U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from January 1, 2000 through August 31, 2000.
Commission file number 000-28935
OMNINET MEDIA.COM, INC.
(Name of Small Business Issuer)
Nevada 880398783
(State or Other (I.R.S. Employer
Jurisdiction of Identification
Incorporation or Number)
Organization)
7825 Fay Avenue, Suite 200, La Jolla, CA 92037
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (858) 456-5588
Securities registered pursuant to section 12(g) of the Act: Common Stock
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. Yes X
---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-KSB or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $75,983 for the
transition period beginning January 1, 2000 and ending at the end of the fiscal
year on August 31, 2000.
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and ask price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)
The number of shares outstanding of each class of common equity, as of August
31, 2000 are 11,745,692 restricted, and 30,532,829 unrestricted shares.
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
History.
MAS Acquisition XXV Corp. (hereafter "MAS"), the registrant's predecessor, was
incorporated on January 6, 1997 in the State of Indiana to engage in any lawful
business, including but not limited to selecting and entering into business
combinations. MAS has been in the developmental stage since inception and had
not, until August 17, 2000, conducted any active business operations, other than
issuing shares to its shareholders. Until August 17, 2000 MAS could have been
considered as a "shell" company whose sole purpose was to locate and consummate
a merger or acquisition with an operating business entity.
MAS filed registration statement under, Section 12(g) of the Securities Exchange
Act of 1934 on a voluntary basis in order to make itself more attractive as a
merger candidate. Until August 17, 2000 MAS was a "blank check" company because
its business plan was to engage in a merger or acquisition with an unidentified
company or companies, or other entity or person. Many states have enacted
statutes, rules and regulations limiting the sale of securities of "blank check"
companies in their respective jurisdictions. MAS distributed shares of its
common stock as gift without any cash considerations to non-U.S. persons in
reliance on Regulation S. The shares of common stock distributed in reliance on
Regulation S were escrowed and MAS will refuse to register any transfer of the
shares, during the two year distribution compliance period unless registered
under the Securities Act of 1933 or unless an exemption from registration is
available to cover any such transaction.
Pursuant to its business plan, MAS Acquisition XXV Corp. entered into an
Agreement and Plan of Reorganization effective August 17, 2000 by which 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, OmniNet paid MAS Capital, Inc,
the sum 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 Act 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. A copy of the Agreement and Plan
of Reorganization is filed as an Exhibit to the Form 8-KSB Report and is
incorporated herein by reference.
<PAGE>
History of OmniNet.
OmniNet Media.Com, Inc. was incorporated on March 12, 1997 as Clinical
Aesthetics Centre, Inc. ("Clinical") under the laws of the State of Nevada.
Clinical conducted no active business operations from inception through July
1998. On July 27, 1998 Clinical entered into a business reorganization in which
it issued 5,250,000 of its common shares in exchange for all the issued and
outstanding shares of TriCom Technology Group, Inc. ("TriCom"), a Nevada
corporation formed on July 14, 1998. TriCom continued to operate under its own
name, but failed in its attempt to operate as an advertising and communications
company. It became inactive, and remained inactive until February 2000.
On February 18, 2000 the Board of Directors of TriCom approved the issuance of
5,000,000 of its common shares in exchange for 100% of the issued and
outstanding stock of OmniNet Media.Com, Inc. which had been formed as a Nevada
business corporation on January 7, 2000 under the name of Kioskcoupon.Com, Inc.
("Kioskcoupon") Its business purpose was to provide communications services.
Kioskcoupon had changed its name to OmniNet Media.Com, Inc. by amendment to its
articles of incorporation on January 20, 2000. TriCom subsequently adopted the
name of its subsidiary by amending its articles of incorporation to change its
name to OmniNet Media.Com, Inc.
On June 8, 2000, the Company acquired 75.72% of a U.S./Ace Security
Laminates("U.S./Ace") 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.
The product sold by U.S./Ace is a series of safety and security film laminates
which provide protection from thefts, accidents, explosions, hurricanes,
tornadoes and earthquakes by holding broken glass together like an invisible
certain. These products, marketed under the name Global Glass Guard ("3G")
create a safety and security barrier for homes and commercial, industrial and
government installations. The Company intends to sell master and dealership
licenses to market laminates, and sell the products to distributors for resale.
The licensing agreements the Company is offering provide for term payment plans
and include purchase quotas for distributors. Breach of the quotas will result
in forfeiture of the licenses with no recourse for recovery of the term payments
which have been made.
Neither OmniNet nor any of its predecessors has been party to any bankruptcy,
receivership or other similar proceedings.
Business of OmniNet Media.Com, Inc.
OmniNet is in the business of providing an innovative, public, interactive
multi-media retail-based product and information delivery network installed in
kiosks located in major shopping malls, retail outlets, public facilities,
transportation hubs and pay phone installations. The "kiosks" deliver internet
and other multi-media services through a proprietary MultiMedia Interactive
Network Terminal tm ("MINTtm") system which is a wireless (cellular) information
and interactive receiving device that gives individual users access to coupons,
on-board information on local retail businesses, and provides product and
shopping incentives via interactive touch video display screens. The
installations will also provide access to local and long distance telephone
services. Income from the MINTtm is generated by selling advertising which is
displayed electronically to the captive audience of both, users of MINTtm and
foot traffic of the MINTtm. The MINTtm terminals can be modified with numerous
application to provide specific location information dictated by the proprietor
of each location. The MINTtm us valuable for placement in any high-traffic
consumer oriented locations and will provide users with access to the Internet,
E-mail, high-speed information sending and receiving, coupons and other retail
selling incentives, and information (provided by the touch screen) which can be
tailored to each specific location or class of locations.
<PAGE>
The characteristics of the MINTtm technology is a small physical structure
including a computer and a display screen that displays information for people
passing in the public arena. Kiosks are common near the entrances of shopping
malls in North America where they provide shoppers with directories and store
discounts. Kiosks are also used at trade shows and professional conferences. The
word is of Turkish and earlier Persian origin, where it meant an outdoor
pavilion or a portico. Public access kiosks come in all shapes and sizes. They
include ATM machines, lottery terminals, coupon dispensing machines, airport
flight information screens and many more applications. Technology has now made
the public access kiosk and interactive device that can handle almost any kind
of functionality one can think of, including all forms of point-of-sale
transactions with the right connectivity. One can place the entire store's
product line on the kiosk and put in a mall in a 2 ½ square foot area.
The kiosk industry is in its infancy. Technology is invading this industry and
it is now scheduled to explode. Frost & Sullivan in Mountain View, California
now estimated a 41% growth in public access kiosks through 2004. Sales will rise
from $1.8 Billion in 1999 to $5.3 Billion by 2002. They estimate at least Two
Hundred and Twelve Thousand (212,000) new kiosks will be placed in public areas
by the year 2002 in this country alone. Five million (5,000,000) will be place
worldwide by the year 2007. Because of this fact, the Company has chosen this
industry to apply its marketing skill and Entertainment/Information application.
The key factor for success in this industry is to identify unique user groups
and provide the specific content they want.
The Company is in the technology business with a sophisticated marketing plan.
The Company is applying its knowledge and experience to an industry that is
ready to explode. That segment of the technology industry is public access
kiosks. The Company, along with its strategic partners market a wide variety of
kiosk targeted to all demographic profiles. The Company placed them in high
traffic, targeted locations, which assure high visibility and usage. High usage
assures high revenue streams and profits.
The Company has plans to develop additional products and services and is
devoting significant resources to research and development.
<PAGE>
Global Glass Guard ("3G")
Global Glass Guard ("3G") is a division of OmniNet Media.Com, Inc. whose primary
responsibility is to provide training and installation support for 3G.
These types of safety film products were originally designed to protect property
and people against terrorist attacks in Europe and the Middle East. 3G film
laminates work as an integral element for safety and security requirements -
from thefts, accidents, explosions, hurricanes, tornadoes, or earthquakes. 3G
film laminates hold broken glass together like an invisible curtain. 3G films
creates a safety and security barrier for homes, commercial, industrial, or
government buildings, by discouraging break-ins, vehicle intruders and/or
penetration of dangerous objects. 3G 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 3G products, but safety and security
although 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 have been greatly reduced. As a result, it limits the cost of damage,
and repair and/or theft related problems. 3G 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. 3G's safety and security laminate
films are excellent retrofit related products that virtually eliminate these
potential problems. 3G's safety and security film product line can be purchased
and professionally installed at a fraction of the cost when compared to other
alternatives available today. 3G 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 all other
uncontrollable weather related conditions.
3G's 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
cause a licensee to forfeit their license with no recourse to recover term
payments made.
Competition.
Competition to OmniNet laminate business conducted through Global Glass Guard
("3G")comes from manufacturers and distributors of alarm systems, marketers of
competing window protection products like metal bars, and other safety window
tints and films such as 3M, Llumar, Madico and Film Technologies, Inc. While
many of these competitors are more well-known, better capitalized and more
experienced than 3G, the Company believes the 3G product line to be distributed
is superior in many respects to most classes of products or mode of protection
offered by many competitors.
<PAGE>
Competition in the specific business proposed to be conducted in connection with
the provision of out-of-home, out-of-office internet and electronic services is
anticipated to come from existing providers of similar services such as Advants
Public Internet Access, Inc., Netshif, Netkey (formerly Lexitech), CAIS Software
Solutions which markets the "IPORT" Public Terminal System and Central
Management Service (CMS) as well as turnkey kiosk solutions, "eKiosk" (whose
product eKiosk.com is dedicated to providing public internet access and
web-based services for people away from home), and Coynet, which is the leading
edge provider of public access internet solutions and is acknowledged as the
market leader with the largest existing network of public internet kiosks in
Europe. Many of these competitors are better funded, more experienced and
supported by better technical experts than OmniNet.
The Company is not dependent on any major customers and do not anticipate such
dependency in the future. The hardware and software used in the MINTtm is
proprietarily configured. Governmental approval is not required to conduct any
activity which the Company presently anticipates, and the Company see no
likelihood that governmental regulations will have any effect on its business in
the foreseeable future. The Company does not expect to be subjected to any
significant financial costs in order to comply with state, federal or local
environmental regulations, or any other statutory requirements.
During the last fiscal year the Company has spent in excess of $500,000 in
research and development, primarily devoted to its MINTtm device and 3G
products. At the present time the Company has three full time and fifteen
part-time employees.
Item 2. Description of Property.
OmniNet does not own, or have any interest aside from a leasehold interest in
any property. The Company operates out of office space located at 7825 Fay
Avenue, Suite 200, La Jolla, CA 92037 which carries a monthly lease payment of
approximately $1,000. The space is adequate for its current operations.
Item 3. Legal Proceedings.
There are no legal proceedings pending against OmniNet and the Company has
received no threat or other such notice that any such proceeding is likely to be
filed in the foreseeable future. To its knowledge no administrative or other
similar action is threatened or warranted by any state, local or federal
administrative agency.
U.S./Ace, now known as Global Glass Guard ("3G"), is involved in litigation.
U.S./Ace, including certain employees, officers, and directors, is a defendant
in a lawsuit filed by the original licensor (in Hull, Quebec, Canada) of certain
territories which U.S./Ace 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 U.S./ACE has advised that, at this stage in the proceeding, the counsel
cannot offer an opinion as to the probable outcome. U.S./Ace believes the suit
is without merit and is vigorously defending its position. The plaintiffs
attorney has been sanctioned by the Court for no appearance at court hearings.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
The Company has not conducted any annual or special meeting of stockholders at
which any matters have been submitted for a vote of the stockholders at large
during this transition period, and no matter have been approved by the written
consent of a majority of the company's outstanding shares pursuant to Section
78.320(2) of the Nevada Revised Statutes.
PART II
Item 5. Market for Common Equity and Related Stockholders Matters.
Common shares of OmniNet Media.Com, Inc. are traded on the over-the-counter
market through the medium of the NASD Interdealer Quotation System with bid and
ask quotations for its shares reported in the NQB "Pink Sheets." Brokers began
submitting bid and ask quotations for its common shares on or about March, 2000.
The range of high and low bid information for its common equity for each quarter
for the last two years as reported by the OTCBB Pink Sheets are as follows:
Date Open High Low Close Volume
6/30/99 6.000 6.250 5.625 5.675 992,700
9/30/99 5.718 6.250 0.250 0.312 532,700
12/31/99 0.375 0.375 0.062 0.125 710,100
3/31/00 0.125 2.750 0.062 2.500 637,400
6/30/00 2.500 2.750 0.531 0.875 390,000
9/11/00 0.875 4.250 0.625 4.187 1,297,000
The readers are cautioned that these prices reflect inter-dealer process,
without retail mark-up, mark-down or commission and may not represent actual
transactions.
Item 6. Management's Discussion and Analysis or Plan of Operation.
OmniNet Media.Com, Inc. conducted no active business operations in 1998 or 1999.
It commenced active operations in January of 2000 which have continued to the
date of this transition report.
<PAGE>
In note 1 to its financial statements as of August 31, 2000 its auditors state
that the 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. However, as noted there, the Company has sustained
recurring losses since inception and has negative working capital for the eight
months ended August 31, 2000 and the years ended December 31, 1999 and 1998. The
Company experienced operating losses of $1,560,604, $41,971 and $14,350,
respectively, during those periods. Its ability to continue as a going concern
is contingent upon its ability to secure additional equity financing, initiate
sales of its products and thereby attain profitable operations. The Company is
pursuing financing by the issuance of common stock shares. Although the Company
plans to pursue additional financing on terms beneficial to the Company and its
stockholders. Without such funds the Company will be unable to comply with its
payment obligations to vendors.
The Company anticipates that the Company will require $5,000,000 in additional
debt or equity financing in order to continue as a going concern during the next
twelve months of operation. The Company plans to attempt to enter into
arrangements to raise these funds through the private or public sale of common
shares, and by initiating profitable operations. No assurance can be given that
either of these plans will be realized and thus, no assurance can be given that
the Company will be able to continue as a going concern in the foreseeable
future.
Its plan of operation is to aggressively market digital information kiosks in
malls, individual large retail stores like Target and Wal-Mart, public
transportation stations and airports, and individual pay telephone locations.
The Company believes its Cellular Digital Packet Data network links are
attractive to retailers because they link all retailers, manufacturers,
distributors, marketers, advertisers and shoppers together, and offer
interactive TV, MultiMedia, computer technology and communications technology
together by use of a user-friendly electronic presentation via keyboard and
touch screens. Specific retailer and advertiser information and coupon and other
sales incentives are available to shoppers at a touch in a format that can be
updated daily via wireless communications between OmniNet and any number of
MINTtm installations. Though its plan is yet unproven, the Company believes
these installations will be attractive to vendors because in the age of
self-service and transactional marketing the Company can, through four vertical
market "Shopper Intranets," supply the means by which participating industry,
manufacturers, advertisers, retailers and industry service providers can create
"one-on-one" relationships with their customers through new "sell-through"
retail technologies.
The Company has established seven combined goals for successful implementation
of its store-based MINTtm program. These goals require each installed system (1)
create store traffic by offering unique products and services, (2) be a
stand-alone profit center for the retailer, (3) address specific vertical market
needs of the shopper, (4) offer manufacturer coupons in all categories which can
be produced by the machine on demand, (5) offer on-board tangible products and
services, (6) capture specific data from users for demographic statistics and
profiles, and (7) provide an incentive for shopper use.
Though untested, the Company believed it will succeed in distributing these
devices and that once in place, they will be profitable both for the operator of
the location in which they are installed, and for the Company.
As to 3G, the Company intends to build up distribution through establishing new
regional dealers and providing sales training to existing dealers and
distributors.
Item 7. Financial Statements.
The following financial statements are included in this part: Audited balance
sheets of OmniNet Media.Com, Inc. and subsidiary (formerly Clinical Aesthetics
Centre, Inc. and Tricom Technology Group, Inc. as of August 31, 2000 and
December 31, 1999 and 1998, and the related statements of income, retained
earnings and cash flows for the eight months ended August 31, 2000 and the years
ended December 31, 1999 and 1998.
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
INCLUDING INDEPENDENT AUDITORS' REPORT
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
<PAGE>
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT............................... 1
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS.............................. 2
CONSOLIDATED STATEMENTS OF OPERATIONS.................... 3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS'
DEFICIT................................................ 4
CONSOLIDATED STATEMENTS OF CASH FLOWS.................... 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS................. 6 - 18
<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. and Subsidiaries
La Jolla, CA
We have audited the accompanying consolidated balance sheets of OmniNet
Media.Com, Inc. and Subsidiaries as of August 31, 2000 and December 31, 1999 and
1998, and the related consolidated statements of operations, stockholders'
deficit and cash flows for the eight months ended August 31, 2000 and the years
ended December 31, 1999 and 1998. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.
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 consolidated financial statements are free of
material misstatement. An audit includes, examining on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of OmniNet Media.Com,
Inc. and Subsidiaries as of August 31, 2000 and December 31, 1999 and 1998, and
the results of operations and its cash flows for the eight months ended August
31, 2000 and the years ended December 31, 1999 and 1998 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 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
consolidated financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
/s/ DiRocco and Dombrow, P.A.
-----------------------------
DiRocco and Dombrow, P.A.
September 26, 2000
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
August 31, December 31,
2000 1999 1998
---------- --------- ---------
Current Assets
Cash $ 1,420 $ 29 $ 0.00
Prepaid expenses 6,779 0.00 0.00
Total Current Assets 8,199 29 0.00
Property and Equipment, net 158,507 0.00 0.00
Other Assets
License agreement, net 703,916 0.00 0.00
Security deposits 2,796 0.00 0.00
Total Assets $ 873,418 $ 29 $ 0.00
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accrued expenses $ 400,920 $ 16,000 $ 8,000
Current portion of note payable 642,000 0.00 0.00
Notes payable to related partied 623,956 0.00 0.00
Total Current Liabilities 1,666,876 16,000 8,000
Noncontrolling interest in
net assets (277,405) 0.00 0.00
Stockholders' Deficit
Preferred stock, $0.0001
par value; 10,000 shares
authorized, no shares
issued and outstanding 0.00 0.00 0.00
Common stock, $0.0001 par value;
690,000,000 shares authorized;
42,278,173, 11,260,748 and
11,260,748 shares issued and
outstanding, respectively 4,228 1,126 1,126
Additional paid in capital 1,759,262 701,842 667,842
Accumulated deficit (2,279,543) (718,939) (676,968)
Total Stockholders' Deficit ( 516,053) ( 15,971) ( 8,000)
Total Liabilities and Stockholders'
Deficit $ 873,418 $ 29 $ 0.00
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Eight months ended
-----------------------------------------
August 31, December 31,
2000 1999 1998
---------- ---------- ----------
Revenues, net $ 75,983 $ 0.00 $ 0.00
Cost of products sold ( 47,037) 0.00 0.00
28,946 0.00 0.00
Expenses
Consulting 137,418 22,500 0.00
Advertising 940,990 0.00 0.00
Travel and entertainment 57,350 0.00 0.00
Research and development 17,410 10,425 0.00
Transfer agent fee 5,652 0.00 0.00
Rent 24,851 0.00 0.00
Professional fee 151,250 8,000 8,000
Other 346,149 1,496 0.00
Total Expenses 1,681,070 42,421 8,000
Operating Loss (1,652,124) ( 42,421) ( 8,000)
Non-controlling interest 91,520 0.00 0.00
Other Income (Expenses)
Interest income 0.00 450 0.00
Loss on disposal of asset 0.00 0.00 ( 6,350)
Total Other Income (Expenses) 0.00 450 ( 6,350)
Net Loss (1,560,604) ( 41,971) ( 14,350)
Net Loss Per Common Share $( 0.04) $ 0.00 $ 0.00
Weighted Average Number of Common
Shares Outstanding 36,292,734 11,260,748 6,782,331
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Eight months ended
---------------------------------
August 31, December 31,
2000 1999 1998
----------- -------- --------
Cash Flows From Operating Activities
Net loss $(1,560,604) $(41,971) $(14,350)
Adjustment to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 122,921 0.00 0.00
Minority interest in net loss of
consolidated subsidiaries ( 91,520) 0.00 0.00
Loss on disposal of assets 0.00 0.00 6,350
Increase in prepaid expenses ( 6,779) 0.00 0.00
Increase in security deposit ( 2,796) 0.00 0.00
Increase in accrued expenses 384,920 8,000 8,000
Net Cash Used in Operating
Activities (1,153,858) (33,971) 0.00
Cash Flows From Investing Activities
Purchase of property and equipment ( 8,599) 0.00 0.00
Acquisition of U.S./ACE ( 60,000) 0.00 0.00
Acquisition of MAS ( 50,000) 0.00 0.00
Net Cash Used by Investing
Activities ( 118,599) 0.00 0.00
Cash Flows From Financing Activities
Proceeds from issuance of stock 81,039
Proceeds from notes payable 623,956 0.00 1,100
Payment of license agreement ( 125,000) 0.00 ( 1,100)
Additional investment by stockholders 691,071 34,000 0.00
Net Cash Provided by Financing
Activities 1,271,066 34,000 0.00
Net Increase in Cash 1,391 29 0.00
Cash at beginning of year 29 0.00 0.00
Cash at end of year $ 1,420 $ 29 $ 0.00
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
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), a State of Delaware
incorporated Company, 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 August 31, 2000 are included in
the consolidated statement of operations for the eight months ended August 31,
2000.
On July 27, 2000, OmniNet issued 25,000 of its authorized shares of common stock
and paid $50,000 in cash to acquire MAS Acquisition XXV Corporation (MAS). MAS
is a development stage corporation incorporated in the State of Indiana.
Consolidation Policy
The accompanying consolidated financial statements include the accounts of the
OmniNet, US/ACE and MAS Acquisition XXV Corporation. Intercompany transactions
and balances have been eliminated in consolidation.
-6-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
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 for the eight months ended August
31, 2000 and the years ended December 31, 1999 and 1998. The Company experienced
net losses of $1,560,604, $41,971 and $14,350, respectively. 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 January 1, 2000 through
August 31, 2000 was $59,817.
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
-7-
<PAGE>
OMNINET MEDIA.COM, INC. AND
SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND
THE YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(Continued)
Intangible Assets, Continued
changing facts and circumstances resulting in increases or decreases in the
asset's estimated useful life and records the change currently.
Amortization expense of $63,084 was charged to operations during the period from
January 1, 2000 through August 31, 2000.
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 eight months ended August 31, 2000 and
the years ended December 31, 1999 and 1998.
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. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
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 eight months ended August 31, 2000 and the years ended
December 31, 1999 and 1998.
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 adopt early 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. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following at August 31, 2000:
Machinery and equipment $130,569
Office equipment 54,874
Leasehold improvements 8,760
Vehicle 24,121
-------
218,324
Less accumulated depreciation 59,817
-------
Property and equipment $158,507
=======
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.
-10-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
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 value of $1,608,676 to net
realizable value of $767,000.
NOTE 4 - ACCRUED LIABILITIES
Accrued liabilities consist of the following at:
August 31, December 31,
2000 1999 1998
---------- -------- --------
Professional fees $ 238,091 $ 16,000 $ 8,000
Office expenses 127,706 - -
Leases 35,123 - -
-------- ------- --------
$ 400,920 $ 16,000 $ 8,000
======== ======= ========
NOTE 5 - NOTES PAYABLE
At August 31, 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 6 - NOTES PAYABLE TO RELATED PARTIES
Advances from officers totaling $623,956 at August 31, 2000 are interest
bearing, unsecured, and due on demand. Interest is accrued at the rate of 10%
per annum. At August 31, 2000, the Company accrued interest of approximately
$42,000.
Consulting fees to related parties amounted to approximately $132,000 for the
eight months ended August 31, 2000.
-11-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 7 - 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:
August 31, December 31,
2000 1999 1998
Income tax benefits at statutory rate $(499,393) $ (13,588) $ ( 4,646)
Change in valuation allowance related
to deferred tax benefit carryforwards 499,393 13,588 4,646
Income tax benefit $ - $ - $ -
========= ========= =========
Due to net operating losses and the uncertainty of realization, no tax benefit
has been recognized for operating losses. At August 31, 2000, net operating
losses of approximately $2,280,000 are available for carryforward against future
years taxable income and begin expiring in 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 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of the Company's financial instruments are as follows:
August 31, December 31,
2000 1999 1998
Carrying Fair Carrying Fair Carrying Fair
Amount Value Amount Value Amount Value
-------- -------- -------- -------- -------- --------
Assets
Cash $ 1,420 $ 1,420 $ 29 $ 29 $ - $ -
Prepaid Assets $ 6,779 $ 6,779 $ - $ - $ - $ -
Liabilities
Accrued
expenses $400,920 $400,920 $ 16,000 $ 16,000 $ 8,000 $ 8,000
Current portion
of note
payable $642,000 $642,000 $ - $ - $ - $ -
Notes payable to
related
parties $623,956 $623,956 $ - $ - $ - $ -
-12-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 9 - STOCKHOLDERS' EQUITY
Common Stock Issuances
Common stock was issued for the eight months ended August 31, 2000 and the years
ended December 31, 1999 and 1998 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, Tricom shareholders contributed
$34,000. 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.
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. i) On June 8, 2000, OmniNet issued 18,099 shares of common
stock to one investor.
j) 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. k) On June 28,
2000, OmniNet issued 55 fractional shares to investors. l) On July 27, 2000,
OmniNet issued 25,000 shares of common stock to acquire MAS Acquisition XXV Corp
(MAS). In addition, OmniNet issued 100,000 shares of common stock to a
subscriber for $50,000 cash. This amount of cash was also paid for the
Acquisition of MAS.
-13-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 9 - STOCKHOLDERS' EQUITY, Continued
Common Stock Issuances, Continued
---------------------------------
(m)In August 2000, OmniNet issued 367,018 shares of common stock to investors
for loans and payment of expenses.
In 1999, the Company issued 11,745,480 shares of its restricted common stock for
cash and the purchase of a subsidiary.
The Company issued 510,172 shares of unregistered common stock for a total of
$1,215,233. The shares were issued under stock subscriptions agreements dated
June 8, 2000, June 30, 2000, July 27, 2000 and August 31, 2000.
The Company authorized shares of unregistered common stock is, as follows:
18,099 shares issued at $0.0001 per share on June 8, 2000.
55 shares issued at $0.0001 on June 30, 2000.
100,000 shares issued at $0.50 per share on July 27, 2000.
25,000 shares issued at $0.0001 per share on July 27, 2000.
367,018 shares issued at $3.17 per share on August 31, 2000.
NOTE 10 - LEASES
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 eight
months ended August 31, 2000 was $4,514.
NOTE 11 - 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 eight months ended August
31, 2000 was $12,304. At August 31, 2000, the minimum aggregate lease
commitments is $2,051.
The Company has also entered into a non-cancelable operating lease agreement for
the facilities of one of its Subsidiaries 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.
-14-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 11 - COMMITMENTS AND CONTINGENCIES, Continued
Operating Lease, Continued
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 eight months ended August 31,
2000 was $20,334.
Future minimum annual rentals payable under this noncancelable operating
agreement are, as follows:
2001 $66,494
2002 $69,142
2003 $29,371
NOTE 12 - 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 $6.3 million 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. No
provision has been made in the financial statements related to this lawsuit.
In September 2000, the manufacturer of laminates and issuer of the license
agreements to U.S./ACE Security Laminates, Inc. cancelled the license agreements
issued to U.S./ACE Security Laminates, Inc. for non-payment of license fees. In
addition, the landlord for U.S./ACE Security Laminates, Inc. filed suit for
default on the rent payments to recover three months of rent in arrears. At
August 31, 2000, license agreements with the manufacturer represented 80% of the
Company's total assets. The Company is currently engaged in negotiations with
the manufacturer and the landlord and does not believe the outcome will have a
material adverse effect to the consolidated financial statements.
-15-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 13 - UNAUDITED STATEMENT OF INCOME AND CASH FLOWS FOR THE COMPARABLE
TRANSITION PERIOD OF THE PRECEDING YEAR
Eight months ended August, 31
2000 1999
----------- -----------
Income Statement Data
Net sales $ 75,983 $ 409,897
Gross profit 28,946 278,940
Operating loss (1,560,604) (159,396)
Interest expense, net -- --
----------- -----------
Loss before income taxes (1,560,604) (159,396)
Income taxes -- --
----------- -----------
Net loss $(1,560,604) $ (159,396)
=========== ===========
Per Share Data
Net loss $ (0.04) $ (0.00)
=========== ===========
NOTE 14 - CASH FLOWS SUPPLEMENTAL INFORMATION
Supplemental Cash Flow Information:
Cash paid during the year for interest $ - $ --
=========== ===========
Non-Cash Investing and Financing Activity
Purchase of license agreement was financed through a note payable of $767,000
during the year.
NOTE 15 - STOCK OPTIONS
On August 31, 2000, the Company issued options to purchase an aggregate of
250,000 shares of its common stock as $4.00 per share to a vendor of advertising
services. These options were fully vested as of the date of their issuance with
an exercise period of three years.
-16-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 15 - STOCK OPTIONS, Continued
Activity related to the Company's stock options during the eight months ended
August 31, 2000 was as follows:
Outstanding Options
-------------------
Weighted
Number Average
Of Exercise
Shares Price
-------- --------
September 1, 1999 - $ -
Grants, August 31, 2000 250,000 $ 4.00
Exercises (228,000) $ 4.00
Cancellations - $ -
--------
Options exercisable at:
August 31, 2000 22,000 $ 4.00
========
SFAS No. 123, "Accounting for Stock-Based Compensation" (SFAS 123) was issued
during 1995 and is effective for fiscal years ending after December 15, 1996.
This pronouncement established financial accounting and reporting standards for
stock-based employee compensation plans. It encourages, but does not require,
companies to recognize compensation expense for grants of stock, stock options
and other equity instruments to employees based on new fair value accounting
rules. Companies that choose not to adopt the new fair value accounting rules
are required to disclose net income and earnings per share under the new method
on a pro forma basis. The Company accounts for its options and warrants
according to APB No. 25 and follows the disclosure provisions of SFAS 123.
Accordingly, if options or warrants are granted to employees or others for
services and other consideration with an exercise price below fair market value
on the date of the grant, the difference between the exercise price and the fair
market value is charges to operations. The fair value of the options granted
during the eight months ended August 31, 2000 and the fiscal years ended
December 31, 1999 and 1998, reported below, has been estimated at the dates of
grant using the Black-Schole option pricing model with the following
assumptions:
Expected life (in years) 3
Risk-free interest rate 6.0%
Volatility 11.0%
Dividend yield 0.0%
-17-
<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 2000 AND THE
YEARS ENDED DECEMBER 31, 1999 AND 1998
NOTE 15 - STOCK OPTIONS, Continued
The Black-Scholes option valuation method was developed for use in estimating
the fair value traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected stock price volatility.
Because the Company's options have characteristics significantly different from
those of traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in the opinion of management, the
existing models do not materially affect the fair value estimate, in the opinion
of management, the existing models do not necessarily provide a reliable single
measure of the fair value of its options.
For the purpose of pro form disclosures, the estimated fair values of the
options amortized to expense over the options vesting period. The Company's pro
forma information is as follows:
2000 1999 1998
---- ---- ----
Pro forma net loss $(1,560,604) $( 41,971) $( 14,350)
Pro forma loss per share $( 0.04) $( 0.00) $( 0.00)
The effects on pro forma disclosures of applying SFAS 123 are not necessary
indicative of the effects on pro forma disclosures of future years.
-18-
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
Financial Statements for MAS Acquisition XXV Corp. were provided by Stark Tinter
and Associates. As a result of the business reorganization on August 17, 2000 by
which OmniNet Media.Com, Inc. acquired 5,000,000 shares of MAS and became the
successor to MAS which subsequently changed its name to OmninNet Media.Com,
Inc., and because the only active business operations of the registrant are now
the operations of OmniNet, the Company has engaged DiRocco and Dombrow, P.A.,
3601 W. Commercial Blvd., Suite #39, Ft. Lauderdale, Florida 33309 as the
registrant's auditors.
Stark Tinter did not resign or decline to stand for re-election or was dismissed
for cause. The change was effected entirely because DiRocco and Dombrow had
prior experience with OmniNet and was far more familiar with its business
operations.
Stark Tinters reports for neither of the past two years contained an adverse
opinion or disclaimer of opinion, or was modified as to uncertainty, audit
scope, or accounting principles. The decision to change account was adopted by
the Board of Directors exclusively for the reason indicated. There were no
disagreements with the former accountant, whether or not resolved, on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which, if not resolved to the former accountant's
satisfaction, would have caused it to make reference to the subject matter of
the disagreements in connection with its report.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following persons are the Directors and Executive Officers of OmniNet.
Name Age Positions Held
Michael A. Knox 39 Director, President, Chief Executive Officer
James Graves 31 Director, Secretary/Treasurer, Chief
Financial Officer and Vice President
Under Article III, Section 3.2 of the Bylaws, Directors hold their offices until
their successors have been elected and qualified unless removed by a vote of a
two-thirds majority of outstanding shares either at a stockholders' meeting or
by written consent.
The business experience of the directors is as follows:
Michael A. Knox has fifteen years of experience in the software industry.
Recently he acted as the CEO of Casino Entertainment Company, Inc. of San Diego,
California. Prior to his employment with Casino he served one year (1996-1997)
as V.P. of software development for BAOA, Inc., and for six years prior
(1989-1995) to that was CEO of Park Place Productions, Inc., both of San Diego,
California. Prior (1988-1989) to that he was Executive Programmer for Cinemaware
Corp., Thousand Oaks, California for two years (1987-1988) before which he spent
two years as Software Engineer for Pacific Dataworks, Inc., Aguoura Hills,
California. For the three years prior to that he was a Programmer for West Coast
Consultants, San Diego, California. His software experience began when he served
as a Data Systems Technician for the U.S. Navy in San Diego, California.
<PAGE>
Mr. Knox's experience has included the development of numerous technically
advanced and commercially successful software offerings. He programmed and
designed one of the industry's first interactive movies, "Sinbad and the Throne
of the Falcon." After he founded Park Place Production with $3,000 cash and a
credit card, this company became recognized as one of North America's largest
independent software designed and development houses. It led the industry by
developing sports titles, entertainment, educational and simulation products for
many of the leading software publishing houses such as Nintendo, Sea, Virgin
Electronic Arts, Acclaim, Compton's New Media and others.
Through his Company he was responsible for developing many noted software
titles, including "Monday Night Football, the original "John Madden Football"
the most successful sports game of all time, and NFL Hockey which is used in
Nintendo and Sega video game machines. In 1993 Mr. Knox received INC. Magazine's
Entrepreneur of the Year award in the software industry category.
Mr. Knox has worked with colleges and universities to develop software industry
curricula. Through his efforts, San Diego State University has a program to
bring industry executives into the curriculum to teach and modify courseware to
fit the entertainment and educational software development industry. He is also
involved as a co-founder in "MERGE" (Multimedia Education & Retraining for
Gainful Employment), an organization dedicated to retraining displaced defense
workers and the socially disadvantaged.
He is knowledgeable in nearly all operating platforms and has superior knowledge
of many of today's most valuable software tools.
Mr. Graves attended San Diego State University from 1993-1997 studying Corporate
finance and Business Administration. Soon after, Mr. Graves became a self
employed consultant within the media communication industry. He elected to work
exclusively with J. Thomas Markham, Inc. because of the unique distribution
channel J. Thomas Markham, Inc created using the transportation Industry. At J.
Thomas Markham, Mr. Graves developed cost estimates, sales projections and
enhanced business development. Furthermore Mr. Graves conducted in-depth
research on more 300 public companies in the Internet Industry. He has
experience with filing documents such as 10-KSD, 10-Q, and 8-K will the
Securities and Exchange Commission. He has worked extensively with SEC
Attorneys, Consultants, Auditors, Transfer Agents, Market Markers, Brokerage
Houses, Printers, etc. In February, 2000, Mr. Graves joined as Vice President
and Secretary of OmniNet Media.com, Inc. He has developed strategic alliances
between OmniNet Media.com, Inc. and J. Thomas Markham, Inc. to put OmniNet
Media's Kiosks at Airports, Train Stations, Bus Stations, etc.
<PAGE>
Mr. Knox was the President of Incarnations, Inc., a corporation that filed for
voluntary bankruptcy protection under Chapter 11 of the Bankruptcy act. Those
proceedings are still pending and a plan of reorganization has been submitted to
the Court. The case is pending in the bankruptcy division of the United states
District Court in the Southern District of California at San Diego.
Other that the foregoing, no officer or director of OmniNet has been subject to
any of the following:
a. Any bankruptcy petition filed by or against any such person or any
business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two year prior to that time; or
B. Convicted in a criminal proceeding or charged in or subject to any
criminal proceeding excluding traffic or other minor offenses; or
c. Subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities, or
d. Being found by a court of competent jurisdiction (in a civil action),
the Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or commodities law,
and the judgment has not been reversed, suspended or vacated.
ITEM 10. EXECUTIVE COMPENSATION.
During the period covered by this Transitional Report officers and directors of
OmniNet were paid the following total consideration.
Michael Knox: $2,000 in cash and 36,198 restricted common shares of
OmniNet.
James Graves: No cash consideration and 100,000 restricted common
shares
of OmniNet.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth as of June 30, 2000, the name and the number of
shares of the Company's Common Stock, par value $0.0001 per share, held of
record or beneficially by each person who held of record, or was known by the
Company to own beneficially, more than 5% of the 42,278,521 issued and
outstanding shares of the Company's Common Stock, and the name and shareholdings
of each director and of all officers and directors as a group.
(1) (2) (3) (4)
Title of Name and Amount and Percent of
Class Address of Nature of Class
Beneficial Beneficial
Owner Owner
Common Jupiter Products, Ltd. 6,000,000 14%
Rule 144 94 Dowdes Well St.
PO Box N 7521
Nassau, Bahamas
Common Mike Knox 286,198 .06%
Rule 144 4341 Springs St #54
La Mesa, CA 98118
Common James A. Graves 100,000 .02%
2338 Walmar Lane
San Diego, CA 92109
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There have not, within the last two years, been any transactions with the
registrant in which any of its officers, directors or controlling stockholders
had any interest, and no such transaction has been proposed.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
The registrant has filed two Current Reports on Form 8-K during the transition
period covered by this report, to wit:
1. Form 8-K filed August 28, 2000 which reported (i) the change in control of
the registrant which resulted from the acquisition by OmniNet of 5,000,000
common shares of MAS Acquisitions XXV, Inc., (ii) the Accusation of Assets which
resulted from that transaction, (iii) the change in the registrant's accountant,
(iv) other events related to the history of OmniNet, (v) the inclusion of
financial statements of the business acquired and pro forma financial
information, and (vi) the change in the issuer's fiscal year to December 31.
2. Form 8-K filed September 27, 2000 which reported the change of the
registrant's fiscal year to August 31.
Both of these reports are incorporated herein by reference.
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.
By: /s/ James A. Graves
--------------------------
James A. Graves, Secretary
and Director
