to certain persons, amounted
to approximately $333,500 which amount was charged to additional
paid-in-capital. Previously issued financials statements disclosed 1,702,140
shares of common stock outstanding pursuant to the above offering at December
31, 1997. The total amount of shares of common stock outstanding at December 31,
1997 pursuant to the above offering was adjusted to 2,091,700 shares based on
updated information received from the Company's transfer agent.
During fiscal 1998, the Company issued 580,000 shares of restricted common
stock. These shares of restricted common stock were issued for cash amounting to
$100,000 and for services rendered to the Company valued at $68,400.
In fiscal 1998, the Company issued 644,000 shares of common stock to certain
suitable investors pursuant to a Regulation D Rule 504 Offering Memorandum. The
Company sold 144,000 shares of common stock at prices ranging from $.50 to $1.00
per share, and the Company issued 500,000 shares of common stock in exchange for
the repayment of $200,000 of advances from a corporation controlled by a
relative of the Company's president. Gross cash proceeds to the Company related
to this offering amounted to $98,200. NOTE G--INCOME TAXES
The Company had a deferred tax asset of approximately $195,000 and $56,000
resulting primarily from net operating losses at December 31, 1998 and 1997,
respectively. A valuation allowance of $195,000 and $56,000 was recorded to
reduce this deferred tax asset to zero at December 31, 1998 and 1997,
respectively. This valuation allowance was based on the Company's lack of
earnings history. For federal income tax purposes, the Company has a net
operating loss carryforward of approximately $1,029,000 expiring through the
year 2018.
NOTE H--COMMITMENTS AND CONTINGENCIES
The Company leases office space under a non-cancelable operating lease which
commenced in May 1997. The lease requires payments of approximately $3,200 per
month and expires during June 2000, at which time the Company has the option to
renew the lease for an additional two years. Rent expense for the years ended
December 31, 1998 and 1997 was approximately $38,100 and $14,500, respectively.
27
<PAGE>
ALLNETSERVICES.COM CORP.
NOTES TO FINANCIAL STATEMENTS--Continued
The following is a schedule of the future minimum rental payments under this
non-cancelable operating lease as of December 31, 1998:
Year Ending
December 31,
------------
1999 $ 39,000
2000 20,000
---------------
$ 59,000
===============
NOTE I--CONCENTRATIONS OF CREDIT RISK
Cash concentration: The Company maintains its cash in bank deposit accounts
which, at times, may exceed federally insured limits. The balances are insured
by the Federal Deposit Insurance Corporation up to $100,000. The Company has not
experienced any losses in such accounts.
Major customers: The Company had one customer that accounted for approximately
64% and 87% of net sales in 1998 and 1997, respectively. Additionally, this
customer accounted for substantially all of the Company's accounts receivable in
1997.
NOTE J--MAJOR SUPPLIERS
The Company purchased approximately 61% and 66% of its total purchases from one
supplier during the years ended December 31, 1998 and 1997, respectively.
NOTE K--SUBSEQUENT EVENTS
Subsequent to December 31, 1998, the Company sold 550,000 shares of common stock
to certain suitable investors pursuant to a Regulation D Rule 504 Offering. The
shares of common stock were sold at prices ranging from $0.857 to $2.00 per
share. Gross cash proceeds to the Company related to this offering amounted to
$700,000.
In January 1999, the Company entered into an agreement whereby the Company is
the exclusive licensee in the United States of a single user software program
that employs voice recognition technologies. The agreement requires the Company
to issue 400,000 shares of restricted common stock and pay minimum royalties as
follows:
28
<PAGE>
ALLNETSERVICES.COM CORP.
NOTES TO FINANCIAL STATEMENTS--Continued
Years Ended January 31,
-----------------------
2000 $100,000
2001 200,000
2002 250,000
2003 300,000
2004 350,000
The Company is required to pay a technical service fee of $2,000 per month and a
sales expense fee of $120,000 for the first two contract years. After the first
two contract years, any future sales expense fees will be mutually agreed to by
the companies. The Company is also required to pay $100,000 or 50% of the costs
for making upgrades to the software, whichever is less. The agreement also
requires the Company to maintain an escrow account with an initial balance of
$300,000. All receipts related to the sale of the software are to be deposited
into this account. The funds in the account shall be used exclusively for
production, marketing, sales and/or distribution of the software product.
NOTE L--LIQUIDITY
The Company incurred net losses of approximately $975,000 and $481,000 for the
years ended December 31, 1998 and 1997, respectively. The Company's working
capital deficiency at December 31, 1998 amounted to approximately $323,000. The
Company has raised approximately $700,000 in a Regulation D Rule 504 Offering
subsequent to December 31, 1998. Management of the Company believes that the
inflow of new capital, coupled with the current available funds is sufficient
capital resources to allow the Company to continue in existence as a going
concern. In the event that the Company does not achieve profitable operations in
the near future, management will be forced to raise additional funds through the
sale of equity securities or the issuance of additional debt. Management is
currently evaluating several proposals to obtain additional financing through
the sale of convertible debt and equity securities.
PART III
- --------
ITEMS 1 AND 2: INDEX TO AND DESCRIPTION OF EXHIBITS:
- ----------------------------------------------------
A) Financial Statements filed as part of the Registration Statement.
(a) Audited year end financial statements as of December 31, 1998 and
1997, page 16.
29
<PAGE>
ALLNETSERVICES.COM CORP.
NOTES TO FINANCIAL STATEMENTS--Continued
(B) Exhibit Description
3.i Articles of Incorporation, as amended(1)
3.ii By-Laws(1)
23.2 Consent of Berkowitz Dick Pollack & Brant, LLP(2)
27 Financial Data Schedule(2)
(1) To be Filed By Amendment
(2) Filed Herewith
30
<PAGE>
AllnetServices.com Corp.
INCOME STATEMENT
FOR THE 6 PERIODS ENDED JUNE 30, 1999
____ YEAR TO DATE _____
ACTUAL PERCENT
Revenue
Sales Customers $1,498,910.06 99.3 %
Auction Vendor Fees 1,768.17 .1
Design/Hosting Sales 18,979.42 1.3
Shipping & Handling (UPS) (1,994.08) (.1)
Sales Discounts and Returns (7,646.21) (.5)
--------------- -------
TOTAL Revenue 1,510,017.36 100.0
Cost of Sales
Cost of Sales Goods 1,332,529.38 88.2
Purchases - Cost of Sales (101.87) .0
Cost of Sales - Freight In 4,717.90 .3
Liability Ins. Cost of Sales 978.24 .1
--------------- -------
TOTAL Cost of Sales 1,338,123.65 88.6
--------------- -------
Gross Profit 171,893.71 11.4
General Administrative
Workmens Comp. Insurance (437.00) .0
Selling Exp. Advertising 31,253.54 2.1
Selling Exp. Consulting 22,021.00 1.5
Credit Card Fees 1,411.56 .1
G & A Labor Straight Time 208,427.25 13.8
G & A Fica Expense 12,922.46 .9
G & A Medicare Expense 3,022.21 .2
G & A Futa Expense 590.60 .0
G & A Florida SUI Exp 1,703.08 .1
Workmens Comp. Ins. G & A 2,765.55 .2
G & A Medical Ins. Expense 1,678.26 .1
G & A Consultants Fees 34,725.00 2.3
Rent 19,080.00 1.3
Electricity 1,556.27 .1
ISP Expense 3,966.01 .3
Repair & Maintenance 538.80 .0
Travel & Entertainment 15,113.16 1.0
Travel & Ent. - Meals Portion 378.22 .0
Telephone 13,599.56 .9
Mobile Phone 818.63 .1
Security 222.60 .0
Legal Fees 20,194.45 1.3
Accounting Fees - G & A 32,946.25 2.2
Bank Charges 1,952.44 .1
Temporary Service Expense 1,079.20 .1
Payroll Processing 1,470.80 .1
Office Supplies 4,411.35 .3
G & A Postage 3,125.75 .2
Office Expense 830.07 .1
G & A Advertising 1,300.00 .1
31
<PAGE>
AllnetServices.com Corp.
INCOME STATEMENT
FOR THE 6 PERIODS ENDED JUNE 30, 1999
____ YEAR TO DATE _____
ACTUAL PERCENT
General Administrative (Continued)
Investor Relations Expense $18,712.21 1.2 %
Interest on Charge Cards 758.37 .1
Interest Exp. (CRG Loan) 3,706.29 .2
Interest Revenue (2,406.62) (.2)
Misc. Income (7,625.00) (.5)
--------------- -------
TOTAL General Administrative 455,812.32 30.2
--------------- -------
Net Income from Operations (283,918.61) (18.8)
--------------- -------
Earnings before Income Tax (283,918.61) (18.8)
--------------- -------
Net Income (Loss) $(283,918.61) (18.8)%
=============== =======
32
<PAGE>
AllnetServices.com Corp.
BALANCE SHEET
JUNE 30, 1999
Assets
Current Assets
Cash Operating Acct. Union $131.64
Cash Oper. Acct Metrobank 206,087.50
Payroll Acct. Metrbank 948.47
M & T Cash Operating Acct 17.32
MetroBank Money Mkt. Acct. 2,110.33
Acct. Receivable 189,760.02
A/R Danka Imaging 55,289.47
Allowance for Doubtful Accts (54,971.73)
Inventory 31,886.27
Prepaid Inventory 229,796.93
Reserve on Prepaid Inventory (219,600.00)
Advance to CCM 10,000.00
---------------
TOTAL Current Assets 451,456.22
Fixed Assets
Fixed Assets, Furn & Fixtures 6,118.70
Fixed Assets Equipment 60,686.02
Accumulated Depreciation (9,890.00)
---------------
TOTAL Fixed Assets 56,914.72
Other Assets
Deposits 7,268.00
Licensing fee 25,000.00
---------------
TOTAL Other Assets 32,268.00
---------------
TOTAL Assets $540,638.94
===============
33
<PAGE>
AllnetServices.com Corp.
BALANCE SHEET
JUNE 30, 1999
Liabilities AND Equity
Current Liabilities
Accounts Payable $180,376.21
Accrued Expenses 47,201.67
Fed. With Tax Payable (4.43)
FICA Tax Payable 4.43
Fl Sales Tax Payable 56.20
PO Clearing Inventory (108.27)
Advances from David R. Aubel 5,100.00
Advance from Avara Trading 59,382.24
Computer Resource Group Factor (24,877.80)
Accrued Purch.HighTechLogistic 120,379.34
---------------
TOTAL Current Liabilities 387,509.59
---------------
TOTAL Liabilities 387,509.59
Equity
Common Stock 837.00
Additional Pd in Capital 1,882,570.70
Retained Earnings (1,446,359.74)
Retained Earnings-Current Year (283,918.61)
---------------
TOTAL Equity 153,129.35
---------------
TOTAL Liabilities AND Equity $540,638.94
===============
34
<PAGE>
SIGNATURES
- ----------
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
ALLNETSERVICES.COM CORP.
By:/s/Robert Aubel Date: August 27, 1999
---------------------------- ---------------
Robert Aubel, President
35
CONSENT OF INDEPENDENT AUDITORS'
Board of Directors
Allnetservices.com Corp.
3650 Coral Ridge Drive, Suite 101
Coral Springs, Florida 33065
We consent to the use in this Registration Statement of AllnetServices.com Corp.
on Form 10-SB, of our report dated April 27, 1999 of AllnetServices.com Corp.
for the years ended December 31, 1998 and 1997, which are part of this
Registration Statement, and to all references to our firm included in this
Registration Statement.
/s/ BERKOWITZ DICK POLLACK & BRANT, LLP
---------------------------------------
BERKOWITZ DICK POLLACK & BRANT, LLP
CERTIFIED PUBLIC ACCOUNTANTS
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of AllnetServices.com Corp. for the year ended December 31,
1998 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-1997
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<PERIOD-END> Dec-31-1997
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0
0
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</TABLE>
