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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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10-KSB/A
AMENDMENT NO. 1
Dated May 3, 2000
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Calendar Year Ended December 31, 1999
Commission File Number: 1-13327
CENTURY INDUSTRIES, INC.
(Exact Name of Registrant as specified in its charter)
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District of Columbia 54-1666769
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
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2106 New Road
Linwood Commons, Suite C4
Linwood, NJ 08221
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(609) 601-2300
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Securities registered pursuant to Section 12 (b) of the Act:
Common Stock, par value $.001 per share.
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $.001 per share.
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Title of each class Name of each exchange on
which registered
Century Industries, Inc. NASDAQ Bulletin Board
Class A Common Voting
Indicate by check mark whether the registrant (1) has filed all report
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days.
(1) Yes _X_ No ___
(2) Yes _X_ No ___
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B, and no disclosure will be contained in any
amendment to this Form 10-KSB. _X_
Issuer's consolidated revenues for 1999 were $1,384,571.00.
The aggregate market value of the 12,586,131 common voting shares of
common voting stock based at the average of the bid/asked of $0.40 was
$5,034,452.40.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Century Industries, Inc., (hereinafter referred to as "CNTI"),
acquired all the assets of Worldwide Network, Inc., (hereinafter referred to as
"WNI"), a private corporation domiciled in New Jersey, on December 30, 1999.
Pursuant to the contract for Sale and Purchase of Assets, WNI
Shareholders approved the acquisition by CNTI on November 15, 1999 and CNTI
Shareholders affirmed the acquisition of WNI on December 30, 1999 at their
annual meeting.
At the annual meeting of CNTI on December 30, 1999, Wade Cordell was
elected Director/Chairman of the Board, Carl J. Valore was elected
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Director/CEO, Ronald Howell was elected Director/President and Thomas L. Murphy
was elected Director/Chief Financial Officer. Stefanou & Co., LLP, CPA's, were
appointed independent auditors for the year ending December 31, 1999. Ronald
Howell subsequently resigned and Carl J. Valore assumed duties of
President/CEO/Director.
Under the terms of the Sale & Purchase of Assets Agreement and with
Shareholder approval, the common shares of CNTI were created as one class with
approximately 85 million shares to be distributed to WNI Shareholders and 14
million to the existing CNTI Shareholders and authorized shares in CNTI were
increased to 200 million. Shareholders in CNTI also approved the sale of CNTI's
assets leaving CNTI on December 30, 1999 with only the assets in WNI and WNI's
operations for 1999.
WNI acquired Worldwide Universal Health Network, Inc., (hereinafter
referred to as "WUHN"), a private New Jersey Corporation on March 1, 1999 under
an Asset Purchase Agreement. WNI was incorporated in New Jersey on February 22,
1999. Prior to this acquisition, WUHN had acquired Beta Source, a private South
Carolina Corporation on November 6, 1998.
The nature of WNI's business is the distribution of nutritional
products. All of the Company's revenues in 1999 came almost entirely from the
sale of Beta Glucan products.
During 1999, WNI converted Beta Source's Marketing Representatives
from a binary compensation plan to a uni-level and generational compensation
plan. Management perceived the need to bring commissions within a range that
would yield profits from gross revenues. The binary system would not allow the
Company to run profitably. The re-engineering of the Compensation Plan caused
anticipated loss of some Marketing Representatives.
During 1999, management discerned that the margins on WNI's principal
products: (1) Beta Gold and (2) Beta Glucan 100 were not satisfactory for
purposes of Network Marketing. Therefore, the Company took steps to investigate
replacing these products with products that would have better margins.
During 1999, management attempted to implement a concept call "Arena
Network Marketing". This concept required capital that was unavailable during
1999. However, the concept of acquiring and developing Network Marketing
Companies emphasizing Internet and Intranet components and providing the
Network Marketing Industry with an infrastructure, i.e. "Arena", remains
proprietary to CNTI. The company has long term plans to implement this concept.
During 1999, WNI lost the rights to use the Nautilus license
controlled by Healthrite, Inc., and contracted to WNI, when the Nautilus name
was acquired by Direct Focus, Inc., and Direct Focus canceled Healthrite's
license agreement. This cancellation does adversely impact WNI's ability to
sell the Nautilus product line. WUHN had originally planned to launch the
Company built around the Nautilus product
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line and name. When Beta Source was acquired, it was perceived the Company
would have two principal product lines: (1) Beta Glucan; and (2) Nautilus.
Uncertainties over the renewal of the Nautilus license as well as contractual
disagreements with Healthrite adversely impacted sales of the Nautilus product.
This is why almost all of the Company's revenues came from the sale of the Beta
Glucan product line.
During 1999, the Company attempted to create national distribution
through a system of coordinators in a hierarchy that went from National, Area,
Region, District and Zone. This system has intrinsic proprietary and management
value. However, the uncertainties with respect to the Nautilus license created
negative impacts on distributing the product and adversely impacted the field
management system of coordinators.
Worldwide operations are subject to various federal and state laws and
regulations. The labeling, packaging, and marketing of the Company's products
are regulated by one or more governmental agencies, including the FDA, FTC, the
Consumer Products Safety Commission and various agencies of the Shared States
and the states where the Company's products are manufactured, shipped and sold.
The Company does not conduct any manufacturing operations.
The Company is subject to provisions of the Federal Food, Drug and
Cosmetic Act (Act) which is administered by the FDA. Although vitamins and
nutritional supplements are generally regulated as "foods" and "foods for
special dietary use" under the Act and do not need approval by the FDA, the FDA
requires that such products be produced according to "Good Manufacturing
Practices" and other guidelines set forth in the Act.
Products currently distributed by Worldwide are regulated pursuant to
the Act and the distribution of these products can be subject to continued
comprehensive reviews by the FDA, The Federal Trade Commission or any other
Federal or State Governmental Agency having jurisdiction over these matters.
Numerous firms distribute personal care, health products and vitamins
on a wholesale and retail basis. Many of such firms have been in business for a
significantly longer period of time than Worldwide and have financial,
marketing, personnel and other resources substantially greater than those of
Worldwide. Due to the relatively easy access to the Network Marketing industry,
additional firms may, in the future, enter the market and compete with the
Company.
During 1999, WNI favorably resolved a patent litigation that had been
instituted by Carmel Research, Inc., against Beta Source and obtained certain
legal advantages with respect to marketing Beta Glucan.
During 1999, the Company was unable to make payments to certain
Bondholders. Some of these Bondholders converted to common stock and
negotiations for payment of the bonds were ongoing at the end of December 31,
1999.
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During 1999, WNI attempted to sell 1,000,000 shares of common stock at
$1.00 per share pursuant to a 504 Regulation D Offering to Marketing
Representatives in order to raise capital. However, sales were minimal and
changes in the 504 Regulation made sales difficult. Accordingly, the Company
relied on contractual arrangements with other entities (some of which were
related parties) to solve cash flow problems.
Part of the problem was created by contractual disagreements with
Healthrite, Inc., as the warehousing and distribution of the Nautilus products
as well as representations as to the continuity of the license agreement and
shipments of dated product.
WNI conducted its operations during 1999 by outsourcing all of its
personnel needs. All of WNI's Officers and Executives work under consulting
contracts. WNI's sales force are Independent Contractors.
ITEM 2. DESCRIPTION OF PROPERTY
WNI leased warehouse space in Bridgeton, New Jersey and Hamilton
Township, New Jersey. Executive offices were leased at 2106 New Road, Suite C4,
Linwood, New Jersey 08221 and 111 Tarrar Springs Road, Suite B, Lexington,
South Carolina 29072.
ITEM 3. LEGAL PROCEEDINGS
No legal proceedings were filed in 1999, except for a dispute with a
vendor, Jenkon, Inc. This dispute is now in mediation and arbitration and will
not have a material effect on the Company's business.
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
WNI and CNTI mailed its information statement to all Shareholders of
recording advising them of the shareholders meeting of November 15, 1999 and
December 31, 1999 respectively.
At the annual meeting of CNTI on December 30, 1999, Wade Cordell was
elected Director/Chairman of the Board, Carl J. Valore was elected
Director/CEO, Ronald Howell was elected Director/President and Thomas L. Murphy
was elected Director/Chief Financial Officer. Stefanou & Co., LLP, CPA's, were
appointed independent auditors for the year ending December 31, 1999. Ronald
Howell subsequently resigned as Director/President and Carl J. Valore was
elected President/CEO/Director.
The Shareholders unanimously affirmed the acquisition of WNI on
December 30, 1999.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Class A common voting stock, par value $.001, trades on the NASDAQ
OTC:BB under the symbol "CNTI".
The range of bid/asked information for the Company's voting shares for
each quarter of the last year (1999), as reported by NASDAQ OTC:BB are as
follows:
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First Quarter Second Quarter Third Quarter Fourth Quarter
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Low High Low High Low High Low High
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<S> <C> <C> <C> <C> <C> <C> <C>
25 cents 50 cents 25 cents 50 cents 25 cents 50 cents 25 cents 50 cents
</TABLE>
The range for the year ending December 31, 1998, is on file with the
companies 1998 10-KSB.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
The Plan of Operation for the year 2000 is as follows:
(I) The Company must raise capital to sustain its operations for
the next 12 months.
On December 31, 1999, the newly elected Board of Directors of CNTI
created a Plan of Reorganization. The Plan creates three divisions within the
Company: (a) Nutritional Division; (b) Membership Marketing Division; and (c)
Web Technology Division.
During 1999, all of CNTI's revenues came from steel products and
insurance products. As of December 30, 1999, none of those revenues will accrue
to CNTI. CNTI's entire source of revenues will be from WNI's Network Marketing
unit and the three divisions under the Plan of Reorganization.
In order to implement the Plan, it will be necessary for CNTI to raise
at least $500,000 in capital during the year 2000 and preferably $5 million to
fully implement the Plan.
The Plan is discussed at the conclusion of Managements Discussion and
Analysis of Financial Conditions and Results of Operations.
The Company increased the authorized common shares of CNTI to 200
million shares. The Company is in the process of changing its domicile from the
District of
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Columbia to Nevada. The Company will declare a record date for a reverse split
of the issued shares on or about May 12, 2000 or shortly thereafter.
Management's judgment is that the contractual negotiations into the
year 2000 and the revenue stream that will be generated will justify raising a
minimum of $500,000 and as much as $5 million in capital during the year 2000.
(II) Research and development is taking place within the Company
with respect to producing Beta Glucan and Aloe products for the Network
Marketing Unit of the Nutritional Division. The Company has also developed
twelve (12) functional ready-to-drink products.
(III) The Company does not anticipate or have any contracts for the
sale or purchase of plant and significant equipment.
(IV) The Company does not anticipate any change in the number of
employees. In conformity with the Company's commitment to outsourcing, it is
anticipated the number of outsourced employees during the year 2000 would be
between 8 and 12.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CNTI's consolidated assets have decreased from $1,057,122.00 in 1998
to $931,861.00 in 1999. This is based on the sale of assets in CNTI during 1999
and the purchase of WNI's assets on December 30, 1999.
The resulting figure of income (loss) is ($!,324,029.00) for 1999 as
contrasted to ($339,862.00) for 1998.
(I) The Registrant's judgment is that there are trends, events or
uncertainties that could have a material impact on the Registrant's short-term
or long-term liquidity. The Registrant has contractual negotiations in place
which could have a strongly positive effect on both short-term and long-term
liquidity. This is based on sales to the mass market in the Nutritional
Division and revenues from USA One and International Retail Marketing
Associates, (hereinafter referred to as "IRMA"), in the Membership Marketing
Division (discussed below).
(II) The Registrant requires external sources of capital or
borrowings in the year 2000. The Registrant requires a minimum of $500,000 and
up to $5 million to fully implement the Plan of Reorganization.
(III) The Registrant does not have any material commitments for
capital expenditures as of December 31, 1999.
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(IV) The Registrant's judgment is that trends, events and
uncertainties will have a positive impact on the Registrant's net sales or
revenues or income form continuing operations. Under the Plan of
Reorganization, the Registrant expects a significant increase in sales,
revenues and income.
(V) The Registrant has had a significant change in income or loss
as a result of the purchase of WNI's assets on December 30, 1999.
(VI) The causes for material changes from period to period are
based on the Asset Purchase of WNI on December 30, 1999. WNI had only one (1)
year of operation and there is no period that exists for comparisons in 1998.
(VII) There are no seasonal aspects that have an effect on the
Registrants financial condition and operations.
PLAN OF REORGANIZATION
On December 31, 1999, CNTI's Board of Directors created a Plan of
Reorganization to build upon the contractual relationships and negotiations
that WNI created during the year 1999.
NUTRITIONAL DIVISION
WNI's Network Marketing Business will become a unit under the
Nutritional Division. This business unit will be lead by Brad Cordell, CNTI's
Chief Operations Officer. Brad Cordell brings extensive corporate experience to
operations with respect to warehousing, personnel and Network Marketing.
Operations of this business unit will be conducted out of Columbia,
South Carolina in leased office space.
The sales of Beta Glucan products will be expanded to include Aloe
products. The products will be manufactured, warehoused and distributed from
Aloe Commodities, Inc., based in Dallas, Texas. At present, CNTI has an option
to purchase 12.5% of the common stock of Aloe Commodities, Inc.
It is anticipated that the Compensation Plan will be revised at the
time the new product line is launched.
In addition, the Network Marketing unit will implement an Internet and
print campaign built around a proprietary concept called "Downline Services".
If CNTI raises sufficient capital or has internal liquidity, it will
continue the "Arena Network Marketing" program. This program will enable CNTI
to acquire other Network Marketing companies and provide them with an improved
infrastructure, better products and a more rewarding Compensation Plan.
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The Company will re-implement the Coordinator system or a National,
Area, Regional, District and Zone configuration based on the success of certain
Zone Coordinators who fit the marketing profile.
Mass marketing of the Nutritional Division will be lead by Reed
Vordenberg, who will serve as President of that Division. Mr. Vordenberg is the
Founder and President of Vordenberg Marketing, Inc., (hereinafter referred to
as "VMI"), a private label sales and marketing consulting company. VMI has
provided marketing, consulting, sourcing, advertising, package design and
quality assurance assistance to companies such as Heinz, Starkist, Ore-Ida
Potatoes, Jergens, Marketing Corporation of American and may retailer brands.
VMI has developed complete private label programs for several major retailers
covering over 2,500 items and ten (10) different labels.
Mr. Vordenberg also serves as Chairman of Quantum Nutritionals, LLC,
that has a Joint Venture Agreement with CNTI to research and develop
nutritional products and create distribution for CNTI.
At present, CNTI, through its Nutritional Division, has contractual
negotiations and consummated sales that will positively effect revenues in the
year 2000.
Internet marketing of nutritional products by the Nutritional Division
will take place in the latter part of the year 2000.
MEMBERSHIP MARKETING DIVISION
Wade Cordell, Chairman of the Board of CNTI, heads up the Membership
Marketing Division. Mr. Cordell has distinguished himself as an entrepreneur
and motivator. Mr. Cordell has held corporate positions and also has a strong
background in insurance and benefits programs.
During 1999, WNI established relationships with USA One and IRMA to
distribute USA One's membership benefits products. USA One has sixty-seven
thousand (67,000) members and five hundred thousand (500,000) providers in its
network. Under the Joint Venture Agreement with USA One and IRMA, Century
receives six percent (6%) of the gross revenues of USA One and IRMA or fifteen
percent (15%) of the net revenues, whichever sum is greater.
Century is most excited about the initial work that has been done to
position itself to become the national lender in the marketing of membership
benefit products and services in the United States. This multi-faceted
marketplace has the opportunity to become enormously profitable and produce
immediate residual income through new contracts signed within the last few
months and recent alliances with related marketing companies and/or
organizations. The combined penetration of lives associated with these
companies and/or organizations touches millions of households throughout the
United States. Membership Benefit Plans are offered to individuals and their
families through the organizations they belong to, products they purchase, or
the companies that they work for.
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Simply defined, membership marketing is selling memberships into a
not-for-profit association that provides each member with a package of family
benefits. By becoming a member, individuals can use "one" membership card to
access a whole array of diverse benefits. The benefits card includes ancillary
and primary health products and services, financial and communication services.
With the financial problems arising from HMO models, family benefit
packages that do not discriminate for pre-existing conditions, age are
available without waiting periods.
These family benefit packages can include comprehensive dental plan,
prescription, vision, hearing and alternative medicine benefits like
chiropractic, acupuncture, massage therapy, and nutritional products.
Additional medical programs provide air ambulance and emergency medical travel
assist, 24-hour nurse or doctor hotline, a huge national network of doctors and
hospitals that provide dramatic savings on all services and procedures. Members
can save on long-term care facilities and services such as nursing homes,
physical therapy, home health care, and assisted living centers. Membership
includes an auto club, pet club, and legal club. The membership card can even
be used to insure savings on a multitude of travel and entertaining programs.
Plus, members are given group insurance products, such as accident coverage and
accidental death and dismemberment. Worksite Marketing Division works in
conjunction with insurance companies by providing supplemental products like
health, cancer, heart, life, retirement programs and group disability all
offered in membership benefit packages.
In summary, the benefits card that individuals and their families can
obtain through Century's Membership Marketing Divisions, is the most unique and
comprehensive benefits program of its kind in America. The diversity of the
benefit programs offered and the affordability of a membership card create a
tremendous value for consumers. This value and diversity opens unlimited
avenues of marketing possibilities.
ORGANIZATIONAL ANALYSIS
Century has positioned itself to absorb the anticipated massive
national growth in the membership marketing industry. The membership marketing
divisions's three-year goal is to establish itself as the premier national
leader in this multibillion-dollar industry. To accomplish this goal, Century's
Divisional Companies must be structured to handle the growth and have a clear
direction in its marketing strategy. Alliances with other existing and
successful national marketing groups must be made.
Century is confident that the foundation has already been built and
implemented to accomplish this monumental task. Leadership of each company is
in place. Organizational structure has prepared each company for expected
growth while marketing efforts have already positioned the divisions to see
phenomenal national activity. Contracts are in place and ready to be
implemented. New marketing offices
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are being opened across the country with management and sales training
currently taking place. Contractual alliances are under negotiation with
several national sales and marketing organizations that promise to produce
immediate activity. All this leaves Century confident that it will see a burst
of sales activity beginning in the latter half of this year dramatically
expanding to reach Century's three-year projections.
ORGANIZATION STRUCTURE AND SUMMARY
UNITED SAVINGS ALLIANCE, INC., (USA), located in Houston, is the not-for-profit
member association that has leveraged its large national membership numbers to
solidify its contracts with provider networks and enhance its membership
benefits to be the best of its kind in the nation.
USAONE FINANCIAL GROUP, INC., (UFGI), located in Houston, Texas, has
structured itself to be the premier administration and Service Company for
member services in the country. USAone services and administrates for all of
United Savings Alliance's existing and new members, marketing organizations and
agents. USAone operates and maintains for USA members and representatives,
24-hour member access to utilization and provider information. This service is
accomplished by using state-of-the-art, voice prompted, IVR technology and
self-replicating, E-Commerce Internet sites. USAone also administrators all
accounting and monies for members, sales organizations, and sales
representatives. USAone is continually expanding its data processing and
informational capabilities with a staff of in-house programmers and outside
contractual consultants. USAone operates, during normal business hours, a
highly trained member "Help Desk" that is staffed and capable of handling
thousands of member phone calls daily. In addition, USAone maintains its own
fulfillment capabilities as well as full design and graphics department.
INTERNATIONAL RETAIL MARKETING ASSOCIATES, INC., (IRMA), home office is
located in Columbia, South Carolina, and is responsible for the marketing of
all non-insurance member benefits programs. IRMA markets membership benefits
through two divisions.
WHOLESALE DIVISION
The Wholesale Division markets primarily to insurance companies, large
national associations, marketing organizations, financial institutions or
church groups. Currently, IRMA has contracted with two national Church Groups,
Heart of the Matter and Partners for Economic Development. Both groups plan to
introduce in the Summer of 2000, a customized membership benefit program. They
represent a combined national church membership of over 13 million households.
Heart of the Matter has secured financing for the leasing of 1,000,000
computers to be offered to the children of church members, including low-income
families, and to be financed in one package with USA's most comprehensive
member benefit program and three years of pre-paid Filtered Internet Service.
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Partners for Economic Development has completed the design and
printing of all brochures and enrollment materials with plans to introduce
their unique package of benefits and services to 22,000 church pastors and
leaders at their next national convention.
THE DIRECT RETAIL MARKETING DIVISION
The Direct Retail Marketing Division of IRMA is active in securing
marketing groups all over the country to market its new PlanUSA benefits
package. Most significantly, IRMA is currently negotiating with a fortune 100
Insurance Company to train and service 55,000 of its 165,000 agents as a test
to measure the viability of membership benefit marketing in their system. This
company has immense financial and support resources to compliment an
unprecedented sales tract-record in the insurance industry. Century leadership
is convinced that this insurance company's commitment to market the USAone
membership benefits program would, not only bring huge financial rewards to all
Century divisions, but would also guarantee national recognition to the USAone
benefits program. This infusion of resources would clearly establish USAone as
the premier provider of ancillary benefits and services in the nation.
Negotiations expect to be completed by late Summer of 2000 and delivery of
products, training and marketing materials would soon follow.
Several other large sales organizations are either in negotiations or
have reached agreements with IRMA to form national marketing alliances. These
alliances bring mutual financial rewards a synergy of services and products. On
such agreement of note is the alliance with ASAP, an Internet provider,
services and marketing group aligned with AT&T. This unique organization
provides customized private label, filtered ISP sites for school districts,
colleges, associations, church groups, financial organizations, government
institutions and large employer groups. Agreements have been put into place to
combine the marketing efforts of both sales organizations to agent/agency that
represents the ONEcard concept. This system of marketing to employer groups
produces 10 times the number of commissionable dollars for the representative
and most importantly, gives the agent a real possibility to sell every employee
in the company. This is dramatically different from the Cafeteria marketing
approach, which produces sales with only one third of every employee seen.
WEB TECHNOLOGY DIVISION
Beverly L. Valore serves as Chief Information Officer for CNTI. Mrs.
Valore has a Masters of Science Degree from Drexel University and a J.D. Degree
from Rutgers Law School and is a member of the New Jersey Bar and admitted to
practice law in the United States District Court. She also holds a
Certification from the State of New Jersey to teach comprehensive science in
the school systems. Mrs. Valore has extensive experience in computer software
applications, especially in the law office setting. She has served on the Board
of Public Companies and the American Trial Lawyers Association. She is
President of Cybercourt Systems, Inc., (hereinafter referred to as "CSI"), a
New Jersey Corporation, which has a proprietary interest in Cybercourt(TM).
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CNTI has entered into a joint venture agreement with Cybercourt(TM)
Systems, Inc. (hereinafter referred to as "CSI"), to develop the
Cybercourt(TM).
Cybercourt(TM) is a market place in cyberspace that provides a Virtual
Private Community, (Private Virtual Net), for professionals and small/medium
sized business.
CSI provides a core of solution developers, webmasters, data-base
managers, data entry clerks, maintenance, hardware and software that services
the Private Virtual Community, (hereinafter referred to as "PVC"), and also has
the capacity to be an application service provider. An Intranet and
collaborating Extranet creates Providers, Vendors and Subscribers with a secure
private environment for information and commerce. Subscribers, such a patients,
clients or customers using Web Technology can enter the PVC for a nominal
annual or monthly fee. Providers such as doctors, lawyers or businesses access
information or e-commerce activities from the Intranet as well as have access
to data management services. This is a negotiated annual or monthly fee.
Vendors collaborate on the Extranet and provide revenues to Century, which acts
as a reseller. In addition, advertising revenues are generated from the
Extranet and Intranet.
Century is uniquely positioned to implement the Cybercourt(TM) because
of its affiliation with USA One and the 500,000 Provider base.
In addition, CNTI has entered into a letter of intent with a Dallas
based company to provide distribution of the creation of Virtual Internet
Service Provider portals for affinity groups.
The Web Technology Division is also developing the infrastructure and
information matrix for Preferred Attorney Network, ("PAN"), which will be
launched in the latter part of the year 2000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1999 AND 1998
FORMING A PART OF ANNUAL REPORT
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934
CENTURY INDUSTRIES, INC.
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CENTURY INDUSTRIES, INC.
INDEX TO FINANCIAL STATEMENTS
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<TABLE>
<CAPTION>
PAGE
<S> <C>
Report of Independent Certified Public Accountants F-3
Balance Sheet at December 31, 1999 and 1998 F-4
Statements of Losses for the year ended December 31, 1999 and the period March
1, 1998 (date of inception) through December 31, 1998 F-6
Statements of Deficiency in Stockholders' Equity for the year ended December 31,
1999 and the period March 1, 1998 (date of inception) through December 31, 1998 F-7
Statements of Cash Flows for the year ended December 31, 1999 and the period
March 1, 1998 (date of inception) through December 31, 1998 F-8
Notes to Financial Statements F-9 to F-18
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STEFANOU & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS
1360 Beverly Road
Suite 305
McLean, VA 22101-3621
703-448-9200
703-448-3515 (fax)
Philadelphia, PA
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Century Industries, Inc.
Linwood, New Jersey
We have audited the accompanying balance sheets of Century Industries,
Inc. of December 31, 1999 and 1998 and the related statements of losses,
stockholders' equity (deficit), and cash flows for the year ended December
31,1999 and the period March 1, 1998 (date of inception) through December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and the 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 audits provide 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 Century Industries,
Inc. as of December 31, 1999 and 1998, the results of its operations and its
cash flows for the year ended December 31, 1999 and the period March 1, 1998
(date of inception) through December 31, 1998 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note N, the
Company is experiencing difficulty in generating sufficient cash flow to meet
it obligations and sustain its operations, which raises substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note N. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ STEFANOU & COMPANY, LLP
-----------------------
Stefanou & Company, LLP
Certified Public Accountants
McLean, Virginia
April 28, 2000
F-3
<PAGE> 17
CENTURY INDUSTRIES, INC.
BALANCE SHEET
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 9,754 $ 99,447
Inventory, at cost 409,975 208,129
-------- ----------
Total current assets 419,729 307,576
PROPERTY AND EQUIPMENT-AT COST:
Computer equipment and software 107,092 107,092
Furniture, equipment and leasehold improvements 2,597 2,597
-------- ----------
109,689 109,689
Less accumulated depreciation 29,578 10,831
-------- ----------
80,111 98,858
OTHER ASSETS:
Customer list, less accumulated amortization of $223,979 in
1999 and $5,312 in 1998 (Note D) 432,021 650,688
-------- ----------
$931,861 $1,057,122
-------- ==========
</TABLE>
See accompanying notes to consolidated financial statements
F-4
<PAGE> 18
CENTURY INDUSTRIES, INC.
BALANCE SHEET
DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
LIABILITIES
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 777,388 $ 215,500
Bonds payable (Note C) 637,500 282,500
Current maturities of capital lease obligations (Note I) 20,352 20,352
Advances from stockholders 302,923 -
------------- ------------
Total current liabilities 1,738,163 518,352
CAPITAL LEASE OBLIGATIONS, less current portion 41,104 65,827
COMMITMENTS AND CONTINGENCIES (Note I) - -
STOCKHOLDERS' EQUITY (DEFICIT)(NOTE H)
Preferred stock, $.001 par value, 1,000,000 shares
authorized, no shares issued and outstanding - -
Common stock, $.001 par value, 200,000,000
shares
authorized; 97,586,131 issued 97,586 97,586
Additional paid in capital 747,350 715,219
Accumulated deficit (1,692,342) (339,862)
------------- ------------
Stockholders' equity (deficit) ( 847,406) 472,943
------------- ------------
$ 931,861 $ 1,057,122
============= ============
</TABLE>
See accompanying notes to consolidated financial statements
F-5
<PAGE> 19
CENTURY INDUSTRIES, INC.
STATEMENTS OF LOSSES
YEAR ENDED DECEMBER 31, 1999 AND THE PERIOD MARCH 1, 1998 (DATE OF INCEPTION)
THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Revenues:
Sales $ 1,384,571 $ 143,220
Cost of sales: 1,021,350 68,686
----------- -----------
Gross profit 363,221 74,534
Operating expenses:
Selling, general and administrative 1,408,603 366,848
Depreciation and amortization 237,414 31,405
Interest 41,232 16,143
----------- -----------
Operating expenses 1,687,250 414,396
----------- -----------
Loss from operations (1,324,029) (339,862)
----------- -----------
Net loss before income taxes (1,324,029) (339,862)
Income (taxes) benefit - -
----------- -----------
Net loss $ ( 1,324,029) $ ( 339,862)
============== ------------
Loss per share , basic and diluted $ ( .01) $ ( .00)
Weighted average common shares outstanding
(Note J) 97,586,131 97,586,131
</TABLE>
See accompanying notes to consolidated financial statements
F-6
<PAGE> 20
CENTURY INDUSTRIES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEAR ENDED DECEMBER 31, 1999 AND THE PERIOD MARCH 1, 1998
(DATE OF INCEPTION) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
Common
Stock Stock Additional Accumulated
Shares Amount Paid-in-Capital Deficit Total
------ ------ --------------- -------------- -----
<S> <C> <C> <C> <C> <C>
Balance at inception, as
restated for
recapitalization 85,000,000 $ 85,000 $ - $ - $ 85,000
Shares issued in exchange
for cash, net of costs - - 52,500 - 52,500
Shares issued in exchange
for debt - - 62,500 - 62,500
Shares issued in exchange
services - - 9,460 - 9,460
Shares issued in exchange
for assets - - 590,759 - 590,759
Shares retained by former
Century shareholders 12,586,131 12,586 - - 12,586
Net loss - - - (339,862) (339,862)
-------------- ------------- -------------- -------------- -----------------
Balance at December 31, 1998 85,000,000 97,586 715,219 (339,862) 472,943
Shares issued in exchange
for cash, net of costs - - 19,650 - 19,650
Shares issued in exchange
for debt - - 12,481 - 12,481
- - -
Net loss - - - (1,352,480), (1,352,480)
-------------- ------------- -------------- -------------- -----------------
Balance at December 31, 1999 97,586,131 $ 97,586 $ 747,350 $ (1,692,342) $ (847,406)
============== ============= ============== ============== =================
</TABLE>
See accompanying notes to consolidated financial statements
F-7
<PAGE> 21
CENTURY INDUSTRIES, INC.
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1999 AND THE PERIOD MARCH 1, 1998
(DATED OF INCEPTION) THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
Cash flows from operating activities
Net loss for the year $(1,352,480) $ (339,862)
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 237,414 16,143
(Increase) decrease in:
Inventory (201,843) (208,132)
Increase (decrease) in:
Accounts payable and accrued expenses, net 561,888 215,500
------------ -----------
Net cash (used) provided by operating activities (755,021) (316,351)
Cash flows used in investing activities:
Capital expenditures (15,946) (759,934)
------------ -----------
Net cash used in investing activities (15,946) (759,934)
------------ -----------
Cash flows used in financing activities:
Repayment of capital leases (24,724) -
Issuance of stock in connection with asset purchase and other , net - 754,552
Advances from shareholders and other 331,348 -
Proceeds from capital leases - 86,180
Proceeds from bonds, net 355,000 282,500
Proceeds form issuance of common stock 19,650 52,500
------------ -----------
Net cash, provided (used) in financing activities 681,274 1,175,732
------------ -----------
Net (decrease) increase in cash and equivalents (89,693) 99,447
Cash and equivalents at beginning of year 99,447 -
------------
Cash and equivalents at end of year $ 9,754 $ 99,447
============ ===========
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for interest $ 4,975 4, 975
Cash paid during the year for taxes $ - $ -
Non-cash financing activities
Common stock issued for services $ - $ 9,460
Issuance of common stock in exchanged for debt 12,481 62,500
</TABLE>
See accompanying notes to consolidated financial statements
F-8
<PAGE> 22
CENTURY INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE A-SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies of Century Industries, Inc
(hereinafter "Century" or the 'Company") is presented to assist in understanding
the accompanying financial statements. The financial statements and notes are
representations of the management of Century which is responsible for their
integrity and objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements.
Business and Basis of Presentation and Sale of Company's Assets
Century Industries, Inc. (the " Company" or "Century") was incorporated in the
District of Columbia in 1993 and until December 30, 1999, was the parent
holding company for its subsidiaries, Century Steel Products, Inc., Scibal
Associates, Inc., U.S. Insurance Brokers, Inc., and USIB Holdings Limited
Partnership.
Effective December 30, 1999, Century effected a business combination with
Worldwide Network, Inc. (" Worldwide")., a privately-held corporation.
Worldwide markets and distributes nutritional products through marketing
representatives. Under the terms of the agreement, Century, which had 3,782,680
shares of Class A and 5,166,998 shares of Class B common shares outstanding,
issued 85,000,000 unregistered shares of its common stock in exchange for all
of the outstanding and common stock of Worldwide. As a result of the
transaction, the shareholders of Worldwide received stock representing
approximately 90.5 % of Century, thereby effecting a change in control of
Century.
Concurrent with the business combination on December 30, 1999, the Century's
shareholders voted to vend s all of its assets to Globespan Technologies PLC
for 1,800,000 shares of Globespan Technologies PLC. The shares will be
distributed at 1p (Irish) to the Company's shareholders.
Such a business combination has been accounted for as a reverse acquisition. In
accordance with APB Opinion 16, Worldwide is considered the acquiring entity .
As a result, historical financial information for periods prior to the date of
the transaction is that of Worldwide . However, the capital structure for all
periods presented has been restated to reflect the capital structure of Century
as the legal acquirer. Goodwill was not recorded in the merger since the
transaction was the equivalent to the issuance of stock by Worldwide for the
net monetary assets of Century after sale of its assets.
Revenue Recognition
The Company follows a policy of recognizing sales upon the shipment of its
nutritional products net of applicable provisions for returns and allowances.
F-9
<PAGE> 23
CENTURY INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998 AND 1998
NOTE A-SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Inventories
Inventories are stated at the lower of cost or market determined by the
first-in, first-out (FIFO) method. Inventories consist of nutritional products
available for resale to independent marketing representatives and distributors.
Inventories at December 31, 1999 and 1998 are comprised of the following:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Beta nutritional products $ 409,975 $ 208,132
</TABLE>
Advertising
The Company follows the policy of charging the costs of advertising to expenses
incurred. For the years ended December 31, 1999 and 1998, advertising costs
were $ 17,570 and $ 15,551, respectively.
Property and Equipment
For financial statement purposes, property and equipment are depreciated using
the straight-line method over their estimated useful lives (five years for
furniture, fixtures and equipment and software). The straight-line method of
depreciation is also used for tax purposes.
Intangible Assets
Intangible assets consist of customer lists, which are amortized using the
straight line method over a three year period, which management considers to be
the useful life of the asset. Organization costs incurred after December 31,
1999 will be expensed as incurred in accordance with AICPA Statement of
Position 98-5.
Income Taxes
Income taxes are provided based on the liability method for financial reporting
purposes in accordance with the provisions of Statements of Financial Standards
No. 109, "Accounting for Income Taxes". Under this method deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to be removed or settled. The effect on deferred tax assets and liabilities of
a change in tax rates is recognized in the consolidated statements of
operations in the period that includes the enactment date.
F-10
<PAGE> 24
CENTURY INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE A-SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Cash Equivalents
For purposes of the Statements of Cash Flows, the Company considers all highly
liquid debt instruments purchased with a maturity date of three months or less
to be cash equivalents.
Impairment of Long-Lived Assets
The Company has adopted Statement of Financial Accounting Standards No. 121
(SFAS 121). The Statement requires that long-lived assets and certain
identifiable intangibles held and used by the Company be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. SFAS No. 121 also requires
assets to be disposed of be reported at the lower of the carrying amount or the
fair value less costs to sell.
Use of Estimates
THE PREPARATION OF FINANCIAL STATEMENTS IN CONFORMITY WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES REQUIRES MANAGEMENT TO MAKE ESTIMATES AND ASSUMPTIONS
THAT AFFECT CERTAIN REPORTED AMOUNTS AND DISCLOSURES. ACCORDINGLY ACTUAL
RESULTS COULD DIFFER FROM THOSE ESTIMATES.
Concentrations of Credit Risk
Financial instruments and related items which potentially subject the Company
to concentrations of credit risk consist primarily of cash, cash equivalents
and trade receivables. The Company places its cash and temporary cash
investments with credit quality institutions. At times, such investments may be
in excess of the FDIC insurance limit. The Company's customers are concentrated
primarily in the southeastern area of the United States and it periodically
reviews its trade receivables in determining its allowance for doubtful
accounts. The Company had no accounts receivable at December 31, 1999.
STOCK BASED COMPENSATION
The Company accounts for stock transactions in accordance with APB Opinion 25,
"Accounting for Stock Issued to Employees." In accordance with statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based
Compensation," the Company has adopted the proforma disclosure requirements.
F-11
<PAGE> 25
CENTURY INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE A-SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Liquidity
As shown in the accompanying financial statements, the Company incurred a net
loss of $ 1,352,480 during the year ended December 31, 1999 and $ 339,862
during the year ended December 31, 1998. The Company's current liabilities
exceeded its current assets by $ 1,318,434 as of December 31, 1999. At December
31, 1999 a substantial portion of all of the Company's assets are illiquid.
Comprehensive Income
The Company does not have any items of comprehensive income in any of the
periods presented.
Segment Information
The Company adopted Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS
131") in the year ended December 31, 1998. SFAS 131 establishes standards for
reporting information regarding operating segments in annual financial
statements and requires selected information for those segments to be presented
in interim financial reports issued to stockholders. SFAS 131 also establishes
standards for related disclosures about products and services and geographic
areas. Operating segments are identified as components of an enterprise about
which separate discrete financial information is available for evaluation by
the chief operating decision maker, or decision making group, in making
decisions how to allocate resources and assess performance. The information
disclosed herein, materially represents all of the financial information
related to the Company's principal operating segment.
New Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards No. 132,
Employers' Disclosures about Pension and Other -Post Employment Benefits ("SFAS
132") in the year ended December 31, 1999. SFAS No. 132 establishes disclosure
requirements regarding pension and post employment obligations. SFAS No. 132
does not effect the Company as of December 31, 1999.
New Accounting Pronouncements (Continued)
In March 1998, Statement of Position No. 98-1 was issued, which specifies the
appropriate accounting for costs incurred to develop or obtain computer
software for internal use. The new pronouncement provides guidance on which
costs should be capitalized, and over what period such costs should be
amortized and what disclosures should be made regarding such costs. This
pronouncement is effective for fiscal years beginning after December 15, 1998,
but earlier application is acceptable. Previously capitalized costs will not be
adjusted. The Company believes that it is already in substantial compliance
with the accounting requirements as set forth in this new pronouncement, and
therefore believes that adoption will not have a material effect on financial
condition or operating results.
F-12
<PAGE> 26
CENTURY INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE A-SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
In April 1998, Statement of Position No. 98-5 was issued which requires that
companies expense defined previously capitalized start-up costs including
organization costs and expense future start-up costs as incurred. Adoption of
this statement does not have an effect on financial condition or operating
results.
The Company adopted Statement of Financial Standards No. 133, Accounting for
Derivative Instruments and for Hedging Activities ("SFAS No. 133") in the year
ended December 31, 1999. SFAS No. 133 requires that certain derivative
instruments be recognized in balance sheets at fair value and for changes in
fair value to be recognized in operations. Additional guidance is also provided
to determine when hedge accounting treatment is appropriate whereby hedging
gains and losses are offset by losses and gains related directly to the hedged
item. SFAS No. 133's impact on the Company's consolidated financial statements
is not expected to be material as the Company has not historically used
derivative and hedge instruments.
Earnings Per Share
The Company has adopted Statement of Financial Accounting Standard No. 128,
"Earnings Per Share," specifying the computation, presentation and disclosure
requirements of earnings per share information. Basic earnings per share has
been calculated based upon the weighted average number of common shares
outstanding. Stock options and warrant's have been excluded as common stock
equivalents in the diluted earnings per share because they are either
antidilutive, or their effect is not material. There is no effect on earnings
per share information for the years ended December 31, 1999 and 1998 relating
to the adoption of this standard.
NOTE B-BUSINESS DIVESTITURE
On December 30, 1999, the Company's shareholders voted to vend all of its
assets to Globespan Technologies PLC for 1,800,000 shares of Globespan
Technologies PLC. The shares were distributed at 1p (Irish) to the Company's
shareholders. The Company recorded the transaction as a distribution to the
Century shareholders.
F-13
<PAGE> 27
CENTURY INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1
NOTE C-BONDS PAYABLE
<TABLE>
<CAPTION>
Bonds payable at December 31, 1999 and 1998 consists of the following:
1999 1998
---- ----
<S> <C> <C>
Bonds payable with interest at 13% per annum, unsecured; bond principal
plus accrued interest , if any, may be converted to the Company's common
stock at the option of the holder at $.50 per share $ 265,000 265,000
Bonds payable with interest at 11% per annum, unsecured; bond principal plus
accrued interest , if any, may be converted to the Company's common
stock at the option of the holder at $1.00 per share 17,500 17,500
Bonds payable with interest at 9 % per annum, unsecured; bond principal
plus accrued interest , if any, may be converted to the Company's common
stock at the option of the holder at $1.00 per share 355,000 -
-------------- ---------------
$ 637,500 $ 282,500
============== ===============
</TABLE>
The Company is in default under all the terms and conditions of the bonds
outstanding at December 31, 1999.
NOTE D-INTANGIBLE ASSETS
The costs and accumulated amortization of intangible assets, which is comprised
of customer lists, at December 31, 1999 and 1998 are summarized as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Customer lists $ 656,000 $ 656,000
Less: accumulated amortization 223,979 5,312
----------- ----------
$ 432,021 $ 650,688
=========== ==========
</TABLE>
Amortization expense included as a charge to income amounted to $ 218,667 and
$ 5,312 for the year ended December 31, 1999 and 1998, respectively.
NOTE E-STOCK OPTIONS AND WARRANTS
The Company does not have a formal stock option plan.
F-14
<PAGE> 28
CENTURY INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE F-INCOME TAXES
The Company has adopted Financial Accounting Standard number 109 which requires
the recognition of deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statement
or tax returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between financial statements and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse. Temporary differences between
taxable income reported for financial reporting purposes and income tax
purposes are insignificant.
For income tax reporting purposes, the Company's aggregate unused net operating
losses approximate $1,600,000 which expire through 2015. The deferred tax asset
related to the carryforward is approximately $ 550,000. The Company has
provided a valuation reserve against the full amount of the net operating loss
benefit, since in the opinion of management based upon the earning history of
the Company, it is more likely than not that the benefits will be realized.
Components of deferred tax assets as of December 31, 1999 are as follows:
<TABLE>
<S> <C>
Non Current:
Net operating loss carryforward $ 550,000
Valuation allowance 550,000
------------
Net deferred tax asset $ -
============
</TABLE>
NOTE G-MAJOR CUSTOMERS
No customer accounted for more than 5% of the Company's sales for he year
ended December 31, 1999 and 1998.
NOTE H - CAPITAL STOCK
On December 31, 1999 the Company's authorized capital stock was 200,000,000
shares of common stock, par value $.001 per share and 1,000,000 shares of
preferred stock, par value $.001 per share. On that date the Company had
outstanding 97,586,131 shares of common stock and no shares of preferred stock.
F-15
<PAGE> 29
CENTURY INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE I-COMMITMENTS AND CONTINGENCIES
Lease Commitments
An entity owned by a Century stockholder provides office space, clerical
support, telecommunications and computer services to the Company at no cost to
the Company.
Computer equipment and software includes the following amounts for capitalized
leases at December 31, 1999 and 1998, respectively:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Computer equipment and software $ 90,471 $ 90,471
Less: accumulated depreciation an amortization 28,221 10,127
-------- --------
$ 62,250 $ 80,344
======== ========
</TABLE>
Future minimum lease payments required under the capital leases are as follows:
<TABLE>
<S> <C>
2000 $ 33,468
2001 33,468
---- ------
$ 66,936
Less amount representing interest 5,480
-----
Present value of future minimum lease payment 61,456
Less current portion 20,352
------
Long- term portion $ 41,104
========
</TABLE>
As of December 31, 1999, the Company had computer equipment and
software purchased under non-cancelable leases with an original cost of $
90,741. Amortization of $ 28,221 and $ 10,127 has been charged to operations as
of December 31, 1999 an 1998, respectively.
F-16
<PAGE> 30
CENTURY INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE I-COMMITMENTS AND CONTINGENCIES (CONTINUED)
Litigation
In December, 1999, Jenkon, Inc. filed a complaint in the Superior Court of the
State of Washington, Clark County . The Complaint seeks payment for software
provided to the Company in the amount of $.30,000. The Complaint was
subsequently dismissed and the Company and Jenkon, Inc. agreed to mediation and
arbitration of the dispute. The Company acknowledges that it is indebted to the
Company for software provided, however disputes the amount owed. The Company
believes that it has meritorious defenses, as well as affirmative claims
against Jenkon, Inc.. The Company believes that the outcome of the arbitration
will not in any material adverse effect on the Company's financial position ,
results of operations or liquidity.
NOTE J-LOSSES PER COMMON SHARE
The following table presents the computation of basic and diluted loss per
share:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net loss available for common shareholders $(1,352,480) $ ( 339,862)
Basic and fully diluted loss per share $ (.01) $ (.00)
Weighted average common shares outstanding
(basic and diluted) 97,586,131 97,586,131
=========== ==========
</TABLE>
Net income per share is based upon the weighted average number of shares of
common stock outstanding. In December, 1999, the Worldwide shareholders
recapitalized the Company (See Note A). Accordingly, all historical weighted
average share and per share amounts have been restated to reflect this business
combination.
NOTE K-RELATED PARTY TRANSACTIONS
As of December 31, 1999 and 1998, the Company's principal shareholder advanced
funds to the Company for working capital purposes. Such advances are
non-interest bearing and have no specific repayment terms.
The Company's Board of Directors has agreed that, subject to the Company's
improved financial condition, the Company's Chairman and Chief Executive
Officer will each receive $500,000 in additional compensation, or the
equivalent of options to purchase the Company's common stock. The terms of the
options to be granted, if any, will be determined by the Company's Executive
Committee. The accompanying financial statements do not include an accrual for
the additional compensation.
F-17
<PAGE> 31
CENTURY INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE L- INTEREST EXPENSE
Interest cost, none of which was capitalized, was approximately $ 69,782 and $
16,143 for the years ended December 31, 1999 and 1998, respectively.
NOTE M- EMPLOYEE STOCK OPTION PLAN
Effective January 1, 1997, the Company adopted a key Employee Stock Option Plan
(ESOP). There was no activity in the ESOP since inception.
NOTE N-GOING CONCERN MATTERS
The accompanying 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 shown in the accompanying financial
statements during the years ended December 31, 1999 and 1998, the Company
incurred losses from operations of $ 1,352,480 and $ 339,862 respectively.
These factors among others may indicate that the Company will be unable to
continue as a going concern for a reasonable period of time.
The Company is actively pursuing additional equity financing through
discussions with investment bankers and private investors. There can be no
assurance the Company will be successful in its effort to secure additional
equity financing.
If operations and cash flows continue to improve through these efforts,
management believes that the Company can continue to operate. However, no
assurance can be given that management's actions will result in profitable
operations or the resolution of it's liquidity problems.
The Company's existence is dependent upon management's ability to develop
profitable operations and resolve it's liquidity problems. Management
anticipates the Company will attain profitable status and improve it liquidity
through the continued developing, marketing and selling of its products and
additional equity investment in the Company. The accompanying financial
statements do not include any adjustments that might result should the Company
be unable to continue as a going concern.
F-18
<PAGE> 32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CENTURY INDUSTRIES, INC.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Carl J. Valore President, Chief Executive Officer May 3, 2000
- --------------------------- and Director (Principal Executive
Carl J. Valore Officer)
/s/ Wade Cordell Chairman of the Board and Director May 3, 2000
- ---------------------------
Wade Cordell
/s/ Thomas L. Murphy Chief Financial Officer and Director May 3, 2000
- --------------------------- (Principal Financial and Accounting
Thomas L. Murphy Officer)
</TABLE>
-14-
