<PAGE>
United States
Securities and Exchange Commission
Washington, DC 20549
FORM 10-QSB/A-1
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
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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 September 1, 2000
</Page>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
</Page>
<PAGE>
<PAGE> WORLDNET RESOURCE GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
------
<TABLE><CAPTION>
December 31, June 30,
------------ ------------
1999 2000
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 18,872 $ 2,521
Inventory 21,639 21,639
Notes Receivable - 25,360
Due From Stockholders 29,912 29,912
------------ ------------
Total Current Assets 70,423 79,432
------------ ------------
EQUIPMENT, net 17,544 85,404
------------ ------------
LEASEHOLD IMPROVEMENT, net - 3,662
------------ ------------
INVESTMENTS 979,849 4,949,169
------------ ------------
GOODWILL 150,540 292,546
------------ ------------
OTHER ASSETS
Recording Masters 513,000 513,000
Remastering Costs, net 150,567 120,315
Record License Rights 1,000 1,000
Web Development Cost - 18,333
------------ ------------
Total Other Assets 664,567 652,648
------------ ------------
$1,882,923 $6,062,861
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 274,779 $ 202,308
Taxes Payable - 30,812
Accrued Interest Payable - 33,990
Stockholders Advances 397,197 420,731
Due to Int'l Yield Enhancement - -
Due to Planet Entertainment Co. 180,615 180,615
Note Payable - Bridge Loan - 855,000
Due to Related Parties 370,666 -
------------ ------------
Total Current Liabilities 1,223,257 1,723,456
------------ ------------
STOCKHOLDERS' EQUITY
Preferred Stock; $0.001 par value, 50,000,000
shares authorized, no shares issued and outstanding
Common Stock; $0.001; par value, 150,000,000
shares authorized, 6,391,711 shares issued
and 20,938 shares issued and outstanding 6,392 20,938
Contributed Capital - 5,000
Additional Paid-In Capital 12,314,752 19,523,152
Accumulated (deficit) (11,661,478) (15,209,685)
------------ ------------
Total Stockholders' Equity 659,666 4,339,405
------------ ------------
$ 1,882,923 $ 6,062,861
============ ============
</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
--------------------------
Years Ended December 31, June 30,
-------------------------- --------------------------
1998 1999 1999 2000
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
SALES $ 4,547 $ - $ - $ -
COST OF SALES 1,478 - - -
------------ ------------ ------------ ------------
GROSS PROFIT 3,069 - - -
------------ ------------ ------------ ------------
OPERATING EXPENSES:
General and Administrative 183,845 345,004 49,119 577,681
Amortization 59,974 61,156 15,056 52,135
Depreciation 933 - 233 7,287
------------ ------------ ------------ ------------
Total Operating Expenses 244,752 406,160 64,408 637,103
------------ ------------ ------------ ------------
OTHER EXPENSES:
Financing Costs - - - 1,780,000
Failed Acquisition - - - 168,343
Interest expense 3,900 36,000 2,575 33,990
Loss on impairment of assets - 812,000 - -
------------ ------------ ------------ ------------
Total Other Expenses 3,900 848,000 2,575 1,982,333
------------ ------------ ------------ ------------
OTHER INCOME 8,916 - - (1,257)
------------ ------------ ------------ ------------
NET (LOSS) $ (236,667) $(1,254,160) $ (66,983) $(2,618,179)
============ ============ ============ ============
------------ ------------ ------------ ------------
NET (LOSS) PER COMMON SHARE
BASIC AND DILUTED $ (0) $ (0) $ (0) $ (0.17)
============ ============ ============ ============
------------ ------------ ------------ ------------
Weighted Average Number of
Common Shares 1,833,200 3,395,430 3,395,430 15,841,844
============ ============ ============ ============
</TABLE>
</Page>
<PAGE>
<PAGE>
WORLDNET RESOURCE GROUP, INC.,
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR 2ND QUARTER ENDING JUNE 30, 2000
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital (Deficit) Total
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances,
December
31, 1999 $ 6,391,711 $ 6,392 $14,144,008 $(11,661,478) $ 2,488,922
Issuance of
Common Stock
For Services $ 177,504 $ 177 $ 278,149 $ 278,326
Issuance of
Common Stock
for Debt $ 654,312 $ 654 $ 700,815 $ 701,469
Issuance of
Common Stock
for Acquisition
of Eccount $12,000,000 $ 12,000 $ 2,388,000 $ 2,400,000
Issuance of
Common Stock
for Acquisition
of Navitech $ 69,444 $ 69 $ 13,819 $ 13,888
Issuance of
Common Stock
for Exercise
of Warrants $ 700,000 $ 700 $ 1,620,300 $ 1,621,000
Sale of Common
Stock $ 65,167 $ 66 $ 198,945 $ 199,011
Net (Loss) for
the quarter
ended March
31, 2000 $ (903,028) $ (903,028)
-------------------------------------------------------------------
Balances,
March 31, 2000 $20,058,138 $ 20,068 $19,344,038 $(903,028) $6,772,388
Settlement of
Failed
Acquisition
- Ron & Jan Hagan $ 750,000 $ 750 $ 149,250 $ 150,000
Issuance of
Common Stock for
Investor
Relations
Service with
Venture
Catalyst $ 30,000 $ 30 $ 14,968 $ 14,998
</Page>
<PAGE>
WORLDNET RESOURCE GROUP, INC.,
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR 2ND QUARTER ENDING JUNE 30, 2000
</TABLE>
<TABLE>
<CAPTION>
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital (Deficit) Total
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Issuance of
Common Stock for
Legal and
financing
services with
Stephen Godwin $ 100,000 $ 100 $ 19,900 $ 20,000
Net (loss) for
the quarter
ended June
30, 2000 $(2,618,179) $(2,618,179)
-------------------------------------------------------------------
Balances,
June 30, 2000 $20,938,138 $20,938 $19,528,154 $(15,209,685) $ 4,339,407
===================================================================
</TABLE>
</Page>
<PAGE>
<PAGE> WORLDNET RESOURCE GROUP, INC.
Consolidated Statement of Cash
For 2nd Qtr. Ending June, 2000
<TABLE> <CAPTION>
Years Ended December 31, For the Six Months Ended
-------------------------- --------------------------
1998 1999 1999 2000
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM (TO)
OPERATING ACTIVITIES
Net Loss (236,667) (1,254,160) (106,335) (2,818,173)
Adjustments to reconcile net
(loss) to net cash provided
(used) by operations;
Depreciation and amortization 61,157 61,156 30,578 7,287
Loss on impairment of Assets - 812,000 - -
Stock issued for Services 299,465 55,000 - 515,909
Stocks issued for Conversion
Of Debt - - - 499,481
Settlement of Failed
Acquisition - - - 149,250
Changes in:
Changes in Inventory 1,228 - - -
Prepaid Expenses 21,350 - - -
Due from Stockholders - (29,912) - 180,615
Accounts Payable and Accrued
Expenses (93,745) 176,311 - (22,364)
Advances (20) - - -
Accrued Interest (48,010) (8,523) 2,575 33,990
Accrued Interest Related Party (2,083) - - -
------------ ------------ ------------ ------------
Cash Flows Provided (Used)
By Operating Activities (394) (188,128) (73,182) (1,052,671)
------------ ------------ ------------ ------------
CASH FLOWS FROM (TO)
INVESTING ACTIVITIES:
Purchase of office furniture
& equipment - - - 88,416
Advance to Anything Surplus - (52,387) - -
Advances to Cars Direct - - - (850,000)
Cash Paid for Investments - (328,250) - -
Collection of Notes Receivable - - - 20,000
------------ ------------ ------------ ------------
Cash Flows Provided (Used)
by Investing Activities - (380,627) - (541,584)
------------ ------------ ------------ ------------
CASH FLOWS FROM (TO)
FINANCING ACTIVITIES
Sale of Common Stock - 293,750 - 153,850
Repayment of Note Payable - (84,477) - -
Advances from Stockholders - 378,289 - 588,031
Proceeds of Short Term Debt - - - 855,000
------------ ------------ ------------ ------------
Cash Flows Provided (Used)
by Financing Activities - 587,542 - 1,596,681
------------ ------------ ------------ ------------
NET CHANGES IN CASH (394) 18,777 - 2,426
------------ ------------ ------------ ------------
CASH, BEGINNING OF PERIOD 489 95 95 95
------------ ------------ ------------ ------------
CASH, END OF PERIOD 95 18,872 95 2,521
============ ============ ============ ============
</TABLE>
</Page>
<PAGE>
<PAGE>
NOTE 1 - BASIS OF PRESENTATION
------------------------------
The accompanying reviewed financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and in accordance with the instructions for the 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, 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 of the three months ended March 31, 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.
NOTE 2 - GOING CONCERN ISSUES
-----------------------------
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern which
contemplates the realization of assets, particularly record masters, and
the satisfaction of liabilities in the normal course of business. The
Company has incurred operating losses since inception, has a working
capital deficit and a significant accumulated deficit. Additionally,
during 1996, efforts to market the film titles represented by the film
license rights acquired during 1995, were discontinued. The Company's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow from operations to meet its obligations on a timely
basis, and/or obtain financing as may be required.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
WorldNet Resource Group, Inc. and its wholly owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
</Page>
<PAGE>
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
EARNINGS PER SHARE
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
(SFAS No. 128) was issued in February 1997 (effective for financial
statements issued for periods ending after December 15, 1997). This
Statement simplifies the standards for computing earnings per share (EPS)
previously found in Accounting Principles Board Opinion No. 15, "Earnings
Per Share", and makes them more comparable to international EPS standards.
SFAS No. 128 replaces the presentation of primary EPS with a presentation
of basic EPS. In addition, the Statement requires dual presentation of
basic and diluted EPS on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation.
REVENUE RECOGNITION
Sales of compact disks are recognized at the time inventory has been
shipped to customers.
INVENTORY
Inventory consists of compact disks and is stated at the lower of cost
(first-in, first-out) or market.
EQUIPMENT
Equipment is carried at cost and depreciated on a straight-line basis over
the estimated useful lives of three to ten years. Depreciation expense was
$933 and $932 for the years ended December 31, 1998 and 1999, respectively
and $466 and $7287 for the three months ended June 30, 1999 and 2000,
respectively.
EQUITY INVESTMENT
The Company accounts for its equity investment under the equity method.
The Company's share of earnings is included in income as earned. During
the 2nd quarter ended June 30, 2000, earnings from the Company's equity
investment were immaterial.
OTHER INVESTMENTS
The Company accounts for other investments at fair value which approximates
cost at June 30, 2000.
REVERSE STOCK SPLIT
In January 2000, the Company's Board of Directors approved a one for twelve
reverse split of the outstanding common shares of the Company. All per
share amounts have been restated to reflect the reverse stock split.
</Page>
<PAGE>
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
-----------------------------------------------------------------
NAME CHANGE
In January 2000, the Company changed its name from Multi-Media Industries
Corporation to WorldNet Resource Group, Inc.
RECORD MASTERS
Record masters consist of record titles and are stated at the lower of cost
or net realizable value.
Amortization of record masters will be computed based on the ratio that
current years' revenues will bear to anticipated total gross revenues over
the estimated life of the record master (generally 5-10 years). As of
December 31, 1999 and 1998, no revenues have been generated from the record
masters; therefore, no amortization has been recorded. As discussed in
Note 6, the Company has determined that an adjustment of the carrying value
was required in 1999.
REMASTERING COSTS
Remastering costs consist of costs associated with the reproduction of
record titles including license costs, artwork and liner notes.
Amortization of remastering costs is computed based on a straight-line
basis over the life of the music license agreement following the date of
initial release (approximately 5 years). Amortization expense was $60,224
and $59,974 for the years ended December 31, 1999 and 1998, respectively
and accumulated amortization was $130,477 and $70,253 for the years ended
December 31, 1999 and 1998, respectively. Amortization expense was
$30,112 and $30,252 for the six months ended June 30, 1999 and 2000,
respectively and accumulated amortization was $146,518 for the six months
ended June 30, 2000.
RECORDING LICENSE RIGHTS
Recording license rights represent the exclusive unlimited rights to
certain recordings. Amortization of recording license rights will be
computed based on the ratio that current years' revenues will bear to
anticipated total gross revenues over the term of the license agreement.
As of December 31, 1999 and 1998 and for the six months ended June 30,
2000, no revenues have been generated from the recording license rights;
therefore, no amortization has been recorded.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value of financial instruments approximate carrying value due to the
short maturity of the instruments. Fair value of notes payable was based
upon current borrowing rates available for financings with similar
maturities.
</Page>
<PAGE>
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
---------------------------------------------------------------
GOODWILL
The Company amortizes costs in excess of the fair value of net assets of
businesses acquired (goodwill) using the straight-line method over the
estimated recovery periods. Recoverability is reviewed annually (or
sooner), if events or circumstances indicate that the carrying amount may
exceed fair value. Recoverability is determined by comparing the
undiscounted net cash flows of the assets, to which goodwill applies, to
the net book value including goodwill of those assets. The analysis
involves significant management judgment to evaluate the capacity of an
acquired business to perform within projections. Recoverability for
AnythingSurplus.com is estimated to be five years. Amortization expense for
the years ended December 31, 1999 and 1998 was $-0- and $-0- respectively.
Amortization expense six months ended June 30, 2000 was $21,883.
USE OF ESTIMATES IN THE PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the consolidated financial statements and revenues and expenses during
the reporting period. Actual results could differ from those estimates and
assumptions. The rate of amortization of record masters is, in part, based
upon anticipated total gross revenues over the estimated life of the record
masters. Although no amortization has been recorded to date, actual gross
revenues may differ from the amount ultimately realized over the life of
the record master. The difference may be material.
INCOME TAXES
Deferred income taxes are recorded to reflect the tax consequences in
future years of temporary differences between the tax basis of the assets
and liabilities and their financial statement amounts at the end of each
reporting period. Valuation allowances are established when necessary to
reduce deferred tax assets to the amount expected to be realized. Income
tax expense is the tax payable for the current period and the change during
the period in deferred tax assets and liabilities. Deferred tax assets and
liabilities have been netted to reflect the tax impact of temporary
differences.
The Company has a net operating loss carryforward in excess of $5,000,000,
expiring in 2017- 2019. Since it is more likely than not that the Company
will not utilize the net operating loss in the near term, a valuation
allowance equal to the deferred tax asset, which consisted primarily of the
net operating loss carryforwards, has been provided. Upon a change in
control, the net operating loss carryforward may be limited.
</Page>
<PAGE>
<PAGE>
NOTE 4 - ACQUISITIONS
---------------------
ACQUISITION OF ANYTHINGSURPLUS.COM
During December 1999, the Company acquired 100% of the common stock of
AnythingSurplus.com, Inc. ("AnythingSurplus"), in exchange for 833,333
shares of the Company's restricted common stock. Two entities, which are
controlled by two of the majority stockholders of the Company ("Majority
Stockholders") one of whom was the Company's President, owned an aggregate
of 40% shares of AnythingSurplus. The purchase price amount in excess of
the Majority Stockholders' historical cost basis has been reflected as a
distribution to the stockholders and reduction of the purchase price.
AnythingSurplus was formed on September 30, 1999 and has had minimal
operations to date.
The Company had advanced $100,000 to AnythingSurplus as required by the
stock purchase agreement. The Company may advance up to an additional
$900,000 to AnythingSurplus to be used for operations and salaries.
The purchase price has been allocated as follows:
<TABLE>
<S> <C>
Furniture and fixtures $ 16,288
Stockholder receivable 47,612
Advances forgiven (100,000)
Goodwill 150,540
Distributions to stockholders 52,227
-----------
Value of stock issued $ 166,667
</TABLE>
ACQUISITION OF HALL OF FAME PARTNERS, INC.
During December 1999, the Company acquired 20% the outstanding common stock
of Hall of Fame Partners, Inc. (Hall of Fame), in exchange for 833,333
shares of the Company's restricted common stock valued at $.20 per share
and $262,000 cash. Two entities, which are controlled by two of the
majority stockholders of the Company, one of whom was the Company's
President, own an aggregate of 20% of the shares of Hall of Fame. The
purchase price amount in excess of the majority stockholders' historical
cost basis has been reflected as a distribution to the stockholders and
reduction of the purchase price. The investment will be accounted for
under the equity method. The Company has agreed to repurchase 550,000
shares of its common stock issued to Hall of Fame for $110,000.
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.
By exchanging 12,000,000 shares of the Company's restricted common stock,
there was a change in control of the Company.
ACQUISITION OF AUCTIONFUN, INC.
During December 1999, the Company acquired 5% of the outstanding shares of
Auctionfun.com, Inc. (Auctionfun) in exchange for 1,000,000 shares of the
Company's restricted common stock valued at $.20 per share and
approximately $437,000 cash. The investment will be accounted for under
the cost method.
Neither Hall of Fame nor Auctionfun have had any significant operations to
date.
</Page>
<PAGE>
NOTE 5 - EQUIPMENT
Equipment consists of the following:
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
------------ ------------
<S> <C> <C>
(Unaudited)
Office equipment 16,288 23,397
Processing equipment 4,665 4,665
------------ ------------
20,953 20,062
Less accumulated depreciation (3,409) (4,527)
------------ ------------
$ 17,544 $ 23,535
============ ============
</TABLE>
NOTE 6 - IMPAIRMENT OF RECORD MASTERS
In accordance with Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting For the Impairment of Long-Lived Assets and For Long-Lived
Assets to be Disposed Of", the Company records impairment losses on long-
lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets
are less than the assets' carrying amount.
During 1999, the Company adjusted the carrying value of the record masters.
Based upon current management estimates indicating impairment, the Company
adjusted the carrying value of the record masters, resulting in a reduction
of the asset and a charge to operations of $812,000.
NOTE 7 - CONVERTIBLE DEBENTURE
On February 2, 2000 the Company issued a $500,000 Convertible Debenture at
a rate of 8% per annum commencing on March 3, 2000 with a maturity date of
February 3, 2001. This note was immediately converted into 520,835 shares
at a price of $0.96.
NOTE 8 - SHORT TERM NOTES
On March 1, 2000, the Company issued convertible Notes with a total face
value of $555,000. On March 16, 2000 the Company issued a non-convertible
Note with a face value of $300,000. All of the Notes bear an interest rate
of 8% per annum, and were due three months after the issuance date. The
Notes included detachable cashless warrants for 700,000 shares of common
stock that were immediately exercised. Related to these warrants, the
Company is amortizing financing costs of $1,715,000 over the life of the
note.
NOTE 9 - NOTES PAYABLE - RELATED PARTY
On December 31, 1999 there was a Note Payable - Related Party balance of
$397,164. During the three months ended March 31, 2000, the Company made
several cash payments to this balance that totaled $45,000, the company
also issued 221,000 shares at a price of $1.50 to several shareholders as
payment to the loan.
</Page>
<PAGE>
NOTE 10 - COMMITMENTS AND CONTINGENCIES
INSURANCE
The Company does not maintain insurance to cover damages from fire, flood
or other casualty losses to its film and music libraries. Costs resulting
from uninsured property losses will be charged against income upon
occurrence. No amounts for uninsured casualty property losses were charged
to operations for the years ended December 31, 1999 and 1998.
OFFICE SPACE
The Company utilized nominal office space in Salt Lake City, Utah and
Montvale, New Jersey provided by stockholders of the Company at a minimal
charge.
During February 2000, the Company entered into a one year lease for office
space in Marina Del Rey, California for $6,023 per month.
CAR RENTAL DIRECT.COM, INC.
During February 2000, the Company entered into a letter of intent to
purchase all of the outstanding stock of Car Rental Direct.com, Inc. (CRD),
an internet based car rental service. The Company was to fund CRD with $5
million and common stock of the Company valued at $3 million. The Company
advanced $650,000 to CRD pending the completion of the acquisition. The
acquisition was not completed and in May 2000, the Company sold its
$600,000 receivable from CRD to an unrelated third party for a $600,000
non-interest bearing promissory 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 remaining payment, which was due
on June 24, 2000, still has not been received by the Company.
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 was to issue 750,000
shares of its common stock and grant a warrant to purchase an additional
</Page>
<PAGE>
<PAGE>
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Continued)
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 intends to rescind the
agreement.
INVESTOR RELATIONS
During March 2000, the Company entered into an agreement for investor
relations and financial communication services for a period of twelve
months. Fees for the services are $5,000 per month, 10,000 shares of
restricted common stock and out of pocket expenses.
EMPLOYMENT AGREEMENT
During May 2000, the Company entered into an employment agreement with its
then new President for a term of one year at a salary of $150,000. At the
end of each six month period, the Company was to grant warrants to purchase
250,000 shares of common stock at $1.25 per share for a total of 500,000
shares. The Company is negotiating a rescission agreement.
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 under the
name M-K Energy. The Company changed its name in 1982 to Cache Drilling,
Inc. and again in 1988 to Almur Cosmetics, Inc. The Company originally
sold securities to the public pursuant to a registration granted by the
Utah Securities Division on May 1, 1981, and the exemption from
registration under section 3(a)(11) of the Securities Act of 1933.
Subsequent to the Company's initial public offering the Company engaged in
several business ventures, none of which proved successful.
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.
</Page>
<PAGE>
<PAGE>
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.
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 go 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.
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.
</Page>
<PAGE>
Eccount
-------
The Company acquired Eccount in January 2000, when it issued
12,000,000 post-split shares 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 suggest, 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.
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.
</Page>
<PAGE>
Given recent changes, the Company believes that the objectives of
Auctionfun are inconsistent with the Company's current business model. The
Company may seek to sell its interest in Hall of Fame if an equitable
return on its investment can be realized.
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 of 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.
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/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.
</Page>
<PAGE>
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.
As with Auctionfun, the Company believes Hall of Fame no longer
compliments its business portfolio. The Company may sell its interest in
Hall of Fame if an equitable return on its investment can be realized.
Randall Entertainment
---------------------
The Company has determined that Randall does not fit within its
current business model. Therefore, all operations of Randall have been
discontinued and Randall's assets have accordingly been written off by the
Company.
Liquidity and Capital Resources
-------------------------------
For the six months ended June 30, 2000 , operating activities used net
cash of approximately $1,052,671, primarily from a net loss from operations
of approximately $2,618,179.00 which was partially offset by depreciation
and amortization of $ 7,287.00, stock options and warrants issued for
services of $515,009.00, stocks issued for conversion and payment of debt
of $700,815 and lastly, stocks issued for settlement of failed acquisition
for $149,250.
For the six months ended June 30, 2000, investing activities used net
cash of approximately $ 541,584 primarily from the purchase of furniture
and office equipment of $88,416, the funding of a working agreement for a
car rental entity for $ 650,000 and offset by a collection of a note for $
20,0000 from a stockholder.
In addition, financing activities provided net cash of approximately
$1,596,681, primarily from the proceeds of short term notes of $ 855,000,
advances from a major stockholder amounted to $ 588,031 and proceeds from
sale of common stock posted a total of $ 153,650.00.
</Page>
<PAGE>
Results Of Operations
---------------------
Comparison of the six months ended June 30, 2000 and the six
months ended June 30, 1999.
--------------------------------------------------------------
REVENUE
Revenue from previous periods were mainly derived from the sale of
compact disks by the Company's Century Records subsidiary. The Company has
since changed its focus. No revenue has been recorded for the six months
ended June 30, 2000.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased from $73,182 to
$577,681, or by 689% for the six months ended June 30, 2000 as compared to
the corresponding period in 1999. Payroll and payroll related expenses
were $123,365 and rent expense on our facility was $22,760. Payroll and
payroll related expenses increase increased from $27,958 to $95,407 for
second quarter 2000 as compared to first quarter 2000. The significant
increases in the general and administrative expense have been due to the
increase in overall operation of the company.
SALES AND MARKETING EXPENSE
At this time sales and marketing expense have been insignificant.
However, we expect sales and marketing expense to increase significantly in
absolute dollars as we pursue business plans of the different subsidiaries
within our portfolio.
DEPRECIATION AND AMORTIZATION
Depreciation expense for the six months ended June 30, 2000 were $7,287
increasing from $466 for the six months ended June 30, 1999. Amortization
expense during the six months ended June 30, 2000 was $21,883 an increase
from $0 from the previous year of the same period. The increase in goodwill
expense is due to the recent acquisitions that the Company has made, notably
AnythingSurplus.com and Eccount.com. Other amortization expense consisted of
record remastering expense of $30,252 and $30,112 for the six months ended
June 30, 2000 and 1999, respectively.
FINANCING COSTS
Financing Costs during the six months ended June 30, 2000 were
$1,780,000. The increase from the first three months ending March 31, 2000 of
$1,242,833 consisted primarily of brokerage fees in connection to the
issuance of convertible notes issued and warrants in connection with
financing during the period.
INTEREST EXPENSE
Interest expense for the six months period ended June 30, 2000 posted
a total of $ 33,990.
Short-term convertible notes bearing an interest rate of 8% accounted for the
subject amount for the period covered.
</Page>
<PAGE>
FAILED ACQUISITIONS
A total of $ 168,343 in failed acquisitions represented expenses
covering salaries, sales and marketing promotions, professional fees and
other organizational costs incurred during the time
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.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
--------------------------
None.
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 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 of 500,000 restricted common shares
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. The remaining shares were issued to a non-
affiliated third party.
On August 8, 2000, the Company issued of 4,500,000 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 a non-
affiliated third party.
</Page>
<PAGE>
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.
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.
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 determined 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 Mary 12, 2000
and May 17, 2000. These payments were made directly to the Company's
Chairman as repayment for advances previously made to the Company. 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.
</Page>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(A) Exhibits. The following exhibits are included as part of this
report:
<TABLE>
<CAPTION>
Exhibit SEC Exhibit
Number Ref. Number Title of Document Location
---------------------------------------------------------------------
<S> <C> <C> <C>
27.01 27 Financial Data Schedule Attached
(B) Reports on Form 8-K
None.
</Page>
<PAGE>
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.
September 14, 2000 /s/ Stephen Brown
------------------
Stephen Brown
Chief Executive Officer,
President and Director
September 14, 2000 /s/ Noel Navarro
------------------
Noel Navarro
Vice President, Secretary, Treasurer and
Chief Accounting Officer
</Page>
</TABLE>
