<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-28065
INTERNET SERVICE NETWORK, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 58-2489419
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification no.)
204 EAST MCKENZIE STREET, UNIT D
PUNTA GORDA, FLORIDA 43016
(Address of principal executive offices)
(941)575-7878
Issuer's telephone number
HAWKEYE CORPORATION
SUITE 310, 1000 ABERNATHY ROAD NE
ATLANTA, GEORGIA 30328
(Former name, former address and former fiscal year,
if changed since last report)
As of May 1, 2000, there were 26,661,000 shares of common stock outstanding.
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INTERNET SERVICE NETWORK, INC.
<TABLE>
Table of Contents
<CAPTION>
Page
----
Part I. Financial Information
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<S> <C>
Item 1. Financial Statements 3
Balance Sheet as of March 31, 2000 (unaudited) 3
Statements of Operations for the three-months
ended March 31, 2000 and 1999 (unaudited) 4
Statements of Operations for the nine-months
ended March 31, 2000 and 1999 (unaudited) 5
Statements of Cash Flows for the nine-months
ended March 31, 2000 and 1999 (unaudited) 6
Notes to Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. Other Information
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Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
(a) Exhibits
(b) Reports on Form 8-K
Signatures 17
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
INTERNET SERVICE NETWORK, INC.
BALANCE SHEET
Unaudited
<CAPTION>
MARCH 31, 2000
ASSETS (UNAUDITED)
--------------
<S> <C>
Cash $ 138
Prepaid expenses 443
Other current assets 0
Deferred tax asset 50,858
---------
Total current assets 51,439
Premises and equipment, net 83,667
---------
Total assets $ 135,106
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
Line of credit $ 9,979
Bank overdraft 6,113
Accounts payable 18,397
Deferred revenue 9,477
Advance from shareholder 125,000
Due to affiliate 37,953
Current portion of long-term debt 14,680
---------
Total current liabilities 221,599
Long-term debt less current portion due within one year 19,804
Shareholders' equity:
Preferred stock, par value $.0001 per share,
20,000,000 shares authorized; no shares issued and
outstanding --
Common stock, par value $.0001 per share, 100,000,000
shares authorized; 26,661,000 shares issued and
outstanding 2,666
Additional paid-in capital 0
Accumulated deficit (108,963)
Unrealized loss on securities available for sale --
---------
Total shareholders' equity (106,297)
---------
Total liabilities and shareholders' equity $ 135,106
=========
</TABLE>
See accompanying notes to financial statements.
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<TABLE>
INTERNET SERVICE NETWORK, INC.
STATEMENTS OF OPERATIONS
Unaudited
<CAPTION>
THREE MONTHS ENDED MARCH 31
---------------------------
2000 1999
-------- -------
<S> <C> <C>
INCOME
Internet service fees $109,250 $60,410
Other revenue 340 2,201
-------- -------
Total revenue 109,590 62,611
-------- -------
COST AND OPERATING EXPENSES
Cost of revenues 41,223 21,611
Cost of subscriber start-up 80 1,308
Advertising 3,234 5,294
Bank and service charges 3,756 3,238
Consulting fees 125,000 0
Depreciation 2,400 2,391
Employee leasing costs 19,329 12,770
Rent 2,647 2,745
Other occupancy and office expenses 4,253 3,628
Other expenses 3,820 2,232
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Total operating expenses 205,742 55,217
-------- -------
Income (loss) from operations (96,152) 7,394
-------- -------
OTHER DEDUCTIONS
Interest expense (1,074) 0
-------- -------
Income (loss) before taxes (97,226) 7,394
-------- -------
INCOME TAXES (CREDIT) (28,217) 2,782
-------- -------
Net income $(69,009) $ 4,612
======== =======
</TABLE>
See accompanying notes to financial statements.
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<TABLE>
INTERNET SERVICE NETWORK, INC.
STATEMENTS OF OPERATIONS
Unaudited
<CAPTION>
NINE MONTHS ENDED MARCH 31
--------------------------
2000 1999
-------- --------
<S> <C> <C>
INCOME
Internet service fees $275,747 $116,320
Other revenue 4,385 4,731
-------- --------
Total revenue 280,131 121,051
COST AND OPERATING EXPENSES
Cost of revenues 99,956 56,174
Cost of subscriber start-up 19,280 7,134
Advertising 12,606 12,604
Bank and service charges 9,381 4,998
Consulting fees 125,000 0
Depreciation 7,182 3,576
Employee leasing costs 47,490 41,867
Rent 7,773 4,927
Other occupancy and office expenses 12,504 7,080
Other expenses 11,922 2,934
-------- --------
Total operating expenses 353,094 141,293
-------- --------
Income (loss) from operations (72,963) (20,242)
-------- --------
OTHER DEDUCTIONS
Interest expense (2,545) 0
-------- --------
Income (loss) before taxes (75,507) (20,242)
-------- --------
INCOME TAXES (CREDIT) (20,482) (11,303)
-------- --------
Net income $(55,025) $ (8,939)
======== ========
</TABLE>
See accompanying notes to financial statements.
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<TABLE>
INTERNET SERVICE NETWORK, INC.
STATEMENTS OF CASH FLOWS
Unaudited
<CAPTION>
NINE MONTHS ENDED MARCH 31
--------------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(55,025) $ (8,939)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 7,182 3,576
Deferred income taxes (20,482) (11,303)
Increase in other assets (443) 0
Increase in accounts payable
and other liabilities 71,395 46,095
-------- --------
Total adjustments 57,652 38,368
-------- --------
Net cash provided by operating activities 2,627 29,428
-------- --------
Cash flow from investing activities:
Purchase of premises and equipment (13,046) (28,576)
-------- --------
Net cash used in investing activities (13,046) (28,576)
-------- --------
Cash flow from financing activities:
Net borrowings on short-term debt 9,979 0
Principal payments on capital lease obligations (6,004) (455)
Proceeds from issuance of common stock and additional
paid in capital 660 --
-------- --------
Net cash provided by (used in) financing activities 4,635 (455)
-------- --------
Increase (Decrease) in cash and cash equivalents (5,784) 397
Cash and cash equivalents, beginning of period 5,922 47
-------- --------
Cash and cash equivalents, end of period $ 138 $ 444
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 2,480 $ 0
======== ========
Capital lease obligation incurred for the
acquisition of new equipment $ 30,923 $ 10,931
======== ========
</TABLE>
See accompanying notes to financial statements.
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INTERNET SERVICE NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED MARCH 31, 2000
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with instructions to Form 10-QSB. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary have
been made for the fair presentation of the Company's results for the nine-month
period ended March 31, 2000, are not necessarily indicative of the results that
may be expected for the year ended June 30, 2000.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements within the meaning of
the federal securities laws with respect to the Company's operations, industry,
financial condition, and liquidity. These statements typically include words or
phrases such as " believes," ""will likely result," "expects," "will continue,"
"anticipates," "estimates," "intends," "plans," "projects," "outlook," or
similar expressions.
The Company has based its forward-looking statements on current plans,
expectations, goals, and projections that are subject to numerous assumptions,
risks, and uncertainties. Actual results could differ materially from those
contained in or implied by our statements due to a variety of factors including:
o the Company may fail to be competitive with existing and new
competitors,
o the Company may not retain or grow its subscriber base,
o the Company may not or may not be able to adequately respond to
technological developments impacting the Internet,
o financing may not be available to the Company when needed,
o the Company's warrants may not be exercised,
o the Company's largest shareholder may reduce or eliminate his financial
support of the Company,
o a significant adverse change in the growth rate of the overall U.S.
economy may occur, such that consumer and corporate spending are
materially impacted and the number of subscribers who return to the
Company's service area during the winter season may decrease thereby
decreasing the Company's potential subscriber base,
o a significant reversal in the trend toward increased usage of the
Internet may occur.
Thus, forward-looking statements should be viewed as strategic objectives rather
than absolute targets of future performance.
OVERVIEW
Internet Services Network, Inc. ("ISNI" or the "Company") is an
Internet service provider currently serving individuals and small businesses
primarily in Charlotte County, Florida. ISNI is also a provider of Web hosting
services, a complement to its Internet access business and one of the fastest
growing segments of the Internet marketplace.
The Company offers up to 56K modem access and ISDN (Integrated Digital
Service Network) connectivity. As of March 31, 2000, the Company served
approximately 2,000 subscribers, including 27 Web hosting subscribers. The
Company's services include dial-up Internet access, Web hosting, and other
value-added services such as Web page design and Web-
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server co-location. The Company's dial-up Internet access and Web hosting are
offered in various price and usage plans designed to meet the needs of its
customers.
The Company was incorporated under the laws of the state of Delaware on
August 31, 1999, as Hawkeye Corporation, a developmental stage company created
to engage in a merger or acquisition ("Hawkeye"). It had no operations other
than issuing shares to its original shareholders. On March 23, 2000, the Company
was merged (the "Merger") with Internet Services Network, Inc., a closely held,
private company, organized in 1997 as a Florida corporation ("Internet
Services").
In the Merger, all of the issued and outstanding stock of Internet
Services, consisting of 1,000 shares of voting common stock, $0.10 par value,
all of which was owned by Werner K. Ebner, were exchanged for and converted into
24,000,000 shares of voting common stock of the Company, and the name of the
Company was changed to "Internet Service Network, Inc." The Merger was accounted
for as a pooling of interests and, therefore, the Company's financial
information included in this report has been restated for the Internet Services
transaction.
STATEMENT OF OPERATIONS
The Company derives revenue primarily from monthly subscriptions from
individuals for dial-up access to the Internet. Subscription fees vary by
billing plan. Under the Company's current pricing plans, customers have a choice
of "Monthly" billing if they pay by credit card or "Quarterly" billing if they
pay by cash or check. Subscribers are given "Unlimited Access" on both plans.
For the nine months ended March 31, 2000 and 1999, the average monthly recurring
revenue per dial-up subscriber was approximately $20. There are no "start-up"
fees for new subscribers although new customers are required to pay in advance
either one month or three months depending on the billing plan.
In the beginning of October 1999, the Company instituted a prepayment
plan available to all dial-up subscribers. Under the plan, subscribers may
prepay their access fees for either one or two years at a discounted rate.
Subscribers prepaying for one year receive a discount equivalent to two months
of service and subscribers prepaying for two years receive a discount equivalent
to three months.
In addition, the Company earns a small portion of its revenue by
providing Web hosting, domain registration, Web page design services, Web-server
co-location, and full-time dedicated access connections to the Internet. These
services have been classified as "Other revenue" on the ISNI's Statements Of
Operations.
The Company's Web-hosting services allow a business or individual to
post information on the World Wide Web so that the information is available to
anyone who has access to the Internet. The Company currently offers two pricing
plans for Web hosting subscribers, $15.95 per month for "Silver" and $19.95 per
month for "Gold". The Company also charges a one-time set-up fee of $19.95 for
both plans. ISNI had 27 Web hosting subscribers as of March 31, 2000.
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Domain registration involves the reservation on behalf of a customer of
a Web address with a organization such as Network Solutions. This service is
typically, but not always, coupled with the Company's Web page design service.
The Company has offered its Web page design services for $100 per page,
including graphics, but also from time to time packages this service with other
Internet-related services at a discount. Other services available to ISNI
customers include (a) Web-server co-location, where the customer uses the
Company's Internet T-1 access and facilities to store the customer's computer
and Web page, and (b) full-time dedicated access connections to the Internet for
customers who need uninterrupted Internet connection. These additional services
do not currently contribute significantly to the Company's total revenues.
Cost and Operating Expenses generally consist of (a) costs of revenue
and cost of subscriber start-up that are primarily related to the number of
subscribers; (b) overhead expenses that are associated more generally with
operations; and (c) depreciation, which is related to the Company's network
equipment costs.
Costs of revenue are recurring telecommunication costs that are
primarily related to the number of subscribers and are necessary to provide
service to those subscribers. Telecommunication costs include the costs
associated with local telephone lines into the Company, leased lines connecting
the Company's dial-in locations, and T-1 lines connecting the Company's main
switch to the Internet backbone. Start-up expenses for each subscriber include
the Company's software, cost of diskettes and other product media, manuals, and
packaging as well as mailing costs associated with the materials provided to new
subscribers. The Company does not defer any such subscriber start-up expenses.
Other operating expenses are incurred in the areas of advertising,
banking and credit card service fees, consulting fees, employee leasing costs,
rent, other occupancy and office expenses, and other expenses. Operating
expenses will increase over time as the Company's scope of operations increases.
However, the Company expects that such costs will be offset by anticipated
increases in revenue attributable to overall subscriber growth.
The Company advertises using paid newspaper, radio, and television
advertisements as well as flyers and postcard mailed to potential subscribers in
the Company's service area. The Company has experienced some customer defection
to providers of free internet services; however, a portion of these customers
return to the Company in order to obtain the high level of service provided by
the Company. Higher levels of advertising and marketing may be necessary in
order for the Company to enter new markets or increase its subscriber base in
its existing market to a size large enough to generate sufficient revenue to
offset such marketing expenses. The Company may determine to significantly
increase the level of marketing activity in order to increase the rate of
subscription growth and retention of existing customers. Any such increase would
have a short-term negative impact on earnings. The Company does not defer any
start-up expenses related to entering new markets.
The Company is planning to add subscribers by purchasing customer bases
from other Internet service providers initially in the Southwest Florida area.
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The Company has incurred significant bank and credit card service
charges due to the billing method of payment offered to its customers. At the
quarter ended March 31, 2000, ISNI was paying a fee of approximately 1.69% of
the amount of transactions being processed monthly through credit card services.
ISNI has used the services of an outside payroll and employee leasing
company in order to keep its costs of staffing to a minimum. At the quarter
ended March 31, 2000, the Company had five full time employees and two part-time
employees. These employees were in the areas of customer support and
maintenance, accounting, and administration. The current officers of the Company
are primarily compensated by a corporation that is wholly owned by the Company's
largest shareholder. At the present time, this shareholder intends to continue
to compensate the Company's officers in this manner until the Company's
operations can support the additional expense; however, this shareholder is
under no contractual or other obligation to do so and can discontinue this
practice at any time.
The Company leases approximately 2,500 square feet of office and
classroom space from a corporation that is wholly owned by the Company's largest
shareholder at a below market rent. The Company anticipates entering into a
long-term lease with the building owner which is expected to result in a rent
increase. Other occupancy and office expenses consists of the cost of utilities
and general office supplies.
Other expenses include costs of insurance, accounting services, dues
and subscriptions, travel related to the Merger, and reimbursed employee
expenses.
The Company expects to continue to focus on increasing its subscriber
base, which will cause its operating expenses and capital expenditures to
increase in addition to its revenues. There can be no assurance, however, that
growth in the Company's revenue or subscriber base will continue or that the
Company will be able to achieve profitability or positive cash flows.
From time to time, the Company engages in discussions involving
potential acquisitions of other Internet service providers in or around the
Southwest Florida area. If the Company is able to successfully negotiate
agreements to acquire one or more Internet service providers, the Company may
need to raise additional debt or equity capital to finance such acquisitions.
There is no assurance that the Company will be able to successfully complete any
such acquisition transaction. Any significant acquisition could materially
affect the Company's operating and financial expectations and results,
liquidity, and capital resources.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
Income. Internet service fees for the three months ended March 31,
2000, were $109,250, as compared to $60,410 for the comparable quarter in 1999.
This 44.7% increase in fees was the result of an increase in total subscribers
from approximately 1,400 subscribers at March 31,
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1999, to approximately 2,000 subscribers at March 31, 2000. This increase in
subscribers is due primarily to print advertising directed toward potential dial
up customers. Other revenue decreased significant during the three months ended
March 31, 2000 as compared to the comparable quarter because the Company
curtailed its adverting for its ancillary services such as Web page hosting and
design. The Company intends to grow revenue in this area in the fourth quarter
by directing additional advertising to potential customers of these services.
Cost of revenues. Cost of revenues for the three months ended March 31,
2000, was $41,223, as compared to $21,611 for the comparable quarter in 1999.
This increase of 47.58% was mainly due to the acquisition of additional phones
lines and leasing of new equipment connected with the increase in total
subscribers.
Cost of subscriber start-up. Cost of subscriber start-up for the three
months ended March 31, 2000, was $80 as compared to $1,308 for the comparable
quarter in 1999. This decrease of 1534.35% in subscriber start-up cost was due
to a substantial decrease in the need for start up disks which the Company
provided to its subscribers free of charge. In the quarter ended March 31, 1999,
nearly every subscriber required a start-up disk to install the Internet
Explorer software as a browser whereas in the most recent periods, most
customers already had the Internet Explorer installed in their computer due to
the increased use of Windows 98.
Advertising. Advertising for the three months ended March 31, 2000, was
$3,234, as compared to $5,294 for the comparable quarter in 1999. This decrease
of 63.71% in advertising was due to a temporary hold on new advertising while
the Company's management team explored different opportunities for the future of
the Company, ultimately resulting in the Merger. As a result, Other revenues
such as Web hosting and designing had decreased significantly.
Bank and service charges. Bank and service charges for the three months
ended March 31, 2000, were $3,756, as compared to $3,238 for the comparable
quarter in 1999. This increase of 13.80% was a result on the increase of the
Company's total subscribers and their use of the Monthly billing system.
Consulting Fees. Consulting fees for the three months ended March 31,
2000, were $125,000, and there were no such fees incurred by the Company in the
comparable quarter in 1999. Internet Services paid a $25,000 consulting fee to
Coral Capital Partners prior to the Merger and an additional $100,000 to Coral
Capital Partners at the closing of the Merger for services rendered in
connection with the Merger. The Company does not expect to pay similar
consulting fees in the future and thus, this is a non-recurring expense.
Employee leasing costs. Employee leasing costs for the three months
ended March 31, 2000, were $19,329, as compared to $12,770 for the comparable
quarter in 1999. This increase of 33.93% was a result of the need for the
Company to hire two additional technical support personnel due to the 44.70%
increase in the Company's subscriber base.
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Other occupancy and office expenses. Other occupancy and office
expenses for the three months ended March 31, 2000, were $4,253, as compared to
$3,628 for the comparable quarter in 1999. Other occupancy and office expenses
increased 14.68% due primarily to an increase in utility costs which are
associated with having more computer equipment and more subscribers.
NINE MONTHS ENDED MARCH 31, 2000 COMPARED TO NINE MONTHS ENDED MARCH 31, 1999
Income. Internet service fees for the nine months ended March 31, 2000,
were $275,747, as compared to $116,320 for the comparable period in 1999. This
57.82% increase was the result of an increase in total subscribers. This
increase in subscribers is due primarily to print advertising directed toward
potential dial up customers. Other revenue decreased by 7.90% during the nine
months ended March 31, 2000, as compared to the comparable period in 1999. The
Company intends to grow revenue in this area in the fourth quarter by directing
additional advertising to potential customers of these services.
Cost of revenues. Cost of revenues for the nine months ended March 31,
2000, were $99,956, as compared to $56,174 for the comparable period in 1999.
This increase of 43.80% was mainly due to the acquisition of additional
telephone lines and leasing of new equipment connected with the 57.82% increase
in total subscribers.
Cost of subscriber start-up. Cost of subscriber start-up for the nine
months ended March 31, 2000, was $19,280, as compared to $7,134 for the
comparable period in 1999. This increase of 63.00% in start-up cost was due to a
substantial need of free start-up disks provided to new customers early in this
period. The Company provides to its customers the Internet Explorer software as
a browser to the Internet. The cost of subscribers is mainly associated for the
purchase of diskettes and packaging of the set up for the new subscribers. This
expense decreased significantly late in the period as most new subscribers
already had the Internet Explorer software installed on their computers.
Bank and service charges. Bank and service charges for the nine months
ended March 31, 2000, were $9,381, as compared to $4,998 for the comparable nine
month period in 1999. This increase of 46.72% was a result on the 57.82%
increase of the Company's total subscribers. These service charges are
associated with the customers monthly credit card payments.
Consulting Fees. Consulting fees for the nine months ended March 31,
2000, were $125,000, and there were no such fees incurred by the Company in the
comparable period in 1999. Internet Services paid a $25,000 consulting fee to
Coral Capital Partners prior to the Merger and an additional $100,000 to Coral
Capital Partners at the closing of the Merger for services rendered in
connection with the Merger. The Company does not expect to pay similar
consulting fees in the future and thus, this is a non-recurring expense.
Rent. Rent cost for the nine months ended March 31, 2000, were $7,773,
as compared to $4,927 for the comparable nine month period in 1999. This
increase of 36.62% was a result of the Company's new lease agreement with the
building owner.
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Other occupancy and office expenses. Other occupancy and office
expenses for the nine months ended March 31, 2000, were $12,504, as compared to
$7,080 for the comparable period in 1999. Other occupancy and office expenses
increased 43.38% due to an increase in utility cost that is associated with
having more computer equipment and more subscribers in the most recent period.
Other expenses. Other expenses include commissions, liability
insurance, accounting and bookkeeping charges, dues and subscriptions, and also
travel related expenses as a result of the Merger. Other expenses for the nine
months ended March 31, 2000, were $11,922, as compared to $2,934 for the
comparable nine month period in 1999. The 75.39% increase in Other expenses was
primarily due to commissions paid to a software specialist in connection with
the web design business.
LIQUIDITY AND CAPITAL RESOURCES.
The Company is currently seeking a bank loan in the amount of $250,000
in order to relieve the current majority shareholder of the necessity of making
further advances associated with filings required from the SEC and the
subsequent costs associated with issuing the Company's stock. The Company plans
to issue an as-yet-undetermined number of shares of common stock in the first
quarter of 2001 and anticipates the exercise of outstanding warrants. The
Company currently intends to use the proceeds from such common stock issuance
and warrant exercises for the acquisition of companies providing Internet
services in the Southwest Florida region. Such plans could change based upon the
Company's capital needs at that time as well as the then existing acquisition
opportunities, stock market developments, and other unknown future events.
The Company does not have any commitments to make additional capital
expenditures and does not anticipate the need to make further capital
expenditures during the remainder of the current fiscal year.
SEASONAL ASPECTS OF BUSINESS
There is a strong seasonal influence which is associated with the
Company's location in Southwest Florida, a popular winter holiday destination
for retirees of northern States. As a consequence, during the winter months,
subscriber numbers increase rapidly and, during the summer months, they decrease
significantly. Commencing in the fourth quarter of 2000, the Company will offer
its customers who are part-time Southwest Florida residents the ability to
maintain their e-mail account with the Company and forward their e-mails to
their summer residences' accounts during periods when they are not in residence
in Southwest Florida. The Company will charge a monthly fee of $5.00 for this
service. This new service will help to recapture these individuals as
full-paying subscribers when they return to the Company's service area during
the winter months.
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PART II. OTHER INFORMATION
In accordance with the instructions to Part II, the other specified
items in this Part have been omitted because they are not applicable or the
information has been previously reported.
ITEM 5. OTHER INFORMATION
Massella, Tomaro & Co., LLP, New York, audited the Hawkeye's balance
sheet prior to the Merger. Internet Services' financial statements had never
been audited prior to the Merger. Subsequent to the Merger, the Company decided
it would be more efficient to engage an accounting and auditing firm that had a
office located in the Southwest Florida area where the Company's new principal
executive offices are located. Consequently, the Company engaged the firm of
Hill, Barth & King, Inc. to serve as its independent accountants and prepare the
Company's audited statements.
Massella, Tomaro & Co., LLP was notified that its services were no
longer needed on April 7, 2000, at which time the Company engaged Hill, Barth &
King. Massella, Tomaro & Co., LLP's report on Hawkeye's balance sheet did not
contain an adverse opinion or disclaimer of opinion nor was it qualified or
modified as to uncertainty, audit, scope, or accounting principals. The decision
to change accountants was not recommended or approved by any audit committee or
similar committee of the Board of Directors. The Board of Directors of the
Company ratified the decision to retain Hill, Barth & King on April 7, 2000.
There were no disagreements with Massella, Tomaro & Co., LLP on any matter of
accounting principals or practices, financial statement disclosure, or auditing
scope or procedure.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 3(i) Certificate of Incorporation (previously filed as
Exhibit 2.1 of the Company's registration statement
on Form 10-SB (File No. 0-28065), filed on November
12, 1999, which is incorporated herein by reference).
Exhibit 3(ii) By-Laws (previously filed as Exhibit 2.2 of the
Company's registration statement on Form 10-SB (File
No. 0-28065), filed on November 12, 1999, which is
incorporated herein by reference).
Exhibit 4 Instruments defining the rights of holders. Reference
is made to Articles FOUR, EIGHT, NINE, TEN, ELEVEN,
TWELVE, THIRTEEN, FOURTEEN, and FIFTEEN, incorporated
by reference above.
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K
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The Company filed a report on Form 8-K, dated April 25, 2000,
under report item numbers 1, 2, and 7, concerning the merger
of Internet Services into Hawkeye and the resulting name
change of the Company to Internet Service Network, Inc.
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<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERNET SERVICE NETWORK, INC.
(Registrant)
Date: May 19, 2000 /s/ Lesly Benoit
-------------------------------------
Lesly Benoit, Chief Financial Officer
(Principal Financial Officer)
-17-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE UNAUDITED
FINANCIAL STATEMENTS OF INTERNET SERVICE NETWORK, INC. FOR THE NINE MONTHS ENDED
MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 138
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 51,439
<PP&E> 98,100
<DEPRECIATION> 14,433
<TOTAL-ASSETS> 135,106
<CURRENT-LIABILITIES> 221,599
<BONDS> 0
0
0
<COMMON> 2,666
<OTHER-SE> (108,963)
<TOTAL-LIABILITY-AND-EQUITY> 135,106
<SALES> 275,747
<TOTAL-REVENUES> 280,131
<CGS> 119,236
<TOTAL-COSTS> 119,236
<OTHER-EXPENSES> 233,858
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,545
<INCOME-PRETAX> (75,507)
<INCOME-TAX> (20,482)
<INCOME-CONTINUING> (55,025)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (55,025)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
