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U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
(UNDER SECTION 12(B) OR (G) OF THE
SECURITIES EXCHANGE ACT OF 1934)
PEDIANET.COM,INC.
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(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
GEORGIA 58-1727874
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(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION IDENTIFICATION
NUMBER)
1804 Jerome Avenue, Brooklyn, New York 11235
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(Address of Principal Executive Offices) (Zip code)
Issuer's Telephone Number: (718) 332-3994
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Securities to be registered under Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
None N/A
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Securities to be Registered under Section 12(g) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
Common Shares N/A
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PEDIANET.COM,INC. FORM 10-SB
PEDIANET.COM,INC.
TABLE OF CONTENTS
PART I - INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Description of Business........................................... 4
Item 2. Management's Discussion and Analysis or Plan of Operation......... 10
Item 3. Description of Property........................................... 13
Item 4. Security Ownership of Certain Beneficial Owners and Management..... 13
Item 5. Directors, Executive Officers, Promoters and Control Persons...... 14
Item 6. Executive Compensation............................................. 16
Item 7. Certain Relationships and Related Transactions.................... 17
PART II .................................................................. 18
Item 8. Legal Proceedings................................................. 19
Item 9. Market for Common Equity and Related Stockholder Matters.......... 19
Item 10. Recent Sales of Unregistered Securities........................... 20
Item 11. Description of Securities........................................ 21
Item 12. Indemnification of Directors and Officers......................... 22
PART F/S .................................................................. 23
Item 13. Financial Statements.............................................. 23
Disclosure................................................................. 24
PART III .................................................................. 25
Item 15. Financial Statements and Exhibits................................ 26
Other Exhibits............................................................. 27
Signatures................................................................. 28
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Item 1. Description of Business
PediaNet, Inc. on December 31, 1999 affected a merger with
Ultraphonics-USA ("Ultraphonics"), a non-operating entity and Ultraphonics
changed its name to PediaNet.com, Inc. ("PediaNet" or the "Company"). On January
14, 2000, PediaNet began trading on the OTCBB under the new symbol "PEDN."
PediaNet, through its website at www.PediaNet.com is establishing
itself as a primary information system, based on internet solutions utilizing a
proprietary pediatric software program known as Devset. PediaNet's primary
focus is on expedient, internet-based delivery of world-class, up to date, state
of the art information. Utilizing the vast communicative power of the Internet,
PediaNet provides a wide variety of interactive information and services
designed to enhance the lives of children and adolescents regardless of
geographic considerations. What differentiates PediaNet from other existing
medical internet sites is PediaNet's exclusive dedication of its site to
pediatrics. PediaNet is designed to accommodate two types of users:
Public Site:
This site is for the public-at-large, particularly parents, children
and medical students. PediaNet's concentration is on information necessary to
cover the issues of children's development and medical care. World-renowned
pediatric professionals will have written all materials presented on the public
site. Such authorship insures the delivery of the highest caliber of pediatric
information to the public. PediaNet not only links the public to medical
information but provides interactive avenues of communication between parents
and medical professionals.
Professional Site:
This site is for licensed pediatricians, medical institutions and
related industries servicing the world of pediatric medicine. The foundation of
the professional site is the development of a private communications network for
pediatric professionals, providing them with the software tools necessary for
creating a nationwide and, in the future, a worldwide informational pediatric
database within PediaNet.
PediaNet's professional site is for physicians, hospitals, medical
professionals, and experts in the pedantic healthcare field, nationally and
worldwide and is supported by Devset, a unique proprietary pediatric software.
Devset, will be marketed to physicians and other healthcare professionals to
enhance their daily practice of pediatrics. Devset is designed to provide an
interface between the pediatrician's office or home and the Internet. Utilizing
the power of the World Wide Web, PediaNet's professional website will link
pediatricians worldwide for professional education and consultation and will
offer quick access to vast resources for current newsworthy releases and
articles regarding pediatrics and children, including health and legal issues,
and discussion groups between health professionals, medical scholars and
practitioners.
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PediaNet's professional site amplifies and enhances the practitioners'
art and craft, in service to their patients--the children. PediaNet also
subscribes to the "HONcode principles" of the Health On the Net Foundation.
Marketing Policy:
PediaNet's marketing policy is to provide general services, free of
charge, to both the public and the pediatric professional community. The main
revenue stream will be from specialized services, such as advertising and
sponsors, digital space, pediatric internet digital TV, pediatric national
database subscription, instructional courses and online conferences.
Plans for Growth:
In addition to internal growth, PediaNet intends to expand through
acquisitions and new product development. While PediaNet has no present
agreements to acquire additional companies, it intends to focus on companies
that exhibit stable, aggressive growth that would complement the services
offered on its website. No assurance can be given that PediaNet will be
successful in its endeavors to acquire compatible companies.
Website Design:
PediaNet has been recognized as the producer of award-winning graphics,
layout design and content by the following rating companies:
o Medsite, the online source for medical information awarded
PediaNet "HotMedsite" the highest award for medical content and
design;
o Webnet awarded Pedianet their highest "5-star rating"; and
o EZ Connect awarded the PediaNet site as "Best of the Net."
Ultraphonics-USA Prior to the Merger:
Ultraphonics was originally incorporated on April 3, 1975 under the
laws of the State of Utah under the name of David Thatcher & Sons Enterprises,
Inc. Thereafter, on June 4, 1979, its name was changed to Aware Products
Corporation.
In April, 1989 the Company acquired 100% of the Assets subject to
Liabilities of Ultraphonics, a Georgia corporation,and changed its name to
Ultraphonics-USA. In April 1989, the Company changed its State of Domicile from
Utah to Georgia. Ultraphonics was engaged in the design and manufacture of a
proprietary ultrasound diagnostic device for the military and industrial use.
Ultraphonics discontinued operations in April, 1991 and had no operating
activities since that date. On November 17, 1999 the Board of Directors of
Ultraphonics approved a 1 for 1000 reverse stock split, entered into
negotiations with PediaNet, Inc., a New York corporation, completed a merger
with PediaNet, Inc. on December 31, 1999 and changed its name to PediaNet.com,
Inc.
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PediaNet, Inc. Prior to the Merger:
PediaNet, Inc. was incorporated in the State of New York on April 22,
1996. The Company has worked since that time to establish itself through its
website at www.Pedianet.com as a primary information and interactive
communications resource for pediatric health related matters for parents,
guardians, children, sponsors, medical and professionals as well as the general
public on a worldwide basis. While the majority of PediaNet's business activity
centered around its website, there were other integral facets of the Company's
operations including Devset, developed to serve Pediatricians, by enhancing
their practice through professional access (the "Professional Gateway") of
PediaNet website. The Devset software is available to pediatricians and other
health care professionals, enabling them to track the growth and developmental
milestones of children, report immunizations, perform billing and gather
statistical information. Devset also is designed to provide pediatric
practitioners with printouts of all patient related data, as well as printouts
of diagnoses and treatment in layman's language, making it easier for the
patient to understand. Effective on the merger the Company changed its name to
PediaNet.com, Inc.
Product Strategy:
PediaNet offers unlimited Internet access to the public and provides the
following:
Public Gateway:
Emergency Alerts: Local and national outbreaks of diseases or epidemics
highlight this important site. Data from the Center for Disease Control and
other professional sources regarding warnings about dangerous health related
situations will keep people informed with the latest breaking health emergency
information and allow you to react promptly.
Pedia News: PediaNet gathers a wide array of important newsworthy releases and
articles regarding children, including health and other matters and puts it
quickly at interested persons fingertips. It is the only place that one needs to
turn to for quick access to information that may affect your child's health and
well being.
Disease Database: PediaNet has a comprehensive, easy to use, searchable list of
known illnesses and disorders that are relevant to children and adolescents.
These are referenced with all pertinent information, such as common symptoms and
effects, aiding in the detection of diseases at the earliest stages.
Simple Rx Guide: The world of prescription and over the counter drugs is
continually expanding with new drugs and treatments constantly being approved.
This site provides a brief description of drugs, their usage and possible side
effects.
Product Recalls and Alerts: Crucial information about toys, games and children's
products that may be dangerous or defective can be found here. Users of this
site will be able to check regularly to see what toys are currently being
recalled and what you should do if you or someone you know owns one. This
information is not available everywhere and is a key feature of PediaNet. The
information contained here has the potential of possibly saving a child from
serious injury or even fatality. PediaNet is committed to help insure the safety
of all children.
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Development/Growth Chart: By using a special limited version of PediaNets Devset
software program, a parent or guardian can see a child's projected development
and probable growth up to age eighteen. This points out to parents the average
child's developmental abilities at a given age. This feature can also be an
invaluable tool for parents sensing that their child is not properly growing
physically or developmentally.
Immunization: An ever increasingly health issue for our children is receiving
timely and proper immunizations. PediaNet will provide a list of immunizations
categorized by age, due date and the reasons for their necessity. At this site,
PediaNet will inform the users of any new standards and requirements as they are
established.
Resource Center/E-Parent: This new alliance combines EXCEPTIONAL PARENT
Magazine's more than a quarter century of caring, with PediaNet's award-winning
design and cutting-edge technology and provides users with the following:
o Database of Diseases and Disorders;
o Opportunities to interact with a community of parents,
pediatricians, educators and therapists;
o Pharmaceutical Information
o Links to Disability Organizations
o Fresh online reports and stories from EXCEPTIONAL PARENT.
Product Expo: PediaNet is an online source for finding and purchasing products
for children of all ages. Working in cooperation with major manufacturers and
catalog companies, PediaNet offers and displays a broad array of products and
services. Many items to aid and assist those who are physically and mentally
challenged are featured here.
Kidz Club Only: This area is for children. Here information, games and
entertainment are available specifically for their use and exploration. While at
the PediaNet site, the user's child will have an opportunity to open up and
develop interpersonal as well as learning skills.
Medical House Calls: Within the legal jurisdiction of the end-user and the
development of laws governing the Internet, it may very well be possible to
bring a new kind of House Call to the doctor/patient relationship.
Benefits to the End-user: As technology improves, and costs drop, the end-user
of PediaNet can expect to:
o Receive medical-related, Internet broadcasts;
o On-demand download voice/data;
o Receive speeches on medical topics;
o Receive Internet audio broadcasts of conferences;
o Interactive courses;
o Interactive seminars;
o Receive full-motion video; and
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o Access interactive applications supplied by advertisers
These services and more will be available on-demand.
Professional Gateway:
PediaNews Pro: PediaNet gathers a wide array of important, newsworthy releases
and articles regarding pediatrics and children, including health and legal
issues and puts it quickly at the doctors fingertips.
Discussion Groups: Between Noted medical scholars and practitioners will present
forums and seminars.
Experts' Corner: Take advantage of the knowledge and expertise of other medical
scholars and practitioners giving their viewpoints on specific medical
treatments and cases. PediaNet's professional medical board encourages the
submission of special topics that users feel deserve immediate attention.
Journal Reviews: PediaNets medical advisory board will review articles written
in major medical journals and contribute their own opinions and independent
authoritative articles to this site.
Hot Topics: This area will present ideas and opinions from out
medical advisory board regarding "hot" medical issues.
Services For the Pediatrician
PediaNet Professional site will provide Pediatricians with a summary of the
following benefits:
o Information on-demand which is user friendly and will
provide a fluid distribution of content - information
critical to the practices of the PediaNet user community;
o Communications on-demand which will be real-time
communications, with world-class Pediatricians; one-on-one,
or groups; Telephony, private, conference and video;
o Online reference data which will include national
statistical information; diagnosis, treatment, results,
comprehensive summary reference data and Who's Who in
Pediatrics.
Planned Products:
PediaNet plans to continually develop new products and enhance existing
products. In response to demonstrated needs of its market, new products or
services currently being developed include:
Educational Annex: This area offers the parent or guardian a diverse collection
of children's books and software along with new reviews and recommendations.
Here too, the parent or guardian will find helpful hints and interesting
articles to enhance every child's learning experience and interactive skills.
PediaNet will also periodically sponsor educational and fun contests that will
award prizes and merchandise to the winning participants.
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Pediatric Resource and Referral Guide: A proprietary database of practicing
pediatricians and pediatric specialists accessible via PediaNet's custom search
engine providing helpful information for locating proper qualified practicing
physicians by name, location, specialty or insurance coverage.
Nutrition Center: Proper nutrition is essential for healthy children. PediaNet's
world-renowned nutritionists will provide content and guidance in this important
area. Diets can be very beneficial to some, yet damaging to others. One will be
able to check out this site for a list of various children's specialty diets,
their purposes and their side effects.
Resource Center: If you need to find a doctor for a particular problem - you can
find one here by turning to our online directory of pediatricians, hospitals and
places to get special treatment for particular problems. You can quickly locate
the medical help you need, arranged by specialty or geographical location.
Organizations specializing in providing aid to children with various afflictions
are featured here for fast and convenient access.
Q&A and Chat Center: This is a place where parents, teachers and children can
join chat groups and discuss common problems with others who may be experiencing
similar problems. Users will also be able to use the Q&A section to direct
questions to the PediaNet professionals.
Pharmacy: The world of prescription drugs is continually expanding with new
drugs and treatments constantly being approved. This site will give you a
comprehensive description of these drugs, their usage and possible side effects
as well as an in-depth description of known diseases affecting children, their
symptoms and effects.
Devset Pediatric Software: This is a proprietary software package, which tracks
growth and developmental milestones and that will be available to physicians and
other healthcare professionals. Devset creates a projection of a child's height
and weight at age 18. In addition, it will store and transfer immunization
records for schools and the Department of Health.
Devset also provides the pediatric practitioner with printouts of all patient
related data as well as print outs of diagnosis and treatment in laymen's
language for the patient to understand and retain. Using Devset has been proven
to be an enhancement to every pediatric practice.
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Item 2. Management's Discussion and Analysis or Plan of Operation
Overview
The following is a discussion of certain factors affecting PediaNet's
results of operations, liquidity and capital resources. You should read the
following discussion and analysis in conjunction with the Company's consolidated
financial statements and related notes that are included herein.
The following discussion regarding PediaNet and its business and
operations contains "forward- looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements consist of any
statement other than a recitation of historical fact and can be identified by
the use of forward-looking terminology such as "may," "expect," "anticipate,"
"estimate" or "continue" or the negative thereof or other variations thereon or
comparable terminology. The reader is cautioned that all forward-looking
statements are necessarily speculative and there are certain risks and
uncertainties that could cause actual events or results to differ materially
from those referred to in such forward-looking statements.
Results of Operations
Reverse Acquisition
On December 31, 1999, PediaNet, Inc. merged into Ultraphonics-USA, Inc.
In total, 3,730,386 shares of Ultraphonics-USA, Inc. shares of Common Stock were
exchanged for the outstanding shares of PediaNet, Inc. This reverse acquisition
resulted in the Company acquiring all of the assets, net of liabilities, of
Ultraphonics, with a net value of $154,538. Ultraphonics changed its name to
PediaNet.com,Inc. Prior to the merger Ultraphonics was engaged in the design and
manufacture of proprietary ultrasound diagnostic devices for military and
industrial use. Ultraphonics had no operating history since April, 1991.
PediaNet recognizes revenues under the categories of Sponsorships and Website
PediaNet generated revenues from sponsorship fees and Website income.
The Company's sponsorship category contains revenue generated from direct
sponsorship. For the year ended December 31, 1999 the Company realized revenues
of $1,000 from sponsorship fees. The prior year the Company did not generate any
revenue in this category. The Company's website income was derived from
advertisers. For the year ended December 31, 1999 the Company experienced a
decline of 45% in website advertising revenues to $3,500 as compared to $6,379
for the year ended December 31, 1998. This loss was attributable to non-renewal
of the Exceptional Parent Magazine advertising commitment for the year- ended
December 31, 1999. The Company has since entered into a new relationship with
Exceptional Parent Magazine.
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PediaNet plans to recognize additional revenue from design and implementation of
Websites and Licensing of Devset
PediaNet intends to derive future revenues from the design and
implementation of their Pediatrics Information Directory System and will offer a
number of website services to members of the Pediatrics profession. These
potential revenue streams will come from offering website design of Internet
home pages for Pediatricians, registration of domain addresses, setup of access
service and webmaster service. In addition, the Company's aim is to license and
distribute the Devset software and upgrades to Devset module. The Company also
plans to generate future revenues from digital space, pediatric internet digital
TV, pediatric national database subscriptions, instructional courses and online
conferences.
Year ended December 31, 1999 as compared with year ended December 31, 1998
During the year ended December 31, 1999 as compared to year ended
December 31, 1998, the Company's total assets increased 540% over the same
period ended December 31, 1998. This increase is attributable to the Private
Placement and the proceeds from an offering by Ultraphonics prior to its merger
into PediaNet, Inc.
Revenue Total revenue for the Company for the year ended December 31, 1999
declined 29% to $4,500 as compared to $6,379 for the year-ended December 31,
1998. The decline was attributable to a 45% drop in revenue from website income.
The Company was able to generate income from Sponsorship fees after a generating
no revenue for this category a year earlier. The Company's ability to continue
as a going concern is dependent upon our ability to obtain additional debt or
equity financing and realize revenues from our website sufficient to cover our
overhead.
Operating Expense During the year ended December 31, 1999 the Company
experienced an increase of approximately 42% in operating costs and expenses.
Operating costs increased to $682,533 from $395,396 from the year ended December
31, 1998. The primary reason for the increase was an increase in cost and
expenses associated with selling, general and administrative expenses.
Gains or (Losses) There were no realized gains or losses for the years ended
December 31, 1999. The unrealized loss of $25,000 has been personally guaranteed
by a shareholder of the Company and has been recorded as accounts receivable -
shareholder. Therefore no unrealized gain or loss has been recorded for the year
ended December 31, 1999.
Net Earnings (Loss) During the year ended December 31, 1999 the
Company's net earnings (loss) increased 43% to $678,033 as compared to $389,017
for the year ended December 31, 1998. This loss was primarily attributable to an
increase in non-cash compensation for services of $330,678 as compared to
$5,000, a year earlier. Other categories showed slight increases, decreases or
remained the same, such as depreciation expense of $3,562 from $3,410 in 1998,
amortization of $77,821 remained unchanged in 1998, slight decrease in accounts
payable and accrued expenses to $237,669 from $286,904 in 1998 and an increase
in net cash used in operating activities of $28,303 from $15,882. As a result
the Net earnings loss per Common Share of the Company's stock, (basic and
diluted) increased to ($0.20) from ($0.12) a year ago. Prior to the merger,
Ultraphonics had experienced recurring losses and negative cash flows through
May 31, 1999 and, as of April 30, 1999, the Company had a stockholder deficiency
of approximately $128,000 and was in default on its debt to one of the Company's
shareholders. We need to obtain additional financing to support our planned
activities and to achieve a level of sales adequate to support our costs
structure.
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Liquidity and Capital Resources
As of December 31, 1999, PediaNet had working capital of $151,687.
Currently, PediaNet's primary source of cash is advertising revenue, sponsorship
and investment capital. The Company believes that it is on its way to becoming
the world's largest, most comprehensive assemblage of health-related pediatric
sources. The main revenue stream will be from specialized services such as
advertising and sponsors, digital space, pediatric internet digital TV,
pediatric national database subscriptions, instructional courses and online
conferences.
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Item. 3 Description of Property
The Company presently leases space at 1804 Jerome Avenue, Brooklyn, New
York 11235. The Company's phone number is 718-332-3994. The present facility is
slightly less than 800 square feet and serves as the Company's headquarters and
technology center. The Company anticipates that it will be moving into a new
facility during the second quarter of this year. The proposed new address will
be 15 Westend Avenue, Brooklyn, New York 11235. This facility is described as a
storefront property with street level access. This new facility is approximately
1500 square feet and will serve as the corporate headquarters and technology
center for the Company. The Company anticipates that they will be able to retain
their current phone number.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of February 28, 2000, the number of
shares of Common Stock of the Company beneficially owned by all persons known to
be holders of more than five percent (5%) of the Company's Common Stock and by
all executive officers and directors of the Company individually and as a group.
(a) Security Ownership of Certain Beneficial Owners
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<CAPTION>
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Title of Name and address Amount and Nature Percentage of
Class of beneficial owners of beneficial ownership class
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<S> <C> <C> <C>
Common Stock The Goalkeeper* 293,661 shares of 5.5%
Group, Limited Common Stock
c/o Meridian Management
Impress House, Douglas
Isle of Mann
1M99 1EE
British Isles
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*The listed beneficial owner has no right to acquire any shares within
60 days of the date of this Form 10-SB from options, warrants, rights,
conversion privileges or similar obligations.
(b) Security Ownership of Management
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Title of Name and address Amount and Nature Percentage of
Class of beneficial owners of beneficial ownership shares outstanding
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<S> <C> <C> <C>
Common Melvin Koplow, MD* ** 630,000 shares 11.93%
Stock 531 Huguenot Avenue
Staten Island, New York 10312
Common Steven Richter* ** 500,000 shares 9.47%
Stock 2226 Ralph Avenue
Brooklyn, New York 11234
Common Aleksandr Akerman* 500,000 shares 9.47%
Stock 641 88th Street 3C
Brooklyn, New York 11228
</TABLE>
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<TABLE>
<CAPTION>
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Title of Name and address Amount and Nature Percentage of
Class of beneficial owners of beneficial ownership shares outstanding
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<S> <C> <C> <C>
Common Shlomo Carlebach* 500,000 shares 9.47%
Stock 1314 Carroll Street
Brooklyn, New York 11231
Common John DeMauro* ** 375,000 shares 7.10%
Stock 577 Raphbun Avenue
Staten Island, New York 10312
Total All Officers & Directors 2,505,000 shares 47.44%
as a group beneficially own
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</TABLE>
* The listed beneficial owners have no rights to acquire any shares
within 60 days of the date of this Form 10-SB from options, warrants, rights,
conversion privileges or similar obligations.
** Shares are beneficially held jointly with other family members.
(c) Change in Control
There are no arrangements, including any pledge by any person of
securities of PediaNet, the operation of which may at a subsequent date result
in a change in control of the registrant.
Item 5. Directors, Executive Officers, Promoters and Control Persons
The following Table sets forth certain information regarding the
executive officers and directors of PediaNet as of February 25, 2000.
<TABLE>
<CAPTION>
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Name Age Title Five Year Business Experience
---- --- ----- -----------------------------
<S> <C> <C> <C>
Melvin D. Koplow 55 CEO Dr. Melvin Koplow is currently CEO and
Director* Director of Informatics for PediaNet. He has
been a practicing pediatrician for the past
22 years and developer of Devset software, a
pediatric growth and developmental tracking
software program that was developed in 1984.
His current software projects are focused on
immunization tracking, electronic billing and
pediatric resource information.
Steven Richter 57 President Mr. Richter presently serves as President and
Director Director of Marketing. Mr. Richter has been self
employed for the past five years and has been a
successful entrepreneur and consultant in wholesale
consumer electronics field for the past twenty-five
years. Starting with amongst many of his achievements
he pioneered the distribution of personal computers
into the consumer electronics pipeline. Mr. Richter's
ability to recognize emerging technologies and
consumer trends have made him a known resource.
</TABLE>
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<TABLE>
<CAPTION>
Name Age Title Five Year Business Experience
---- --- ----- -----------------------------
<S> <C> <C> <C>
John Lapore 43 Secretary Mr. Lapore presently serves as Corporate
Director* Secretary and Director of PediaNet. In addition
Mr. Lapore since 1989 has managed and
operated successfully an Allstate Insurance
agency.
Ernest Cifaldi 39 Treasurer Mr. Cifaldi presently serves as Corporate
Director* Treasurer and Director of PediaNet. In addition
Mr. Cifaldi from 1997 to Present is Senior Vice
President in charge of Consolidation, General
Ledgers and Control at Solomon Smith Barney.
Aleksandr Akerman, 51 Director* Mr. Akerman currently serves as Treasurer and
Director of Production. Mr. Akerman has a
Master of Computer Science degree from Moscow
University; he served more than 20 years as
Deputy Director of Project Development for the
Central Bank of U.S.S.R. Mr. Ackerman created
the Banking Information System for Moscow Central
Bank of the U.S.S.R. Since 1993 Mr. Akerman has
been associated with Greycourt, a major computer
original equipment manufacturer. He is presently
President of Greycourt Inc.
Shlomo Carlebach 40 Director* Mr. Carlebach presently serves Director. In 1993,
Mr. Carlebach was one of the founders and
President of a major computer original equipment
manufacturer Greycourt, which is one of the fastest
growing PC companies in the nation. He designed the
specifications for Wall Street brokerage computer
applications, the first of its kind.
John DeMauro 61 Director* From 1997 to Present Mr. DeMauro has been associated
with PediaNet and currently serves as a Director of
PediaNet. In 1996 Mr. DeMauro served as an Administrator
of Photographers Union, Local 1. From 1995 to 1996 Mr.
DeMauro was a private consultant of Employee Benefits.
Mr. DeMauro has more than 38 years of business experience
with notable expertise in fields of finance and
administration. His business tenure includes 7 years of
investment banking experience with Lehman Bros.
Investment Bankers, as trading department administrator,
10 years with Allied Chemical Corp., in a senior
financial position, and 21 years with National Maritime
Union Pension Trust as Controller and Administrator.
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</TABLE>
* Each Director shall hold office until the next annual meeting of
stockholders and until his successor shall have been elected and qualified.
The Directors of PediaNet hold no other directorship in any other
reporting company. PediaNet's significant employees include besides Dr, Melvin
D. Koplow, MD who is CEO and Director of Informatics, Steven Richter, President
and Director of Marketing, John Lapore, Corporate Secretary and Director, Ernest
Cifaldi, Treasurer and Director, Aleksandr Akerman, Director, Shlomo Carlebach,
Director, and John DeMauro, Director. There are no family relationships among
the directors or persons nominated or chosen by the Company to become a
director.
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Item 6. Executive Compensation
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<CAPTION>
Summary Compensation Table
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<S> <C> <C> <C> <C>
Annual Compensation Long-Term
------------------- Compensation
-------------
Awards
-------------
Securities
Name and Underlying
Principal Position Year Salary Bonus Options
- ---------------------- ----- ------ ----- -------------
Dr. Melvin D. Koplow,MD* 2000 N/A
Steven Richter* 2000 N/A
John Lapore* 2000 N/A
Ernest Cifaldi* 2000 N/A
Shlomo Carlebach* N/A N/A
Aleksandr Akerman* N/A N/A
John DeMauro* N/A N/A
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</TABLE>
*There is no annual compensation for the officers and directors of the
Company. However, the Board of Directors has adopted a Board Resolution in
January, 2000 whereby Options will be granted annually to the Directors. Options
to purchase 15,000 shares of the Company's Common Stock at an exercise price of
$1.50 per share in whole or in part during each year they are awarded the right
to purchase such options. Additionally Officers of the Company receive annually
Options to purchase 15,000 shares of the Company's Common Stock at an exercise
price of $1.50 per share in whole or in part during each year they are awarded
the right to purchase such options.
Employment Agreement
PediaNet, provided John DeMauro, as part of his employment agreement
of October 8, 1996, an Option to purchase 125,000 shares of common stock at one
cent ($.01) per share and an additional 100,000 shares at either ten percent
(10%) of an initial public offering by the Company, at takeover price offer, any
buyout price, private sale price or book value price, as defined under the terms
of that employment agreement. This employment agreement was terminated but John
DeMauro retained the options.
Stock Option Agreements
The Board of Directors of the Company on January 2, 2000 met and
adopted a board resolution by unanimous consent to grant Options to the officers
and directors of the Company. The Company determined that options may be granted
at prices not equal to the fair market value of the Company's Common Stock at
the date of issue. The following individuals were granted options exercisable at
$1.50 per share, all of which expire on January 3, 2005 to purchase shares of
Common Stock in the following amount:
16
<PAGE>
Dr. Melvin D. Koplow, MD, Chief Executive Officer 150,000 shares
Steven Richter, President 150,000 shares
John Lapore, Secretary 40,000 shares
John DeMauro, Director 150,000 shares
Aleksandr Akerman, Director 100,000 shares
Item 7. Certain Relationships and Related Transactions
The Company presently sub-leases its facilities on a month-to-month
basis from Aleksandr Akerman, a Director and shareholder who has forgiven all
rent payments. The forgiveness of the rent obligation of $2,400 for the years
ended December 31, 1999 and December 31, 1998 has been credited to additional
paid in capital. See "FINANCIALS STATEMENTS NOTE 8."
On December 31, 1999 when PediaNet, Inc. merged into Ultraphonics, the
Company assumed a liability of a shareholder loan, in the principal amount of
$43,611 which was in default at the time of the reverse merger. In addition to
the principal amount there was accrued interests of $55,358 and accrued fees and
court costs amounting to $18,876 associated with this liability. See
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION--OTHER EXPENSES' AND
"FINANCIAL STATEMENTS NOTE 3."
17
<PAGE>
PART II
18
<PAGE>
Item 8. Legal Proceedings
The Company is not a party to or involved in any material litigation,
nor is it aware, to the best of its knowledge, of any pending or contemplated
proceedings against it by any third party or any government authorities.
Item 9. Market for Common Equity and Related Stockholder Matters
PediaNet's Common Stock is currently traded on the Over-the-Counter
Bulletin Board ("OTCBB") under the symbol "PEDN." The Company is presently not
required to file reports with the SEC pursuant to the Exchange Act. However,
under the OTC Eligibility Rule, effective January 4, 1999, companies whose
securities are quoted on the OTCBB are required to file periodic reports with
the SEC to continue quoting their securities (the "Eligibility Rule"). In order
to comply with the Eligibility Rule, most companies will register their
securities under the Exchange Act on Form 10 or (Form 10-SB if a small business
issuer, as is the case with PediaNet). The Eligibility Rule currently provides
that an issuer reach "no comment" status prior to its scheduled phase-in date in
order to avoid being delisted. PediaNet's scheduled phase-in date is May 3,
2000. No assurances can be given that PediaNets Form 10-SB filing will be
effective in time to sustain an active public trading market.
The following table sets forth the range of the high and low closing
bid prices per share of PediaNet's Common Stock during each of the calendar
quarters identified below. These bid prices were obtained from the Standard &
Poor's Comstock, and do not necessarily reflect actual transactions, retail
markups, markdowns or commissions. Based on the very limited public float and
trading in PediaNet's Common Stock, PediaNet believes that such data is
anecdotal and may bear no relation to the true value of PediaNet's Common Stock
or the range of prices that would prevail in a liquid market.
The high and low bid sales prices for the equity for each full
quarterly period within the two most recent fiscal years and any subsequent
interim period for which financial statements are included are as follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Year Quarter High Bid Low Bid Year Quarter High Bid Low Bid
<S> <C> <C> <C> <C> <C> <C> <C>
1998 1st* N/A N/A 1999 1st* N/A N/A
1998 2nd* N/A N/A 1999 2nd* N/A N/A
1998 3rd* N/A N/A 1999 3rd* N/A N/A
1998 4th* N/A N/A 1999 4th 0.625 0.25
- --------------------------------------------------------------------------------------------------------
</TABLE>
* Prior to the merger Ultraphonics securities were inactive until December 13,
1999, when trading resumed under the symbol ULPC. Following the merger and a
change in the stock symbol to PEDN to reflect the new merged Company, PediaNet
began trading on the Over-the-Counter Bulletin Board under the new symbol on
January 11 of 2000.
19
<PAGE>
Item 10. Recent Sales of Unregistered Securities
On December 28, 1999 Ultraphonics closed on a private placement
pursuant to Rule 504 of Regulation D in which Ultraphonics raised $1,000,000 in
a combination of cash, promissory notes and shares of common stock in another
publicly traded company. Pursuant to the Offering the Company sold:
900,000 shares of the Company's Common Stock at $0.22 per share for
(a) $133,012 in cash; (b) $14,982 in Notes; and (c) $50,006 in marketable
securities;
410,000 Warrants at $.01 per Warrant exercisable at $.01 per share;
As part of the offering the Company sold a $793,800 1 Year, 10%
Convertible Promissory Note (the "Convertible Note) convertible into shares of
common stock of the Company at $1.50 per share. The Convertible Note is due
December 28, 2000. The Convertible Note was purchased by the purchaser issuing
to the Company, a 6 Month promissory note (the "Investor Note"). The Investor
Note is callable by the Company in 25% increments in certain circumstances:
The Convertible Note is convertible into 529,200 shares of the
Company's Common Stock. Interest is payable on the due date.
The proceeds to Ultraphonics, were used for working capital for the Company
after the merger with PediaNet, Inc.
20
<PAGE>
Item 11. Description of Securities
<TABLE>
<S> <C>
Common Stock The authorized capital stock of PediaNet consists of 50,000,000,
shares of Common Stock, par value $0.001 of which 5,278,560
are issued and outstanding as of March 6, 2000. All outstanding
shares of Common Stock are fully paid and non-assessable. Each
holder of record of Common Stock is entitled to one vote for each
share held on all matters properly submitted to the shareholders
for their vote.
Preferred Stock: The Company is also authorized to issue 10,000,000, shares of
Preferred Stock, par value $0.10 per share of which 1,678 shares
are issued and outstanding as of March 6,2000. Each holder of
record of Preferred Stock is entitled to exchange one share of
Preferred Stock into one share of Common Stock on a one to one
basis.
Warrants: The Company has 410,000 Warrants outstanding. Each Warrant is
exercisable at $.01 per share to purchase 410,000 shares of
Common Stock.
Convertible Promissory Note: A 1 year, 10%, $793,800 Convertible Promissory Note (the
"Convertible Note") convertible into shares of common stock of the
Company at $1.50 per share. The Convertible Promissory Note is due
December 28, 2000 and is convertible into 529,200 shares of the
Company's Common Stock.
</TABLE>
21
<PAGE>
Item 12. Indemnification of Directors and Officers
The Company, may by virtue of section 722 of the Georgia Business
Corporation Law,("GBCL") indemnify any person made a party to an action by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he, his testator or intestate, is or was a director of officer of the
corporation, against the reasonable expenses, including attorneys' fees,
actually and necessarily incurred by him in connection with the defense of such
action, or in connection with an appeal therein, except in relation to matters
as to which such director or officer is adjudged to have breached his duty to
the corporation under section 717 or section 715(h), respectively, of the GBCL.
Such indemnification shall in no case include amounts paid in settling or
otherwise disposing of threatened action, or a pending action with or without
court approval, or expenses incurred in defending a threatened action, or a
pending action with or without court approval, or expenses incurred in defending
a threatened action, or a pending action which is settled or otherwise disposed
of without court approval. The comprehensive statutory provisions for
indemnification of officers and directors sets forth the public policy of the
state as to this matter, and no provision to the contrary, whether found in the
certificate of incorporation, by-laws, shareholders' or directors' resolution,
agreement, or court order is valid "unless consistent" with the GBCL.
22
<PAGE>
PEDIANET.com, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1999 and 1998
<PAGE>
PEDIANET.com, INC.
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditors Report 1-2
Financial Statements:
Balance Sheets,
December 31, 1999 and 1998 3
Statement of Operations, Years
Ended December 31, 1999, 1998
and 1997 4
Statement of Stockholders' Deficiency
Years Ended December 31, 1999, 5
1998 and 1997
Statement of Cash Flows, Years Ended
December 31, 1999, 1998 and 1997 6
Notes to Financial Statements 7-15
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders of
PediaNet.com, Inc.
We have audited the accompanying balance sheets of PediaNet. com, inc. (the
"Company") as of December 31, 1999 and the related statements of operations,
stockholders' deficiency and cash flows for the year then ended. These financial
statements are the responsibility of management. our responsibility is to
express an opinion of these financial statements based on our audit. We did not
audit the 1998 and 1997 financial statements. These statements were audited by
other auditors whose report dated June 15, 1999 and February 24, 2000 has been
furnished to us.
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, based on our audit and the report of other auditors, such
financial statements present fairly, in all material respects, the financial
position of PediaNetcom,Inc. as of December 31, 1999 and 1998 and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1999, in conformity with generally accepted accounting
principles
-1-
<PAGE>
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As more fully explained in Note 2 of
Notes to Financial Statements, the Company needs to obtain additional financing
to fulfill its activities and achieve a level of sales adequate to support its
cost structure, These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Managements' plans are also described in
Note 2. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties should the Company be unable to
continue as a going concern.
WEINER, GOODMAN & COMPANY, P.C.
Certified Public Accountants
Eatontown, New Jersey
February 28, 2000
-2-
<PAGE>
PEDIANET.com, INC
BALANCE SHEETS
ASSETS
December 31,
Current Assets: 1999 1998
----------- -----------
Cash and cash equivalents $ 151,687 $ (107)
Marketable securities 25,000 -
Accounts receivable-shareholder 25,000 -
Notes receivable 850,000 -
Prepaid interest 82,335 -
----------- -----------
Total current Assets 1,134,022 (107)
Property, furniture and equipment - net 157,653 239,036
----------- -----------
TOTAL ASSETS $ 1,291,675 $ 238,929
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable $ 129,864 $ 117,972
Accrued expenses 767,530 451,367
Note payable 793,800 -
Loans payable-related parties 48,611 6,500
----------- -----------
Total Liabilities 1,739,805 575,839
----------- -----------
Commitments and Contingencies
Stockholders' Equity (Deficiency);
Preferred stock, p4r value $.10
per share, 10,000,000 shares authorized
outstanding 10,003 shares 1,000 -
Common stock, par value $.001 per share
50,000,000 shares authorized;
outstanding 5,248,557 and 3,467,136
shares 5,249 3,467
Additional paid-in capital 1,375,836 811,805
Deficit (1,830,215) (1,152,182)
----------- -----------
Total Stockholders' Deficiency (448,130) (336,910)
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIENCY $ 1,291,675 $ 238,929
=========== ===========
See notes to financial statements
-3-
<PAGE>
PEDIANET.com, INC
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended
December 31,
--------------------------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Sponsorship fees $ 1,000 $ - $ 10,000
Website income 3,500 6,379 6,720
---------- ---------- ----------
Total Revenue 4,500 6,379 16,720
Cost and Expenses;
Selling, general
and administrative 682,533 395,396 529,893
---------- ---------- ----------
Loss from operations (678,033) (389,017) (513,173)
Other income
Interest income _ _ 1,766
---------- ---------- ----------
Net (loss) $ (678,033) $ (389,017) $ (511,407)
========== ========== ==========
Net earnings (loss)
per common share
basic and diluted $ (0.20) $ (0.12) $ (0.16)
========== ========== ==========
Weighted average of common
shares outstanding
basic and diluted 3,538,986 3,345,220 3,229,597
========== ========== ==========
</TABLE>
See notes to financial statements
-4-
<PAGE>
PEDIANET.com, INC
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
Preferred Stock
-------------------
Comprehensive Shares Par
Total (loss) Deficit Outstanding Value
--------- ------------- ------------ ----------- ------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1996 $ 471,293 $ (251,758) - $ -
Sale of common stock
(at $1.4476 per share) 69,001
Issuance of common stock
for services rendered
(at $.2736 per share) 15,820
Forgiveness of rent
obligation 2,400
Net (loss) (511,407) (511,407)
--------- --------- ----------- ------------ ------
Balance, December 31, 1997 47,101 (763,165)
Exercise of stock options 65
Issuance of common stock
for services rendered
(at $.0159 per share) 2,535
Forgiveness of rent
obligation 2,400
Net (loss) (389,017) (389,017) -
--------- --------- ----------- ------------ ------
Balance, December 31, 1998 (336,910) (1,152,182) - -
Sale of common stock
(at $1.50 per share) 66,000
Issuance of common stock
for services (at $1.44
per share) 328,278
Forgiveness of rent
obligation 2,400
Exercise of stock options 15,597
Issuance of stock in
connection with reverse
acquisition 154,538 10,003 1,000
Net (loss) (678,033) $(678,033) (678,033)
--------- --------- ----------- ------------ ------
Balance, December 31, 1999 $(448,130) $(678,033) $(1,830,215) 10,003 $1,000
========= ========= =========== ============ ======
</TABLE>
<PAGE>
[RESTUBBED TABLE]
<TABLE>
<CAPTION>
Common Stock
-------------------- Additional
Shares Par Paid-in
Outstanding Value Capital
----------- ------ -----------
<S> <C> <C> <C>
Balance December 31, 1996 3,198,050 $3,190 719,053
Sale of common stock
(at $1.4476 per share) 47,666 48 68,953
Issuance of common stock
for services rendered
(at $.2736 per share) 57,820 58 15,762
Forgiveness of rent
obligation 2,400
Net (loss)
---------- ------ ----------
Balance, December 31, 1997 3,303,536 3,304 806,368
Exercise of stock options 65,300 65 -
Issuance of common stock
for services rendered
(at $.0159 per share) 98,300 98 2,437
Forgiveness of rent
obligation 2,400
Net (loss)
---------- ------ ----------
Balance, December 31, 1998 3,467,136 3,467 811,805
Sale of common stock
(at $1.50 per share) 44,000 44 65,956
Issuance of common stock
for services (at $1.44
per share) 59,550 60 328,218
Forgiveness of rent
obligation 2,400
Exercise of stock options 159,700 160 15,437
Issuance of stock in
connection with reverse
acquisition 1,518,171 1,518 152,020
Net (loss)
---------- ------ ----------
Balance, December 31, 1999 5,248,557 $5,249 $1,375,836
========== ====== ==========
</TABLE>
See notes to financial statements
-5-
<PAGE>
PEDIANET.com, INC
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended
December 31,
-------------------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $(678,033) $(389,017) $(511,407)
Adjustments to reconcile net loss to
cash used in operating activities:
Non-dash compensation for services 330,678 5,000 18,220
Depreciation 3,562 3,410 5,684
Amortization 77,821 77,821 77,821
Changes in operating assets and
liabilities:
Decrease in advances - - 20,000
Increase in accounts
payable and accrued expenses 237,669 286,904 272,452
Decrease in officers'
compensation payable - - (181,687)
--------- --------- --------
Net Cash (Used in)
Operating Activities (28,303) (15,882) (298,917)
--------- --------- --------
Cash flows from investing activities:
Computer software costs - - (103,196)
Cash acquired from acquisition 100,000 - -
--------- --------- --------
Net Cash Provided by (Used in)
Investing Activities 100,000 - (103,196)
--------- --------- --------
Cash flows from financing activities:
Proceeds from sale of common stock 66,000 - 69,001
Proceeds from loans payable - 5,500 (16,764)
Payments on loans (1,500) - -
Proceeds from exercise of stock options 15,597 - -
--------- --------- --------
Net Cash Provided by Financing
Activities 80,097 5,500 52,237
--------- --------- --------
Net increase (decrease) in cash and
cash equivalents 151,794 (10,382) (349,076)
Cash - beginning of year (107) 10,275 360,151
--------- --------- --------
Cash - end of year $ 151,687 $ (107) $ 10,275
========= ========= ========
Supplementary information;
Non-cash investing activities (acquisition);
Fair value of assets acquired-
net of cash acquired $ 902,336
=========
Liabilities assumed $ 927,797
=========
Assets acquired net of cash $ 54,538
=========
</TABLE>
See notes to financial statements
-6-
<PAGE>
PEDIANET.com, INC.
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTANT POLICII&S
Organization
------------
PediaNet.com, Inc (the "Company") formerly Ultraphonica-USA Inc.
("Ultraphonics"), was engaged in the design and manufacture of proprietary
ultrasound diagnostic devices for military and industrial use. Ultraphonics
discontinued operations in 1991. On December 31, 1999, Ultraphonics merged
with PediaNet, Inc. and changed its name to PediaNet.com, Inc. The Company
currently operates a website, PediaNet.com, as a primary information and
interactive communication resource for pediatric health related matters for
professionals as well as the general public on a worldwide basis,
Use of Estimates
----------------
The preparation of the financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Marketable Securities
---------------------
The Company classifies its investment in equity securities as "available for
sale", and accordingly, reflects unrealized losses, net of deferred taxes,
and net of a personal guarantee from a minority shareholder as a separate
component of stockholders, equity. As of December 31, 1999 the fair market
value of the marketable security was $25,000 compared to an original cost of
$50,000. See Note 4 of Notes to Financial Statements,
The fair values of marketable securities are estimated based on quoted market
prices. Realized gains or losses from the sales of marketable securities are
based on the specific identification method.
Concentration of Credit Risk
----------------------------
Financial instruments which potentially subject the Company to concentrations
of credit risk consist principally of temporary cash investments. The Company
places its temporary cash investments which quality financial institutions
and, by policy, limits the amount of credit exposure with any on financial
institution.
-7-
<PAGE>
Revenue Recognition
-------------------
The Company's website income is derived from advertisers and revenue is
recognized in the period earned.
The Company has direct sponsorship revenue which is recognized in the period
earned,
Depreciation
------------
Property, furniture and equipment are Stated at cost less accumulated
depreciation. Depreciation is calculated using the straight-line method over
the estimated useful lives of the assets.
Computer Software Costs
-----------------------
In 1999 the Company adopted the provisions of the American Institute of
Certified Public Accountants, Statement of Position 98-1. "Accounting for the
Cost of Computer Software Development or Obtained for Internal Use". This
statement requires capitalization of certain costs incurred in the
development of internal use software. Adaptation of the provisions of this
statement did not have a material effect on the financial statement of the
Company.
Stock-Based Compensation
------------------------
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS
No. 123). The standard encourages, but does not require, companies to
recognize compensation expense for grants of stock, stock options and other
equity instruments to employees based on fair value accounting rules. The
Company has adopted the disclosure-only provisions of SFAS No. 123.
Earnings Per Common Share
-------------------------
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, "Earnings per Share", which
requires companies to present basic earnings per share ("RPS11) and diluted
earnings per share instead of the primary and fully diluted EPS that was
required. The new standard requires additional information disclosures and
also makes certain modifications to the currently applicable EPS calculations
defined in Accounting Principles Board No. 15.
-8-
<PAGE>
Basic lose per common share is computed by dividing net loss by the weighted
average number of common shares outstanding during the year. Diluted earnings
per common share are computed by dividing net earnings by the weighted
average number of common and potential common shares during the year.
Potential common shares relate to 410,000 outstanding stock warrants and
529,200 shares that are convertible in lieu of payment on the Company's note
payable at December 31, 1999. These potential common shares were excluded
from the computation of loss per share aa the effect is antidilutive.
Evaluation of Long-Lived Assets
-------------------------------
Long-lived assets are assessed for recoverability on an ongoing basis. Tn
evaluating the fair value and future benefits on long-lived assets, their
carrying value would be reduced by the excess, if any, of the long-lived
asset over management's estimate of the anticipated undiscounted future net
cash flows of the related long-lived asset. An of December 31, 1999
management concluded that no valuation allowance was required.
Fair Value of Financial Instruments
-----------------------------------
For financial instruments including notes receivable, loans payable, short
term debt, accounts payable and accrued expenses it was assumed that the
carrying values approximated fair value because of their short-term
maturities.
2. BASIS OF PRESENTATION
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.
As of December 31, 1999 the Company has a deficit in stockholders, equity of
approximately $1,830,200 and is in default on its debt to one of the
Company's shareholders,
The Company's ability to continue as a going concern is dependant upon its
ability to obtain additional debt and/or equity financing and realize
revenues from its website sufficient to cover its overhead. Management,
through its website at www.PediaNet.com intends to establish itself as a
primary information system on the internet that exclusively dedicates its
site to pediatrics. The Company believes that it is on its way to becoming
the world's largest, most comprehensive assemblage of health-related
pediatric resources. The main revenue stream will be from specialized
services such as advertising and sponsors digital space, pediatric internet
digital TV, pediatric national database subscriptions, instructional courses
and online conferences. These uncertainties raise substantial doubt about the
ability of the Company to continue as a going concern.
-9-
<PAGE>
The financial statements do not include any adjustments relative to the
recoverability and classification of recorded asset amounts or the amounts
and classification of liabilities that might be necessary should the Company
be unable to continue as a going concern.
3. REVERSE ACQUISITION
On December 31, 1999 (the "Merger Date"), PediaNet, Inc. ("PediaNet") merged
into Ultraphonics-USA, Inc. (the "Merger"). In total, 3,730,386 of
Ultraphonics-USA, Inc. common stock was exchanged for the outstanding common
stock of PediaNet.
The Merger was accounted for as a reverse acquisition whereby PediaNet was
treated as the acquirer and Ultraphonics-USA, Inc. as the acquiree, because
Pedia.Net shareholders owned a majority of the company as of the Merger Date
and PediaNet's management will have actual operating control of the combined
company after the merger date.
The reverse acquisition resulted in the Company acquiring all the asset,9 net
of liabilities of Ultraphonics-USA, Inc. with a net value of $154,538. One of
the liabilities assumed by the Company was a shareholder loan in the
principal amount of $43, 611 which was in default at December 31, 1999.
Accrued interest of $55,358 and $18,876 of accrued fees and court coats at
December 31, 1999 are included in accrued expenses in the accompanying
financial statements . The Company also assumed a third party $793,800
principal, 10% convertible promissory note due December 28, 2000. The note is
convertible into 529,200 shares of the Company's common stock, at the option
of the holder, at $1.50 per share. Interest is payable on the due date. The
historical financial statements prior to December 31, 1999 are those of
PediaNet, Inc.
The financial statements include the Statements of Operations of the Company,
exclusive of Ultraphonics, for the three year ended December 31, 1999. The
assets acquired by the Company included the following at December 31, 1999:
Cash $100,000
Marketable securities 50,000
Notes receivable-
shareholders 850,000
Prepaid interest 82,335
----------
Assets acquired 1,082,335
Liabilities assumed 927,797
----------
$ 154,538
==========
-10-
<PAGE>
4. MARKETABLE SECURITIES
Estimated Gross Gross
Fair Unrealized Unrealized
Cost Value Gains Losses
-------- --------- ---------- ----------
December 31, 1999:
Marketable securities-
current:
Common stock $ 50,000 $ 25,000 $ -0- $ 25,000
======== ======== ====== ========
There were no realized gains or losses for the years ended December 31, 1999.
The unrealized loss of $25,000 has been personally guaranteed by a
shareholder of the Company and has been recorded as accounts receivable -
shareholder. Therefore no unrealized gain or loss has been recorded for the
year ended December 31, 1999.
5. NOTES RECEIVABLE
As part of the acquisition by the Company of the net assets of Ultraphonics
the Company acquired notes receivable of $850,000 bearing interest at 10%,
due June 28, 2000. Warrants to purchase an additional 410,000 shares of the
Company's common stock at $.01 a share which expires December 31, 2000 are
included in these notes. The warrants are exercisable at $.01 which was
below market value at the date of the sale. Additional interest expense of
approximately $82,335 will be expensed during the year ended December 31,
2000.
6. PROPERTY, FURNITURE AND EQUIPMENT
1999 1998
---- ----
Furniture and
equipment $ 18,945 $ 18,945
Software (1) 389,107 389,107
-------- --------
408,052 408,052
Less accumulated
depreciation 250,399 169,016
-------- --------
$157,653 $232,036
======== ========
Depreciation expense for the years ended December 31, 1999, 1998 and 1997 was
$81,383, $81,231 and $83,505, respectively,
(1) Software costs consist of software purchased from an officer/director for
200,000 shares of the Company's common stock valued at $200,000 during
1996. During 1997, the Company incurred an additional $189,107 in
software costs associated with the development of their website.
-11-
<PAGE>
7. NOTES PAYABLE
One of the liabilities assumed by the company as part of the reverse
acquisition was a $793,800 principle, lot convertible promissory note to a
third party due December 28, 2000. Interest is payable on the due date and
thereafter until the obligation is discharged. The note is convertible into
529,200 shares of the Company's common stock, at the option of the holder, at
a conversion price of $1.50 per share.
8. RELATED PARTY TRANSACTIONS
(a) Loans payable to related parties consists of:
1999 1998
------- ------
Due to Directors $ 5,000 $6,500
Shareholder loans acquired
through merger (see Note 3
of Notes to Financial
Statements) 43,611 -
------- ------
$48,611 $6,500
======= ======
The shareholder loan bears interest at 12% per annum. There is no accrued
interest on the loans from the directors.
(b) The company sub-leases its facilities on a Month-to-month basis from a
shareholder who has forgiven all rent payments. The forgiveness of the
rent obligation of $2,400 for the years ended December 31, 1999 and 1998
has been credited to additional paid in capital.
9. INCOME TAXES
The Company has a net operating loss ("NOL") carryforward of approximately
$1,830,200 for tax reporting purposes expiring in the years 1999 through
2012. The Company has not reflected any benefit of such net operating loss
carryforward in the accompanying financial statements in accordance with
Financial Accounting Standards Board Statement No. 109 "Accounting for Income
Taxes" (SPAS 1109) as the realization of deferred tax benefit is not more
than likely.
The Tax Reform Act of 1986 provided for limitation of the use of NOL
carryforwards, following certain ownership changes. Under such circumstances,
the potential benefits from utilization of tax carryforward may be
substantially limited or reduced on an annual basis.
There is no provision for income taxes during the years ended April 30, 1999
and 1998 as the Company had no taxable income due to net operating losses.
-12-
<PAGE>
A reconciliation of taxes on income at the federal statutory rate to amounts
provided is as follows:
Year Ended December 31,
-------------------------------
1999 1998
---------- ------------
Tax benefit computed
at the Federal
statutory rate $(271,200) $(155,600)
Increase in taxes
resulting from:
Effect of unused
tax losses 271,200 155,600
--------- ---------
$ - $ -
========= =========
The temporary differences between the tax basis of assets and the financial
reporting amount that give rise to the deferred tax assets and their reported
tax effect are as follows:
December, 31
------------
1999 1998
---- ----
Temporary Tax Temporary Tax
Difference Effect Difference Effect
---------- ------ ---------- ------
Net operating
loss carry-
forward $ 1,830,200 $ 732,080 $ 1,152,200 $ 460,880
Valuation
allowance (1,830,200) (732,080) (1,152,200) (460,880)
----------- --------- ----------- ---------
$ - $ - $ - $ -
=========== ========= =========== =========
10. STOCK OPTIONS AND WARRANTS
The Company has adopted the disclosure only provision of Statement of
Financial Accounting Standards No. 123 "Accounting for Stock Based
Compensation" (SPAS No. 123).
The Company grants stock options and warrants as follows:
(a) The Company has established the 1997 Non-Statutory Stock Option Plan,
(The Plan), a non-qualified plan. The purpose of the Plan is to provide
a method whereby employees, officers, directors, and consultants of the
Company may acquire a proprietary interest in the Company through the
purchase of shares Of common stock. Options may be granted at prices not
equal to the fair market value of the common stock at the date of the
grant. The Company has reserved 1,000,000 shares of common stock under
the plan.
-13-
<PAGE>
(b) John DeMauro, a director of the Company, received, as part of his
employment agreement dated October 8, 1996, an option to purchase
125,000 shares of common stock at one cent ($.01) per share and an
additional 100,000 shares at either ten percent (10%) of an initial
public offering by the Company, a take over price offer, any buy-out
price, private sale price or book value price, as defined under the
terms of the agreement.
(c) 410,000 warrants were sold by Ultraphonics prior to the acquisition for
$8,200 and expire December 31, 2000. The warrants are exercisable at
$.01 which was below market value at the date of the sale.
Additionally, interest expense in the estimated amount of $82,335 will
be expensed during the year ended December 31, 2000. See Note 5 of
Notes to the Financial Statements.
Information regarding the Company's stock warrants for the year ending
December 31, 1999, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------------- ------------------ -----------------
Weighted Weighted Weighted
Average Average Average
Exercised Exercised Exercised
Shares Price Shares Price Shares Price
------- --------- -------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Options and warrants
outstanding beginning
of year 159,700 $.10 225,000 $.07 225,000 $.07
Warrants acquired 410,000 .01 - - - -
Options exercised 159,700 $.10 65,300 .01
------- -------
Options and Warrants
outstanding end
of year 410,000 $.01 159,700 $.10 225,000 $.07
------- ------- -------
Warrant price range
at end of year $.01
Options and warrants
available for grant
at end of year 775,000
</TABLE>
-14-
<PAGE>
The following table summarizes information about fixed price stock warrants
outstanding at December 31, 1999;
<TABLE>
<CAPTION>
Weighted
Average Weighted Weighted
Range at Number Remaining Average Number Average
Exercise Outstanding Contracted Exercise Exercisable Exercise
Price December 31, 1999 Life Price December 31, 1999 Price
-------- ----------------- ---------- -------- ----------------- --------
<S> <C> <C> <C> <C> <C>
$ .01 410,000 1 year $ .01 410,000 $ .01
</TABLE>
11. COMMITMENTS AND CONTINGENCIES
(a) During 1997 the Company entered into an exclusive one-year renewable
contract with Exceptional Parent Magazine of Pay-Ed Corp to work on a
marketing plan for sales presentations for print and on-line
sponsorship. The Company is to pay fees to Exceptional Parent Magazine
for their support personnel. Additionally, the Company was required to
pay an annual royalty fee of $20,000 for the use of the Exceptional
Parent Magazine name. At December 31, 1998 the Company owed Exceptional
Parent $47,000 which is included in accounts payable. The Company did
not renew the contract for 1999. On January 6, 2000 Exceptional Parent
Magazine agreed to accept 31,339 shares of PediaNet.com common stock for
payment in full of the debt owed.
(b) The Company has signed a proposed agreement to acquire Newco, (a
corporation to be formed), with assets of $262,500 in cash and 8,250
original production cels with a wholesale value of $412,500 for 450,000
shares of its common stock and warrants to purchase 225,000 shares of
PediaNet's common stock exercisable at $2.50 per share. The principal
shareholder of Newco is also a shareholder of PediaNet.com, Inc and one
of the shareholders who is obligated on the $850,000 note receivable to
the Company.
Newco is intended to be a subsidiary of Premier Classic Art, Inc.
("Premier") one of the principal shareholders of Premier is a
shareholder of PediaNet who is obligated as part of the $850,000 note
due to the Company.
By written notice by PediaNet, prior to the expiration of 18 months from
the closing of the transaction Newco will be required to repurchase from
PediaNet all of PediaNet's inventory of cels for cash or pro rata number
of shares of PediaNet's common stock.
-15-
<PAGE>
Item 14. Changes In and Disagreements With Accountants On Accounting and
Financial Disclosure
Not Applicable
24
<PAGE>
PART III
25
<PAGE>
Item 15. Financial Statements and Exhibits
26
<PAGE>
Other Exhibits
3.
(a) Plan of Merger of PedniaNet, Inc. a New York Corporation Into
Ultraphonics-USA, Inc. a Georgia Corporation
(b) Article of Merger of PediaNet, Inc. and Ultraphonics-USA, Inc.
(c) Certified Copy of Certificate of Merger as Filed with the Secretary of
State, Georgia
(d) Certificate of Merger of PediaNet, Inc. into Ultraphonics-USA as filed
with the state of New York
(e) State of New York filing receipt, Entity Name: Ultraphonics-USA, Inc.;
Document Type: Merger
27
<PAGE>
Signatures
In accordance with Section 12 of the Securities Exchange Act
of 1934, the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
PEDIANET.COM,INC.
(Registrant)
Date:_____________________
By:_______________________
Dr. Melvin D. Koplow
Chief Executive Officer
28
<PAGE>
EXHIBIT A
<PAGE>
PLAN OF MERGER
OF
PEDIANET INC.,
A NEW YORK CORPORATION,
INTO
ULTRAPHONICS - USA, INC.,
A GEORGIA CORPORATION
PLAN OF MERGER adopted by PediaNet Inc., a corporation for profit
organized under the laws of the State of New York, by resolution of its Board of
Directors on November 22, 1999 and adopted by Ultraphonics - USA, Inc., a
corporation for profit organized under the laws of the State of Georgia, by
resolution of its Board of Directors on November 22, 1999. The names of tile
corporations planning to merge are PediaNet Inc., a corporation for profit
organized under the laws of the State of New York, and Ultraphonics - USA, Inc.,
a corporation for profit organized under the laws of the State of Georgia. The
name of tile surviving corporation into which PediaNet Inc. plans to merge
shall- by this merger, be changed from Ultraphonics - USA, Inc. to
Pedia.Net.com,Inc.
1. The name of each constituent corporation is PedlaNet Inc., a New
York corporation, sometimes hereinafter referred to as the "terminating
corporation", and Ultraphonics- USA, Inc., a Georgia Corporation, sometimes
hereinafter referred to as the "surviving corporation." The name of the
surviving corporation is PediaNet.com, inc . a Georgia corporation incorporated
under the name Ultraplionics - USA, Inc., but whose Articles of Incorporation
will be amended by this merger such that its corporate name will be changed to
PediaNet.com, Inc.
<PAGE>
2. PediaNet Inc. and Ultraphonics - USA, Inc. shall, pursuant to the
provisions of the laws of the State of New York and the provisions of the
Georgia Business Corporation Code, be merged with and into a single corporation,
to wit, Ultraphonics - USA,Inc., which, by this merger, shall have its name
changed to PediaNet.com, Inc., shall be the surviving corporation upon the
effective date of the merger and which shall continue to exist as the surviving
corporation under the corporate name PediaNet.com, Inc. pursuant to the
provisions of the Georgia Business Corporation Code. The separate existence of
PediaNet Inc., the New York corporation, shall cease upon the effective date of
the merger in accordance with the laws of the jurisdiction of its organization
3. The designation, number and voting fights of the outstanding shares
of each class and series of the constituent corporations is as follow:
CLASS NUMBER OUTSTANDING
----- ------------------
ULTRAPHONICS - USA, INC.
------------------------
voting common stock having a par value 49,846 shares
of $0.001 (one mil) per share
non-voting preferred shares having a par 10,000 shares
value of $0.10 (ten cents) per share
stock options none
2
<PAGE>
5. The present bylaws of the terminating corporation will be the bylaws
of said surviving corporation and will continue in full force and effect until
changed, altered, or amended as therein provided and in the manner prescribed by
the provisions of the Georgia Business Corporation Code.
6. The directors and officers in office of the terminating corporation
upon the effective date of the merger shall be the members of the first Board of
Directors and the first officers of the surviving corporation, all of whom shall
hold their respective successors or until their tenure is otherwise terminated
in accordance with the bylaws of the surviving corporation.
7. Each issued share of the terminating corporation when the merger
takes effect shall be converted into one (1) common share of the surviving
corporation, provided, however, if the application of such conversion, formula
would result in the issuance to any shareholder of the terminating corporation
of a fractional share of the surviving corporation, no fractional share shall be
issued, rather, that fractional share which would otherwise be issued shall be
rounded up to a whole share of the surviving corporation. After the effective
date of this Plan, each holder of outstanding certificates representing shares
of stock of the terminating corporation shall surrender the same to the
surviving corporation and each such holder shall be entitled, upon such
surrender, to receive the numbers of shares of stock of the surviving
corporation as is provided for in the preceding sentence. The surviving
corporation will bear the costs of such share surrender and issuance is to each
holder of the outstanding certificates representing shares of stock of the
terminating corporation who surrenders all of his said certificates within
thirty (30) days of the
4
<PAGE>
date of the notice from the surviving corporation to such holders containing
instructions as to the method of such surrender; the such holders shall bear
such costs as to such certificates surrendered after such thirty (30) day
period. Until so surrendered, the outstanding shares of the stock of the
terminating corporation may be treated by the surviving corporation for all
corporate proposes as evidencing the ownership of shares of the surviving
corporation as through said surrender and exchange had taken place. The issued
shares of the surviving corporation shall not be converted or exchanged in any
manner, but each said share which is issued as of when the merger takes effect
shall continue to represent one issued share of the surviving corporation
8. The merger of the terminating corporation with and into the
surviving corporation shall be authorized in the manner prescribed by the laws
of the jurisdiction of organization of the terminating corporation. As permitted
by subsection (h) of Section 14-2-1103 of the Georgia Business Corporation Code,
the approval of the Plan of Merger herein made is not being submitted to the
shareholders of the surviving corporation for their approval.
9. In the event that the merger of the terminating corporation with and
into the surviving corporation shall have been duly authorized in compliance
with the laws of the jurisdiction of organization of the terminating
corporation, and in the event that the Plan of Merger shall have been approved
by the Board of Directors of the surviving corporation in the manner prescribed
by the provisions of the Georgia Business Corporation Code, the terminating
corporation and the surviving corporation hereby stipulate that they will cause
to be executed and filed and/or recorded any document or documents prescribed by
the laws of the State of New
5
<PAGE>
York and of the State of Georgia, and that they will cause to be performed
all necessary acts therein and elsewhere to effectuate the merger.
10. Upon the effective date of this Plan, the surviving corporation
shall possess all the rights, privileges, powers and franchises of a public and
private nature and shall be subject to all the duties of each of the constituent
corporations parties to this merger, and all and singular the rights,
privileges, powers, and franchises of each of the corporations parties to this
merger on whatever account shall be vested in the surviving corporation, and all
property, rights, privileges, powers, contracts and franchises and every officer
interest shall be thereafter as effectually the property of the surviving
corporation as they were (if the respective constituent corporations parties to
this merger, but all rights of creditors and all liens upon any property of
either of any of the constituent corporations parties to this merger shall be
preserved unimpaired and all debts, liabilities, duties of the respective
constituent corporations parties to this merger shall thenceforth attach to the
surviving corporation and be enforceable against it to the same extent as if
said debts, liabilities, and duties had been incurred or contracted by it.
11. If, at any time, the surviving corporation shall consider or be
advised that any further assignments or assurance in law or any other things are
necessary or desirable to vest in the surviving corporation, according to the
terms hereof, the title to any property or rights of the terminating
corporation, the proper officers and directors of the terminating corporation
shall and will execute and make all such proper assignments and assurances and
do all things necessary or proper to vest title in such property or rights in
surviving corporation and otherwise to carry out the purposes of this merger.
6
<PAGE>
12. The effective date of this merger in Georgia and New York shall be
December 31, 1999.
13. The President or other officers or directors of each of the
constituent corporations to this Plan are hereby authorized and directed to
prepare and execute such agreements, certificates or other documents as may be
necessary in order to carry out this Plan.
14. Anything herein or elsewhere to the contrary notwithstanding this
merger may be terminated and abandoned by either of the Boards of Directors of
the constituent corporations at any time prior to the effective date of this
merger, if, in the opinion of either of the Boards of Directors, the merger is
impractical by reason of the possible exercise of statutory rights or appraisal
and payment of stock to any objecting shareholders.
15. The Board or Directors and the proper officer of the terminating
corporation and of the surviving corporation, respectively, are hereby
authorized, empowered, and directed to do any and all acts and things and to
make, execute, deliver, file and or record any and all instruments, papers, and
documents which shall be necessary, proper or convenient to carry out or put
into effect any of the provisions of this Plan of Merger.
7
<PAGE>
EXHIBIT B
<PAGE>
000030814
ARTICLES OF MERGER
OF
PEDIANET, INC.
AND
ULTRAPHONICS - USA, INC.
J908534
To the Secretary of State
State of Georgia
Pursuant to the provisions of the Georgia Business Corporation Code,
the domestic corporation and the foreign corporation herein named do hereby
adopt the following articles of merger.
FIRST: Annexed hereto and made a part hereof is the Plan of Merger for
merging PediaNet Inc., a corporation of the State of New York, with and into
Ultraphonics - USA, Inc., a corporation of the State of Georgia, as adopted at a
meeting by the Board of Directors of PediaNet Inc. on November 22, 1999, and
adopted at a meeting by the Board of Directors of Ultraphonics - USA, Inc. on
November 23, 1999.
SECOND: Pursuant to subsection (h) of Section 14-2-1103 of the Georgia
Business Corporation Code, the approval by the shareholders of Ultraphonics -
USA,Inc. to the merger is not required.
THIRD: The merger of PediaNet,Inc. with and into Ultraphonics - USA,
Inc. is permitted by the laws of the jurisdiction of organization of PediaNet
Inc. and has been authorized in compliance with said laws.
<PAGE>
FOURTH: Ultraphonics - USA, Inc. will continue its existence as the
surviving corporation under the corporate name PediaNet.com, Inc. pursuant to
the provisions of the Georgia Business Corporation Code.
FIFTH: These Articles constitute an undertaking by Ultraphonics - USA,
Inc. that the request for publication of a notice of filing these Articles of
Merger and payment therefor will be made as required by subsection (b) of
Section 14-2-1105.1 of the Georgia Business Corporation Code.
SIXTH: These Articles of Merger shall be effective on December 3l,
1999.
Executed on this fourteenth day of December, 1999.
PEDIANET, INC.
By: /s/ Steven Richter
------------------------
Name: Steven Richter
Title: President
ULTRAPHONICS - USA, INC.
By: /s/ C.M. Benedict
-------------------------
Name: C.M. Benedict
Title: President
<PAGE>
EXHIBIT C
<PAGE>
Secretary of State DOCKET NUMBER : 000100537
Corporations Division CONTROL NUMBER : J908534
315 West Tower DATE INC/AUTH/FILED : 04/27/1989
#2 Martin Luther King, Jr. Dr. JURISDICTION : GEORGIA
Atlanta, Georgia 30334-1530 PRINT DATE : 01/10/2000
FORM NUMBER : 215
LIBERTY CORPORATE SERVICES, INC.
JANE MALONEY
828 COBB PARKWAY NORTH
MARIETTA, GA 30062
CERTIFIED COPY
I, Cathy Cox, the Secretary of State of the State of Georgia, do hereby certify
under the seal of my office that the attached documents are true and correct
copies of documents filed under the name of
ULTRAPHONICS - USA, INC.
A DOMESTIC PROFIT CORPORATION
Said entity was formed in the jurisdiction set forth above and has filed in the
office of Secretary of State on the date set forth above its certificate of
limited partnership, articles of incorporation, articles of association,
articles of organization or application for certificate of authority to transact
business in Georgia.
This certificate is issued pursuant to Title 14 of the Official Code of Georgia
Annotated and is prima-facie evidence of the existence or nonexistence of the
facts stated herein,
[SEAL OMITTED] /s/ Cathy Cox
------------------
Cathy Cox
Secretary of State
<PAGE>
State of New York }
} ss:
Department of State }
I hereby certify that the annexed copy has been compared with the original
document in the custody of the Secretary of State and that the same is a true
copy of said original.
Witness my hand and seal of the Department of State on Jan 04 2000
[SEAL OMITTED]
[Signature Illegible]
-------------------------------------
Special Deputy Secretary of State
DOS-1266 (5/96)
<PAGE>
EXHIBIT D
<PAGE>
F991231000485
CERTIFICATE OF MERGER
OF
PEDIANET,INC.
INTO
ULTRAPHONICS - USA, INC.
Under Section 907 of the
Business Corporation Law
The undersigned, Steven Richter and Shlomno Carlbach, being,
respectively, the President and the Secretary of PediaNet Inc., a corporation
duty organized and existing under and by virtue of the laws of the State of New
York, and C.M. Benedict being, respectively, both the President and Secretary of
Ultraphonics - USA, Inc., a foreign corporation duly organized and existing
under and by virtue of the laws of the State of Georgia, do hereby certify and
set forth as follows:
FIRST: The name of each constituent corporation is as follows:
PediaNet Inc., a New York corporation; and Ultraphonics - USA, Inc., a
Georgia corporation.
SECOND: The name of the surviving corporation is PediaNet.com,Inc., of
the State of Georgia incorporated under the name of Ultraphonics - USA, Inc.
<PAGE>
THIRD: The designation, number and voting rights of the outstanding
shares of each class and series of the constituent corporations is as follows:
CLASS NUMBER OUTSTANDING
----- ------------------
ULTRAPHONICS-USA, INC.
voting common stock having a par value
of $0.001 (one mil) per share 49,846 shares
non-voting preferred shares having a par
value of $0.10 (ten cents) per share 10,000 shares
stock options none
PEDIANET, INC.
voting common stock having a par value of 3,757,386 shares
of $0.01 (one cent) per share
preferred shares having
a par value of $0.01 (one cent) per share none
stock options none
2
<PAGE>
FOURTH: The jurisdiction of Ultraphonics - USA, Inc. is Georgia, and
the date of filing by the Secretary of State of Georgia of the Articles of
Incorporation of Ultraphonics - USA, Inc. is April 27, 1989.
FIFTH. The date of filing by the of the Department of State of New York
of the Certificate of Incorporation of PediaNet Inc. is April 22, 1996.
SIXTH: No Application for Authority was filed in the Department of the
State of New York by Ultraphonics - USA, Inc., the surviving corporation, to
transact business as a foreign corporation in this state; and Ultraphonics -
USA, Inc., the surviving corporation, is not to do business in the State of New
York until it has filed such an Application for Authority with the Department of
State of the State of New York.
SEVENTH: The merger herein certified was authorized in respect of the
constituent domestic corporation by the vote of the holders of at least
two-thirds of all outstanding shares of the corporation entitled to vote on the
plan of merger under the certificate of incorporation
EIGHTH: The surviving corporation hereby agrees that it may be served
with process in this state in any action or special proceeding for the
enforcement of any liability or obligation of any domestic corporation or of any
foreign corporation, previously amenable to suit in this state, which is a
constituent corporation in such merger, and for the enforcement of the right of
shareholders of any constituent domestic corporation to receive payment for
their shares against the surviving corporation.
3
<PAGE>
NINTH: The surviving corporation hereby agrees that, subject to the
provisions of Section 623, it will promptly pay to the shareholders of each
constituent domestic corporation the amount, if any, to which they shall be
entitled under the provision of this chapter.
TENTH: The surviving corporation hereby designates the Secretary of
State as the agent of the corporation upon whom process against it may be
served. The post-office address to which the Secretary of State shall mail a
copy of any process against the corporation served upon him, c/o Bruce Berger,
Esq., 2 Ravinia Drive, Suite 1570, Atlanta, GA 30346.
ELEVEN: The merger is permitted by the laws of the jurisdiction of the
constituent foreign corporation and is in compliance therewith.
TWELFTH: All fees and taxes (including penalties and interest)
administered by the Department of Taxation and Finance of the State of New York
which are now due and payable by the constituent domestic corporation have been
paid and a cessation franchise tax report (estimated or final) through the
anticipated date of merger has been filed by the constituent domestic
corporation. The said report if estimated, is subject to amendment. The
surviving foreign corporation agrees that it will within 30 days after the
filing of the certificate of merger file the cessation tax report, if an
estimated report was previously filed, and promptly pay to the Department of
Taxation and Finance of the State of New York all fees and taxes (including
4
<PAGE>
penalties and interest), if any, due to the Department of Taxation and
Finance by the constituent domestic corporation.
THIRTEENTH: This Certificate of Merger shall be effective on December
3l, 1999.
IN WITNESS WHEREOF, the undersigned affirm that the statements made
herein are true under the penalties of perjury, this fourteenth day of November,
1999.
/s/ Steven Richter
---------------------------------
Steven Richter, President of
PediaNet Inc., a New York
Corporation
/s/ Shlomo Carlbach
---------------------------------
Shlomo Carlbach, Secretary of
PediaNet Inc., a New York
corporation
/s/ C.M. Benedict
-----------------------------
C.M. Benedict, President of
Ultraphonics - USA, Inc., a
Georgia corporation
/s/ C.M. Benedict
-----------------------------
C.M. Benedict, Secretary of
Ultraphonics - USA, Inc.,
a Georgia corporation
5
<PAGE>
F9912310004
CERTIFICATE OF MERGER
OF
PEDIANET INC.
INTO
ULTRAPHONICS-USA, INC.
Under Section 907 of the Business Corporation
Law of the State of New York
Bondy & Schloss
6 East 43rd Street
New York, New York 10017
CUSTOMER REFERENCE NUMBER 49774MR
<PAGE>
EXHIBIT E
<PAGE>
N. Y. S. DEPARTMENT OF STATE
DIVISION OF CORPORATIONS AND STATE RECORDS ALBANY, NY 12231-0001
FILING RECEIPT
================================================================================
ENTITY NAME: ULTRAPHONICS - USA, INC.
DOCUMENT TYPE: MERGER (UNA. BUSINESS) COUNTY: UNKN
PROCESS
SERVICE COMPANY: UNITED CORPORATE SERVICES SERVICE CODE: 37
CONSTITUENT NAME: PEDIANET INC.
================================================================================
FILED:12/31/1999 DURATION:********* CASH#:991231000512 FILM #:991231000485
ADDRESS FOR PROCESS EFFECT DATE
- ------------------- -----------
C/O BRUCE BERGER, ESQ. 12/31/1999
2 RAVINIA DRIVE, SUITE 1570
ATLANTA, GA 30346
REGISTERED AGENT
- ----------------
[SEAL OMITTED]
================================================================================
FILER FEES 135.00 PAYMENTS 135.00
- ----- ---- -------
FILING 60.00 CASH 0.00
BONDY & SCHLOSS TAX 0.00 CHECK 0.00
6 EAST 43RD STREET CERT 0.00 CHARGE 0.00
COPIES 50.00 DRAWDOWN 135.00
NEW YORK, NY 10017 HANDLING 25.00 BILLED 0.00
REFUND 0.00
================================================================================
49774MR DOS-1025 (11/89)
