<PAGE>
United States
Securities and Exchange Commission
Washington, DC 20549
FORM 10-QSB/A-2
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
June 30, 2000 0-28225
WORLDNET RESOURCE GROUP, INC.
(Exact name of registrant as specified in its charter)
UTAH
-----
(State or other jurisdiction of incorporation or organization
91-2063237
----------
(I.R.S. Employer Identification No.)
4052 Del Rey Avenue, Suite 108
-------------------------------
Marina Del Rey, California 90292
----------------------------------
(Address of principal executive offices)
(310) 578-6950
----------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
None
-----
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
X Yes No
---- -----
State the number of shares outstanding of each of the registrants classes
of common equity, as of the latest practicable date.
Common stock, par value $.001; 45,722,084 shares outstanding
as of October 2, 2000
</Page>
<PAGE>
<PAGE> PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WORLDNET RESOURCE GROUP, INC.
(f/k/a MULTI-MEDIA INDUSTRIES CORPORATION) AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
----------------------------
<TABLE><CAPTION> ASSETS
------
December June
-------------- --------------
31, 1999 30, 2000
-------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 18,872 $ 2,616
Inventory 21,639 21,639
Notes Receivable, related party - 25,360
Due from Carrentaldirect.com - 200,000
Prepaid loan fees - -
Due from stockholder 29,912 60,528
-------------- --------------
Total Current Assets 70,423 310,143
-------------- --------------
PROPERTY AND EQUIPMENT, net 17,544 89,065
GOODWILL 150,540 316,046
INVESTMENTS 979,849 1,000,449
RECORD MASTERS 513,000 513,000
REMASTERING COSTS, net 150,567 120,316
RECORD LICENSE RIGHTS 1,000 1,000
-------------- --------------
$ 1,882,923 $ 2,350,019
-------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
CURRENT LIABILITIES
Accounts payables and accrued expenses $ 274,779 $ 358,828
Due to related party 370,666 -
Stockholders Advances 397,197 -
Due to Planet Entertainment Co 180,615 180,615
Convertible Debt - 855,000
Accrued Interest - 17,100
-------------- --------------
Total Current Liabilities 1,223,257 1,411,543
-------------- --------------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value;
50,000,000 shares authorized, no
shares issued and outstanding - -
Common stock, $.001 par value,
100,000,000 shares authorized;
6,391,711 and 20,938,138 shares
issued and outstanding, respectively 6,392 20,938
Contributed Capital - -
Additional Paid-In Capital 14,144,008 17,151,652
Accumulated (deficit) (13,490,734) (16,234,114)
-------------- --------------
Total Stockholders' Equity 659,666 938,476
-------------- --------------
$ 1,882,923 $ 2,350,019
============== ==============
</TABLE></Page>
<PAGE>
<PAGE>
WORLDNET RESOURCE GROUP, INC.
(f/k/a MULTI-MEDIA INDUSTRIES CORPORATION) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months Ended For the Three Months Ended
June 30, June 30,
--------------------------- ---------------------------
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
SALES $ - $ - $ - $ -
COST OF SALES - - - -
------------- ------------- ------------- -------------
GROSS PROFIT - - - -
------------- ------------- ------------- -------------
OPERATING EXPENSES:
Selling, general
and administrative 669,772 73,182 303,140 24,063
Failed acquisition
costs 218,343 - 218,343 -
Depreciation and
amortization 59,422 30,578 32,308 15,289
------------- ------------- ------------- -------------
Total Operating
Expenses 947,537 103,760 553,791 39,352
------------- ------------- ------------- -------------
OTHER INCOME (EXPENSES):
Amortization of Loan
fees (1,780,000) - (1,242,833) -
Interest expenses (17,100) (5,150) (17,100) (2,575)
Interest income 1,257 - 370 -
------------- ------------- ------------- -------------
Total Other
Expenses (1,795,843) (5,150) (1,259,563) (2,575)
------------- ------------- ------------- -------------
NET (LOSS) $ (2,743,380) $ (108,910) $ (1,813,354) $ (41,927)
============= ============= ============= =============
NET (LOSS) PER
COMMON SHARE BASIC
AND DILUTED $ (0.18) $ (0.03) $ (0.11) $ (0.01)
============= ============= ============= =============
Weighted Average
Number of Common
Shares Outstanding 15,587,543 3,294,392 16,057,747 3,295,458
============= ============= ============= =============
</TABLE>
</Page>
<PAGE>
<PAGE>
WORLDNET RESOURCE GROUP, INC.
(f/k/a MULTI-MEDIA INDUSTRIES CORPORATION) AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended
-----------------------------
June 30,
-----------------------------
2000 1999
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
Net (loss) $ (2,743,380) $ (108,910)
Adjustments to reconcile net (loss) to net
cash provided (used) by operations:
Depreciation and amortization 59,421 30,578
Stock issued for services and failed
acquisitions 240,002 -
Stock issued for loan fees 1,621,000 -
Bad debt from advances to acquisition target 50,000 -
Changes in:
Advances to acquisition target (650,000) -
Payments received by stockholder 400,000 -
Due from stockholders (30,616) -
Accounts payable and accrued expenses 180,678 73,182
Accrued interest expenses 17,100 5,150
-------------- --------------
Cash Flows Provided (Used) by
Operating Activities (855,795) -
-------------- --------------
CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
Purchase of equipment (78,808) -
Cash paid for acquisition of Navitec (150,000) -
Cash paid for investments (391,266) -
Collection of notes receivable 20,000 -
-------------- --------------
Cash Flows Provided (Used) by
Investing Activities (600,074) -
-------------- --------------
CASH FLOWS FORM (TO) FINANCING ACTIVITIES
Sale of Common Stock 153,648 -
Repayment of advances from stockholders (69,035) -
Proceeds from sale of convertible debt 1,355,000 -
-------------- --------------
Cash Flows Provided (Used) by
Financing Activities 1,439,613 -
-------------- --------------
NET CHANGES IN CASH (16,256) -
CASH, BEGINNING OF PERIOD 18,872 95
-------------- --------------
CASH, END OF PERIOD $ 2,616 $ 95
============== ==============
</TABLE>
</Page>
<PAGE>
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements (the
"financial statements") include the accounts of WorldNet Resource Group and
its subsidiaries (the "Company"). All material inter-company transactions
have been eliminated upon consolidation. The financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and in accordance with the instructions
for 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, the financial statements contain all
material adjustments, consisting only of normal recurring adjustments
necessary to present fairly the financial condition, results of operations,
and cash flows of the Company for the interim periods presented.
The results for the three and six months ended June 30, 2000 are not
necessarily indicative of the results of operations for the full year.
These financial statements and related footnotes should be read in
conjunction with the financial statements and footnotes included in the
Company's 8-K/A-1 filed with the Securities and Exchange Commission on
September 7, 2000.
Certain amounts in the prior year's financial statements have been
reclassified for comparative purposes to conform to the current year
presentation. These reclassifications had no effect on results of
operations or retained earnings as previously reported.
NOTE 2-ACQUISITIONS
Acquisition of Eccount, Inc.
----------------------------
During January 2000, the Company acquired 100% of the outstanding
shares of Eccount, Inc., in exchange for 12,000,000 shares of the Company's
restricted common stock. Eccount was owned by the Company's Chairman of
the Board and therefore, the acquisition price of Eccount was limited to
the predecessor cost of $23,500. By exchanging 12,000,000 shares of the
Company's restricted common stock, there was a change in control of the
Company. The Company accounted for its acquisition of Eccount under the
purchase method.
Engulf and Devour Creative Group, Inc.
--------------------------------------
During March 2000, the Company entered into a letter of intent to
purchase all of the outstanding shares of Engulf and Devour Creative Group,
Inc., a web site design and development company. The agreement was later
rescinded.
<PAGE>
WorldAg.com, Inc.
-----------------
During March 2000, the Company entered into a letter of intent with
Hagen Marketing and Communications, Inc. (Hagen) to form a joint venture
called WorldAg.com, Inc. (WorldAg), a company which will sell agricultural
and related industry products over the internet. During April 2000, the
Company entered into a development agreement with Hagen to design and build
the WorldAg.com website to be owned 60% by the Company and 40% by Hagen.
The Company was to fund WorldAg $200,000 delivered in six equal monthly
installments and to pay the rental costs for WorldAg at the Company's
corporate headquarters. In addition, the Company issued 750,000 shares of
its common stock and granted a warrant to purchase an additional 750,000
shares at $1.00 expiring three years from the date of the agreement to the
principals of Hagen. Warrants to purchase an additional 400,000 shares of
the Company's common stock were to be reserved for use in an employee
incentive plan for WorldAg. The Company is negotiating a rescission of
this agreement.
NOTE 3- CONVERTIBLE DEBT
Series A Convertible Notes
--------------------------
On March 1, 2000, the Company sold Series A 8% Convertible Notes due
on May 1, 2000 with a face amount of $555,000. The Company paid loan fees
of approximately $55,000 in cash and issued 550,000 shares of common stock
valued at $1,249,000. Interest was payable monthly at 8% per annum. The
notes are convertible into shares of common stock based upon the current
market price of the Company's common stock on the date of conversion at the
option of the note holder. The notes are in default. Interest is accruing
on the entire amount in default at 10% per annum.
Series B Notes Payable
----------------------
On March 15, 2000, the Company sold Series B 8% Notes due on June 16,
2000 with a face amount of $300,000. The Company paid loan fees of
approximately $39,000 in cash and issued 150,000 shares of common stock
valued at $365,000. Interest was payable monthly at 8% per annum. The
notes are in default. Interest is accruing at 10% per annum.
In August 2000, the holders of the Series A 8% Convertible Notes due
on May 1, 2000, and the series B 8% Notes Due on June 16, 2000, entered
into litigation with the Company to collect on past due amounts, plus
interest and legal fees. In October 2000, the note holders were granted a
judgement of $1,204,246.
NOTE 4 - SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING
ACTIVITIES
During the six months ended June 30, 2000, outstanding notes payable
and accrued expenses totaling $979,795 were exchanged for 831,816 shares of
common stock, as payment in full.
During March 2000, warrants to purchase 700,000 shares of common stock
were exercised.
During February 2000, the Company issued 21,000 shares of common stock
in exchange for a non-interest bearing note receivable of $45,360. The
Company has collected $20,000 of this receivable.
</Page>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL STATEMENTS
This Form 10-QSB contains certain forward-looking statements. For
this purpose any statements contained in this Form 10-QSB that are not
statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, words such as "may," "will,"
"expect," "believe," "anticipate," "estimate" or "continue" or comparable
terminology are intended to identify forward-looking statements. These
statements by their nature involve substantial risks and uncertainties, and
actual results may differ materially depending on a variety of factors.
General
-------
The Company was incorporated in 1981 in the state of Utah. The
Company changed its name from Multi-Media Industries Corp., to WorldNet
Resource Group, Inc., in February 2000.
In January 2000, control of the Company was acquired by the current
controlling shareholders. Since that time, the Company has undertaken to
reorganize its management and business strategy. While the Company will
continue to work in the entertainment industry, the Company will also act
as an incubator for internet-related companies primarily focused on helping
traditional brick-and-mortar businesses take advantage of new media
technology. The Company will develop these companies either as majority-
owned subsidiaries or through strategic partnering arrangements. The
Company may also acquire or partner with existing internet companies whose
business model or technology complements the Company's strategy and
enhances its products and services.
The Company has two primary criteria for evaluating companies for
acquisition and development. The first is based on demonstrated synergies
with the Company's core business and the ability to promote synergistic
business relationships among the companies within its portfolio. The
second criteria will be the ability of that company or business model to
generate revenues within a short period of time, preferably 90 days.
The Company will also seek to realize gains through the selective sale
of minority interests in its subsidiaries to outside investors. In some
cases, the Company may also seek to sell all or a majority interest in some
subsidiaries. The Company believes that this strategy provides it the
ability to increase shareholder value and provide capital to support future
growth in the Company's subsidiaries and investments. The Company expects
to continue to develop and refine the products and services of its
business, with the goal of increasing revenue as new products are
commercially introduced, and to continue to pursue the acquisition of or
investment in, additional allied companies and technologies.
The Company currently owns or is negotiating the acquisition of all or
a majority interest in several companies including, UltraVu.com, Inc.
Eccount, Inc., AnythingSurplus.com, Inc., Sprocket Music, Inc., Century
Records, Inc., and Randall Entertainment, Inc. The Company has minority
interests in MyMobileCity, Inc., EnterTech Media Group, Inc.,
Auctionfun.com, Inc., and Hall of Fame Partners, Inc.
</Page>
<PAGE>
Products and Services
---------------------
The products and services of the Company's subsidiaries as of August
31, 2000, include the following:
UltraVu.com
The Company is currently finalizing contracts to acquire certain
information streaming technology, domain names, business concepts, business
plan, industry contacts and know how from its developers. The primary
developer of which is Stephen Brown, the Company's President and CEO.
Pursuant to the Company's commitment to this acquisition, the Company has
set aside 3,000,000 restricted shares of Company common stock. Mr. Brown
will receive 2,500,000 of those shares. The remaining shares will be
issued to a non-affiliated third party.
Upon completion of the final contracts, the business of UltraVu will
be to exploit this information streaming technology, including the
distribution of the UltraVu Player through which streamed information can
be viewed.
MyMobileCity
In August 2000, the Company acquired Stephen Brown's 20% interest in
MyMobileCity in exchange for 2,000,000 restricted shares of Company common
stock. MyMobileCity provides directory services for web enabled telephones
and internet enabled PDA's such as the Palm VII. Via MyMobileCity
individuals can obtain tailored information on dining, drinking, shopping
and other leisure time activities in relation to the users current
location. In essence, MyMobileCity delivers a location and content
tailored "yellow pages" to the users fingertips.
</Page>
<PAGE>
EnterTech Media Group
In August 2000, the Company exchanged 10,000,000 restricted shares of
its common stock for 2,000,000 restricted shares of EnterTech common stock.
The Company is also working to finalize a strategic agreement with
EnterTech to collaborate on the production of programing for the internet
and visual telephone based technologies, both wired and wireless. The
companies are also considering expanding their websites to include areas
devoted to original and re-purposed 3D content, as well as specific
programming such as children's programming and science fiction. It is
anticipated that this programming will be marketed on a business-to-
business basis to sites using the UltraVu Player.
Eccount
The Company acquired Eccount in January 2000, when it issued
12,000,000 post-split shares of the Company's restricted common stock to
Stephen Brown to acquire all of the issued and outstanding shares of
Eccount. Eccount will be an online incentive bank consisting of electronic
dollars earned by members when shopping on the internet for goods or
services from member merchants. These eccount dollars in turn can be used
by the eccount members as payment for purchases from member merchants
within the system. Eccount will be used to enhance and encourage business
among member merchants, particularly the Company's subsidiaries. The
Company will target a wide range of businesses to be member merchants
including supermarkets, telecommunications companies, airlines, credit card
companies, music and book sellers, leading online merchants and content
providers, and others.
Eccount will also sell on-line direct marketing services to its member
merchants and others.
AnythingSurplus.com
AnythingSurplus was established to be the premier internet site
providing an on-line discount store that specializes in providing retail
surplus inventory to consumers, and to a lesser extent to businesses. The
surplus inventory will come from a variety of industries including home
electronics, furniture, sporting goods, pet supplies, clothing, and more.
All merchandise will be sold on consignment. Revenue will be generated by
equally splitting excess revenues over merchandise liquidation value with
the partnering companies.
The Company is currently building a web site for AnythingSurplus,
which will be accessible at http://www.anythingsurplus.com.
Auctionfun.com
The Company acquired a five percent interest in Auctionfun in December
1999. Auctionfun is a development stage company established to be a premier
source for buying and selling products and/or services in a unique and
entertaining auction format on the internet. As the name suggests, the
niche of Auctionfun is on the actual transaction. The focus is to provide
a fun and enjoyable experience for consumers as they shop and barter on-
line.
</Page>
<PAGE>
In addition to the auction service, Auctionfun will create a site
where communities can develop around specific products and business
categories. For instance, train collectors can meet people with the same
interests, distributors can chat with manufacturers, and corporations can
engage distributors and consumers with new promotions. This will be done
through providing a community section on the web site. These sections
provide a hub to communicate and will contain links to specific products,
associations, clubs, and other related sites.
Sprocket Music
Sprocket Music will be a traditional record label company. Sprocket
will find and sign artists to its label and engage in all other activities
associated with a record label company. Sprocket will have a traditional
off-line retail distribution system. Sprocket will also have an on-line
presence. Music from its artists will be downloadable via mp3 technology.
The Company is currently finalizing contracts to acquire domain names,
business concepts, business plans, technology, industry contacts and know
how from the individuals who developed this business model. Included among
those individuals is Stephen Brown. The Company has set aside 4,500,000
restricted common shares for this acquisition. Pursuant to the terms of
the agreement, Mr. Brown will receive 1,500,000 of those shares. The
remaining shares will go to non-affiliated third parties.
Century Records
Century is involved in various areas of the recorded music industry.
Century's principal activities include the acquisition, licensing,
production, marketing and distribution of high quality recorded music in a
variety of music formats: Compact Disks ("CD's"), video, CD-ROM and to a
lesser extent, cassette tapes. Century produces such types of music as
gospel, adult contemporary, reggae, top 40, blues, country, rap, rock,
instrumental, rock and roll, jazz, pop rock, classical, easy listening, big
band, rhythm and blues, various ethnic folk and music recordings.
Century owns a Master Catalog of about 4,000 song titles. Ownership
of such master recordings gives the owner all the rights to commercially
exploit the master recordings in any formats which are legally permissible.
The owner of a master recording pays the artist continuing royalty on
revenues generated by the commercial exploitation of the master recordings.
The usual industry terms of such royalty arrangements require continuing
royalties on net sales. In certain instances, Century's rights to these
master recordings are not exclusive.
</Page>
<PAGE>
Hall of Fame
The Company owns a 20% interest in Hall of Fame. Hall of Fame is a
development stage company established to create a national Big Band & Jazz
Hall of Fame Museum, produce an annual network television awards show and
stage an annual celebrity golf tournament. Hall of Fame currently owns the
exclusive license to the Federal Trademark of "The National Big Band & Jazz
Hall of Fame Museum", and has a contract with Emmy Award winner Steve
Binder to produce and direct the television awards show. Although Hall of
Fame will make great efforts to ensure the success of all three activities,
the museum is the main focus of the project.
Hall of Fame believes it will gain most of the exposure for the museum
through promotional events. The two main promotional activities that will
take place annually are the production of the television awards show and
the celebrity golf tournament. In addition, Hall of Fame will develop a
website museum. The virtual museum will contain over 1,500 musician
biographies, and provide a taste for the actual museum. Also, admission
tickets will be available for purchase on-line.
Randall Entertainment
Randall Entertainment is currently inactive.
Liquidity and Capital Resources
-------------------------------
Since our inception, we have financed our operations primarily through
loans and private sales of our equity securities. As of June 30, 2000, we
had $2,616 in cash. For the six months ended June 30, 2000, operating
activities used net cash of $855,795 primarily from a net loss from
operations of $2,743,380, which was offset by depreciation and amortization
of $59,421, amortization of loan fees of $1,621,000 and stock for issued
services and failed acquisition costs valued at $240,002. The Company also
advanced $650,000 to an acquisition target, of which $50,000 was written
off and $400,000 which was collected by our President to offset advances
made by him to the Company.
For the six months ended June 30, 2000, investing activities used net
cash of $600,074, primarily for the acquisition of Navitec (the Company's
recently completed reverse merger) and for other investments.
Financing activities provided net cash of $1,439,616, primarily from
the proceeds from the sale of convertible debt, which totaled $1,355,000
and the sale of common stock.
</Page>
<PAGE>
Results Of Operations
---------------------
Comparison of the six months ended June 30, 2000 and the six months
ended June 30, 1999.
Revenues
--------
The Company had no revenues during the six month periods ended June
30, 2000 and 1999.
Selling, General and Administrative Expenses
--------------------------------------------
Selling, general and administrative expenses increased from $73,182 to
$669,772 for the six months ended June 30, 2000 as compared to the
corresponding period in 1999. The increases for the six months were
primarily due to increase in web development expense, business development
expense, investor relations and promotions, and legal and accounting fees.
Depreciation and Amortization
-----------------------------
Depreciation expense during the six months ended June 30, 2000 was
$7,287 as compared to $466 for the six months ended June 30, 1999.
Amortization expense during the six months ended June 30, 2000 was
$52,134 increasing from $30,112. Amortization of goodwill totaled $21,883
for the six months ended June 30, 2000, as compared to $0 during the prior
period. The increase in goodwill came as a result of the
AnythingSurplus.com, Eccount and Navitec acquisitions. Amortization
expense for record re-mastering costs was $30,251 and $30,112 for the six
month periods ended June 30, 2000 and 1999, respectively.
Financing Costs
---------------
Financing costs during the six months ended June 30, 2000 were
$1,780,000 as compared to $0 for the six months ending June 30, 1999. The
increase consisted of loan fees in connection with the issuance of various
convertible notes issued during the period, including the fair market value
of warrants issued in connection with the financing.
Interest Expense
----------------
Interest expense during the six months ended June 30, 2000 was $17,100
as compared to $5,150 for the corresponding prior period due to the
increase in debt outstanding during the period.
</Page>
<PAGE>
Failed Acquisitions
-------------------
A total of $218,343 in failed acquisitions represented expenses
covering salaries, sales and marketing promotions, professional fees and
other organizational costs incurred. The Company was establishing an
internet platform for an agricultural business concern but considered that
such activity was not in the best interest of the Company.
Comparison of the three months ended June 30, 2000 and the three
months ended June 30, 1999.
Revenues
--------
The Company had no revenues during the three month periods ended June
30, 2000 and 1999.
Selling, General and Administrative Expenses
--------------------------------------------
Selling, general and administrative expenses increased from $24,063 to
$303,140 for the three months ended June 30, 2000 as compared to the
corresponding period in 1999. The increases for the three months were
primarily due to increase in web development expense, business development
expense, investor relations and promotions, and legal and accounting fees.
Depreciation and Amortization
-----------------------------
Depreciation expense during the three months ended June 30, 2000 was
$6,473 as compared to $233 for the three months ended June 30, 1999.
Amortization expense during the three months ended June 30, 2000 was
$25,834 increasing from $15,056. Amortization of goodwill totaled $11,625
for the three months ended June 30, 2000, as compared to $0 during the
prior period. The increase in goodwill came as a result of the
AnythingSurplus.com, Eccount and Navitec acquisitions. Amortization
expense for record re-mastering costs was $15,195 and $15,563 for the three
month periods ended June 30, 2000 and 1999, respectively.
Financing Costs
---------------
Financing costs during the three months ended June 30, 2000 were
$1,242,833 as compared to $0 for the three months ending June 30, 1999.
The increase consisted of loan fees in connection with the issuance of
various convertible notes issued during the period, including the fair
market value of warrants issued in connection with the financing.
Interest Expense
----------------
Interest expense during the three months ended June 30, 2000 was
$17,100 as compared to $2,575 for the corresponding prior period due to the
increase in debt outstanding during the period.
Failed Acquisitions
-------------------
A total of $218,343 in failed acquisitions represented expenses
covering salaries, sales and marketing promotions, professional fees and
other organizational costs incurred. The Company was establishing an
internet platform for an agricultural business concern but considered that
such activity was not in the best interest of the Company.
</Page>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On or about August 4, 2000, the Company and its President, Stephen
Brown, were named as defendants in a complaint filed in the United States
District Court, Central District of California (Western Division) by
H.A.A., Inc., a New York corporation, Birdie Capital Corporation, a New
York corporation, Forest Equities, a British Virgin Islands corporation,
and Steven Berger seeking to recover payment of $555,000 of Notes sold by
the Company on March 1, 2000, which were due and payable on May 1, 2000,
and a Note for $300,000 sold on March 16, 2000, which was due and payable
on June 16, 2000, as well as, interest on the Notes, prejudgment interest,
attorneys fees and costs. On or about October 16, 2000, a default judgment
was entered by the Court against the Company and Steven Brown in the amount
of $1,204,245.64.
Item 2. Changes in Securities
No instruments defining the rights of the holders of any class of
registered securities have been materially modified, limited or qualified.
The following securities, which are not registered under the
Securities Act of 1933, were issued by the Company since April 1, 2000:
On January 4, 2000, the Company sold 16,667 shares of its common stock
to an accredited investor. The Company received total consideration of
$53,000. These shares were issued pursuant to exemptions from registration
requirements set forth in Rule 504 of Regulation D and Section 3(b) of the
Securities Act of 1933.
On May 14, 2000, pursuant to a certain Development Agreement, the
Company issued 750,000 restricted shares of its common stock in exchange
for a 60% interest in WorldAg.com, Inc. The shares were issued pursuant to
an exemption from registration under Section 4(2) of the Securities Act of
1933. No cash was received by the Company. Subsequent to the issuance of
these shares, the Company and Hagen determined it would be in each party's
best interest to rescind the Agreement. The Company is currently
negotiating a recission of the Agreement and return of the 750,000 shares.
On May 17, 2000, the Company issued 100,000 restricted common shares
to a consultant for financial marketing services to be provided by the
consultant. The services were valued at $35,000. The shares were issued
pursuant to an exemption from registration under Section 4(2) of the
Securities Act of 1933.
On July 31, 2000, the Company issued 500,000 restricted common shares
to a non affiliated third party and on August 11, 2000, the Company issued
2,500,000 restricted common shares to acquire certain information streaming
technology, domain names, business concepts, business plans, industry
contacts and know how from its developers. The shares were issued pursuant
to an exemption from registration under Section 4(2) of the Securities Act
of 1933. No cash was received by the Company. Stephen Brown, the Company
President received 2,500,000 shares of the restricted common stock.
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On August 8, 2000, the Company issued 4,500,000 restricted common
shares to acquire certain domain names, business concepts, business plans,
industry contacts and know how. The shares were issued pursuant to an
exemption from registration under Section 4(2) of the Securities Act of
1933. No cash was received by the Company. Stephen Brown, the Company
President received 1,500,000 shares of the restricted common stock. The
remaining shares were issued to non-affiliated third parties.
On August 10, 2000, the Company issued 800,000 restricted common
shares to a consultant for investment marketing and analysis services to be
provided by the consultant. The services were valued at $100,000. The
shares were issued pursuant to an exemption from registration under Section
4(2) of the Securities Act of 1933. No cash was received by the Company.
On August 11, 2000, the Company issued 10,000,000 shares of its
restricted common stock in exchange for 2,000,000 restricted shares of
EnterTech Media Group, Inc., common shares. The shares were issued
pursuant to an exemption from registration under Section 4(2) of the
Securities Act of 1933. No cash was received by the Company.
On August 21, 2000, the Company issued 2,000,000 shares of its
restricted common stock to Stephen Brown to acquire his 20% interest in
MyMobileCity.com. The shares were issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933. No cash was
received by the Company.
Item 5. Other Information
On March 28, 2000, the Company reported that it had reached agreements
in principle to acquire Engulf and Devour Creative Group, Inc., and Car
Rental Direct.com, Inc. The parties were unable to reach mutually
agreeable terms for these acquisitions, and in May 2000, the Company
decided not to acquire either company.
The Company had advanced approximately $650,000 to Car Rental
Direct.com in anticipation of the acquisition. When the parties determined
mutually agreeable terms could not be reached, the Company accepted a
$600,000 non-interest bearing promissory note as repayment of moneys
advanced. Under the terms of the note, the Company received payments of
$200,000 on May 12, 2000 and May 17, 2000. These payments were made
directly to the Company's Chairman. The final payment was to be made on
June 24, 2000. To date, the Company has not received that final $200,000
payment.
During April 2000, the Company entered into a Development Agreement
with Hagen Marketing and Communications, Inc., ("Hagen"), to form a joint
venture called WorldAg.com, Inc. Through WorldAg.com, the Company was
going to sell agricultural and related industry products over the internet.
Pursuant to the Agreement, the Company was to provide WorldAg $200,000 in
funding. The Company did not do so. The Company and Hagen have agreed to
rescind the Agreement and are currently negotiating that recission,
including the return of the 750,000 shares issued to Hagen.
In June 2000, Samy Salem resigned as Company President, Debra Gilson
resigned as Company Secretary, and Robert Alexander resigned as a Director.
None of these resignations were the result of a dispute with the Company or
its practices or procedures. In June 2000, Noel Navarro was appointed as
Company Secretary and Treasurer. In July 2000, Stephen Brown was appointed
Company President.
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Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits. The following exhibits are included as part of this
report:
Exhibit SEC Exhibit
Number Ref. Number Title of Document Location
--------------------------------------------------------------------------
27.01 27 Financial Data Schedule Attached
(B) Reports on Form 8-K
None.
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SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this to be signed on
its behalf by the undersigned thereunto duly authorized.
WorldNet Resource Group, Inc.
October 13, 2000 /s/ Stephen Brown
------------------------------
Stephen Brown
Chief Executive Officer, President and Director
October 13, 2000 /s/ Noel Navarro
------------------------------
Noel Navarro
Vice President, Secretary, Treasurer and
Chief Accounting Officer
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