<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Amendment No. 3
to
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.
--------------------------------------------------------------------------------
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
GEORGIA 58-1727874
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION IDENTIFICATION
NUMBER)
1804 Jerome Avenue, Brooklyn, New York 11235
---------------------------------------- ---------------
(Address of Principal Executive Offices) (Zip code)
Issuer's Telephone Number: (718) 332-3994
------------------
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
-------------------- -----------------------------------------
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
------------------- -----------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
PART I - INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Description of Business...............................................3
-
Item 2. Management's Discussion and Analysis or Plan of Operation.............7
-
Item 3. Description of Property..............................................10
--
Item 4. Security Ownership of Certain Beneficial Owners and Management........10
--
Item 5. Directors, Executive Officers, Promoters and Control Persons.........11
--
Item 6. Executive Compensation................................................13
--
Item 7. Certain Relationships and Related Transactions.......................14
--
Item 8. Description of Securities............................................14
--
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters...........................................16
--
Item 2. Legal Proceedings....................................................16
--
Item 3. Changes in and Disagreements With Accountants........................17
--
Item 4. Recent Sales of Unregistered Securities..............................18
--
Item 5. Indemnification of Directors and Officers............................18
--
PART F/S Financial Statements..........................................FS1-FS18
--------
PART III
Item 1. Index to Exhibits....................................................37
--
Item 2. Description of Exhibits...............................................37
--
<PAGE>
Item 1. Description of Business
PediaNet, Inc. was incorporated in the State of New York on April 22,
1996. In December 31, 1999, PediaNet, Inc. affected a merger with
Ultraphonics-USA ("Ultraphonics"), a public, 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."
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 Aware Products Corporation acquired 100% of the
assets subject to liabilities of Ultraphonics, a Georgia corporation, changed
its name to Ultraphonics and 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 and completed the merger with PediaNet.
The Company is in its development stage and has incurred operating
losses in excess of $1.3 million from its inception to December 31, 1999
including losses of $439,080, $389,017 and $511,407 for 1999, 1998 and 1997,
respectively. The Company's revenues have declined for each of the past three
years. Due to its lack of revenues, accumulated operating losses and the need
for additional working capital, there is no assurance that the Company's
business plan will be successful or that it will be able to continue as a going
concern.
PediaNet, through its website at www.PediaNet.com is establishing
itself as a primary information and interactive communications resource for
pediatric health related matters for parents, guardians, children, sponsors, and
medical professionals as well as the general public on a worldwide basis, based
on internet solutions utilizing a proprietary pediatric software program known
as Devset ("Devset").
The Devset software was designed by a founder of the Company to serve
pediatricians by enhancing their practice. Devset augments the PediaNet Website
and enables visitors to the site to enjoy its benefits without any additional
cost to them. In addition, the Devset software enables pediatricians and other
health care professionals to track the growth and developmental milestones of
children and is being upgraded to 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.
PediaNet's primary focus is on expedient, internet-based delivery of up
to date 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 most other existing
medical internet sites is PediaNet's exclusive dedication of its site to
pediatrics. The Company believes that the variety of services provided on its
Website differentiates it from those few websites dedicated to pediatrics.
The Company presently has six non-salaried employees, one of whom is
employed full time.
3
<PAGE>
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. All materials
presented on the public site are authored by pediatric professionals. The
Company believes that such authorship helps ensure 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. The Website is supported by portions
of Devset and can be accessed directly by visitors to the Website at no
additional cost.
Professional Site:
-----------------
This site is intended for use by 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 intended for use by physicians,
hospitals, medical professionals, and experts in the pediatric healthcare field,
nationally and worldwide also will be used to market Devset. The Company intends
to market Devset to physicians and other healthcare professionals to enhance
their daily practice of pediatrics. Utilizing the power of the World Wide Web,
PediaNet's professional website is designed to link pediatricians worldwide for
professional education and consultation and to 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.
Marketing Policy:
----------------
PediaNet's marketing policy is to provide general services, free of
charge, to both the public and the pediatric professional community.
Historically, the Company has generated its revenues primarily from grants from
sponsors. It is expected that going forward 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. The Company's revenues have declined each year
over the past three years and the Company currently has no significant revenue
source. There can be no assurance that the Company will be successful in
generating revenues as planned.
Competition:
-----------
The online medical information and services market, like many other
online markets is characterized by strong competition. There are a large number
of web sites devoted to offering pediatric information or services. The Company
is not aware of any website offering the variety of information and services
offered on the PediaNet Website or augmented by a software system comparable to
Devset.
Because Web sites can be launched at relatively low cost, other
traditional providers of pediatric
4
<PAGE>
services and information may choose to create an online model. Many of these
companies have longer operating histories, greater brand recognition, larger
customer user bases and significantly greater financial, technical and marketing
resources than the Company. Failure to compete effectively with such companies
will have a material adverse effect on the Company's business, financial
conditions and results of operations.
Proprietary Rights:
------------------
The Company has been granted an exclusive, worldwide license to exploit
the Devset software by Dr. Melvin Koplow, the Chief Executive Officer of the
Company and a Director. The Company intends to seek patent and trademark
protection for Devset as soon as feasible. Currently, the Company relies
primarily upon its know-how, rather than patents, to develop and maintain its
competitive position.
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.
Product Strategy:
----------------
PediaNet offers unlimited Internet access to the public, at no charge,
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 keeps people informed with the latest breaking health emergency
information.
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.
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 pertinent information, such as common symptoms and
effects, aiding in the early detection of disease.
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.
5
<PAGE>
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 are able to check regularly to see what products are currently being
recalled and what should be done if they own one. This information is not
available everywhere and is a key feature of PediaNet.
Development/Growth Chart: Through the underlying site support of a special
limited version of PediaNet's Devset software program, a parent or guardian can
see a child's projected development and probable growth up to age eighteen. This
feature can be an valuable 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 provides 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.
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 through links to participating companies. Many items to aid and assist
those who are physically and mentally challenged are featured here. The Company
is entitled to a portion of the revenues from products sold in this manner but
has generated only nominal revenue in this manner to date.
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 has an opportunity to open up and develop
interpersonal as well as learning skills.
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
o Access interactive applications supplied by advertisers
These services and more are expected to be available on-demand.
Professional Gateway:
The Company's professional site is intended for use by pediatric
professionals who gain access to the site by means of a password provided to
them after they have completed a professional questionnaire compiled by the
Company. The Company does not independently verify the veracity or accuracy of
these questionnaires.
6
<PAGE>
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.
CME Corner: Offered here are various products including publications, Board
Reviews, audios and videos which offer professionals required Continuing Medical
Education credits.
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. 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
Recapitalization
----------------
On December 31, 1999, the Company merged with Ultraphonics-USA, Inc.
and issued 10,003 shares of its preferred stock and 1,518,171 shares of its
common stock in exchange for the outstanding shares of Ultraphonics-USA, Inc.
The financial statements contained herein for all periods prior to December 31,
1999 are the financial statements of PediaNet, Inc. This recapitalization
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 including unrestricted educational grants
received from pharmaceutical companies for the production of educational
information in support of pediatric information seminars.
PediaNet plans to recognize additional revenue from design and implementation of
Websites and Licensing of Devset
7
<PAGE>
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
expects to commence implementation of these services sometime early in the third
quarter of 2000. 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, the Company's total assets
increased $202,746 or 85% to $441,675 as compared to $238,929 for the year ended
December 31, 1998. This increase is attributable to 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.
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'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. There can be no assurance that the
Company will be successful in generating such funds, and failure to do so would
have a material adverse impact on the Company's ability to continue as a going
concern.
Operating Expense During the year ended December 31, 1999 the Company
experienced an increase of approximately 13% in operating costs and expenses.
Operating costs increased to $443,580 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, including
the issuance of $89,325 of common stock in consideration for consulting services
rendered in 1999 compared to $2,535 in 1998 and legal and accounting fees
increased $5,295 to $15,808 in 1999 compared to $10,513 in 1998. This increase
in expenses was partially offset by a reduction in royalty expense from $47,178
in 1998 to zero in 1999.
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 recorded as a
separate component of stockholder's deficiency for the year ended December 31,
1999.
Net (Loss) During the year ended December 31, 1999 the Company's net (loss)
increased 13% to $439,080 as compared to $389,017 for the year ended December
31, 1998. This loss was primarily attributable to lack of significant revenue
and an increase in selling, general, and administrative expenses of 13% over the
prior year. As a result of additional shares outstanding, the Net (loss) per
Common Share of the Company's stock,(basic and diluted) was ($0.13) in 1999,
compared to ($0.12) in 1998. 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
8
<PAGE>
in default on its debt to one of the Company's shareholders in the amount of
$117,795. We need to obtain additional financing to support our planned
activities and to achieve a level of sales adequate to support our costs
structure.
Year ended December 31, 1998 compared with year ended December 31, 1997
Revenue. Total revenue for the Company for the year ended December 31, 1998
declined 62% to $6,379 as compared to $16,720 for the year ended December 31,
1997. The decline was attributable to the Company receiving no revenue from
Sponsorship fees in 1998 as compared to $10,000 in Sponsorship fees for 1997.
Website revenue also decreased $341 in 1998 as compared to 1997.
Operating Expenses. Operating expenses decreased because of lower selling,
general, and administrative expenses. Selling general and administrative
expenses decreased $134,497 or 25% to $395,396 in 1998 as compared to $529,893
in 1997 as follows: in 1998 salaries decreased $34,517 to $8,400, professional
fees decreased $37,425 to $10,513, office expenses decreased $22,696 to $10,618,
and telephone expense decreased $6,681 to $3,428; in 1998 medical consulting
fees were eliminated as compared to $64,800 in 1997. In 1998 royalty fees
increased $42,178 to $47,178 as compared to $5,000 for 1997.
Net Loss. The net loss for 1998 decreased $112,390 or 22% to $389,017 as
compared to $511,407 in 1997. The reduction in net loss was the result of lower
selling, general and administrative expenses. The net loss per common share
(basic and fully diluted) decreased to $(.12) in 1998 as compared to $(.16) in
1997.
Three Months Ended March 31, 2000 compared to Three Months Ended March 31, 1999
Sales. Sales decreased from $3,500 for the three months ended March 31, 1999 to
$-0- for the three months ended March 31, 2000. The Company expects to commence
implementation of its website services sometime early in the third quarter of
2000.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased from $184,629 for the three months ended March
31, 1999 to $63,900 for the three months ended March 31, 2000. This decrease is
primarily due to additional expenses recorded from the issuance of stock issued
for services in the three months ended March 31, 1999.
Financing Costs. Financing costs increased from $-0- for the three months ended
March 31, 1999 to $20,584 for the three months ended March 31, 2000. This
increase is due to financing costs for warrants issued below fair market value
which expire December 31, 2000.
Liquidity and Capital Resources
As of December 31, 1999 the Company has a deficit in stockholders'
equity of approximately $623,100 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,
collect on its notes receivable of $850,000, realize acquisitions and realize
revenues from its website sufficient to cover its overhead.
The Company 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 Pediatric 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 services. In addition, the Company's aim is to license and
distribute the Devset software and upgrades to Devset module. The Company
expects to commence implementation of these services sometime early in the third
quarter of 2000. The Company also plans to generate future revenues from digital
space, pediatric internet digital TV, pediatric
9
<PAGE>
national database subscriptions, instructional courses and online conferences.
In addition to internal growth, the Company intends to expand through
acquisitions and new product development. While the Company 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. There is no assurance that additional capital will be
obtained, revenue stream from its website will be commercially successful or
that the Company will be successful in its endeavors to acquire compatible
companies.
The Company currently does not have commitments for capital
expenditures and does not expect to purchase property or equipment over the next
twelve months that cannot be financed in the ordinary course of business. The
Company estimates that it will require $850,000 to support its planned
activities over the next twelve months. The Company currently does not have
adequate cash reserves to meet its future cash requirements. These uncertainties
raise substantial doubt about the ability of the Company to continue as a going
concern.
Other Matters
Impact of Year 2000. The Company's mission critical systems have operated
without interruption during 2000. Furthermore, the Company has not experienced a
failure of any non-critical devices or systems. In addition, the Company has not
experienced a delay from any service providers or vendors.
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 West End 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 will be able to retain its current phone
number.
Item 4. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of April 25, 2000, the number of
shares of the Company's common stock (the "Common Stock") beneficially owned by
all persons known to be holders of more than five percent (5%) of the Common
Stock and by all executive officers and directors of the Company individually
and as a group.
(a) Security Ownership of Certain Beneficial Owners
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Title of Name and address Amount and Nature Percentage of
Class of beneficial owners of beneficial ownership class
------------------------------------------------------------------------------------------------------------------------------------
<S> <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
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*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.
10
<PAGE>
(a) Security Ownership of Management
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Title of Name and address Amount and Nature
Percentage of
Class of beneficial owners of beneficial ownership shares outstanding
------------------------------------------------------------------------------------------------------------------------------------
<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
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
------------------------------------------------------------------------------------------------------------------------------------
</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 April 25, 2000.
11
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
Name Age Title Five Year Business Experience
---- --- ----- -----------------------------
<S> <C> <C> <C>
Melvin D. Koplow 55 CEO Dr. Melvin Koplow has been CEO and a Director of
Director* PediaNet since April 1996. 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 has served as President since November 1999
Director and as Director of Marketing since 1996. Mr. Richter has
been an in wholesale consumer electronics for the past
twenty years.
John Lapore 43 Secretary Mr. Lapore has served as Corporate Secretary and Director
Director* of PediaNet since January 2000. In addition Mr. Lapore
since 1989 has managed and operated an Allstate Insurance
agency.
Ernest Cifaldi 39 Treasurer Mr. Cifaldi presently has served as Corporate Treasurer of
PediaNet since December 1999. In addition Mr. Cifaldi
from 1997 to date is Senior Vice President in charge of
Consolidation, General Ledgers and Control at Solomon
Smith Barney and from 1995 to 1996 was Vice President
and Controller of Information Systems for Cowan & Co..
Aleksandr Akerman, 51 Director* Mr. Akerman has served as Treasurer from 1996 to
December 1999. 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 he has been President of Greycourt
Inc.
Shlomo Carlebach 40 Director* Mr. Carlebach has served as a Director since 1996. Mr.
Carlebach was one of the founders of Maxum Computers, a
computer original equipment manufacturer and since 1995
has been Purchasing Manager at Greycourt Inc..
John DeMauro 61 Director* Mr. DeMauro has served as as a Director of PediaNet since
1996. In 1996 Mr. DeMauro served as an Administrator of
the Amalgamated Lithographers Union, Local 1. From 1995
to 1996 DeMauro was a private consultant of employee
benefits.. Mr. DeMauro currently is employed by Greycourt
Inc.
--------------------------------------------------------------------------------------------------------------------------------
</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. There are no family relationships among the directors or
persons nominated or chosen by the Company to become a director.
12
<PAGE>
Item 6. Executive Compensation
Summary Compensation Table
-----------------------------------------------------------------------------
Annual Compensation
-------------------
Principal Position Year Salary* Bonus Other
---------------------- ---- ------ ----- -----
Dr. Melvin D. Koplow, MD 1999 $62,500 --
Shlomo Carlebach 1999 $62,500 --
Aleksandr Akerman 1999 $62,500 --
John DeMauro 1999 $62,500 -- **
-----------------------------------------------------------------------------
*Amounts listed represent amounts forgiven under employment contracts
which terminated during 1999. There was no annual compensation paid or owing to
the officers and directors of the Company for fiscal 1999 other than as
described in "Employment Agreements" below.
** Mr. DeMauro exercised 59,700 options to purchase Common Stock at
$.01 per share and 100,000 options to purchase Common Stock at $.15 per share on
January 16, 1999. These options were granted in September 1996 pursuant to an
employment contract and exercised at a time when there was no market for the
Company's stock and the Company had a negative net worth. See "Employment
Agreements" and "Recent Sales of Unregistered Securities" below.
As of January 1, 2000, no executive officer of the Company held any
stock appreciation rights with respect to the stock of the Company. Furthermore,
as of January 1, 2000, no named executive officer of the Company (as defined in
SEC Regulation S-B Item 402(a)(2)) has held any stock options with respect to
the stock of the Company. The authorization and/or granting of stock options to
directors of the Company and to other executive officers of the Company is
discussed below. See"Stock Option Agreements".
Employment Agreements
In 1999 the employment agreements for all of the officers and Directors
of the Company expired and were not renewed, provided, however, that John
DeMauro, a Director, retained an option to purchase 59,700 shares of common
stock at one cent ($.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 his employment agreement. All of these options were
exercised by Mr. DeMauro on January 16, 1999. See "Recent Sales of Unregistered
Securities."
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 15,000 options to
purchase shares of the Company's common stock to the officers and Directors of
the Company annually. Options were granted to the Directors and officers to
purchase 15,000 shares of the Company's Common Stock at an exercise price of
$1.50 per share, exercisable on or after September 1, 2000. In addition, the
following individuals were granted options exercisable at $1.50 per share, all
of which expire on January 2 , 2005 to purchase shares of Common Stock in the
following amounts: Dr. Melvin D. Koplow, MD, Chief Executive Officer 150,000
shares; Steven Richter, President 150,000 shares; John Lapore, Secretary 40,000
shares; John DeMauro, Director 150,000 shares; and Aleksandr Akerman, Director
100,000 shares.
13
<PAGE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
<TABLE>
<CAPTION>
Name Shares acquired Value realized ($) Number of securities Value of unexercised in-
on exercise (#) underlying unexercised the-money options/SARs at
options/SARs at FY- FY-end ($)
end (#) Exercisable/
Exercisable/ Unexercisable
Unexercisable
<S> <C> <C> <C> <C>
John DeMauro, Director 159,700 0 -- --
</TABLE>
* Mr. DeMauro exercised 59,700 options to purchase Common Stock at $.01 per
share and 100,000 options to purchase Common Stock at $.15 per share on January
16, 1999. These options were granted pursuant to an employment contract and
exercised at a time when there was no market for the Company's stock and the
Company had a negative net worth. See "Employment Agreements" and "Recent Sales
of Unregistered Securities" below.
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 although he is under no obligation to continue to do so. 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
"FINANCIAL 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 merger. In addition to the
principal amount, there was accrued interest of $55,358, accruing at the rate of
12% per annum, 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."
The Company believes that the terms of the above transactions are on
terms at least as favorable to the Company as could have been obtained from
arms-length negotiations with unrelated third parties.
Item 8. Description of Securities
The authorized capital stock of PediaNet consists of 50,000,000 shares
of Common Stock, par value $0.001 of which 5,248,557 are issued and outstanding
as of April 25, 2000. 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. The holders of the shares are entitled to one vote for each
share held and are entitled to dividend when, and if, declared by the Board of
Directors. No dividends have ever been declared nor is there any intent to
declare or pay any dividends in the foreseeable future.There are currently no
preemptive rights connected with the common stock.
The Company is also authorized to issue 10,000,000 shares of Preferred
Stock, par value $0.10 per share of which 10,003 shares are issued and
outstanding as of April 25, 2000. Each holder of record of Preferred Stock is
entitled to convert one share of Preferred Stock into one share of Common Stock
on a one to one basis. Each share of preferred stock is entitled to dividends
when, and if, declared by the Board of Directors. There are currently no voting,
conversion and liquidation rights, nor redemption or sinking fund provisions for
the preferred stock.
14
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity and Other
Shareholder Matters
PediaNet's Common Stock is currently traded on the Over-the-Counter
Bulletin Board ("OTCBB") under the symbol "PEDN." As of April 20, 2000, there
were approximately 342 holders of the Common Stock. 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 PediaNet's 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.
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.
15
<PAGE>
Item 2. 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 3. Changes in and Disagreements with Accountants
(a) Previous independent accountants
(i) As a result of the Merger, on December 30, 1999, the Registrant
dismissed Bernard Lipton, CPA (formerly accountant to PediaNet, Inc.) as its
independent accountant.
(ii) the reports of Bernard Lipton, CPA on the consolidated financial
statements for the past two fiscal years ended December 31, 1999 and December
31, 1998 contained no adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or accounting principle.
(iii) The Registrant's Board of Directors participated in and approved
the decision to change independent accountants.
(iv) In connection with its audits for the two most recent fiscal years
ended December 31, 1999 and December 31, 1998 and through April 20, 2000, there
have been no disagreements with Bernard Lipton, CPA on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of Bernard
Lipton, CPA would have caused them to make reference thereto in their report on
the consolidated financial statements for such years.
(v) The Registrant has requested that Bernard Lipton, CPA furnish it
with a letter addressed to the SEC stating whether or not it agrees with the
above statements.
(b) New independent accountants
(i) The Registrant retained Weiner, Goodman & Company, P.C. (prior
accountants of Ultraphonics) as its new independent accountants as of January 1,
2000. During the two most recent fiscal years ended December 31, 1999 and
December 31, 1998 and through April 20, 2000, the Registrant
16
<PAGE>
has not consulted with Weiner, Goodman & Company, P.C. on items which (1) were
or should have been subject to SAS 50 or (2) concerned the subject matter of a
disagreement or reportable event with the former auditor. The Registrant
authorized Bernard Lipton, CPA to respond to any and all inquiries of the
successor accountant.
Item 4. Recent Sales of Unregistered Securities
On December 28, 1999, Ultraphonics closed on a private placement deal
pursuant to Rule 504 of Regulation D to a limited number of "accredited
investors"in which Ultraphonics raised $1,000,000 in a combination of cash,
promissory notes and shares of stock as a condition to completing a merger with
PediaNet, Inc. Pursuant to the offering, Ultraphonics sold a total of (i)
900,000 shares of common stock at $0.22 per share or $198,000; (ii) 410,000
one-year warrants to purchase shares of its common stock at $0.01 per warrant at
an exercise price of $0.01 or $8,200; and (iii) $793,800 principal amount of its
one year 10% convertible promissory notes (the "Convertible notes") for a total
of $1,000,000. At closing, Ultraphonics received $100,000 in cash, $50,000 in
marketable securities and $850,000 in unsecured six-month 10% promissory notes
(the "Investor Notes").
The Investor Notes are callable by the Company in 25% increments under
certain conditions.
The Convertible Note is convertible into 529,200 shares of the Company's
Common Stock. Interest is payable on December 28, 1999, the due date.
The proceeds to Ultraphonics, were used for working capital for the
Company after the merger with PediaNet, Inc.
In January 2, 1999, the Company issued 59,550 shares to outside
consultants in consideration for services rendered valued at $89,325.
On January 16, 1999, PediaNet, Inc. issued 59,700 shares of common stock
to John DeMauro, a Director, upon the exercise of an option granted in September
1996 at an exercise price of $.01 per share or $597 and 100,000 shares of common
stock upon the exercise of an option granted in September 1996 at an exercise
price of $.15 per share or $15,000.
In September 1999, the Company issued 44,000 shares of common stock at
$1.50 per share for a total consideration of $66,000 to two unrelated
"accredited" investors.
On December 31, 1999,Ultraphonics issued 3,730,386 shares of its common
stock in exchange for all of the outstanding shares of PediaNet, Inc.
Item 5. 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
17
<PAGE>
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.
The Company is obligated under its bylaws to indemnify its directors,
officers and other persons who have acted as representatives of the Company at
its request to the fullest extent permitted by applicable law as in effect from
time to time, except for costs, expenses or payments in relation to any matter
as to which such officer, director or representative is finally adjudged
derelict in the performance of his or her duties, unless the Company has
received an opinion from independent counsel that such person was not so
derelict.
The Company's indemnification obligations are broad enough to permit
indemnification with respect to liabilities arising under the Securities Act.
Insofar as the Company may otherwise be permitted to indemnify its directors,
officers and controlling persons against liabilities arising under the
Securities Act or otherwise, the Company has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
18
<PAGE>
Part FS
PEDIANET.com, INC.
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditors' Report FS2 - FS3.1
Financial Statements:
Balance Sheets,
March 31, 2000 (Unaudited)
December 31, 1999 and 1998 FS4
Statement of Operations, Three Months
Ended March 31, 2000 and 1999
(Unaudited), Years Ended
December 31, 1999, 1998 and 1997 FS5
Statement of Stockholders'
(Deficiency) for the periods ended
March 31, 2000 (Unaudited), December
31, 1999, 1998 and 1997 FS6
Statement of Cash Flows, for the
Three Months Ended March 31, 2000
and 1999 (Unaudited), and the Years
Ended December 31, 1999, 1998 and 1997 FS7 - FS8
Notes to Financial Statements FS9 - FS18
FS1
<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, except for Notes 6 and 7 as to
which the date is February 24, 2000 has been furnished to us.
In our previous report, dated February 28, 2000, on the 1999 financial
statements, officers' compensation was accrued and included in accrued expenses.
During 1999, the accrued compensation was forgiven. The financial statements
have reflected this change and is fully disclosed in Note 7.
In our previous report, dated May 18, 2000, on the 1999 financial statements,
notes receivable was offset against the note payable. The Company does not
intend to offset the two obligations. The Company has recorded the note payable
and has offset the note receivable against stockholders equity until the note
has been paid. The financial statements have reflected this change and is fully
disclosed in Note 5.
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.
FS2
<PAGE>
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 PediaNet.com, 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
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.
WIENER, GOODMAN & COMPANY, P.C.
Certified Public Accountants
Eatontown, New Jersey
February 28, 2000, except for Notes 7, 11 and 12,
as to which the date is May 18, 2000 and Note 5 as to
which the date is June 7, 2000.
FS3
<PAGE>
Independent Auditor's Report
To The Board of Directors and shareholders of Pedianet, Inc.
We have audited the accompanying balance sheet of Pedianet, Inc. as of
December 31, 1997 and December 31, 1998, and the related statements of
operations, stockholders equity, and cash flows for the years than ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
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 accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Pedianet, Inc as of
December 31, 1997, and December 31, 1998, and the results of its operations and
its case law for the years then ended in conformity with generally accepted
accounting principals.
/s/ Bernard Lipton
------------------
Bernard Lipton
Certified Public Accountant
760 Jerricho Turnpike
Westbury, New York 11590
June l5, 1999 except for Notes 6 and 7 which are
dated February 4, 2000
FS 3.1
<PAGE>
PEDIANET.com, INC
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, 2000 December 31,
(Unaudited) 1999 1998
-------------- --------- ---------
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 108,886 $ 151,687 $ (107)
Marketable securities 3,750 25,000 -
Accounts receivable-shareholder - 25,000 -
Deferred financing costs 61,751 82,335 -
--------- --------- ---------
Total Current Assets 174,387 284,022 (107)
Property, furniture and equipment - net 137,346 157,653 239,036
Other assets 4,800 - -
--------- --------- ---------
TOTAL ASSETS $ 316,533 $ 441,675 $ 238,929
========= ========= =========
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)
Current Liabilities:
Accounts payable $ 59,076 $ 129,864 $ 117,972
Accrued expenses 99,530 92,530 451,367
Note payable 793,800 793,800 -
Loans payable-related parties 45,111 48,611 6,500
--------- --------- ---------
Total Liabilities 997,517 1,064,805 575,839
--------- --------- ---------
Commitments and Contingencies
Stockholders' (Deficiency):
Preferred stock, par value $.10
per share, 10,000,000 shares authorized;
outstanding 10,003 shares 1,000 1,000 -
Common stock, par value $.001 per share,
50,000,000 shares authorized;
outstanding 5,279,896, 5,248,557
and 3,467,136 shares 5,280 5,249 3,467
Additional paid-in capital 1,884,030 1,836,883 811,805
Cumulative and other comprehensive (loss) (46,250) (25,000) -
Note receivable-subscription agreement (850,000) (850,000) -
Deficit (1,675,044) (1,591,262) (1,152,182)
--------- --------- ---------
Total Stockholders' (Deficiency) (680,984) (623,130) (336,910)
--------- --------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIENCY) $ 316,533 $ 441,675 $ 238,929
========= ========= =========
</TABLE>
See notes to financial statements
FS4
<PAGE>
PEDIANET.com, INC
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
---------------------------- -----------------------------------------------
2000 1999 1999 1998 1997
--------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Revenue:
Sponsorship fees $ - $ - $ 1,000 $ - $ 10,000
Website income - 3,500 3,500 6,379 6,720
--------- --------- ---------- --------- ---------
Total Revenue - 3,500 4,500 6,379 16,720
Cost and Expenses:
Selling, general
and administrative 84,484 184,629 443,580 395,396 529,893
--------- --------- ---------- --------- ---------
Loss from operations (84,484) (181,129) (439,080) (389,017) (513,173)
Other income
Interest income 702 - - - 1,766
--------- --------- ---------- --------- ---------
Net (loss) $ (83,782) $(181,129) $ (439,080) $(389,017) $(511,407)
========= ========= ========== ========= =========
Net (loss) per common
share basic and diluted $ (0.02) $ (0.05) $ (0.13) $ (0.12) $ (0.16)
========= ========= ========== ========= =========
Weighted average of common
shares outstanding
basic and diluted 5,248,557 3,686,386 3,538,986 3,345,220 3,229,597
========= ========== ========== ========= =========
</TABLE>
See notes to financial sttements
FS5
<PAGE>
PEDIANET.com, INC
STATEMENTS OF STOCKHOLDERS' (DEFICIENCY)
<TABLE>
<CAPTION>
Other Note Receivable
Comprehensive Comprehensive Subscription
Total (loss) Deficit (loss) Agreement
--------- ------------- ----------- ------------- --------------
<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 47,107 (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 $1.50
per share) 89,325
Forgiveness of rent
obligation 2,400
Exercise of stock options 15,597
Issuance of stock in
connection with reverse
acquisition 154,538
Forgiveness of officers
salaries 675,000
Note receivable-
subscription agreement (850,000) (850,000)
Net unrealized loss on
marketable security (25,000) $ (25,000) (25,000)
Shareholder contribution 25,000
Net (loss) (439,080) (439,080) (439,080)
---------
$(464,080)
--------- ========= ----------------------------------------------
Balance, December 31, 1999 (623,130) (1,591,262) (25,000) (850,000)
Conversion of accounts
payable to common stock 47,178
Net unrealized loss on
marketable security (21,250) $ (21,250) (21,250)
Net (loss) (83,782) (83,782) (83,782)
---------
$(105,032)
--------- ========= ----------------------------------------------
Balance, March 31, 2000 $(680,984) $(1,675,044) $ (46,250) $(850,000)
========= =========== ========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------- ------------ Additional
Shares Par Shares Par Paid-In
Outstanding Value Outstanding Value Capital
----------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1996 - $ - 3,198,050 $3,198 $ 719,853
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 3,304 806,968
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 $1.50
per share) 59,550 60 89,265
Forgiveness of rent
obligation 2,400
Exercise of stock options 159,700 160 15,437
Issuance of stock in
connection with reverse
acquisition 10,003 1,000 1,518,171 1,518 152,020
Forgiveness of officers
salaries 675,000
Note receivable-
subscription agreement
Net unrealized loss on
marketable security
Shareholder contribution 25,000
Net (loss)
------------------------------------------------------------------------------------
Balance, December 31, 1999 10,003 1,000 5,248,557 5,249 1,836,883
Conversion of accounts
payable to common stock 31,339 31 47,147
Net unrealized loss on
marketable security
Net (loss)
------------------------------------------------------------------------------------
Balance, March 31, 2000 10,003 $1,000 5,279,896 $5,280 $ 1,884,030
====== ====== ========= ====== ===========
</TABLE>
See notes to financial statements
FS6
<PAGE>
PEDIANET.com, INC
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
---------------------------- -----------------------------------------------
2000 1999 1999 1998 1997
--------- --------- ---------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) $ (83,782) $(181,129) $ (439,080) $ (389,017) $ (511,407)
Adjustments to reconcile net
loss to cash used in operating
activities:
Non-cash compensation for services - 89,925 91,725 5,000 18,220
Depreciation 853 891 3,562 3,410 5,684
Amortization 19,455 19,455 77,821 77,821 77,821
Changes in operating assets and
liabilities:
Decrease in accounts receivable 25,000 - - - -
Decrease in deferred financing costs 20,584
Decrease in advances - - - - 20,000
Increase (decrease) in other assets (4,800) - - - -
Increase in accounts
payable and accrued expenses (16,611) 54,841 237,669 286,904 272,452
Decrease in officers'
compensation payable - - - - (181,687)
--------- --------- ---------- ---------- ----------
Net Cash (Used in)
Operating Activities (39,301) (16,017) (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)
--------- --------- ---------- ---------- ----------
(Continued)
</TABLE>
See notes to financial statements
FS7
<PAGE>
PEDIANET.com, INC
STATEMENTS OF CASH FLOWS (Continued)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, December 31,
---------------------------- -----------------------------------------------
2000 1999 1999 1998 1997
--------- --------- ---------- --------- ---------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from financing activities:
Proceeds from sale of common stock - - 66,000 - 69,001
Proceeds from loans payable - 1,500 - 5,500 (16,764)
Payments on loans (3,500) (1,500) (1,500) - -
Proceeds from exercise of stock options - 15,000 15,597 - -
--------- -------- --------- ------ --------
Net Cash Provided by Financing
Activities (3,500) 15,000 80,097 5,500 52,237
--------- -------- --------- ------ --------
Net increase (decrease) in cash and
cash equivalents (42,801) (1,017) 151,794 (10,382) (349,876)
Cash and cash equivalents - beginning of year 151,687 (107) (107) 10,275 360,151
--------- -------- --------- ------ --------
Cash and cash equivalents - end of year $ 108,886 $ (1,124) $ 151,687 $ (107) $ 10,275
========= ======== ========= ====== ========
Supplementary information:
Non-cash investing activities
(acquisition):
Fair value of assets acquired-
net of cash acquired $ 982,335
Liabilities assumed 927,797
---------
Assets acquired net of cash $ 54,538
=========
Conversion of accounts payable to
common stock $ 47,178
=========
Forgiveness of officers salaries $ 675,000
=========
</TABLE>
See notes to financial statements
FS8
<PAGE>
PEDIANET.com, INC.
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
PediaNet.com, Inc (the "Company") formerly Ultraphonics-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,
as a separate component of stockholders' deficiency.
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.
Revenue Recognition
Sponsorship revenues received by the Company are unrestricted educational
grants received from pharmaceutical companies for the production of
educational information in support of pediatric information services.
Website income is derived from advertisers.
FS9
<PAGE>
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 ("EPS") 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.
Basic loss 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 as the effect is
antidilutive.
Evaluation of Long-Lived Assets
Long-lived assets are assessed for recoverability on an ongoing basis. In
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. As of December 31, 1999
management concluded that no valuation allowance was required.
FS10
<PAGE>
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.
Unaudited Interim Financial Statements
The financial statements as of March 31, 2000 and for the three months ended
March 31, 2000 and 1999 include, in the opinion of management, all
adjustments consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial position and results of operations for
these periods. The results of the interim period ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the
entire year.
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 $623,100 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, collect on its
notes receivable of $850,000, realize acquisitions and realize revenues from
its website sufficient to cover its overhead.
The Company 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 Pediatric 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 services. In addition, the Company's
aim is to license and distribute the Devset software and upgrades to Devset
module. The Company expects to commence implementation of these services
sometime early in the third quarter of 2000. The Company also plans to
generate future revenues from digital space, pediatric internet digital TV,
pediatric national database subscriptions, instructional courses and online
conferences.
In addition to internal growth, the Company intends to expand through
acquisitions and new product development. While the Company 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.
There is no assurance that additional capital will be obtained, revenue
stream from its website will be commercially successful or that the Company
will be successful in its endeavors to acquire compatible companies.
FS11
<PAGE>
The Company currently does not have commitments for capital expenditures and
does not expect to purchase property or equipment over the next twelve
months that cannot be financed in the ordinary course of business. The
Company estimates that it will require $850,000 to support its planned
activities over the next twelve months.
The Company currently does not have adequate cash reserves to meet its
future cash requirements. These uncertainties raise substantial doubt about
the ability of the Company to continue as a going concern.
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. RECAPITALIZATION
On December 31, 1999 the Company merged with Ultraphonics-USA, Inc and
issued 10,003 shares of its preferred stock and 1,518,171 shares of its
common stock in exchange for the outstanding shares of Ultraphonics-USA,
Inc. In connection with the share exchange the Company acquired the assets
net of liabilities of Ultraphonics-USA, Inc with a net book value of
$154,538. For accounting purposes, the merger has been treated as a
recapitalization of PediaNet, Inc as the accounting acquirer. 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
==========
FS12
<PAGE>
4. MARKETABLE SECURITIES
Estimated Gross Gross
Fair Unrealized Unrealized
Cost Value Gains Losses
---- --------- ---------- ----------
March 31, 2000:
Marketable securities-
current:
20,000 shares of common
stock of Retail
Entertainment Group
Inc. @ 1.25 per share $ 50,000 $ 3,750 $ -0- $ 46,250
======== ======== ====== ========
December 31, 1999:
Marketable securities-
current:
20,000 shares of common
stock of Retail
Entertainment Group
Inc. @ 1.25 per share $ 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 a contribution to the
Company and is included in accounts receivable - shareholder on the
Company's balance sheet at December 31, 1999. An unrealized loss of $25,000
has been recorded for the year ended December 31, 1999.
5. NOTES RECEIVABLE/NOTES PAYABLE
As part of the recapitalization with Ultraphonics, the Company assumed the
subscription agreement in connection with a private placement of
Ultraphonic's common stock in December 1999. In connection with the $1
million financing under Rule 504 of Regulation D of the Securities Act of
1933, Ultraphonics offered (i) 900,000 shares of Ultraphonic common stock at
$.22 per share; (ii) $793,800 of Ultraphonic's one year, 10% convertible
promissory notes which are convertible into shares of common stock at $1.50
per share and (iii) 410,000 warrants at $.01 per warrant, each warrant
exercisable at $.01 per share. Ultraphonics received $100,000 in cash,
$50,000 in marketable securities and received a note receivable in the
amount of $850,000, bearing interest at 10%, due June 28, 2000.
The convertible note payable of $793,000 is 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 of the Company's common
stock at the option of the holder.
The note receivable and note payable are obligations of the same related
party. At December 31, 1999 the Company did not offset the note receivable
against the note payable as it is not the intention of the Company to offset
the two obligations at maturity. The Company has offset the note
receivable-subscription agreement of $850,000 against stockholder's equity
until the note has been paid.
FS13
<PAGE>
6. PROPERTY, FURNITURE AND EQUIPMENT
December 31,
March 31, ------------------------
2000 1999 1998
----------- -------- --------
(Unaudited)
Furniture and
equipment $ 18,945 $ 18,945 $ 18,945
Software (1) 389,107 389,107 389,107
-------- -------- --------
408,052 408,052 408,052
Less accumulated
depreciation 270,706 250,399 169,016
------- -------- --------
$137,346 $157,653 $239,036
======== ======== ========
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.
7. ACCRUED EXPENSES
Accrued expenses consist of the following:
December 31,
March 31, ------------------------
2000 1999 1998
----------- -------- --------
(Unaudited)
Accrued interest and
court costs $77,530 $ 76,572 $ -
Accrued expense-misc. - 958 1,367
Accrued compensation
expense (1) - - 450,000
Other accrued
expenses 22,000 15,000 -
------- -------- --------
$99,530 $ 92,530 $451,367
======= ======== ========
(1) This amount reflects the annual compensation expense for the officers
and directors of the Company. In 1999, the officers and directors
forgave compensation in the amount of $675,000 and the Company recorded
the forgiveness as a contribution to additional paid-in-capital.
FS14
<PAGE>
8. RELATED PARTY TRANSACTIONS
(a) Loans payable to related parties consists of:
December 31,
March 31, ------------------------
2000 1999 1998
----------- -------- --------
(Unaudited)
Due to Directors $ 1,500 $ 5,000 $ 6,500
Shareholder loans acquired
through merger (see Note 3
of Notes to Financial
Statements) 43,611 43,611 -
------- ------- -------
$45,111 $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, 1998
and 1997 has been credited to additional paid in capital.
9. STOCK BASED COMPENSATION
In 1999, the Company issued 59,550 shares of common stock for consulting
services rendered. The Company valued these shares at $1.50 per share and
recorded additional compensation expense of $89,325, which is included in
selling, general and administrative costs in the Statement of Operations.
10. INCOME TAXES
The Company has a net operating loss ("NOL") carryforward of approximately
$1,591,000 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" (SFAS 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.
FS15
<PAGE>
A reconciliation of taxes on income at the federal statutory rate to amounts
provided is as follows:
Three Months
Ended Year Ended
March 31, December 31,
----------------- ------------------
2000 1999 1999 1998
---- ---- ---- ----
Tax benefit computed (Unaudited)
at the Federal
statutory rate $(33,515) $(72,450) $(175,630) $(155,600)
Increase in taxes
resulting from:
Effect of unused
tax losses 33,515 72,450 175,630 155,600
-------- -------- --------- ---------
$ - $ - $ - $ -
======== ======== ========= =========
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:
<TABLE>
<CAPTION>
December 31,
March 31, ------------
2000 1999 1998
---- ---- ----
Temporary Tax Temporary Tax Temporary Tax
Difference Effect Difference Effect Difference Effect
---------- ------ ---------- ------ ---------- ------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Net operating
loss carry-
forward $ 1,675,044 $ 670,017 $ 1,591,000 $ 636,400 $ 1,152,200 $ 460,880
Valuation
allowance $(1,675,044) $(670,017) (1,591,000) (636,400) (1,152,200) (460,880)
----------- --------- ----------- --------- ----------- ---------
$ - $ - $ - $ - $ - $ -
=========== ========= =========== ========= =========== =========
</TABLE>
11. 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" (SFAS 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.
(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.
FS16
<PAGE>
(c) 410,000 warrants were sold by Ultraphonics prior to the acquisition for
$8,200 in connection with financing received by Ultraphonics and expire
December 31, 2000. The warrants are exercisable at $.01 which was below
market value at the date of the sale, which resulted in additional
interest expense of $86,100. The Company expensed $3,765 for the year
ended December 31, 1999 and deferred financing costs of $82,335 is
included in the Company's balance sheet at December 31, 1999. Financing
costs in the estimated amount of $82,335 will be expensed during the
year ended December 31, 2000.
(d) In January 2000, the Board of Directors authorized the issuance to the
officers and directors of the Company 590,000 options to purchase shares
of the Company's common stock at an exercise price of $1.50 (the fair
market value at the date of issuance).
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
Exercise Exercise Exercise
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 $ .10 $ .07
Options and Warrants
available for grant
at end of year 775,000 775,000 775,000
</TABLE>
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>
FS17
<PAGE>
12. COMMITMENTS AND CONTINGENCIES
(a) During 1997 the Company entered into an exclusive one-year renewable
contract with Exceptional Parent Magazine of Psy-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, 1999 and 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 signed a proposed agreement to acquire a newly formed
corporation on December 20, 1999. This agreement was subsequently
terminated on March 20, 2000.
FS18
<PAGE>
PART III
Item 1. Index to Exhibits
The Following list describes the exhibits filed as part of this Registration
Statement on Form 10-SB:
Exhibit Number Description of Document
2.1* Articles of Incorporation of Ultraphonics- USA, Inc. as
filed on April 27, 1989
2.2* Amendment to Articles of Incorporation as filed on December
31, 1999 (as incorporated in Articles of Merger)
2.3* Bylaws
4.1* Form of Warrant dated December 28, 1999
4.2* Note agreement dated December 28, 1999
6.1* License Agreement among Melvin Koplow, Starr Koplow and
PediaNet, Inc. dated July 1, 1996
8.1* Plan of Merger of PediaNet, Inc. a New York Corporation Into
Ultraphonics-USA, Inc.
16.1 Letter from Bernard Lipton, CPA dated June 7, 2000.
27.1 Financial Data Schedule
* Previously filed with Amendment No. 1 to Registration Statement on Form
10-SB/A (file No. 0-29951) on April 26, 2000.
Item 2. Description of Exhibits
The required exhibits are attached hereto, as noted in Item 1 above.
37
<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: 6/07/2000
---------------------
By: /s/Melvin D. Koplow
-----------------------
Dr. Melvin D. Koplow
Chief Executive Officer
