UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
For the Quarter Ended November 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For the transition period from ______________ to _________________
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)
8615 E. Florence, Suite 210, Downey, CA 92024
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (858) 856-1392
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
NOVEMBER 30, 2000 AND 1999
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TABLE OF CONTENTS
Page
Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Operations 2
Condensed Consolidated Statements of cash Flows 3
Notes to Condensed Consolidated Financial Statements 4 - 6
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OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
November 30, August 30,
2000 2000
Current Assets
Cash $ - $ 1,420
Prepaid expenses - 6,779
Total Current Assets - 8,199
Property and Equipment, net 150,365 158,507
Other Assets
License agreement, net - 703,916
Other assets 6 2,796
Total Assets $150,371 $873,418
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued expenses $413,815 $400,920
Current portion of note payable 19,000 642,000
Notes payable to related parties 627,046 623,956
Total Current Liabilities 1,059,861 1,666,876
Noncontrolling interest ( 302,171) ( 277,405)
Stockholders' 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;
42,278,173, shares issued and
outstanding 4,228 4,228
Additional paid in capital 1,759,262 1,759,262
Accumulated deficit (2,370,809) (2,279,543)
Total Stockholders' Deficit ( 607,319) ( 516,053)
Total Liabilities and Stockholders'
Deficit $ 150,371 $ 873,418
See accompanying summary of notes to unaudited condensed consolidated
financial statements.
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OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended November 30,
2000 1999
Revenues, net $ - $ 305,504
Cost of products sold - ( 163,069)
Gross Profit - 142,435
Expenses
General and administrative 54,116 310,979
Impaired loss on license agreements 61,916 -
Operating Loss ( 116,032) ( 168,544)
Non-controlling interest 24,766 40,451
Net Loss $ ( 91,266) $( 128,093)
Net Loss Per Common Share $ ( 0.002) $( 0.011)
Weighted Average Number of Common
Shares Outstanding 42,278,173 11,260,748
See accompanying summary of notes to unaudited condensed consolidated
financial statements.
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<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended November 30,
2000 1999
Cash Flows From Operating Activities
Net loss $( 91,266) $(128,093)
Adjustment to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 8,142 61,620
Minority interest in net loss of
consolidated subsidiaries ( 24,766) ( 40,451)
Impairment loss on license agreements 61,916 -
Decrease in accounts receivable - 70,125
Increase in inventory - 84,588
Decrease in prepaid expenses 6,779 -
Decrease in security deposit 2,790 -
Increase in accounts payable and
accrued expenses 12,895 4,788
Net Cash Provided by (Used In)
Operating Activities ( 23,510) 52,577
Cash Flows From Investing Activities
Purchase of property and equipment - ( 215)
Net Cash Used by Investing
Activities - ( 215)
Cash Flows From Financing Activities
Proceeds from notes payable 22,090 -
Payments on notes payable - ( 30,464)
Net Cash Provided by (Used In)
Financing Activities 22,090 ( 30,464)
Net Increase (Decrease) in Cash ( 1,420) 21,898
Cash at beginning of year 1,420 99,770
Cash at end of year $ - $121,668
See accompanying summary of notes to unaudited condensed consolidated
financial statements.
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<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Presentation of Interim Information
In the opinion of the management of OmniNet Media.Com, Inc.
and Subsidiaries, Inc. (the Company), the accompanying
unaudited condensed consolidated financial statements
include all normal adjustments considered necessary to
present fairly the financial position as of November 30,
2000, and the results of its operations and cash flows for
the three months ended November 30, 2000 and 1999. Interim
results are not necessarily indicative of results for a full
year.
The condensed consolidated financial statements and notes
are presented as permitted by Form 10-Q, and do not contain
certain information included in the Company's audited
consolidated financial statements and notes for the year
ended August 31, 2000.
2. Financial Statements
The condensed consolidated financial statements include the
accounts of the Company and its subsidiaries. All
significant intercompany transactions and balances have been
eliminated.
3. Supplemental Disclosures of Cash Flow Information
Three months ended November 30,
2000 1999
Operating Activities:
Interest paid $ - $ -
==== ====
4. Going Concern
As shown in the accompanying financial statements, the
Company incurred net losses of $91,266 for the three months
ended November 30, 2000. The Company's current liabilities
exceeded its current assets by $1,059,861 at November 30,
2000. In addition, a subsidiary of the Company is involved
in litigation, the outcome which is unknown at this time and
has defaulted on the license agreements. The ability of the
Company to continue as a going concern is contingent upon
its ability to secure additional equity financing. The
Company will offer additional shares of its common stock to
raise capital and obtain financing on an as needed basis.
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<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. 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.
Activity related to the Company's stock options during the
three months ended November 30, 2000, was as follows:
Outstanding Options
Weighted
Number Average
Of Exercise
Shares Price
September 1, 2000 22,000 $ 4.00
Grants - -
Exercises - -
Cancellations - -
________
Options exercisable at:
November 30, 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 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) 2
Risk-free interest rate 6.0%
Volatility 11.0%
Dividend yield 0.0%
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<PAGE>
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. 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 for the three
months ended November 30, 2000, is as follows:
Pro forma net loss $( 91,266)
Pro forma loss per share $( .002)
The effects on pro forma disclosures of applying SFAS 123
are not necessary indicative of the effects on pro forma
disclosures of future years.
6. Impairment Loss
In September 2000, the issuer of the license agreements to
the Company cancelled the agreements for non-payment of
license fees. An impairment loss in the amount of $61,916
was recognized.
7. Subsequent Event
Effective December, 2000, the Company's Board of Directors
approved the purchase of the Company's minority shareholder
interests.
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<PAGE>
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OmniNet Media.Com, Inc. commenced active operations in January of 2000 which
have continued to the date of this report.
In note 1 to its financial statements as of August 31, 2000 its auditors
stated that the financial statements were presented on a going concern
basis which contemplated 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 had 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 continueing to pursue
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 it 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 believes 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.
The Company has suspended all active business operations in its subsidiary
U.S./Ace Security Laminates and does not expect to resume active operation of
this business in the foreseeable future.
PART II
ITEM 1. 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.
ITEM 2. Changes in Securities.
There have been no changes in the Company's securities.
ITEM 3. Defaults Upon Senior Securities.
There have been no defaults upon senior securities.
ITEM 4. Submission Of Matters To A Vote Of Security Holders.
There have been no Submission of matters to a vote of security holders
ITEM 5. Other Information.
There is no other information.
ITEM 6. Exhibits And Reports On Form 8-K.
The registrant has filed two Current Reports on Form 8-K, to wit:
1. Form 8-K filed September 27, 2000 which reported the change of
the registrant's fiscal year to August 31.
2. Form 8-K/A filed January 19, 2001 which reports (1) a change in control of
the registrant resulting from the election of Don Steffens as President to
replace Michael Knox, who resigned; (2) the resignation of Michael Knox as a
director of the registrant and the appointment of Don Steffens to fill his
unexpired term; and (3) a change of address of the registrant.
All of these reports are incorporated herein by reference.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: January 19, 2001
By:/s/ James A. Graves, Secretary
______________________________________
