U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: August 25, 2000
OMNINET MEDIA.COM, INC.
--------------------------------------------------------------------------------
(Exact Name of registrant as specified in its Charter)
Nevada 0-28935 88-0398783
------------------------ ------------------- --------------------
(State of Incorporation) Commission File No. (IRS Employer
Identification No.)
7825 Fay Avenue, Ste. 200, La Jolla, CA 92037
------------------------------------------------ -------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,( 858 ) 456 - 5588
----------- ------------- ---------------
MAS ACQUISITION XXV CORP.
1710 East Division St.
Evansville, IN 47711
(Registrant's former name and address)
<PAGE>
Item 1. CHANGES IN CONTROL OF REGISTRANT.
(a) Pursuant to the Agreement and Plan of Reorganization effective
August 17, 2000, OmniNet Media.com, Inc., ("OmniNet"), a Nevada corporation,
acquired 5,000,000 shares of MAS Acquisition XXV Corp., for Five Thousand
($5,000) Dollars. As a result of the purchase MAS XXV became a subsidiary of
OmniNet. The Stock Purchase Agreement was approved by the unanimous consent of
the board of directors of OmniNet on July 18, 2000. Prior to the Agreement,
OmniNet had 41,786,155 shares issued and outstanding. Following the Agreement,
OmniNet has 41,811,155 shares issued and outstanding.
In accordance with the terms of the agreement, the OmniNet remunerated
MAS Capital, Inc, in the amount of $45,000 and 25,000 OmniNet restricted common
shares in consideration for the return and cancellation of 8,250,000 common
shares it owned of MAS Acquisition XXV.
Upon effectiveness of the Agreement and Plan of Reorganization,
pursuant to Rule 12g-3(a) of the General Rules and Regulations of the Securities
and Exchange Commission, OmniNet became the successor issuer to MAS XXV for
reporting purposes under the Securities Exchange of 1934, as amended. The
officers, directors and By-laws of OmniNet continued without changes as the
officers, directors and By-laws of the successor issuer. See Item 5. "Other
Events" in this report.
A copy of the Agreement and Plan of Reorganization is filed as an
Exhibit to this Form 8-K Report and is incorporated into this report.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
(a) Effective August 17, 2000 OmniNet Media.com, Inc. acquired
5,000,000 common shares of MAS Acquisition XXV Corp ("MAS), an Indiana
corporation, making MAS a subsidiary of OmniNet.
In evaluating OmniNet as a candidate for the business combination, MAS
XXV used criteria such as the value of the assets of OmniNet, particularly its
expertise of management, current business operations, and anticipated
operations. MAS XXV determined that the consideration for the business
combination was reasonable. In evaluating MAS XXV as a candidate for the
proposed business combination, OmniNet used MAS XXV's status as a reporting
company, its lack of operating history and lack of potential related
liabilities. OmniNet determined that the consideration for the business
combination was reasonable.
Item 3. BANKRUPTCY OR RECEIVERSHIP.
Not applicable.
Item 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNT.
The successor issuer registrant's certifying public accounting firm is
DiRocco & Dombrow, P.A. of Fort Lauderdale, Florida.
Item 5. OTHER EVENTS.
(a) Successor Issuer Election. In accordance with Rule 12g-3(a) of the
General Rules and Regulations of the Securities and Exchange Commission, OmniNet
became the successor issuer to MAS Acquisition XXV for reporting purposes under
the Securities Exchange Act of 1934 and elects to report under the Act.
<PAGE>
(b) OmniNet Media.com, Inc., formerly known as Tricom Technology, Inc.,
was incorporated on July 14, 1998. (See Exhibit 3.0) OmniNet Media.com, Inc., a
Nevada corporation, was merged into and with Tricom Technology, Inc. At the time
of the merger, Tricom changed its name to OmniNet Media.com, Inc. On June 8,
2000 OmniNet acquired 75.72% of the issued and outstanding common stock of
U.S./ACE Security Laminates, Inc.
Item 6. RESIGNATION OF DIRECTORS AND EXECUTIVE OFFICERS.
Effective August 17, 2000, Aaron Tsai, the sole director and officer of
MAS Acquisition XXV Corp, resigned appointing James Graves to fill his director
and officer positions.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of business acquired.
1. Financial statements of OmniNet Media.com, Inc. as of
December 31, 1999 and 1998 (Audited)
2. Financial statements of U.S./Ace Security Laminates,
Inc. as of December 31, 1999 and 1998 (Audited)
3. Financial Statements of OmniNet Media.com, Inc. as of
June 30, 2000 and 1999 (Unaudited)
(b) Pro Forma financial information.
1. The Company pro forma condensed consolidated balance
sheet as of June 30, 2000 (Unaudited)
2. The Company pro forma condensed consolidated statement
of operation for the year ended December 31, 1999
(Unaudited)
3. The Company pro forma condensed consolidated statement
of income for the six month period ended June 30, 2000
(Unaudited)
(c) Index to Exhibits.
Exhibit Number Description
(2.0) Agreement and Plan of Reorganization
(3.0) Articles of Amendment Tricom Technology Group,
Inc.
(3.1) Articles of Incorporation of Tricom Technology
Group, Inc., now OmniNet Media.com, Inc.
(3.2) By-Laws OmniNet Media.com, Inc.
Item 8. CHANGES IN FISCAL YEAR.
The successor issuer registrant's fiscal year ends December 31.
<PAGE>
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 hereunto duly authorized.
OMNINET MEDIA.COM, INC.
Dated: August 25, 2000
By: /s/ James Graves
---------------------
James Graves
Title: V.P./Secretary
<PAGE>
OMNINET MEDIA.COM, INC.
FINANCIAL STATEMENTS
INCLUDING AUDITORS' REPORT
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
AND THE FIVE MONTHS ENDED MAY 31, 2000
<PAGE>
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT............................ 1
FINANCIAL STATEMENTS
BALANCE SHEETS........................................ 2
STATEMENTS OF OPERATIONS.............................. 3
STATEMENTS OF STOCKHOLDERS' EQUITY.................... 4
STATEMENTS OF CASH FLOWS ............................. 5
NOTES TO FINANCIAL STATEMENTS........................... 6 - 12
<PAGE>
DIROCCO AND DOMBROW, P.A.
3601 W. COMMERCIAL BLVD., SUITE #39
FT. LAUDERDALE, FLORIDA 33309
(954) 731-8181
Independent Auditors' Report
----------------------------
To the Board of Directors
OmniNet Media.Com, Inc.
La Jolla, CA
We have audited the accompanying balance sheets of OmniNet Media.Com, Inc. as of
December 31, 1998 and 1999 and May 31, 2000, and the related statements of
operations, changes in stockholders' equity (deficit) and cash flows for the
years then ended and the five months ended May 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes, examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audits provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of OmniNet Media.Com, Inc. as of
December 31, 1998 and 1999 and May 31, 2000, and the results of operations and
its cash flows for the years then ended and the five months ended May 31, 2000
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred significant losses and has
negative net working capital from operations. These factors raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plan in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
DiRocco and Dombrow, P.A.
July 12, 2000
<PAGE>
<TABLE>
<CAPTION>
OMNINET MEDIA.COM, INC.
BALANCE SHEETS
ASSETS
December 31,
---------------------- May 31,
1998 1999 2000
--------- --------- ---------
<S> <C> <C> <C>
Current Assets
Cash $ -- $ 29 $ --
--------- --------- ---------
Total Current Assets -- 29 --
--------- --------- ---------
Total Assets $ -- $ 29 $ --
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accrued expenses $ 8,000 $ 16,000 $ 20,225
--------- --------- ---------
Total Current Liabilities 8,000 16,000 20,225
--------- --------- ---------
Stockholders' Equity (Deficit)
Preferred stock, $0.0001 par value; 10,000 shares
authorized, no shares issued and outstanding -- -- --
Common stock, $0.0001 par value; 690,000,000 shares
authorized; 11,260,748, 11,260,748 and 40,397,521
shares issued and outstanding, respectively 1,126 1,126 4,040
Additional paid-in capital 667,842 701,842 729,965
Accumulated deficit (676,968) (718,939) (754,230)
--------- --------- ---------
Total Stockholders' Equity (Deficit) (8,000) (15,971) (20,225)
--------- --------- ---------
Total Liabilities and Stockholders' Equity (Deficit) $ -- $ 29 $ --
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
OMNINET MEDIA.COM, INC.
STATEMENTS OF OPERATIONS
Five months
Year ended December 31, ended
---------------------------- May 31,
1998 1999 2000
------------ ------------ ------------
<S> <C> <C> <C>
Revenues, net $ -- $ -- $ --
------------ ------------ ------------
Total Revenue -- -- --
------------ ------------ ------------
Expenses
Consulting -- 22,500 2,000
Research and development -- 10,425 17,410
Transfer agent fee -- -- 5,477
Rent -- -- 2,954
Professional fee 8,000 8,000 4,000
Other -- 1,496 3,450
------------ ------------ ------------
Total Expenses 8,000 42,421 35,291
------------ ------------ ------------
Operating Loss (8,000) (42,421) (35,291)
------------ ------------ ------------
Other Income (Expenses)
Interest income -- 450 --
Loss on disposal of asset (6,350) -- --
------------ ------------ ------------
Total Other Income (Expenses) (6,350) 450 --
------------ ------------ ------------
Net Loss $ (14,350) $ (41,971) $ (35,291)
============ ============ ============
Net Loss Per Common Share $ (0.00) $ (0.00) $ (0.00)
============ ============ ============
Weighted Average Number of Common Shares
Outstanding 6,782,331 11,260,748 14,940,931
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
OMNINET MEDIA.COM , INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock Total
$0.0001 Par Value Common Stock Additional Shareholders'
----------------- ------------------------ Paid-In Accumulated Equity
Shares Amount Shares Amount Capital Deficit (Deficit)
------ ------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 -- $ -- 7,787,406 $ 7,787 $ 654,831 $ (662,618) $ --
Issuance of common stock for
exchange agreement at $0.001 -- -- 5,250,000 5,250 -- -- 5,250
Reverse split; 50:1 par $0.001 -- -- (12,776,658) (12,777) 12,777 -- --
Change in par value from
$0.001 to $0.0001 -- -- -- (234) 234 -- --
Issuance of common stock through
a limited offering at $0.0001 par value -- -- 11,000,000 1,100 -- -- 1,100
Net loss for the year ended
December 31, 1998 -- -- -- -- -- (14,350) (14,350)
------ ------ ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1998 -- -- 11,260,748 1,126 667,842 (676,968) (8,000)
Additional investment by stockholders -- -- -- -- 34,000 -- 34,000
Net loss for the year ended
December 31, 1999 -- -- -- -- -- (41,971) (41,971)
------ ------ ----------- ----------- ----------- ----------- -----------
Balance at December 31, 1999 -- -- 11,260,748 1,126 701,842 (718,939) (15,971)
Reverse split; 500:1 par $0.0001 -- -- (11,238,227) (1,123) 1,123 -- --
Issuance of common stock for cash
at $0.0001 -- -- 30,000,000 3,000 27,000 -- 30,000
Issuance of common stock for cash
at $0.0001 -- -- 10,000,000 1,000 -- -- 1,000
Issuance of common stock for cash
at $0.0001 -- -- 375,000 37 -- -- 37
Net loss for the five months ended
May 31, 2000 -- -- -- -- -- (35,291) (35,291)
------ ------ ----------- ----------- ----------- ----------- -----------
Balance at May 31, 2000 -- -- 40,397,521 $ 4,040 $ 729,965 $ (754,230) $ (20,225)
====== ====== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
OMNINET MEDIA.COM, INC.
STATEMENTS OF CASH FLOWS
Five months
December 31, ended
-------------------- May 31,
1998 1999 2000
-------- -------- --------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net loss $(14,350) $(41,971) $(35,291)
Adjustment to reconcile net loss to net cash used in
operating activities:
Loss on disposal of asset 6,350 -- --
Increase in accrued expenses 8,000 8,000 4,225
-------- -------- --------
Net Cash Used in Operating Activities ( -- ) (33,971) (31,066)
-------- -------- --------
Cash Flows From Financing Activities
Proceeds from issuance of stock 1,100 -- 31,037
Payment on stock issuances (1,100) -- --
Additional investment by stockholders -- 34,000 --
-------- -------- --------
Net Cash Provided by Financing Activities -- 34,000 31,037
-------- -------- --------
Net Increase (Decrease) in Cash -- 29 (29)
Cash at beginning of year -- -- 29
-------- -------- --------
Cash at end of year $ -- $ 29 $( -- )
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE>
OMNINET MEDIA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
AND THE FIVE MONTHS ENDED MAY 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Operation
--------------------------
OmniNet Media.Com, Inc. (OmniNet), formerly known as TriCom Technology Group,
Inc., was organized and exists under the General Corporation Law of the State of
Nevada. OmniNet was incorporated in the State of Nevada on March 12, 1997 as
Clinical Aesthetics Centre, Inc. (Clinical). Clinical was inactive from October
1997 to July 1998.
On July 27, 1998, the Board of Director of Clinical approved the issuance of
5,250,000 shares of its common stock in exchange for all outstanding shares of
common stock of TriCom Technology Group, Inc. (TriCom). TriCom was organized
under the General Corporation Law of the State of Nevada on July 14, 1998. The
merged company continued to operate under the name of TriCom but failed in its
attempt to operate as an advertising and communications company and was inactive
from the time of the merger until February 2000.
On January 20, 2000, the Board of Directors of Kioskcoupon.Com, Inc., a Nevada
company incorporated on January 7, 2000 to provide communications services,
amended its Article of Incorporation to change its name to OmniNet Media.Com,
Inc. On February 18, 2000, the Board of Directors of TriCom Technology Group,
Inc. approved the issuance of 5,000,000 shares of its common stock to acquire
all of the outstanding shares of OmniNet Media.Com, Inc. TriCom Technology
Group, Inc., subsequently changed its name to OmniNet Media.Com, Inc.
OmniNet is currently focused on acquiring well established businesses in the
advertisement media, communications and transportation industries and products
for strategic alliances and partnering agreements.
U.S./ACE Security Laminates, Inc.
U.S./ACE is a division of OmniNet Media.Com, Inc. whose primary responsibility
is to provide marketing, training and installation support for Global Glass
Guard.
These safety film products were originally designed to protect property and
people against terrorist attacks in Europe and the Middle East. Global safety
and security film laminates work as an integral element for safety and security
requirements - from thefts, accidents, explosions, hurricanes, tornados, or
earthquakes. Global safety and security film laminates hold broken glass
together like an invisible curtain. Global films create a safety and security
barrier for your home, commercial, industrial, or government
-6-
<PAGE>
OMNINET MEDIA.COM, INC.
(FORMERLY CLINICAL AESTHETICS CENTRE, INC.
AND TRICOM TECHNOLOGY GROUP, INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(continued)
Organization and Operation, (continued)
---------------------------------------
buildings, by discouraging break-ins, vehicle intruders and/or penetration of
dangerous objects. Global security film laminates, when installed by authorized
trained installation specialist offer "smash and grab", "bullet and bomb blast
resistance", unmatched in today's worldwide market place. In a world of constant
change, safety and security concerns have become the major driving force behind
the overwhelming demand for global products, but safety and security are not the
only benefits. These safety and security film laminates discourage "smash and
grab" type crimes. Since time is vital in these situations, the thieves usually
give up quickly. Even violent crimes and vandalism are greatly reduced, as a
result, it limits the cost of damage, and repair and/or theft related problems.
Global products reduce the chance of fatal or serious injury caused by flying
glass fragments. Another common injury is from existing plate glass window and
sliding glass doors, which were originally installed without any safety glass
features. Our safety and security laminate films are excellent retrofit related
products that will virtually eliminate these potential problems. Our safety and
security film product line can be purchased and professionally instated at a
fraction of the cost when compared to other alternatives available today. Global
offers increased security for personal safety and valuables by protecting
against flying glass and other material debris as a result of hurricanes,
tornadoes, typhoons, earthquakes and other uncontrollable weather related
conditions.
Going Concern
-------------
The Company's financial statements are presented on a going concern basis which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business. The Company has experienced recurring losses since
inception and has negative net working capital for the years ended December 31,
1998 and 1999 and the five months ended May 31, 2000. For the years ended
December 31,1998 and 1999 and the five months ended May 31, 2000, the company
experienced net losses of $14,350, $41,971 and $35,291, respectively.
The Company's ability to continue as a going concern is contingent upon its
ability to secure additional equity financing, initiate sales of its products,
and attain profitable operations.
-7-
<PAGE>
OMNINET MEDIA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
AND THE FIVE MONTHS ENDED MAY 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(Continued)
Going Concern, (Continued)
--------------------------
Management is pursuing financing by the issuance of common stock shares.
Although the Company plans to pursue additional financing, there can be no
assurance that the Company will be able to secure or obtain financing on terms
beneficial to the Company. Without such funds the Company would be unable to
comply with its payment obligations to its vendors.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
Income Taxes
------------
The Company accounts for income taxes under Financial Accounting Standards Board
of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under
Statement 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities due to a change in tax rates is
recognized in income in the period that includes the enactment date. No current
or deferred income tax expense or benefit was recognized due to the Company not
having any material operations for the years ended December 31, 1998 and 1999
and the five months ended May 31, 2000.
Fair Value of Financial Instruments
-----------------------------------
The carrying amounts reported in the balance sheets for cash and cash
equivalents and accounts payable approximate fair value because of the immediate
or short-term maturity of these financial instruments.
-8-
<PAGE>
OMNINET MEDIA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
AND THE FIVE MONTHS ENDED MAY 31, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(Continued)
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Net Loss Per Common Share
-------------------------
Net loss per share is calculated based on the weighted average number of shares
outstanding during the years ended December 31, 1998 and 1999 and the five
months ended May 31, 2000.
Recent Accounting Announcements
-------------------------------
The FASB recently issued Statement No. 137 "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB Statement
No. 133". This statement defers for one year the effective date of FASB
Statement No 133, "Accounting for Derivative Instruments and Hedging
Activities". The rule now will apply to all fiscal quarters of all fiscal years
beginning after June 15, 2000. In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
required to be adopted in years beginning after June 15, 1999. The Statement
permits early adoption as of the beginning of any fiscal quarter after its
issuance. The Statement will require the Company to recognize all derivatives on
the balance sheet at fair value. Derivatives that are not hedges must be
adjusted to fair value through income. If the derivative is a hedge, depending
on the nature of the hedge, changes in the fair value of derivatives will either
be offset against the change in fair value of the hedged assets, liabilities, or
firm commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The Company has not yet determined if it will early adopt and what the effect of
SFAS No. 133 will be on the earnings and financial position of the Company.
-9-
<PAGE>
OMNINET MEDIA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
AND THE FIVE MONTHS ENDED MAY 31, 2000
NOTE 2 - INCOME TAXES
The reasons for the differences between income taxes at the statutory income tax
rates and the provision (benefit) for income taxes are summarized, as follows:
December 31, May 31,
-------------------- --------
1998 1999 2000
---- ---- ----
Income tax benefits at statutory rate $ (5,740) $(16,788) $(14,116)
Change in valuation allowance related
to deferred tax benefit carryforwards 5,740 16,788 14,116
-------- -------- --------
Income tax benefit $ -- $ -- $ --
======== ======== ========
Due to net operating losses and the uncertainty of realization, no tax benefit
has been recognized for operating losses. At May 31, 2000, cumulative net
operating losses of $91,612 are available for carryforward against future years
taxable income and expire through the year 2004. The Company's ability to
utilize its net operating loss carryforwards is uncertain and thus a valuation
reserve has been provided against the Company's net deferred tax assets.
NOTE 3 - SUBSEQUENT EVENTS
On June 8, 2000, the Company acquired 76% of a corporation in exchange for
1,370,480 of its common shares. The primary business of the acquired corporation
is to provide marketing, training and installation of security film laminates.
-10-
<PAGE>
<TABLE>
<CAPTION>
OMNINET MEDIA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
AND THE FIVE MONTHS ENDED MAY 31, 2000
NOTE 4 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of the Company's financial instruments, are as follows:
December 31, May 31,
---------------------------- -------------------
1998 1999 2000
---- ---- ----
Carrying Fair Carrying Fair Carrying Fair
Amount Value Amount Value Amount Value
------- ------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash $ -- $ -- $ 29 $ 29 $ -- $ --
Liabilities
Accrued expenses $ 8,000 $ 8,000 $16,000 $16,000 $20,225 $ 20, 225
</TABLE>
NOTE 5 - STOCKHOLDERS' EQUITY
Common Stock Issuances
----------------------
Common stock was issued in the year ended December 31, 1998, 1999 and the five
months ended May 31, 2000, as follows:
a) On July 27, 1998, 5,250,000 shares of common stock were issued for the
purpose of an Exchange Agreement between Tricom Technology Group, Inc.
(Tricom) and Clinical Aesthetics Centre, Inc. (Clinical). The total of
5,250,000 shares of Clinical were delivered to the shareholders of Tricom
in exchange for 10,500,000 shares of its common stock.
b) On September 15, 1998, the Board of Directors of TriCom approved an
amendment to the Articles of Incorporation to change the authorized
capital to 690,000,000 common shares and 10,000,000 preferred shares. At
the same time, a reverse split was approved in the ratio of 50:1 and the
par value of the shares were changed from $0.001 to $0.0001.
c) On December 15, 1998, 11,000,000 shares of common stock were issued
through a limited offering.
d) In fiscal year 1999, $34,000 was contributed to Tricom by shareholders.
No shares were issued for this investment amount.
e) On February 18, 2000, Tricom and OmniNet Media.Com, Inc. merged in an
exchange of their common shares. Following the merger, Tricom's Board of
Directors amended its Article of Incorporation to change its name to
OmniNet Media.Com, Inc. (OmniNet) and authorized a 500:1 reverse stock
split of its own shares.
-11-
<PAGE>
OMNINET MEDIA.COM, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999
AND THE FIVE MONTHS ENDED MAY 31, 2000
NOTE 5 - STOCKHOLDERS' EQUITY (Continued)
f) Pursuant to Rule 504D, OmniNet sold 30,000,000 shares of common stock to
investors. In addition, the OmniNet issued 10,000,000 shares of
restricted stock to sixteen individuals or entities on February 24, 2000.
g) On April 30, 2000, OmniNet issued 50,000 shares of common stock to two
investors.
h) On May 17, 2000, OmniNet issued 325,000 shares of common stock to three
individual investors.
NOTE 7 - LEASE
The Company entered into a month-to-month lease agreement for its office
facility on April 1, 2000 expiring on June 30, 2003. Rent expense for the five
months ended May 31, 2000 was $2,954.
-12-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
FINANCIAL STATEMENTS
WITH INDEPENDENT AUDITORS' REPORT
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
AND THE PERIOD FROM INCEPTION (SEPTEMBER 25, 1997) TO
DECEMBER 31, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT................................. 1
FINANCIAL STATEMENTS
Balance Sheets............................................. 2 - 3
Statements of Operations................................... 4
Statements of Stockholders' Equity......................... 5
Statements of Cash Flows................................... 6
NOTES TO FINANCIAL STATEMENTS................................ 7 - 17
<PAGE>
DIROCCO & DOMBROW, P.A.
3601 WEST COMMERCIAL BLVD., SUITE #39
FORT LAUDERDALE, FLORIDA 33309
(954) 731-8181
FAX (954) 739-1054
Board of Directors
U.S./ACE Security Laminates, Inc.
San Diego, CA 92121
We have audited the accompanying balance sheet of U.S./ACE Security Laminates,
Inc. ("the Company"), as of December 31, 1999 and the related statements of
operations, stockholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of U.S./ACE Security Laminates, Inc. as of
December 31, 1998 and the period from inception (September 25, 1997) to December
31, 1997 were audited by other auditors whose report dated February 8, 2000
expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in a
material respects, the financial position of the Company at December 31, 1999,
and the results of their operations and cash flows for the year then ended, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred significant losses and has
negative net working capital from operations. These factors raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plan in regards to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
these uncertainties.
We also audited the adjustments described in Note 11 that were applied to
restate the 1998 and 1997 financial statements. In our opinion, such adjustments
are appropriate and have been properly applied.
August 11, 2000
-1-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
BALANCE SHEETS
December December December
31, 1999 31, 1998 31, 1997
---------- ---------- ----------
(Restated) (Restated)
ASSETS
Current Assets
Cash $ 9,979 $ 164,212 $ 5,190
Prepaid expenses 19,231 5,717 --
---------- ---------- ----------
Total Current Assets 29,210 169,929 5,190
---------- ---------- ----------
Property and Equipment 170,827 157,779 2,610
Other Assets
License agreements, net of
amortization of $-0- , $ 226,324
and $4,443, respectively 767,000 1,608,676 120,557
Security deposits 2,790 8,875 --
---------- ---------- ----------
Total Other Assets 769,790 1,617,551 120,557
---------- ---------- ----------
Total Assets $ 969,827 $1,945,259 $ 128,357
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
U.S./ACE SECURITY LAMINATES, INC.
BALANCE SHEETS (CONTINUED)
December December December
31, 1999 31, 1998 31, 1997
----------- ----------- -----------
(Restated) (Restated)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $ 48,218 $ 53,065 $ 22,005
Current portion of notes payable 667,000 -- 70,000
Notes payable to related parties 577,808 402,000 --
Advances payable -- 1,014,710 --
----------- ----------- -----------
Total Current Liabilities 1,293,026 1,469,775 92,005
Long-Term Liabilities
Notes payable
less current portion -- 1,171,636 --
----------- ----------- -----------
Total Liabilities 1,293,026 2,641,411 92,005
----------- ----------- -----------
Commitments and Contingencies -- -- --
Stockholders' Equity
Common stock, $0.10 par value,
authorized 50,000,000, issued and
outstanding 2,820,160, 2,444,560 and
2,444,560, respectively 282,016 244,456 244,456
Paid in capital 55,000 55,000 55,000
Accumulated deficit (660,215) (995,608) (263,104)
----------- ----------- -----------
Total Stockholders' Equity (323,199) (696,152) 36,352
----------- ----------- -----------
Total Liabilities and Stockholders'
Equity $ 969,827 $ 1,945,259 $ 128,357
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
STATEMENTS OF OPERATIONS
For the
Period from
Inception
(September
Year Ended Year Ended 25, 1997)
December December to December
31, 1999 31, 1998 31, 1997
----------- ----------- -----------
(Restated) (Restated)
License Sales $ 2,179,364 $ 627,981 $ --
Product Sales 725,409 -- --
Other Revenue -- 106,400 --
----------- ----------- -----------
Total Revenue 2,904,773 734,381 --
Cost of Product Sold 465,457 -- --
----------- ----------- -----------
Gross Profit 2,439,316 734,381 --
Expenses
General and administrative 1,889,508 1,468,706 263,104
Impairment loss of license agreement 215,159 -- --
----------- ----------- -----------
Total Expenses 2,104,667 1,468,706 263,104
----------- ----------- -----------
Operating income (loss) 334,649 (734,325) (263,104)
----------- ----------- -----------
Other Income (Expense)
Interest income 2,602 1,821 --
Other expense (1,858) -- --
----------- ----------- -----------
Total Other Income (Expense) 744 1,821 --
----------- ----------- -----------
Net Earnings (Loss) $ 335,393 $ (732,504) $ (263,104)
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
US/ACE SECURITY LAMINATES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock
$.10 Par Value Additional Total
--------------------- Paid-In Accumulated Shareholders'
Shares Amount Capital Deficit Equity
--------- --------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance at
September 30, 1997 2,444,560 $ 244,456 $ -- $ -- $ 244,456
--------- --------- --------- ----------- ------------
Additional investment by
stockholders -- -- 55,000 -- 55,000
Net loss for period
September 25, 1997 to
December 31, 1997 -- -- -- (263,104) (263,104)
--------- --------- --------- ----------- ------------
Balance at
December 31, 1997 (restated) 2,444,560 244,456 55,000 (263,104) (36,352)
Net loss at
December 31, 1998 -- -- -- (732,504) (732,504)
--------- --------- --------- ----------- ------------
Balance at
December 31, 1998 (restated) 2,444,560 244,456 55,000 (995,608) (696,152)
Stock issuance for
services 360,600 36,060 -- -- 36,060
Stock issuance for cash 15,000 1,500 -- -- 1,500
Net income at
December 31, 1999 -- -- -- 335,393 335,393
--------- --------- --------- ----------- ------------
Balance at
December 31, 1999 2,820,160 $ 282,016 $ 55,000 $ (660,215) $ (323,199)
========= ========= ========= =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
<TABLE>
<CAPTION>
U.S./ACE SECURITY LAMINATES, INC.
STATEMENT OF CASH FLOWS
For the
Period from
Inception
(September
Year Ended Year Ended 25, 1997)
December December to December
31, 1999 31, 1998 31, 1997
----------- ----------- -----------
(Restated) (Restated)
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net income (loss) $ 335,393 $ (732,504) $ (263,104)
Adjustments to Reconcile Net Loss to
Net Cash Used in Operating Activities
Depreciation and amortization 246,481 221,881 4,533
Impairment loss 215,159
Changes in Assets and Liabilities
(Increase) decrease in security deposit 6,085 (8,875) --
(Increase) in prepaid expenses (13,514) (5,717) --
Increase (decrease) in accounts
payable and accrued liabilities (4,847) 31,060 22,005
----------- ----------- -----------
Net Cash Used In Operating Activities 784,757 (494,155) (236,566)
----------- ----------- -----------
Cash Flows From Investing Activities
Purchase of license agreements (560,214) (630,497) --
Purchase of property and equipment (51,445) (162,653) (2,700)
----------- ----------- -----------
Net Cash Used In Investing Activities (611,659) (793,150) (2,700)
----------- ----------- -----------
Cash Flows From Financing Activities
Net advances -- 1,014,710 --
Related party advances 175,805 402,000 --
Common stock issued 1,500 -- 244,456
Net advances on note payable -- 627,982 --
Principal payments on notes payable (504,636) (598,365) --
----------- ----------- -----------
Net Cash Provided By Financing Activities (327,331) 1,446,327 244,456
----------- ----------- -----------
Increase (Decrease) in Cash and Cash
Equivalents (154,233) 159,022 5,190
Cash and Cash Equivalents, Beginning of
Year 164,212 5,190 --
----------- ----------- -----------
Cash and Cash Equivalents, End of Year $ 9,979 $ 164,212 $ 5,190
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
U.S./ACE Security Laminates, Inc. (the Company) was incorporated under the laws
of the State of Delaware on September 25, 1997 as U.S. Glass Security Laminates,
Inc. with authorized capital of 10,000 shares at $0.10 par value per common
share. On November 27, 1997, the Company amended its articles of incorporation
to increase the total number of authorized capital to 50,000,000 common shares.
In 1997, the Company issued 2,444,560 shares of its common stock for services
rendered at $0.10 per share.
In 1997 and 1998, the Company purchased the rights to market and distribute
universally patented security laminates for 5 and 10 year renewable terms in
certain states and territories in the United States, Mexico and the Caribbean.
The Company business is to sell master and dealership licenses under a licensing
agreement to distributors and sales of security laminates through its
distributors. A typical licensing agreement provides for a term payment plan and
includes a quota purchase for distributors. Failure to meet purchase quotas will
cause a licensee to forfeit their license with no recourse to recover term
payments made. The Company commenced its operations it 1998.
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplates continuation of the
Company as a going concern. In 1997, the Company was a development stage company
as defined by Statement of Financial Accounting Standards ("SFAS") No. 7,
"Accounting and Reporting by Development Stage Enterprises". The Company was
devoting substantially all of its efforts in securing and establishing a new
business, and planned principal operations had not commenced. Working capital
funds were to be obtained by seeking additional funding from private and public
equity investments to meet such needs. The accompanying 1997 financial
statements should not be regarded as typical for normal operating periods.
Going Concern
-------------
The Company's financial statements are presented on a going concern basis which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business. The Company has experienced recurring losses in
fiscal year 1998 and the period from inception (September 25, 1997) to December
31, 1997 and has negative working capital for the years ended December 31, 1999,
1998 and the period from inception. For the years ended December 31, 1998 and
the period from inception to December 31, 1997, the Company experienced net
losses of $734,325 and $263,104, respectively. In addition, the Company is
involved in litigation, the outcome of which is unknown at this time, has
defaulted on license agreements, and has failed to exercise the license
agreement options.
-7-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
NOTES TO FINANCIAL STATEMENTS, (CONTINUED)
NOTE 1 - ORGANIZATION, (CONTINUED)
Going Concern, (Continued)
--------------------------
The Company's ability to continue as a going concern is contingent upon its
ability to secure additional equity financing and attain profitable operations.
Management is pursuing financing by merging with a Company which publicly trades
its common stock. Although the Company plans to pursue additional financing,
there can be no assurance that the Company will be able to secure or obtain
financing on terms beneficial to the Company. Without such funds the Company
would be unable to comply with its payment obligations to its vendors.
Management believes that actions presently being taken to revise the Company's
operating and financial requirements provide the opportunity for the Company to
continue as a going concern.
The financial statements do not include any adjustments to reflect possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Method of Accounting
--------------------
The Company's financial statements are prepared using the accrual method of
accounting.
Cash and Cash Equivalents
-------------------------
The Company considers all highly liquid debt instruments with a maturity of
three months or less when acquired to be cash and cash equivalents.
Concentration of Credit Risk
----------------------------
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash held in a financial institution. The
Company deposits its cash and cash equivalents with high credit quality
financial institutions that are insured by Federal Deposit Insurance Corporation
(FDIC) up to $100,000.
-8-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
NOTES TO FINANCIAL STATEMENTS, (CONTINUED)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)
Property and Equipment
----------------------
Property and equipment is stated at cost and depreciated under the double
declining method over their estimated useful lives ranging from five to seven
years. Repairs and maintenance expenses are charged to operations as incurred.
Intangible Assets
-----------------
Intangible assets represent license agreements acquired and are recorded at cost
in accordance with Accounting Principles Board (APB) Opinion No. 17, "Intangible
Assets". The Company amortizes the intangible assets using the straight-line
method over the term of the specific agreements of five to ten years. The
Company evaluates whether the estimated useful life used to amortize an
intangible asset is appropriate due to changing facts and circumstances
resulting in increases or decreases in the asset's estimated useful life and
records the change currently.
Impaired Asset Policy
---------------------
In March 1995, the Financial Accounting Standards Board issued a statement
titled "Accounting for Impairment of Long-lived Assets." In complying with this
standard, the Company reviews its long-lived assets yearly to determine if any
events or changes in circumstances have transpired which indicate that the
carrying value of its assets may not be recoverable. The Company made
adjustments for the carrying value of its assets at December 31, 1999.
Revenue Recognition
-------------------
Revenues from sales to distributors and resellers are recognized when related
products are shipped. Revenues from corporate license programs are based on the
terms of the agreement which typically outline specific payment arrangements.
Use of Estimates
----------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results may vary from the estimates that were assumed in
preparing the financial statements.
-9-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
NOTES TO FINANCIAL STATEMENTS, (CONTINUED)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)
Income Taxes
------------
The Company accounts for income taxes under Financial Accounting Standards Board
of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under
Financial Statement 109, deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities due to a change
in tax rates is recognized in income for the period that includes the enactment
date. No current or deferred income tax expense or benefit was recognized due to
the Company not having any material operations for the years ended December 31,
1999 and 1998 and the period from inception (September 25, 1997) to December 31,
1997.
Fair Value of Financial Instruments
-----------------------------------
The carrying amounts reported in the balance sheets for cash and cash
equivalents and accounts payable approximate fair value because of the immediate
or short-term maturity of these financial instruments.
Recent Accounting Announcements
-------------------------------
The FASB recently issued Statement No. 137 "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB Statement
No. 133". This statement defers for one year the effective date of FSAB No. 133,
"Accounting for Derivative Instruments and Hedging Activities". The rule now
will apply to all fiscal quarters of all fiscal years beginning after June 15,
2000. In June 1998, the FSAB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which is required to be adopted in the
years beginning after June 15, 1999. The Statement permits early adoption as of
the beginning of any fiscal quarter after its issuance. The Statement will
require the Company to recognize all derivatives on the balance sheet at fair
value. Derivatives that are not hedges must be adjusted to fair value through
income.
-10-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
NOTES TO FINANCIAL STATEMENTS, (CONTINUED)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES, (CONTINUED)
If the derivative is a hedge, depending on the nature of the hedge; changes in
the fair value of derivatives will either be offset against the change in fair
value of the hedged assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative change in fair value will be
immediately recognized in earnings. The Company has not yet determined if it
will early adopt and what the effect of SFAS No. 133 will be on the earnings and
financial position of the Company.
The Company has implemented SFAS No. 129, "Disclosure of Information about
Capital Structure", effective January 1, 1998, which established standards for
disclosing information about the entity's capital structure. The implementation
of SFAS No. 129 had no effect on the Company's financial statements.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31:
1999 1998 1997
-------- -------- --------
Machinery and equipment $123,568 $ 79,198 $ -
Office equipment 54,874 54,874 2,700
Leasehold improvements 7,161 7,161 -
Vehicle 24,121 24,121 -
-------- -------- --------
209,724 165,354 2,700
Less accumulated depreciation 38,897 7,575 90
-------- -------- --------
Property and equipment $170,827 $157,779 $ 2,610
======== ======== ========
Depreciation charged to expense during the years ended December 31, 1999 and
1998 and the period from inception (September 25, 1997) to December 31, 1997 was
$31,322, $7,485 and $90, respectively.
NOTE 4 - LICENSE AGREEMENTS
The Company has entered into a "Sales and Distribution Agreement" dated December
31, 1999, (which supersedes all other agreements previously entered as described
below), with Clear Defense, Inc. of Virginia at a cost of $767,000 to become the
exclusive retail dealer and distributor of the laminate products bearing the
trademark commonly known, recognized, and understood as "Clear Defense" safety
and security window film in specific territories as defined by the agreement.
The safety and security laminates and their application to glass windows and
doors will be sold to government, commercial, residential, and automotive
markets.
-11-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
NOTES TO FINANCIAL STATEMENTS, (CONTINUED)
NOTE 4 - LICENSE AGREEMENTS, (CONTINUED)
A lump sum license fee of $100,000 was paid at the signing of the agreement, for
the exclusive distribution rights to the "Initial Territory" defined as the
states of California, Arizona and Florida.
A license fee of $667,000 is due for the exclusive distribution rights to the
"Base Territory" as defined as the states of Nevada, Utah, New Mexico, Georgia,
Texas, Louisiana, Alabama, Mississippi and the country of Mexico and parts of
the Caribbean Islands. The payment schedule is as follows: $25,000 due by or
before January 31, 2000; $25,000 due by or before February 28, 2000; and
$617,000 due by or before March 31, 2000. The Company is also subject to minimum
film purchase requirements under agreement. Interest is due at the rate of 18%
per annum, or 1.5% per month on past due amounts.
The Company had an option to obtain the exclusive rights for the remaining
states within the United States of America for $333,000. The deadline for the
exercise of the option expired on January 31, 2000. The agreement is for a term
of five years and shall automatically renew for an additional successive term of
five years so long as the terms and conditions of the agreement are met.
The Company is currently in default of the license agreement with Clear Defense,
Inc. of Virginia.
In 1997 and 1998, the Company had entered into three separate agreements to
become the exclusive retail dealer and distributor of the products described
above with Ace/Clear Defense, Inc. of Quebec, Canada for a total cost of
$1,835,000. These agreements have been cancelled by U.S./ACE Security Laminates,
Inc. and are currently the subject of litigation (see Note 10). At December 31,
1999, license agreements have been adjusted from their 1998 book of $1,608,676
to net realizable value of $767,000.
Amortization expense of $221,881, $221,881 and $4,443 was charged to operations
during the years ended December 31, 1999 and 1998 and for the period from
inception (September 25, 1997) to December 31, 1997, respectively.
-12-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
NOTES TO FINANCIAL STATEMENTS, (CONTINUED)
NOTE 5 - NOTES PAYABLE
Notes payable at December 31, 1999 and 1998 and 1997 of $667,000, $1,171,636 and
$70,000 represent amounts due under the new and original contracts as described
in Note 4. Payments on these agreements have been terminated by the Company
until resolution of the litigation. The 1998 liability of $1,171,636 has been
restated to $667,000 in 1999, due to the Company entering into an agreement with
a different vendor for the same territories.
NOTE 6 - NOTES PAYABLE TO RELATED PARTIES
Notes payable to related parties at December 31, consists of the following
1999 1998 1997
-------- -------- --------
Southwest Funding GP $ 16,200 $337,000 $ -
Officers (2) 561,605 65,000 -
-------- -------- --------
Total $577,805 $402,000 $ -
======== ======== ========
Southwest Funding GP (the Partnership) is a partnership formed to provide
funding to enable the Company to secure marketing efforts. The Board of
Directors and Management Team is principally the same as the Company's. The
Partnership was formed to provide funding to enable the Company to put into
place a marketing arm for the Company. Funds from Southwest Funding GP are
non-interest bearing, unsecured, and due on demand.
Advances from officers totaling $561,605 and $65,000 at December 31, 1999 and
1998, respectively, are non-interest bearing, unsecured, and due on demand.
-13-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
NOTES TO FINANCIAL STATEMENTS, (CONTINUED)
NOTE 7 - ADVANCES PAYABLE
During 1997 and 1998, the Company received cash advances from a corporation
which was the prior employer of the Company's president and major shareholder.
On January 22, 1999, the Company was released of all obligations arising from
the advances in exchange for dealership rights to the general Orlando, Florida
territory. Since that date, the Company has repossessed the territory due to
breach of contract arising from the failure to meet purchase quota requirements.
NOTE 8 - INCOME TAXES
There is no current or deferred tax expense for the years ended December 31,
1999 and 1998 and the period from inception (September 25, 1997) to December 31,
1997 due to the Company's loss position in 1998 and 1997 and the loss
carryforward to 1999. Timing differences result from accelerated depreciation of
assets and the capitalization of start up costs for tax purposes.
The deferred tax consequences of temporary differences in reporting items for
financial statement and income tax purposes are recognized, as appropriate.
Realization of the future tax benefits related to the deferred tax assets is
dependent on many factors including the Company's ability to generate taxable
income within the net operating loss carryforward period. Management has
considered these factors in reaching its conclusion as to the valuation
allowance for financial reporting purposes. The income tax effect of temporary
differences compromising the deferred tax assets and deferred tax liabilities on
the accompanying balance sheet is a result of the following:
1999 1998 1997
-------- -------- --------
Net Income (loss) $335,393 $(732,504) $(263,104)
Timing Differences
Permanent 52,172 69 -
Temporary Capitalization of
start up costs 8,650 (8,650) 263,104
-------- -------- --------
$396,215 $(741,085) $ -
======== ======== ========
-14-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
NOTES TO FINANCIAL STATEMENTS, (CONTINUED)
NOTE 8 - INCOME TAXES, (CONTINUED)
1999 1998 1997
-------- -------- --------
Net Income (loss) carryforward $134,713 $(251,969) $ -
Valuation allowance (134,713) 251,969 -
-------- -------- --------
$ - $ - $ -
======== ======== ========
The Company has available net operating loss carryforwards of approximately
$700,000 for tax purposes to offset future taxable income which expire
principally in the year 2017.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Operating Lease
---------------
The Company leases a vehicle under a noncancelable operating lease agreement
which expires in October, 2000. Lease expense for the year ended December 31,
1999, was $12,304. At December 31, 1999, the minimum aggregate lease commitments
is $10,253.
The Company has also entered into a non-cancelable operating lease agreement
dated May 26, 1998 for a period of (60) sixty months expiring May 31, 2003 for
approximately 3,200 square feet of office and warehouse space at a base rent of
$2,790 per month. Prepaid rental of $14,591.93 was paid at the execution of the
lease. On December 5, 1998, the Company expanded the premises for a total of
approximately 5,700 square feet. Base rent was increased to $5,000 per month for
a period of twelve (12) months, with a 4% increase in base rent every twelve
months through the term of the lease. Rental expense for the year ended December
31, 1998 was $18,840.
Future minimum annual rentals payable under this noncancelable operating
agreement are, as follows:
2000 $63,948
2001 $66,494
2002 $69,142
2003 $29,371
-15-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
NOTES TO FINANCIAL STATEMENTS, (CONTINUED)
NOTE 9 - COMMITMENTS AND CONTINGENCIES, (CONTINUED)
Consulting Agreements
---------------------
The Company has entered into two separate consulting agreements for services
June 1, 1998. Each agreement is effective for three (3) years and automatically
renews for successive terms of the same duration unless either party provides
thirty (30) days written notice to the other party prior to the termination of
the applicable initial term or renewal. The agreements are for $96,000 and
$72,000 per year, including commissions of all dealership sales at 30% and 5%,
respectively. As of December 31, 1999 and 1998, the Company has accrued $-0- and
$42,000, respectively, for unpaid fees under the agreements.
Additionally, the Company has made and entered into two separate Stock Incentive
Agreements with the above consultants as incentives for future performance,
which provides each consultant with the option to purchase 200,000 shares for an
aggregate purchase price of $2,000 and is exercisable until December 31, 2000.
NOTE 10 - SUBSEQUENT EVENTS
Litigation
----------
The Company, including certain employees, officers, and directors, is a
defendant in a lawsuit filed by the original licensor (in Quebec) of certain
territories which the Company entered into contracts for dealership and
distribution. The claim is for outstanding license fees allegedly owing pursuant
to contracts dated February 9, 1998 and July 7, 1998. The suit asks for damages
totaling approximately $9.3 million (Canadian) plus legal costs.
Outside counsel for the Company has advised that, at this stage in the
proceedings, he cannot offer an opinion as to the probable outcome. The Company
believes the suit is without merit and is vigorously defending its position.
Other Subsequent Events
-----------------------
On June 8, 2000, a Nevada corporation acquired 76% of the Company in exchange
for 1,370,480 shares of common stock of the Nevada corporation.
-16-
<PAGE>
U.S./ACE SECURITY LAMINATES, INC.
NOTES TO FINANCIAL STATEMENTS, (CONTINUED)
NOTE 11 - RECLASSIFICATIONS AND PRIOR PERIOD ADJUSTMENTS
Certain amounts as of December 3, 1998 and 1997 have been reclassified to
conform with the reporting as of December 31, 1999.
Errors resulting in the misstatement of the license agreements, note payable,
and the reported income of the prior year and the period of inception (September
25, 1997) to December 31, 1997 were corrected during 1999, resulting in the
following changes:
1998 1997
----------- -----------
(Losses) unadjusted $(1,314,521) $ (259,489)
Recognition of revenue classified as note payable 627,981 --
Additional amortization of intangible assets (45,964) (3,615)
----------- -----------
(Losses) restated $ (732,504) $ (263,104)
=========== ===========
-17-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUSIDIARY
FINANCIAL STATEMENTS
INCLUDING INDEPENDENT ACCOUNTANTS' REVIEW REPORT
FOR THE SIX MONTHS ENDED JUNE 2000 AND 1999
<PAGE>
TABLE OF CONTENTS
PAGE
INDEPENDENT ACCOUNTANTS' REVIEW REPORT..................... 1
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS............................... 2
CONSOLIDATED STATEMENTS OF OPERATIONS..................... 3
CONSOLIDATED STATEMENTS OF CASH FLOWS..................... 4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.................. 5 - 12
<PAGE>
DIROCCO AND DOMBROW, P.A.
3601 W. COMMERCIAL BLVD., SUITE #39
FT. LAUDERDALE, FLORIDA 33309
(954) 731-8181
Independent Accountants' Review Report
--------------------------------------
To the Board of Directors
OmniNet Media.Com, Inc. and Subsidiary
La Jolla, CA
We have reviewed the accompanying consolidated balance sheets of OmniNet
Media.Com, Inc.and Subsidiary as of June 30, 2000 and 1999 and the related
consolidated statements of operations and cash flows for the six months then
ended. These consolidated financial statements are the responsibility of the
Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the consolidated financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modification that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company's recurring operating losses and
negative working capital raise substantial doubt about its ability to continue
as a going concern. Management's plans regarding those matters also are
described in Note 1. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
DiRocco and Dombrow, P.A.
August 11, 2000
-1-
<PAGE>
<TABLE>
<CAPTION>
OMMNINET MEDIA.COM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND 1999
ASSETS
2000 1999
----------- -----------
<S> <C> <C>
Current Assets
Cash $ 25,340 $ 2
Prepaid expenses 7,830 --
----------- -----------
Total Current Assets 33,170 2
----------- -----------
Property and Equipment 156,727 --
----------- -----------
Other Assets
License agreements, net of $47,313 amortization 719,687 --
Security deposits 2,790 --
----------- -----------
Total Other Assets 722,477 --
----------- -----------
----------- -----------
Total Assets $ 912,374 $ 2
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities $ 117,516 $ 12,000
Note payable 642,000 --
Notes payable to related parties 758,603 --
----------- -----------
Total Current Liabilities 1,518,119 12,000
----------- -----------
Stockholders' Deficit
Preferred stock, $0.0001 par value; 10,000 shares authorized
Common stock, $0.0001 par value; 690,000,000 shares
authorized; 41,786,155 and 11,260,748 shares issued
and outstanding, respectively 4,179 1,126
Additional paid-in capital 729,965 701,842
Accumulated deficit (1,339,889) (714,966)
----------- -----------
Total Stockholders' Deficit (605,745) (11,998)
----------- -----------
Total Liabilities and Stockholders' Deficit $ 912,374 $ 2
=========== ===========
</TABLE>
See accompanying notes and independent accountants' review report
-2-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
2000 1999
------------ ------------
Revenues $ 39,900 $ --
Cost of Product Sold 4,000 --
------------ ------------
Total Revenue 35,900 --
------------ ------------
Expenses
General and administrative 8,658 27,899
Research and development -- 10,099
Interest expense 7,100 --
Depreciation and amortization 2,625 --
------------ ------------
Total Expenses 18,383 37,998
------------ ------------
Net Income (Loss) $ 17,517 $ (37,998)
============ ============
Net Earnings (Loss) Per Common Share $ 0.001 $ (0.003)
============ ============
Weighted Average Number of Common Shares
Outstanding 15,066,978 11,260,748
============ ============
See accompanying notes and independent accountants' review report
-3-
<PAGE>
<TABLE>
<CAPTION>
OMNINET MEDIA.COM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
2000 1999
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net loss $ 17,517 $ (37,998)
Adjustment to reconcile net loss to net cash used in
operating activities
Depreciation and amortization 2,625 --
Increase in accounts payable and accrued liabilites 13,279 4,000
--------- ---------
Net Cash Provided by (Used in) Operating Activities 33,421 (33,998)
--------- ---------
Cash Flows From Investing Activities:
Purchase of subsidiary (102,286) --
--------- ---------
Net Cash Used in Investing Activities (102,286) --
--------- ---------
Cash Flows From Financing Activities:
Proceeds from notes payable to related parties 63,000 --
Additional investment by stockholders -- 34,000
Proceeds from issuance of common stock 31,176 --
--------- ---------
Net Cash Provided by Financing Activities 94,176 34,000
--------- ---------
Net Increase in Cash 25,311 2
Cash, Beginning of Year 29 --
--------- ---------
Cash, End of Year $ 25,340 $ 2
========= =========
</TABLE>
See accompanying notes and independent accountants' review report
-4-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Operation
--------------------------
OmniNet Media.Com, Inc. (OmniNet), formerly known as TriCom Technology Group,
Inc., was organized and exists under the General Corporation Law of the State of
Nevada. OmniNet was incorporated in the State of Nevada on March 12, 1997 as
Clinical Aesthetics Centre, Inc. (Clinical). Clinical was inactive from October
1997 to July 1998.
On July 27, 1998, the Board of Director of Clinical approved the issuance of
5,250,000 shares of its common stock in exchange for all outstanding shares of
common stock of TriCom Technology Group, Inc. (TriCom). TriCom was organized
under the General Corporation Law of the State of Nevada on July 14, 1998. The
merged company continued to operate under the name of TriCom but failed in its
attempt to operate as an advertising and communications company and was inactive
from the time of the merger until February 2000.
On January 20, 2000, the Board of Directors of Kioskcoupon.Com, Inc., a Nevada
company incorporated on January 7, 2000 to provide communications services,
amended its Article of Incorporation to change its name to OmniNet Media.Com,
Inc. On February 18, 2000, the Board of Directors of TriCom Technology Group,
Inc. approved the issuance of 5,000,000 shares of its common stock to acquire
all of the outstanding shares of OmniNet Media.Com, Inc. TriCom Technology
Group, Inc., subsequently changed its name to OmniNet Media.Com, Inc.
On June 8, 2000, OmniNet acquired 75.72% of the outstanding shares of common
stock of U.S./ACE Security Laminates, Inc. (US/ACE) by trading one share of
common stock of OmniNet for two shares of US/ACE common stock. US/ACE provides
marketing, training and installation support for safety film products. The
results of operations of US/ACE for the period from June 8, 2000 through June
30, 2000 are included in the consolidated statement of operations for the six
months ended June 30, 2000.
OmniNet is currently focused on acquiring well-established businesses in the
advertisement media, communications and transportation industries and products
for strategic alliances and partnering agreements.
Consolidation Policy
--------------------
The accompanying consolidated financial statements include the accounts of the
OmniNet and US/ACE. Intercompany transactions and balance have been eliminated
in consolidation.
-5-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(Continued)
Going Concern
-------------
The Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business. The Company has experienced recurring losses since
inception and has negative net working capital of $1,455,949 and $11,998,
respectively, for the six months ended June 30, 2000 and 1999. In addition,
US/ACE is involved in litigation, the outcome of which is unknown at this time,
has defaulted on license agreements and has failed to exercise the license
agreement options.
The Company's ability to continue as a going concern is contingent upon its
ability to secure additional equity financing, initiate sales of its products,
and attain profitable operations.
Management is pursuing financing by the issuance of common stock shares.
Although the Company plans to pursue additional financing, there can be no
assurance that the Company will be able to secure or obtain financing on terms
beneficial to the Company. Without such funds the Company would be unable to
comply with its payment obligations to its vendors.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
the Company to continue as a going concern.
Property and Equipment
----------------------
Property and equipment is stated at cost and depreciated under the double
declining method over their estimated useful lives ranging from five to seven
years. Repairs and maintenance expenses are charged to operations as incurred.
Depreciation charged to expense during the period from June 8, 2000 through June
30, 2000 was $654.
Intangible Assets
-----------------
Intangible assets represent license agreements acquired and are recorded at cost
in accordance with Accounting Principles Board (APB) Opinion No. 17, "Intangible
Assets". The Company amortizes the intangible assets using the straight-line
method over the term of the specific agreements of five to ten years. The
Company evaluates whether the estimated useful life used to amortize an
intangible asset is appropriate due to changing facts and circumstances
resulting in increases or decreases in the asset's estimated useful life and
records the change currently.
-6-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(Continued)
Intangible Assets, Continued
----------------------------
Amortization expense of $1,971 was charged to operations during the period from
June 8, 2000 through June 30, 2000.
Impaired Asset Policy
---------------------
In March 1995, the Financial Accounting Standards Board issued a statement
titled "Accounting for Impairment of Long-lived Assets." In complying with this
standard, the Company reviews its long-lived assets yearly to determine if any
events or changes in circumstances have transpired which indicate that the
carrying value of its assets may not be recoverable.
Revenue Recognition
-------------------
Revenues from sales to distributors and resellers are recognized when related
products are shipped. Revenues from corporate license programs are based on the
terms of the agreement, which typically outline specific payment arrangements.
Income Taxes
------------
The Company accounts for income taxes under Financial Accounting Standards Board
of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Under
Statement 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities due to a change in tax rates is
recognized in income in the period that includes the enactment date. No current
or deferred income tax expense or benefit was recognized due to the Company not
having any material operations for the six months ended June 30, 2000 and 1999.
Fair Value of Financial Instruments
-----------------------------------
The carrying amounts reported in the balance sheets for cash and cash
equivalents and accounts payable approximate fair value because of the immediate
or short-term maturity of these financial instruments.
-7-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(Continued)
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Net Loss Per Common Share
-------------------------
Net loss per share is calculated based on the weighted average number of shares
outstanding during the six months ended June 30, 2000 and 1999.
Recent Accounting Announcements
-------------------------------
The FASB recently issued Statement No. 137 "Accounting for Derivative
Instruments and Hedging Activities-Deferral of Effective Date of FASB Statement
No. 133". This statement defers for one year the effective date of FASB
Statement No 133, "Accounting for Derivative Instruments and Hedging
Activities". The rule now will apply to all fiscal quarters of all fiscal years
beginning after June 15, 2000. In June 1998, the FASB issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which is
required to be adopted in years beginning after June 15, 1999. The Statement
permits early adoption as of the beginning of any fiscal quarter after its
issuance. The Statement will require the Company to recognize all derivatives on
the balance sheet at fair value. Derivatives that are not hedges must be
adjusted to fair value through income. If the derivative is a hedge, depending
on the nature of the hedge, changes in the fair value of derivatives will either
be offset against the change in fair value of the hedged assets, liabilities, or
firm commitments through earnings or recognized in other comprehensive income
until the hedged item is recognized in earnings. The ineffective portion of a
derivative's change in fair value will be immediately recognized in earnings.
The Company has not yet determined if it will early adopt and what the effect of
SFAS No. 133 will be on the earnings and financial position of the Company.
-8-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at June 30, 2000:
Machinery and equipment $125,168
Office equipment 54,874
Leasehold improvements 7,161
Vehicle 24,121
--------
211,324
Less accumulated depreciation 54,597
--------
Property and equipment $156,727
========
NOTE 3 - LICENSE AGREEMENTS
US/ACE has entered into a "Sales and Distribution Agreement" dated December 31,
1999, (which supersedes all other agreements previously entered as described
below), with Clear Defense, Inc. of Virginia at a cost of $767,000 to become the
exclusive retail dealer and distributor of the laminate products bearing the
trademark commonly known, recognized, and understood as "Clear Defense" safety
and security window film in specific territories as defined by the agreement.
The safety and security laminates and their application to glass windows and
doors will be sold to government, commercial, residential, and automotive
markets.
A lump sum license fee of $100,000 was paid at the signing of the agreement, for
the exclusive distribution rights to the "Initial Territory" defined as the
states of California, Arizona and Florida.
A license fee of $667,000 is due for the exclusive distribution rights to the
"Base Territory" as defined as the states of Nevada, Utah, New Mexico, Georgia,
Texas, Louisiana, Alabama, Mississippi and the country of Mexico and parts of
the Caribbean Islands. The payment schedule is as follows: $25,000 due by or
before January 31, 2000; $25,000 due by or before February 28, 2000; and
$617,000 due by or before March 31, 2000. The Company is also subject to minimum
film purchase requirements under agreement. Interest is due at the rate of 18%
per annum, or 1.5% per month on past due amounts.
The Company had an option to obtain the exclusive rights for the remaining
states within the United States of America for $333,000. The deadline for the
exercise of the option expired on January 31, 2000. The agreement is for a term
of five years and shall automatically renew for an additional successive term of
five years so long as the terms and conditions of the agreement are met.
-9-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 3 - LICENSE AGREEMENTS, Continued
The Company is currently in default of the license agreement with Clear Defense,
Inc. of Virginia.
In 1997 and 1998, the Company had entered into three separate agreements to
become the exclusive retail dealer and distributor of the products described
above with Ace/Clear Defense, Inc. of Quebec, Canada for a total cost of
$1,835,000. These agreements have been cancelled by U.S./ACE. and are currently
the subject of litigation (see Note 10). At December 31, 1999, license
agreements have been adjusted from their 1998 book of $1,608,676 to net
realizable value of $767,000.
NOTE 4 - NOTES PAYABLE
At June 30, 2000 in the amount of $642,000, which provides for interest at 18%
per annum on the outstanding balance as of April 1, 2000, represents amounts due
under the new contracts as described in Note 3. The Company has suspended
payments on these agreements until resolution of the lawsuit.
NOTE 5 - NOTES PAYABLE TO RELATED PARTIES
Advances from officers totaling $758,603 at June 30, 2000 are non-interest
bearing, unsecured, and due on demand.
NOTE 6 - INCOME TAXES
The reasons for the differences between income taxes at the statutory income tax
rates and the provision (benefit) for income taxes as of June 30, 200 and 1999
are summarized, as follows:
2000 1999
-------- --------
Income tax (benefit) at statutory rate $ 8,370 $(12,919)
Change in valuation allowance related
to deferred tax (benefit) carryforwards (8,370) 12,919
-------- --------
Income tax (benefit) $ 0 $ 0
======== ========
At June 30, 2000, cumulative net operating losses of approximately $25,300 are
available for carryforward against future years taxable income and expire
through the year 2004. The Company's ability to utilize its net operating loss
carryforwards is uncertain and thus a valuation reserve has been provided
against the Company's net deferred tax assets.
-10-
<PAGE>
<TABLE>
<CAPTION>
OMNINET MEDIA.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair values of the Company's financial instruments as of June 30,
2000 and 1999 are as follows:
2000 1999
--------------------- ----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Assets
Cash $ 25,340 $ 25,340 $ 2 $ 2
Prepaid expense $ 7,830 $ 7,830 $ 0 $ 0
Liabilities
Accounts payable
and accrued liabilities $ 88,516 $ 88,516 $ 12,000 $ 12,000
Note payable $ 642,000 $ 642,000 $ 0 $ 0
Note payable to related party $ 758,603 $ 758,603 $ 0 $ 0
</TABLE>
NOTE 8 - STOCKHOLDERS' EQUITY
Common Stock Issuances
----------------------
Common stock was issued in the six months ended June 30, 2000, as follows:
a) In fiscal year 1999, Tricom shareholders contributed $34,000. No shares
were issued for this investment amount.
b) On February 18, 2000, Tricom and OmniNet Media.Com, Inc. merged in an
exchange of their common shares. Following the merger, Tricom's Board of
Directors amended its Article of Incorporation to change its name to
OmniNet Media.Com, Inc. (OmniNet) and authorized a 500:1 reverse stock
split of its own shares.
c) Pursuant to Rule 504D, OmniNet sold 30,000,000 shares of common stock to
investors. In addition, the OmniNet issued 10,000,000 shares of
restricted stock to sixteen individuals or entities on February 24, 2000.
d) On April 30, 2000, OmniNet issued 50,000 shares of common stock to two
investors.
e) On May 17, 2000, OmniNet issued 325,000 shares of common stock to three
individual investors.
f) On June 8, 2000, OmniNet issued 18,099 shares of common stock to one
investor.
g) On June 13, 2000, OmniNet issued 1,370,480 shares of common stock to
stockholders of the corporation purchase through a stock swap and
cancelled the same number of share issued to the corporation on June 8,
2000.
h) On June 28, 2000, OmniNet issued 55 fractional shares to investors.
-11-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999
NOTE 9 - LEASE
The Company entered into a month-to-month lease agreement for its office
facility on April 1, 2000 expiring on June 30, 2003. Rent expense for the six
months ended June 30, 2000 was $2,954.
NOTE 10 - SUBSEQUENT EVENTS
Litigation
----------
The Company, including certain employees, officers, and directors, is a
defendant in a lawsuit filed by the original licensor (in Quebec) of certain
territories, which the Company entered into contracts for dealership and
distribution. The claim is for outstanding license fees allegedly owing pursuant
to contracts dated February 9, 1998 and July 7, 1998. The suit asks for damages
totaling approximately $9.3 million (Canadian) plus legal costs.
Outside counsel for the Company has advised that, at this stage in the
proceedings, he cannot offer an opinion as to the probable outcome. The Company
believes the suit is without merit and is vigorously defending its position.
-12-
<PAGE>
OMNINET MEDIA.COM, INC
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On July 27, 2000, the Company acquired 5,000,000 of the issued and
outstanding shares of the common stock of MAS Acquisition XXV Corporation for a
cash price of $50,000 and 25,000 shares of its common stock valued at $25.
The acquisition will be accounted for as a purchase, with the assets
acquired and liabilities assumed recorded at fair values, and the results of MAS
Acquisition, XXV Corporation's operations included in the Company's consolidated
financial statements from the date of acquisition.
The accompanying condensed consolidated financial statements illustrate
the effect of the acquisition ("Pro Forma") on the Company's financial position
and results of operations. The condensed consolidated balance sheet as of June
30, 2000 is based on the historical balance sheets of the Company and MAS
Acquisition XXV Corporation as of that date and assumes the acquisition took
place on that date. The condensed consolidated statement of income for the year
ended December 31, 1999 and the statement of income for the six months ended
June 30, 2000 are based on the historical statements of income of the Company
and MAS Acquisition XXV Corporation for those periods. The pro forma condensed
consolidated statements of income assume the acquisition took place on January
1, 1999.
In addition, the consolidated proforma statements of income for the
year ended December 31, 1999 includes the proforma acquisition of U.S./Ace
Security Laminates, Inc. on June 27, 2000.
The pro forma condensed consolidated financial statements may not be
indicative of the actual results of the acquisition. In particular, the pro
forma condensed consolidated financial statements are based on management's
current estimate of the allocation of the purchase price, the actual allocation
of which may differ.
The accompanying condensed consolidated pro forma financial statements
should be read in connection with the historical financial statements of the
Company and MAS Acquisition XXV Corporation.
A recapitalization of the stockholders' equity of the Company has not
been presented as the acquisition of MAS Acquisition XXV Corporation (MAS
Acquisition) is not a reverse acquisition and MAS Acquisition had an immaterial
amount of net monetary assets at the time of acquisition. OmniNet was the
acquirer of MAS Acquisition and the stockholders of OmniNet maintained majority
stock ownership subsequent to the acquisition transaction.
<PAGE>
<TABLE>
<CAPTION>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
JUNE 30, 2000
OMNINET MAS
MEDIA.COM ACQUISITION
INC XXV CORP Adjustments Pro Forma
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash $ 25,340 $ -- $ $ 25,340
Prepaid expenses 7,830 -- 7,830
----------- ----------- -----------
Total Current Assets 33,170 -- 33,170
----------- ----------- -----------
Property and Equipment 156,727 -- 156,727
----------- ----------- -----------
Cost in excess of net assets acquired -- -- (1) 47,025 47,025
----------- ----------- -----------
Other Assets
License agreements 719,687 -- 719,687
Other assets 2,790 26 2,816
----------- ----------- -----------
Total Other Assets 722,477 26 722,503
----------- ----------- -----------
Total Assets $ 912,374 $ 26 $ 959,425
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued liabilities $ 117,516 $ -- $ 117,516
Notes payable 642,000 -- 642,000
Notes payable to related parties 758,603 -- 758,603
----------- ----------- -----------
Total Current Liabilities 1,518,119 -- 1,518,119
----------- ----------- -----------
Stockholders' Deficit (605,745) 26 (1) 47,025 (529,694)
----------- ----------- -----------
Total Liabilities and Stockholders'
Equity $ 912,374 $ 26 $ 959,425
=========== =========== ===========
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements (Unaudited)
-2-
<PAGE>
<TABLE>
<CAPTION>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
FOR THE SIX MONTHS ENDED JUNE 30, 2000
OMNINET MAS
MEDIA.COM ACQUISITION
INC XXV CORP Adjustments Pro Forma
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 39,900 $ -- $ 39,900
Cost of Product Sold 4,000 -- 4,000
----------- ----------- -----------
Gross Profit 35,900 -- 35,900
Expenses
General and administrative 18,383 10 (2) 1,000 19,393
----------- ----------- -----------
Loss from continuing operations (17,517) (10) (16,507)
----------- ----------- -----------
Net Loss (17,517) (10) (16,507)
=========== =========== ===========
Loss per common share $ ( 0.01) $ (0.01)
=========== ===========
Weighted average number of shares
outstanding 1,649,994 1,649,994
=========== ===========
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements (Unaudited)
-3-
<PAGE>
<TABLE>
<CAPTION>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1999
OMNINET MAS
MEDIA.COM ACQUISITION
INC XXV CORP Adjustments Pro Forma
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 2,904,773 $ -- $ $ 2,904,773
Cost of Product Sold 465,457 -- 465,457
----------- ----------- -----------
Gross Profit 2,439,316 -- 2,439,316
----------- ----------- -----------
Expenses
General and administrative 1,897,508 18 (2) 2000 1,899,526
Impairment loss of license agreement 215,159 -- 215,159
----------- ----------- -----------
Total Expenses 2,112,667 18 2,114,685
----------- ----------- -----------
Income (loss) from continuing operations 326,649 (18) 324,631
----------- ----------- -----------
Other Income (Expense)
Interest income 2,602 -- 2,602
Loss on diposal of asset (6,350) -- (6,350)
Other expense (1,858) -- (1,858)
----------- ----------- -----------
Total Other Income (Expense) (5,606) -- (5,606)
----------- ----------- -----------
Net Income (Loss) $ 321,043 $ (18) $ 319,025
=========== =========== ===========
Earnings per common share $ 0.23 $ 0.22
=========== ===========
Weighted average numbe of shares
outstanding 1,418,001 1,418,001
=========== ===========
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements
-4-
<PAGE>
OMNINET MEDIA.COM, INC
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
NOTE A - The pro forma adjustments to the condensed consolidated balance
sheet are, as follows:
(1) To reflect the acquisition of MAS Acquisition XXV Corporation
and the allocation of the purchase price on the basis of the fair
values of the assets acquired and liabilities assumed. The components
of the purchase price and its allocation to the assets and liabilities
of MAS Acquisition XXV Corporation are, as follows:
Components of purchase price:
Cash $ 50,000
Common Stock of OmniNet Media.Com, Inc 25
---------
Total purchase price 50,025
Allocation of purchase price:
Stockholders' equity of MAS Acquisition XXV Corporation 26
---------
Cost in excess of net assets acquired $ 49,999
=========
NOTE B - The pro forma adjustments to the condensed consolidated
statements of income are, as follows:
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
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(2) Adjustments to general and
Administrative expense:
Amortization of excess cost over
Fair value of the net assets
Acquired $ 1,000 $ 2,000