UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
OMB APPROVAL
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FORM 10-KSB/A
Annual Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the
fiscal year ended June 30, 1999
Commission file number 000-03718
AMERINET GROUP.COM, INC.
(Name of small business issuer in its charter)
DELAWARE
(State of incorporation or organization)
11-2050317
(I.R.S. Employer Identification No.)
902 CLINT MOORE ROAD, SUITE 136-C; BOCA RATON, FLORIDA
(Address of principal executive offices)
33487
(Zip Code)
Issuer's Telephone Number: (561) 998-3435
Securities registered under Section
12(b) of the Exchange Act:
Title of Each Class: NONE
Name of each exchange on which registered: NONE
Securities registered under Section
12(g) of the Exchange Act:
COMMON STOCK, $0.01 PAR VALUE
(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. [x] Yes [ ]
No
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [x]
State issuer's revenues for its most recent fiscal year: $0. State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days: $5,501,785.50; based on the final
transaction reported on the OTC Bulletin Board at the close of business on
September 30, 1999 ($1.50 per share), there being 3,667,857 shares of the
Registrant's common stock on such date held by non-affiliates of the Registrant
(persons holding less than 10% of the Registrant's common stock who were not
officers or directors within the last 90 days).
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. As of September 30, 1999,
there were 8,192,384 shares of the Registrant's common stock outstanding.
Transitional Small Business Disclosure Format (Check one): Yes No x
Page 1
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AVAILABLE INFORMATION.
The public may read and copy any materials filed by the Registrant with the
Commission at the Commission's Public Reference Room at 450 Fifth Street,
Northwest, Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The Commission maintains an Internet site that contains reports,
proxy and information statements, and other information regarding the Registrant
and other issuers that file reports electronically with the Commission, at
http://www.sec.gov. The Registrant's wholly owned operating subsidiary, American
Internet Technical Center, Inc., maintains a web site at http://www.aitc.com.
CAVEAT PERTAINING TO FORWARD LOOKING STATEMENTS
The Private Securities Litigate Reform Act of 1995 provides a "safe harbor"
for forward-looking statements. Certain of the statements contained herein,
which are not historical facts, are forward-looking statements with respect to
events, the occurrence of which involve risks and uncertainties. These
forward-looking statements may be impacted, either positively or negatively, by
various factors. Information concerning potential factors that could affect the
Registrant is detailed from time to time in the Registrant's reports filed with
the Commission. This report contains "forward looking statements" relating to
the Registrant's current expectations and beliefs. These include statements
concerning operations, performance, financial condition and anticipated growth.
For this purpose, any statements contained in this Annual Report and Form 10-KSB
that are not statements of historical fact are forward-looking statements.
Without limiting the generality of the foregoing, words such as "may", "will",
"expect", "believe", "anticipate", "intend", "could", "estimate", or "continue",
or the negative or other variation thereof or comparable terminology are
intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties which are beyond the
Registrant's control. Should one or more of these risks or uncertainties
materialize or should the Registrant's underlying assumptions prove incorrect,
actual outcomes and results could differ materially from those indicated in the
forward looking statements.
Page 2
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TABLE OF CONTENTS
Only the following items are amended by this report:
PART ITEM PAGE
NUMBER NUMBER NUMBER CAPTION
II 7 4 Financial Statements
III 13 37 Exhibits and Reports on Form 8-K
Signatures 38
This document incorporates into a single document the requirements of the
Securities and Exchange Commission for the Annual Report to Stockholders and the
Form 10-KSB.
This document amends the financial statements previously filed with the
Commission on form 10-KSB for the years ended December 31, 1997 and 1998, and
June 30, 1999, except as amended hereby or in other subsequent filings with the
Commission, to the best of management's knowledge such reports remain accurate,
as of their respective dates.
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PART II
ITEM 7 FINANCIAL STATEMENTS
(a) Index to financial statements and financial statement schedules.
The auditor's report and audited balance sheet of the Registrant for its
years ended June 30, 1999, December 31, 1998, and 1997 and related statements of
operations, stockholder's equity, cash flows and notes to financial statements
for such years follow in sequentially numbered pages numbered 5 through 22. The
page numbers for the financial statement categories are as follows:
AmeriNet Group.com, Inc. financial statements
5 Cover Page
6 Report of Independent Accountants
7 Report of Independent Accountants from Bowman & Bowman for 1998
8 Report of Independent Accountants from Baum & Company for 1997
9 Balance Sheet
10 Statements of Operations
11 Statements of Shareholders' Equity
12 Statement of Cash Flows
13 Notes to Financial Statements
The auditors report and audited balance sheet of the Registrant for its six
months ended June 30, 1999, and related statements of operations, stockholder's
equity, cash flows and notes to financial statements for such years follow in
sequentially numbered pages numbered 23 through 32. The page numbers for the
financial statement categories are as follows:
American Internet Technical Center, Inc. financial statements
23 Cover Page
24 Independent auditor's report
25 Balance sheets
26 Statements of operations
27 Statements of shareholders' equity
28 Statements of cash flows
29 Notes to financial statements
(b) Financial Statements follow
(c) Pro Forma Financial Statements
The combined balance sheets and statement of income of the Registrant and
American Internet for its year ended December 31, 1998, and statement of income
for six months ended June 30, 1999, follow in sequentially numbered pages
numbered 33 through 36.
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(b) Financial Statements
AMERINET GROUP.COM, INC. AND SUBSIDIARY
(F/K/A EQUITY GROWTH SYSTEMS, INC.)
CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1999
AND YEARS ENDED DECEMBER 31, 1998 AND 1997
Page 5
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DASZKAL BOLTON MANELA DEVLIN & CO.
CERTIFIED PUBLIC ACCOUNTANTS
A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS
2401 N.W. BOCA RATON BOULEVARD, SUITE 100 BOCA RATON, FLORIDA 33431
TELEPHONE (561) 367-1040 FAX (561) 750-3236
JEFFREY A. BOLTON, CPA, P.A. MEMBER OF THE AMERICAN INSTITUTE
MICHAEL I. DASZKAL, CPA, P.A. OF CERTIFIED PUBLIC ACCOUNTANTS
ROBERT A. MANELA, CPA, P.A.
TIMOTHY R. DEVLIN. CPA, P.A.
MICHAEL S. KRIDEL, CPA
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and Stockholders
AmeriNet Group.com, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheet of AmeriNet
Group.com, Inc. (f/k/a Equity Growth Systems, Inc.), and subsidiary as of June
30, 1999, and the related statement of operations, changes in stockholders'
equity and cash flows for the six months ended June 30, 1999. These financial
statements are the responsibility of the management of AmeriNet Group.com, Inc.,
and subsidiary. 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 the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AmeriNet Group.com, Inc., and
subsidiary as of June 30, 1999, and the results of its operations and its cash
flows for the six months ended June 30, 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 discussed in Note 22 to the
financial statements, the Company has suffered recurring losses from operations
and has negative cash flow from operations that together raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 22. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Daszkal Bolton Manela Devlin & Co.
Boca Raton, Florida
October 5, 1999, except for Notes 9 and 15, as to which the date is
November 10,1999.
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BOWMAN& BOWMAN, P.A.
Certified Public Accountants
1705 Colonial Blvd., Suite D-l
Fort Myers, Florida 33907
(941) 939-2301
(941) 939-1297 (Fax)
To the Board of Directors
Equity Growth Systems, inc.
(A Development Stage Company)
3821-B Tamiami Trail, Suite 201
Port Charlotte, Florida 33952
We have audited the accompanying balance sheet of Equity Growth Systems, inc. (A
Development Stage Company) as of December 31, 1998, and the related statements
of operations, stockholders' equity, and cash flows for the year ended 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 on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Equity Growth Systems, inc. (A
Development Stage Company) as of December 31, 1998, and the results of its
operations and its cash flows for the year ended 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 8 to the
financial statements, the Company has suffered recurring losses from operations
and has a net working capital deficiency that together raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 8. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Bowman & Bowman
Bowman & Bowman, P.A.
Myers, Florida
April 23, 1999, except Note 2 and Note 5B(b) as to which the date is November
10, 1999.
Page 7
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BAUM & COMPANY, P.A.
Certified Public Accountant
1515 University Drive, suite 209
Coral Springs, Florida 33071
(954) 752-1712
INDEPENDENT AUDITOR'S REPORT
To the Shareholders of
Equity Growth Systems, Inc.
Port Charlotte, Florida
We have audited the balance sheets of Equity Growth Systems, Inc. at December
31, 1997 and 1996, and the related statements of operations, shareholders'
equity and cash flows for the years then 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 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
misstatements. 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.
We were unable to obtain a discussion or evaluation from the Company's outside
legal counsel of pending or threatened litigations described in Note 14.
In our opinion, except for the effects on the 1997 and 1996 financial statements
of such adjustments, if any, as might have been determined to be necessary have
we been able to obtain a discussion or evaluation of pending or threatened
litigation from the Company's outside legal counsel as discussed in the
preceding paragraph, the financial statements referred to in the first paragraph
present fairly, in all material respects, the financial position of Equity
Growth Systems, Inc., as of December 31, 1997 and 1996 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
May 4, 1998
Coral Springs, Florida
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
ASSETS
<TABLE>
<S> <C> <C>
1999 1998
CURRENT ASSETS:
Cash $ 79,021 $13,182
Accounts Receivable, net 76,662 -
------------ ------------
Total Current assets 155,683 13,182
Property and equipment, net 33,656 -
OTHER ASSETS:
Goodwill, net 1,470,559 -
Deposits 14,492 -
-------------- -----------
Total other Assets 1,485,051 -
-------------- -----------
TOTAL ASSETS $1,674,390 $13,182
============== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 10,648 $ 4,661
Accrued expenses 16,901 147,000
Billings in excess of costs and estimated
earnings on uncompleted contracts 80,558 -
Loans payable-Stockholders 29,333 -
-------------- ------------
TOTAL CURRENT LIABILITIES 137,440 151,661
-------------- ------------
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 5,000,000 shares
authorized, -0- issued and outstanding - -
Common stock, $.01 par value, 20,000,000 shares
authorized; 8,094,884 and 5,991,148 shares issued
and outstanding in 1999 and 1998, respectively 80,948 59,991
Additional paid in capital 4,841,005 2,930,395
Accumulated deficit prior to December 31, 1998 (3,128,785) (3,128,785)
Accumulated deficit from inception of
development stage on December 31, 1998 (256,218) -
------------- -------------
Total Stockholders' equity 1,536,950 (138,479)
------------- -------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $1,674,390 $ 13,182
============= =============
</TABLE>
See accompanying notes to financial statements
Page 9
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
AND YEAR ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C> <C>
1999 1998 1997
Revenues earned $ - $ - $ -
General and administrative expenses (256,218) - -
Loss from Operations (256,218) - -
Provision for income taxes - - -
Loss from discontinued operations - (562,415) (74,043)
Net loss $(256,218) $(562,415) $ (74,043)
============ ========== ==========
Basic loss per share $ (0.04) $ (0.13) $ 0.02
Weighted average shared outstanding 6,091,566 4,174,778 3,807,814
============ ========== ===========
Fully diluted loss per share $ (0.04) $ (0.13) $ (0.02)
Fully diluted average shares outstanding 6,091,566 4,222,191 3,807,814
============ ========== ===========
</TABLE>
See accompanying notes to financial statements
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1999 AND YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Accumulated
Additional Deficit
No. of Common Paid-in Accumulated Development
Shares Stock Capital Deficit Stage Total
Balances, December 31, 1996 3,771,148 $ 37,711 $2,892,195 $(2,492,327) $ - $ 437,579
Common Stock Issued for services 55,000 550 550 - - 1,100
Net loss, December 31, 1997 - - - (74,043) - (74,043)
--------- --------- ---------- ------------ ----------- -----------
Balances, December 31, 1997 3,826,148 38,261 2,892,745 (2,566,370) - 364,636
Common stock issued for services 415,000 4,150 4,150 - - 8,300
Common stock issued for cash 1,750,000 17,500 17,500 - - 35,000
Stock Options outstanding 16,000 16,000
Net loss, December 31, 1998 - - - (562,415) - (562,415)
--------- --------- ---------- ------------- ------------ ------------
Balances, December 31, 1998 5,991,148 59,911 2,930,395 (3,128,785) - (138,479)
Common stock issued for services 247,000 2,470 171,780 - - 174,250
Common stock issued for cash 220,000 2,200 97,800 - - 100,000
Common stock issued for acquisition 1,636,736 16,367 1,423,960 - - 1,440,327
Stock options outstanding - - 37,498 - - 37,498
Contribution of professional services 179,572 179,572
Net loss, June 30, 1999 - - - - (256,218) (256,218)
--------- --------- ---------- ------------ ------------- ------------
Balances, June 30, 1999 8,094,884 $ 80,948 $4,814,005 $(3,128,785) $ (256,218) $ 1,536,950
</TABLE>
See accompanying notes to financial statements
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 AND YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<S> <C> <C> <C>
1999 1998 1997
Cash flows from operating activities:
Net (loss) $(256,218) $(546,415) $ (74,043)
Adjustments to reconcile net income
to net cash used by operating activities:
Loss on non-collectible financial
instruments - - 144,440
Stock options granted to consultant 37,498 - -
Common stock issued for services 27,250 8,300 1,100
Contribution for professional services 179,572
Changes in operating assets and liabilities,
net of effect from acquisitios:
(Increase) decrease in:
Other receivables - 98,590 (98,580)
Increase (decrease) in:
Accounts Payable and accured expenses (1,573) 146,651 (7,990)
Cash overdraft - (4) 4
----------- ---------- ------------
Net cash used by operations (13,471) (292,878) (35,069)
Cash flows from investing activities:
Cash overdraft acquired in acquisitions (20,690) - -
----------- ---------- ------------
Cash flows from financial activities:
Common stock issued for cash 100,000 35,000 -
Decrease (increase) in mortgage
and notes receivable - 1,570,888 339,544
Increase (Decrease) in mortgage
and notes payable - (1,299,828) (305,437)
----------- ----------- ------------
Net cash provided by financial activities 100,000 306,060 34,107
Net increase in cash 65,839 13,182 (962)
Cash at beginning of year 13,182 - 962
----------- ---------- -------------
Cash at end of year $ 79,021 $ 13,182 $ -
=========== ========== =============
</TABLE>
See accompanying notes to financial statements
Page 12
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
AmeriNet Group.com, Inc., formerly known as Equity Growth Systems, Inc. (the
"Company") was organized under the laws of the State of Delaware on December 8,
1964. Beginning in 1996, the principal business of the Company was structuring
and marketing of mortgaged backed securities as well as the acquisition of
select commercial real estate for its own account. Effective December 31, 1998,
the Company discontinued the mortgage business and was reclassified as a
development stage company. The purpose of the development stage company was to
acquire other operating companies.
On June 25, 1999, the Company acquired all of the outstanding common stock of
American Internet Technical Center. American Internet Technical Center, Inc., is
a Florida corporation, established on April 15, 1998, to design and host
websites and to provide e-commerce programs, marketing and other Internet
services. Hosting services, including search engine registrations, are typically
six-month to one-year contracts.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all cash and
other demand deposits to be cash and cash equivalents. As of June 30, 1999, and
December 31, 1998 and 1997, the Company had no cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and are being depreciated using the
straight-line method over the estimated useful lives of five to seven years.
REVENUE AND COST RECOGNITION
Revenues from long-term contracts are recognized on the percentage-of-completion
method, measured by the percentage of costs incurred to date to estimated total
costs for each contract (i.e., cost-to-cost method). This method is used because
management considers total cost to be the best available measure of progress on
the contracts. Because of inherent uncertainties in estimating costs, it is
possible that the estimates used will change within the near term. Contract
costs include all direct material and labor costs and those indirect costs
related to contract performance, such as subcontractors, equipment rental,
supplies, and certain general administrative expenses are charged to expense.
Provisions for estimated losses on uncompleted contracts are made in the period
in which such losses are determined.
The liability, "Billings in excess of costs and estimated earnings on
uncompleted contracts," represents billings in excess of revenues recognized.
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.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of AmeriNet
Group.com, Inc. and its wholly owned subsidiary, American Internet Technical
Center, Inc., at June 30, 1999. All intercompany accounts and transactions have
been eliminated in consolidation.
The financial statements as presented, reflect the Company, for the six months
ended June 30, 1999, and American Internet Technical Center, Inc., for
accounting purposes, June 30, 1999.
Page 13
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADVERTISING
Advertising costs are expensed when incurred. The advertising cost incurred for
the period ended June 30, 1999, was $792.
BASIS LOSS PER SHARES
Basic loss per common share is computed by dividing the net loss by the weighted
average number of shares of common stock outstanding during the year.
DILUTED LOSS PER SHARES
Fully diluted loss per common share is computed by dividing the net loss by the
weighted average number of shares of common stock outstanding plus the shares
that would be outstanding if all stock options were exercised.
NOTE 3 - ACQUISITION
On June 25, 1999, the Company acquired all of the outstanding common stock of
American Internet Technical Center, Inc. For accounting purposes the transaction
was deemed to have become effective June 30, 1999. As initial consideration, the
Company issued an aggregate of 2,236,736 shares of common stock to the
stockholders of American Internet Technical Center, Inc. These initial shares
were reduced by 750,000 shares to an aggregate of 1,486,736 shares and then
again reduced to an aggregate of 553,980 shares. The stockholders of American
Internet Technical Center, Inc. sold 250,000 shares of common stock to Yankee in
consideration for $25,000. The shareholders subsequently contributed the $25,000
to the Company. Under the terms of the earn out provisions of the acquisition
agreement, the Company will issue shares of common stock over a six-year period
beginning June 30, 2000, contingent upon the operating performance of American
Internet Technical Center, Inc. The maximum number of shares that would have
been issued under this agreement is 5,250,000 shares. As a material subsequent
event, such contingency has been eliminated.
The acquisition was recorded using the purchase method of accounting. The
results of operations since the date of acquisition, June 30, 1999, for
accounting purposes, will be included in the consolidated statements of
operations beginning July 1, 1999. Goodwill of $1,470,559 was recorded in this
transaction and is being amortized over 15 years using the straight-line method.
The following summarizes the fair value of the assets acquired and liabilities
assumed:
Cash $(20,690)
Accounts receivable 76,661
Property and equipment 33,656
Deposits 14,492
Accounts payable (7,560)
Accured expenses (16,901)
Loan payable-stockholder (29,333)
Billings in excess of cost and estimated
earnings on uncompleted contracts (80,558)
-----------
Net Assets $ (30,233)
Page 14
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - AMORTIZATION OF GOODWILL
Goodwill represents the amount by which the purchase price of businesses
acquired exceeds the fair market value of the net assets acquired under the
purchase method of accounting.
The excess of the fair value of the net assets of American Internet Technical
Center, Inc. acquired was $1,470,559 and was recorded as goodwill. Goodwill is
being amortized on a straight-line method over 15 years. The accumulated
amortization of the excess fair value of net assets of the Company acquired over
cost is $-0- at for the six months ended June 30, 1999, and the years ended
December 31, 1998 and 1997.
NOTE 5 - ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts receivable are recorded net of an allowance for doubtful accounts of
$57,160 and $-0- and $-0- at June 30, 1999, and December 31, 1998 and 1997,
respectively.
NOTE 6 - CONSULTING AGREEMENT
In September 1998, the Company entered into a consulting arrangement with Yankee
Companies, Inc., ("Yankee") for services relating to reorganization, mergers,
acquisitions and other strategic corporate development, which was formalized in
a written agreement dated November 24, 1998. As compensation Yankee was granted
an option to purchase up to 10% of the outstanding and reserved common stock for
a maximum of $60,000.
The option term commenced on the 60th day after the execution of the agreement
and will terminate at the close of business on the 45th business day after the
shares of common stock into which they can be exercised are registered for sale
to the public under applicable federal and state securities laws. The agreement
also allows the options to be exercised at a 50% discount if exercised prior to
such registration.
If the option had been exercised on June 30, 1999, the Company would have issued
approximately 809,488 shares under this agreement for $60,000, approximately
$0.07 per share. Assuming that the Company's authorized capitalization remains
20,000,000 shares of common stock, the maximum number of shares issuable under
the terms of this agreement will be 2,000,000 shares for $60,000 or $0.03 per
share. Had the options been exercised at the 50% discount the 809,488 shares
would have been issued for $30,000 ($0.04 per share) and the 2,000,000 would
have been issued for $30,000 ($0.02 per share).
In addition to the stock options, Yankee is entitled the following compensation:
(1) In the event that Yankee arranges or provides funding for the Company
on terms more beneficial than those reflected in Company's current
principal financing agreements, Yankee will be entitled, at its
election, to either:
(a) A fee equal to 25% of such savings, on a continuing basis; or
(b) If equity funding is provided through Yankee, a discount of 10%
from the bid price for the equity securities, if they are issued
as free trading securities, or, a discount of 50% from the bid
price for the equity securities, if they are issued as restricted
securities.
(2) In the event that Yankee generates business for the Company, then
Yankee shall be entitled to a commission equal to 10% of the gross
income derived by the Company, on a continuing basis.
(3) In the event that Yankee arranges for an acquisition by the Company,
then Yankee shall be entitled to compensation equal to 10% of the
compensation paid.
Page 15
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - CONSULTING AGREEMENT, CONTINUED
(4) In addition to all other compensation reflected in the agreement, the
Company shall, after one year following execution of this agreement,
pay to Yankee the sum of $5,000 per month, throughout the balance of
this agreement or any renewals.
NOTE 7 - RESCISSION SETTLEMENT AGREEMENT
GRANVILLE-SMITH JR. RESCISSION SETTLEMENT AGREEMENT
On March 22, 1999, the Company's former president, Edward Granville-Smith,
rescinded by agreement, all employment, consulting and creditor agreements and
the following transactions described in previous reports on 10-KSB by the
Company and on previous filings with the Securities and Exchange Commission as
follows:
"During March of 1995, the Company's Board of Directors elected Edward
Granville-Smith, then president of KSG (then operating as EGSI), to the
Company's Board of Directors, after which all directors other than Mr.
Granville-Smith resigned. Mr. Granville-Smith, as the sole director, elected
himself as president, chief executive officer and chairman of the Company's
Board of Directors. Thereafter, Mr. Granville-Smith, as the sole stockholder,
officer and director of Milpitas Investors, Inc., a Delaware corporation
("Milpitas"), caused Milpitas to assign interests of four leases involving five
separate leased parcels of real estate (one lease covers two parcels, four
promissory notes secured by mortgages on real estate leased to third parties in
each case subject to mortgages to third parties, and four demand notes with an
aggregate original principal balance of approximately $160,000, to the Company
in exchange for 1,616,000 shares of the Company's common stock. The demand notes
are subject to an arrangement with Mr. Jerry C. Spellman (which the Company has
agreed to honor) whereby payments thereon are used to repay a $100,000 loan by
Mr. Spellman to a former holder. Milpitas thereafter distributed such stock to
Granville-Smith Trust, which thereafter transferred to K. Walker, Ltd., a
Bahamian corporation (affiliated with Mr. Granville-Smith) and Bolina Trading
Registrant, a Panamanian corporation and/or the WEFT Trust, (affiliated with
Jerry C. Spellman)."
SPELLMAN GENERAL RELEASE
On March 22, 1999, Mr. Jerry C. Spellman, on his own behalf and on behalf of
Bolina Trading Registrant, S.A., a Panamanian Corporation, also known as Bolina
Trading Registrant, a Panamanian Corporation, and Bolina Trading Corporation,
and the WEFT Trust signed and executed for the protection of the Company a
general release.
NOTE 8 - LOSS FROM DISCONTINUED OPERATIONS
On March 22, 1999, the Company entered into an agreement (See Note 7) that
resulted in the discontinued operations of the mortgage finance business. The
following is a summary of loss from operations of the discontinued mortgage
finance business.
1999 1998 1997
Revenue of discontinued operations $ - $162,395 $214,001
Expenses of discontinued operations - 331,535 288,044
_________ ________
Loss from operations of discontinued operations (169,140) (74,043)
Loss on disposal of discontinued operations - (377,275) -
Loss from discontinued operations $ - $(546,415) $(74,043)
========== =========
Page 16
<PAGE>
AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - STOCKHOLDERS' EQUITY
During the six months ended June 30, 1999, the Company issued its common stock
for cash and in exchange for services as follows:
(a) On May 25, 1999, 200,000 shares of common stock were issued for
services. This transaction resulted in $36,500 of professional fees
expense, which was included in the statement of operations.
(b) On May 25, 1999, the Company issued 47,000 shares of common stock to
current and former officers and directors of the Company in order to
discharge all agreements and receive a general release in favor of the
Company. This transaction resulted in $11,750 of professional fees
that was included in the statement of operations.
(c) On June 25, 1999, as a result of the merger, the Company issued
1,486,736 shares of common stock to the shareholders of American
Internet Technical Center, Inc. Additionally, 150,000 shares of common
stock were issued to Yankee as compensation for the acquisition. See
Note 15. Subsequent to June 30, 1999, the Company renegotiated its
acquisition of American Internet Technical Center, Inc., and
consequently the number of shares granted to Yankee was reduced to
55,398.
(d) The Company issued 220,000 shares of common stock for cash during the
six months ended June 30, 1999. The total amount obtained from the
issuance was $100,000.
During the year ended December 31, 1998 the Company issued its common stock for
cash and in exchange for services as follows:
(a) On March 26, 1998, 20,000 shares of common stock were issued at $.02
per share for services.
(b) On September 9, 1998, 50,000 shares of common stock were issued at
$.02 per share for services.
(c) On December 9, 1998, 75,000 shares of common stock were issued at $.02
per share for services and 1,750,000 shares were issued at $.02 per
share for cash. During 1997 the Company also issued stock options for
200,000 shares to the president of the corporation. The options are
exercisable at $.02 per share and accordingly, no compensation expense
has been recorded or will be incurred with the issuance.
(d) In September 1998, the Company entered into a consulting arrangement
for services relating to reorganization, mergers, acquisitions and
other strategic corporate development, which was formalized in a
written agreement dated November 25, 1998. As compensation the
consultant was granted an option to purchase up to 10% of the
outstanding and reserved common stock for a maximum of $60,000 (See
Note 6).
Additional paid-in capital of the Company increased by $179,572. This increase
was due to a capital contribution of professional services provided to the
Company during 1999 by Yankee.
NOTE 10 - COST AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
The following schedule presents the status of costs and estimated earnings on
uncompleted contracts at June 30, 1999, and at December 31, 1998 and 1997:
Page 17
<PAGE>
AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 10, COST AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
The following schedule presents the status of costs and estimated earnings
on uncompleted contracts at June 30, 1999, and at December 31, 1998 and
1997:
1999 1998 1997
Costs incurred on uncompleted contracts $ 5,682 $ - $ -
Estimated earnings 5,743 - -
------- ----- -----
Total 11,425 - -
Less; billings to date (91,983) - -
-------- ----- -----
Total $ (80,558) $ - $ -
Included in accompanying balance sheet under the
following captions:
Costs and estimated earnings in excess of billings
on uncompleted contracts $ - $ - $ -
Billings in excess of cost and estimated earnings on
uncompleted contracts (80,558) - -
------- ------ ------
Total $(80,558) $ - $ -
NOTE 11 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash, accounts receivable, accounts payable and loans to
stockholders approximates fair value because of their short maturities.
NOTE 12 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at June 30, 1999 and December
31, 1998 and 1997:
1999 1998 1997
Machinery and equipment $33,656 $ - $ -
Less: accumulated depreciation - - -
Property and equipment, net $33,656 $ - $ -
Depreciation expense for the period ended June 30, 1999 and the years ended
December 31, 1998, and 1997 was $0.
NOTE 13 - OPERATING LEASES
The Company leases its American Internet Technical Center, Inc. facility in
Florida under an operating lease with no fixed term.
Page 18
<PAGE>
AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 14 - SUPPLEMENTAL COST FLOW INFORMATION
Supplemental cash flow information:
1999 1998 1997
Cash paid for interest $ - $ 127,257 $ 99,602
===== ======= ======
Cash paid for income tax $ - $ - $ -
===== ======= ======
Non cash investing and financing activities:
Issuance of common stock for
acquisition $ 1,636,736 - -
========= ======= ======
Stock issued in settlement of
liabilities and agreements 247,000 - -
========= ======= ======
NOTE 15 - RELATED PARTY TRANSACTIONS
During the six months ended June 30, 1999, Yankee contributed professional
services valued at $217,000 to the Company. The Company recognized $37,428 in
compensation expenses relating to the stock options and the remaining $179,572
was contributed to the Company as additional paid-in capital.
At June 30, 1999, the Company had an outstanding payable to the former
shareholders of American Internet Technical Center, Inc. in the amount of
$29,333.
During the development stage ending June 25, 1999, the Company's corporate
offices and certain management services were provided by two of the Company's
shareholder/directors at no cost to the Company.
On February 18, 1999, the Company issued 150,000 shares of its common stock in
consideration $150,000 of legal and advisory services and related costs provided
by a shareholder, and Vice President of Yankee, during the year ended December
31, 1998. The fair market value of the shares was $24,000, and the remaining
$126,000 was contributed to the Company as additional paid-in captial.
NOTE 16 - LEGAL MATTERS
The Company is currently not a party to any material legal proceedings. Although
the Company is not a party to the following proceedings directly, they involve
real estate located in Kansas and Tennessee in which the Company had an
interest.
A) On October 20, 1997, the various parties entered into a wrap around
mortgage transaction with a previous affiliate of the Company. The
current tenant agreed to settle, but certain parties reserved claims
against each other. The settlement calls for a payment from the
current tenant of $150,000 in exchange for a transfer of a clear and
free title of the underlying real estate. The mortgage holder, Fleet
National Bank, received $52,000 with the balance to be held in escrow
between the other parties. The Company, which was an assignee of
rights to such proceeds, held the position that the ultimate
disbursement of the substantial portion of these escrowed funds should
be earmarked for the reduction of the wrap around mortgage and
promissory note receivable. Therefore, the Company's affiliate set up
an escrow receivable for $98,000 ($150,000 less $52,000). The escrow
receivable was determined to be uncollectable and was expensed in the
loss from discontinued operations during the year ended December 31,
1998. As a result of the divestiture of the assets involved, during
March 1999 the Company's management has determined that such
litigation will not have any materially adverse consequences.
Page 19
<PAGE>
AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(B) A former affiliate of the Company was also in default of the mortgage
on property located in Memphis, Tennessee because it could not satisfy
the balloon payment, in the original amount of $193,580, which was due
on December 31, 1996. The mortgage holder (Lutheran Brotherhood) has
refused to renegotiate or extend the term of the mortgage and would
not accept any further payments from the lessor of other underlying
lease, other than the one made in December, 1996, which was based upon
the old repayment schedule's terms. Through August, 1997, the Company
as an assignee, had received funds from Sun West N.O.P., the lessor on
the underlying lease, which represented the monthly rent payments made
on such lease ($4,609) by the tenant of the Memphis Property. Because
the mortgage holder could not accept any amortization payments on
their matured loan from Sun West N.O.P., the Company was using such
proceeds to reduce the related wrap mortgage receivable. (In August of
1997, the mortgage holder foreclosed on the mortgage payable, which
resulted in a foreclosure sale of the Memphis property. As a result of
these events of foreclosure, the Company wrote off the balance on the
mortgage payable and the related wrap mortgage receivable ($51,772)
and promissory note receivable ($93,686) at December 31, 1996. As a
result of the divestiture of the assets involved, during March 1999,
the Company's management has determined that such litigation will not
have any materially adverse consequences.
(C) IMPROPER ISSUANCES OF STOCK PURSUANT TO RULE 504. During 1998, the
Company's transfer agent issued unregistered shares of the Company's
common stock as free trading securities, purporting to rely on
Commission Rule 540 Current management, upon discovery of the
transactions, insisted that they be reissued as restricted securities.
To date, principals and affiliates of the Registrant's transfer agent
and William J. Riley, Esquire, have failed to comply with the
Registrant's demand that the subject shares be legended and restricted
as having been issued as unregistered securities under Section 4(2) of
the Securities Act. Carrington Capital Corp., a Florida corporation
("Carrington), has returned its shares for re-legending, fully
complying with the Registrant's demand. The Registrant believes that
its transfer agent and Mr. Riley have violated Section 5 of the
Securities Act and continue to do so, and that the Commission may at
some point take action against them. In addition, it appears that
Edward Granville-Smith, Jr., at the time the Registrant's sole
director, may also have violated Section 5 of the Securities Act by
authorizing the issuance of securities to Mr. Riley and Carrington
(but not to its transfer agent) in reliance on Commission Rule 504,
apparently based on Mr. Riley's legal advice. The Registrant does not
believe that the Commission will initiate any action against it as a
result of such violations, as, since the replacement of Mr.
Granville-Smith, it has aggressively taken all steps available to it
to correct such actions.
(D) CERTAIN STOCK TRANSFERS FOR INADEQUATE OR NON-CONSIDERATION. In a
number of instances, subscribers for stock in exchange for services
did not render the required services. The Registrant's legal counsel
has contacted each party involved and demanded either payment for the
subject shares or their return. No response has been provided by any
of the holders and the Registrant's transfer agent has been instructed
not to transfer any of the securities in question as the holding
period under Commission Rule 144 cannot have started for any of such
holders in the absence of full payment. The Registrant has furthermore
elected not to accept payment for such shares in the future at an
amount less than their market price on the date payment is tendered.
NOTE 17 - CONCENTRATION OF CREDIT RISK
Financial instruments, which potentially expose the Company to concentrations of
credit risk, as defined by Statement of Financial Accounting Standards No. 105,
consist primarily of trade receivables. The Company's officers have attempted to
minimize this risk by monitoring the companies for whom they provided credit.
NOTE 18 - SIGNIFICANT VENDOR
During 1999, American Internet Technical Center, Inc. subcontracted the
production of its websites to an unrelated party. This unrelated party provides
100% of the website development.
Page 20
<PAGE>
AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 19 - INCOME TAXES
The significant components of deferred income tax expense benefit for the six
months ended June 30, 1999 and the years ended December 31, 1998 and 1997,
arising from net operating losses are as follows:
1999 1998 1997
Deferred tax asset:
Net benefit of net operation loss $ 194,175 $ 160,976 $25,175
Less: valuation allowance (194,175) (160,976) (25,175)
--------- --------- --------
Deferred tax asset $ - $ - $ -
========= ========= ========
The Company has operating loss carryforwards of approximately $570,000. The
operating loss carryforwards will expire beginning in 2012.
NOTE 20 - STOCK OPTIONS
At June 30, 1999, the Company has granted 1,009,488 stock options to certain
employees and consultants at an average exercise price of $0.07 per share.
The Company has elected to account for the stock options under Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related interpretations. Accordingly, no compensation expense has been
recognized on the employee stock options. The Company accounts for stock options
granted to consultants under Financial Accounting Standards Board Statement No.
123, "Accounting For Stock-Based Compensation". The Company recognized $37,498
in compensation expense for the six months ended June 30, 1999, and $-0- for the
years ended December 31, 1998 and 1997.
Had compensation expense for the employee stock option been determined based on
the fair value of the options at the grant date consistent with the methodology
prescribed under Statement of Financial Standards No. 123, "Accounting for Stock
Based Compensation", the Company's net loss at June 30, 1999 would have been
increased by approximately $-0-, and approximately $16,000 at December 31, 1998.
The fair value of each option is estimated on the date of grant using the fair
market option pricing model with the assumption:
Risk-free interest rate 5.5%
Expected life (years) 3
Expected volatility 9.516
Expected dividends None
Page 21
<PAGE>
AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
NOTE 20 - STOCK OPTIONS (CONTINUED)
A summary of option transactions during the six months ended June 30, 1999 is
shown below:
Number Weighted-Average
of Shares Exercise Price
Outstanding at December 31, 1998 $ 786,615 $ 0.10
Granted 222,873 $ 0.07
Exercised -
Forfeited -
----------
Outstanding at June 30, 1998 1,009,488
==========
Exercisable at June 30, 1999 1,009,488
==========
Available for issuance at June 30, 1999 11,905,116
==========
NOTE 21 - SUBSEQUENT EVENTS
On April 26, 1999, American Internet Technical Center, Inc. was acquired by
Ascot Industries, Inc., a Nevada corporation ("Ascot"), in a stock exchange
agreement. Ascot exchanged 90% of its common stock for all the common shares of
American Internet Technical Center Inc. On July 9, 1999, the agreement was
rescinded and control of Ascot was re-acquired by the original shareholders,
with American Internet Technical Center Inc. becoming a direct, wholly-owned
subsidiary of the Company.
On September 8, 1999, Xcel Associates, Inc. ("Xcel") purchased a warrant for
$10,000, to purchase up to 1,000,000 shares of the Company's common stock at
$0.75 per share.
On September 27, 1999, Xcel loaned American Internet Technical Center, Inc.
$75,000; the note is due on December 31, 1999. In lieu of interest, Xcel will
receive 15,000 shares of the Company's common stock. Yankee pledged 35,000
shares of its common stock as collateral, and the Company has agreed to
indemnify Yankee in the event that Xcel retains the collateral for non-payment
of the note by American Internet Technical Center, Inc. In addition, the Company
agreed to issue 3,500 shares, or the value thereof, to Yankee as consideration
for the pledge of these shares.
In August 1999 the Company adopted a non-qualified stock option and stock
incentive plan. The Company has reserved 1,000,000 shares of common stock upon
the exercise of options granted to employees of the Company.
NOTE 22 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
organization will continue as a going concern. As discussed below, the
organization has negative cash flows from operations and an accumulated deficit
that raises substantial doubt about its ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
The Company's continued existence as a going concern will require the infusion
of new businesses. It is anticipated that the Company will effect this
transition through the acquisition of companies that will operate as
subsidiaries. The Company's continuation is dependent upon its ability to
acquire profitable businesses, control costs, and attain a satisfactory level of
profitability with sufficient financing capabilities or equity investment.
Page 22
<PAGE>
AMERICAN INTERNET TECHNICAL CENTER, INC.
(A WHOLLY-OWNED SUBSIDIARY OF AMERINET GROUP.COM, INC.)
FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1999
Page 23
<PAGE>
DASZKAL, BOLTON, MANELA, DEVLIN & CO.
CERTIFIED PUBLIC ACCOUNTANTS
A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS
2401 N.W. BOCA RATON BOULEVARD, SUITE 100 BOCA RATON, FLORIDA 33431
TELEPHONE (561) 367-1040 FAX (561) 750-3236
JEFFREY A. BOLTON, CPA, P.A. MEMBER OF THE AMERICAN INSTITUTE
MICHAEL I. DASZKAL, CPA, P.A. OF CERTIFIED PUBLIC ACCOUNTANTS
ROBERT A. MANELA, CPA, P.A.
TIMOTHY R. DEVLIN. CPA, P.A.
MICHAEL S. KRIDEL, CPA, P.A.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
American Internet Technical Center, Inc.
We have audited the accompanying balance sheet of American Internet Technical
Center, Inc.(a wholly-owned subsidiary of AmeriNet Group.Com, Inc.) as of June
30, 1999, and the related statement of operations, changes in stockholders'
equity and cash flows for the six months ended June 30, 1999. These financial
statements are the responsibility of the management of American Internet
Technical Center, Inc. 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 audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of American Internet Technical
Center, Inc. as of June 30, 1999, and the results of the operations and its cash
for the six months ended June 30, 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 discussed in Note 13 to the
financial statements, the Company has suffered recurring losses from operations
and has negative cash flow from operations that together raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note 13. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
/s/ Daszkal, Bolton, Manela, Devlin & Co., CPAs
Boca Raton, Florida
October 5, 1999
Page 24
<PAGE>
AMERICAN INTERNET TECHNICAL CENTER, INC.
BALANCE SHEETS
JUNE 30, 1999
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash $ 79,310
Accounts Receivable, net 76,663
----------
Total Current assets 155,973
----------
Property and equipment, net 33,656
----------
Other assets:
Goodwill, net 1,470,559
Deposits 14,492
--------------
Total other Assets 1,485,051
--------------
Total assets: $1,674,680
==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 7,560
Accrued expenses 16,901
Billings in excess of costs and estimated
earnings on uncompleted contracts 80,558
Loan payable-stockholders 29,333
Loan payable-AmeriNet Group 100,000
--------------
Total current liabilities 234,352
------------
Shareholders' equity
Common Stock, $.001 par value, 20,000,000 shares
authorized, 551,333 shares issued and outstanding 551
Additional paid in capital 1,439,777
Retained earnings -
-------------
Total Stockholders' equity 1,440,328
-------------
Total liabilities and stockholders' equity $1,674,680
=============
</TABLE>
See accompanying notes to financial statements
Page 25
<PAGE>
AMERICAN INTERNET TECHNICAL CENTER, INC.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<S> <C>
Revenues earned $ 485,618
Cost of revenues earned 145,718
-----------
Gross profit 339,900
Operating Expenses:
Selling expenses 163,702
Bad debt expense 6,717
General and administrative expenses 236,097
-----------
Total operating expenses $ 406,516
-----------
Net Loss $ (66,616)
===========
</TABLE>
See accompanying notes to financial statements
Page 26
<PAGE>
AMERICAN INTERNET TECHNICAL CENTER, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<S> <C> <C> <C> <C> <C>
Additional
No. of Common Paid-in Retained
Shares Stock Capital Earnings Total
Balances, January 1, 1999 200 $ 200 $ - $ 26,184 $ 26,384
2666.66 for one stock split 533,133 333 (333) - -
--------- --------- ---------- ------------ -----------
Balance, January 1, 1999 533,333 533 (333) 26,184 26,384
Issuance of common stock for cash, net
of issuance costs 18,000 18 9,982 - 10,000
Investment by Parent - - 1,430,128 40,432 1,470,560
Net loss, June 30 - - - (66,616) (66,616)
--------- --------- ---------- ------------ -------------
Balance, June 30, 1999 551,333 $ 551 $1,439,777 $ - $ 1,440,328
</TABLE>
See accompanying notes to financial statements
Page 27
<PAGE>
AMERICAN INTERNET TECHNICAL CENTER, INC.
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<S> <C>
Cash flows from operating activities:
Net (loss) $(66,616)
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amoritization 3,125
Bad debts expenses 11,228
(Increase) decrease in:
Accounts receivables (18,987)
Prepaid expenses 3,161
Deposits 1,600
Increase (decrease) in:
Accounts payable (21,181)
Accured expenses 8,795
Billings in excess of costs and estimated
earnings on uncompleted contracts 39,006
------------
Net cash (used) by operating activities (39,869)
Cash flows used by investing activities:
Purchase of property and equipment (14,515)
------------
Cash flows from financing activities:
Issuance of common stock, net of issuance cost 10,000
Loans from stockholders 20,000
Loan from AmeriNet Group.com, Inc. 100,000
------------
Net cash provided by financing activities 130,000
Net increase in cash 75,616
Cash at beginning of year 3,694
-----------
Cash at end of year $ 79,310
===========
Additional cash payment information:
Interest paid $ -
Income taxes $ -
</TABLE>
See accompanying notes to financial statements
Page 28
<PAGE>
AMERICAN INTERNET TECHNICAL CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
American Internet Technical Center, Inc. (the "Company"), a Florida corporation,
was established on April 15, 1998, to design and host websites and provide
e-commerce programs, marketing and other Internet services. Hosting services,
including search engine registrations, are typically six month or one year
contracts.
The company is a wholly-owned subsidiary of AmeriNet Group.Com, Inc. (see Note
14).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all cash and
other demand deposits to be cash and cash equivalents. As of June 30, 1999, the
Company had no cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and are being depreciated using the
straight-line method over the estimated useful lives of five to seven years.
REVENUE AND COST RECOGNITION
Revenues from long-term contracts are recognized on the percentage-of-completion
method, measured by the percentage of costs incurred to date to estimated total
costs for each contract (i.e., cost-to-cost method). This method is used because
management considers total cost to be the best available measure of progress on
the contracts. Because of inherent uncertainties in estimating cost, it is
possible that the estimates used will change within the near term. Contract
costs include all direct material and labor costs and those indirect costs
related to contract performance, such as subcontractors, equipment rental, and
supplies and, certain general administrative expenses are charged to expense.
Provisions for estimated losses on uncompleted contracts are made in the period
in which such losses are determined. .
The liability, "Billings in excess of costs and estimated earnings on
uncompleted contracts," represents billings in excess of revenues recognized.
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.
ADVERTISING
Advertising costs are expensed when incurred. The advertising cost incurred for
the six months ended June 30, 1999 was $12,125.
Page 29
<PAGE>
AMERICAN INTERNET TECHNICAL CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - COST AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
The following schedule presents the status of costs and estimated earnings on
uncompleted contracts at June 30, 1999.
Costs incurred on uncompleted contracts $ 5,682
Estimated earnings 5,743
Total 11,425
Less; billings to date (91,983)
Total $(80,558)
Included in accompanying balance sheet under the
following captions:
Costs and estimated earnings in excess of billings on
uncompleted contracts $ -
Billings in excess of cost and estimated earnings on
uncompleted contracts (80,558)
Total $(80,558)
NOTE 4 - AMORTIZATION OF GOODWILL
Goodwill represents the amount by which the purchase price of business acquired
exceeds the fair market value of the net assets acquired under the purchase
method of accounting.
The excess of the fair value of the net assets of AITC acquired was $1,470,559,
and was recorded as goodwill. Goodwill is being amortized on a straight-line
method over 15 years. The accumulated amortization of the excess fair value of
net assets of the Company acquired over cost is $-0- at the six months ended
June 30, 1999.
NOTE 5 - ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts receivable are recorded net of an allowance for doubtful accounts of
$57,160 at June 30, 1999.
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash, accounts receivable, accounts payable and loans to
stockholders approximates fair value because of their short maturities.
Page 30
<PAGE>
AMERICAN INTERNET TECHNICAL CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - RELATED PARTY TRANSACTIONS
At June 30, 1999, the Company had an outstanding payable to the stockholders in
the amount of $29,333. The transactions involving the stockholders/officers are
summarized below:
Balance at December 31, 1998 $ 9,333
Advances from stockholders 20,000
Balance at June 30, 1999 $ 29,333
NOTE 8 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at June 30, 1999:
Machinery and equipment $34,597
Furniture and fixtures 6,114
Total property and equipment $40,711
Less: accumulated depreciation (7,055)
Property and equipment, net $33,656
Depreciation expense for the six months ended June 30, 1999, was $3,125.
NOTE 9 - OPERATING LEASES
The Company leases its facilities in Florida under an operating lease with no
fixed term. Total lease expense for the six months ended June 30, 1999 was
$11,934.
NOTE 10 - CONCENTRATION OF CREDIT RISK
Financial instruments, which potentially expose the Company to concentrations of
credit risk, as defined by Statement of Financial Accounting Standards No. 105,
consist primarily of trade receivables. The Company officers have attempted to
minimize this risk by monitoring the companies for whom they provided credit and
also avail themselves of the lien process for contracts.
NOTE 11 - SIGNIFICANT VENDOR
During 1999, the Company subcontracted the production of its websites to an
unrelated party. This unrelated party provides 100% of the website development
to the company.
NOTE 12 - INCOME TAXES
The Company has elected to be treated as an S Corporation for Federal and State
income tax purposes. Under this election, all taxable income, losses and credits
pass through to the individual stockholders and are reflected on their
individual income tax returns. Consequently, no provision for income taxes has
been provided by the corporation. The financial statements reflect earnings on
the percentage of completion method of accounting whereas the completed contract
method is used for income tax purposes.
Page 31
<PAGE>
AMERICAN INTERNET TECHNICAL CENTER, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 13 - STOCKHOLDERS' EQUITY
The Company raised $20,000 through a private placement offering of common stock
during the period January 1, 1999, through March 31, 1999.
On April 26, 1999, the Company was acquired by Ascot Industries, Inc., a Nevada
corporation ("Ascot"), in a stock exchange agreement. Ascot exchanged 90% of its
common stock for all the common shares of American Internet. On July 9, 1999,
this agreement was rescinded and control of AITC was re-acquired by AmeriNet
Group.com, Inc., as the successor in interest to the original stockholders.
NOTE 14 - ACQUISITION
On June 25, 1999, AmeriNet Group.com, Inc. (AmeriNet) acquired all of the
outstanding common stock of the Company; for accounting purposes the transaction
was effective June 30, 1999. As initial consideration, AmeriNet issued an
aggregate of 1,486,736 shares of common stock to the stockholders of the
Company. Under the terms of the earn out provisions of the acquisition
agreement, AmeriNet will issue shares of common stock over a six-year period
beginning June 30, 2000, contingent upon the operating performance of AITC. The
maximum number of shares that could be issued under this agreement is 5,250,000
shares. Such amounts will be accounted for as purchase price adjustments.
The acquisition was recorded using the purchase method of accounting. The
results of operations since the date of acquisition, June 30, 1999, for
accounting purposes, will be included in the consolidated statements of
operations beginning July 1, 1999. Goodwill of $1,470,559 was recorded in this
transaction and is being amortized over 15 years using the straight-line method.
On the date of acquisition, the Company's tax status changed to a regular
corporation from an S-corporation.
NOTE 15 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
organization will continue as a going concern. As discussed below, the
organization has negative cash flows from operations and an accumulated deficit
that raises substantial doubt about its ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
The company's continued existence as a going concern will require new lines of
business. It is anticipated that the Company will effect this transition through
the acquisition of companies that will operate as subsidiaries of the parent
company, AmeriNet Group.com, Inc. The Company's continuation is dependent upon
its ability to acquire profitable businesses, control costs, and attain a
satisfactory level of profitability with sufficient financing capabilities or
equity investment.
Page 32
<PAGE>
c) PRO FORMA
AMERINET GROUP.COM, INC.
PRO FORMA FINANCIAL STATEMENTS
On June 25, 1999, AmeriNet Group.com, Inc., acquired all of the outstanding
common stock of American Internet Technical Center, Inc., ('AITC'). For
accounting purposes, the acquisition was effective June 30, 1999.
The following Pro Forma Combined Balance Sheet for the Registrant has been
prepared by management of the Registrant based upon the balance sheets of the
Registrant as of December 31, 1998. The Pro Forma Combined Statement of
Operations was prepared based upon the statement of operations for the
Registrant for the twelve months ended December 31, 1998, and the six months
ended June 30, 1999. The pro forma statement of operations also includes AITC's
statement of operations for the twelve months ended December 31, 1998, and the
six months ended June 30, 1999. The pro forma statements give effect to the
transaction under the purchase method of accounting and the assumptions and
adjustments in the accompanying notes to pro forma combined financial
statements. The pro forma combined balance sheet gives effect to the acquisition
as if it had occurred as of December 31, 1998. The pro forma combined statement
of operations for the year ended December 31, 1998, gives effect to the
acquisition as if it had occurred as of January 1, 1997. The pro forma combined
statement of operations for the six months ended June 30, 1999, gives effect to
the acquisition as if it had occurred as of January 1,1999.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable. The pro forma combined
financial statements do not purport to represent what the combined companies'
financial position or results of operations would actually have been had the
acquisition occurred on such date or as of the beginning of the period
indicated, or to project the combined companies' financial position or results
of operations for any future period.
Page 33
<PAGE>
AmeriNet Group.com, Inc.
Pro Forma Combined Balance Sheets
December 31, 1998
(Unaudited)
ASSETS
<TABLE>
<S> <C> <C> <C> <C> <C>
American
AmeriNet Internet Pro Forma
December 31, 1998 December 31, 1998 Total Adjustments Combined
Current assets:
Cash 13,182 3,694 16,876 16,876
Accounts Receivable 0 68,903 68,903 68,903
Prepaid and other assets 0 3,161 3,161 3,161
---------------------------------------------------------------------------------
Total Current assets 13,182 75,758 88,940 88,940
Property and equipment, net 0 22,266 22,266 22,266
---------------------------------------------------------------------------------
Other assets:
Deposits 16,092 16,092 16,092
Goodwill, net 0 0 0 (a) 1,413,942 1,413,942
---------------------------------------------------------------------------------
Total other Assets 0 16,092 16,092 1,413,942 1,430,034
---------------------------------------------------------------------------------
TOTAL ASSETS: 13,182 114,116 127,298 1,413,942 1,541,240
=================================================================================
Current liabilities:
Accounts payable 151,661 28,741 180,402 180,402
Accrued expenses 0 8,106 8,106 8,106
Billings in excess of
costs and profits 0 41,552 41,552 41,552
Loans to Stockholders 9,333 9,333 9,333
----------------------------------------------------------------------------------
Total current liabilities 151,661 87,732 239,393 239,393
Stockholders equity (deficit)
Common stock 59,911 200 60,111 (a) 14,201 74,312
Additional paid in capital 2,930,395 0 2,930,395 1,425,925 4,356,320
Retained earnings/deficit (3,128,785) 26,184 (3,102,601) (a) (26,184) (3,128,785)
------------------------------------------------------------------------------
Total stockholders'
equity (deficit) (138,479) 26,384 (112,095) 1,413,942 1,301,847
Total liabilities and
stockholders' equity 13,182 114,116 127,298 1,413,942 1,541,240
====================================================================================
</TABLE>
1. The Pro Forma Balance Sheet at December 31, 1998 is based upon the
balance sheets of the Registrant and American Internet as of December
31, 1998
(a) The purchase price for the acquisition of all common stock of American
Internet was 1,486,736 shares at $0.88 per share goodwill of
$1,413,942 would have been recorded if the acquisition had taken place
on December 31, 1998.
Page 34
<PAGE>
AmeriNet Group.com, Inc.
Pro Forma Combined Statement of Income
For the twelve months ended December 31, 1998
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C>
American
AmeriNet Internet Pro Forma
December 31, 1998 December 31, 1998 Total Adjustments Combined
Revenues earned 0 784,463 784,463 784,463
Costs and revenues earned 0 137,752 137,752 137,752
-------------------------------------------------------------------------------
Gross profit 0 646,711 646,711 646,711
Selling expenses 0 323,762 323,762 323,762
Bad debt expenses 0 45,932 45,932(b) 94,263 140,195
General and administrative expenses 0 132,517 132,517 132,517
-------------------------------------------------------------------------------
Total operating expenses 0 502,211 502,211 94,263 596,474
Loss from operations 0 144,500 144,500 (94,263) 50,237
Other income (expenses):
Loss from discontinued operations (562,415) 0 (562,415) (562,415)
--------------------------------------------------------------------------------
Total other income (expenses) (562,415) 0 (562,415) 0 (562,415)
--------------------------------------------------------------------------------
Net loss (562,415) 144,500 (417,915) (94,263) (512,178)
================================================================================
Basic net loss per share (0.13) (0.09)
Weighted average shares
outstanding 4,174,778 5,811,514
============ ==========
</TABLE>
1. The Pro Forma Statement of Operations for the year ended December 31, 1998
is based upon the twelve months ended December 31, 1998 for the Registrant
and American Internet and gives effect to the acquisition as if it had
occured on January 1, 1998.
(b) Amount represents the amortization of goodwill of $1,413,942 over 15 years
using the straight line method.
Page 35
<PAGE>
AmeriNet Group.com, Inc.
Pro Forma Combined Statement of Income
For the six months ended June 30, 1999
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C>
AmeriNet Group American Internet
Six months ended six months ended Pro Forma
June 30, 1999 June 30, 1999 Total Adjustments Combined
Revenues earned 0 485,618 485,618 485,618
Costs and revenues earned 0 145,718 145,718 145,718
-------------------------------------------------------------------------------
Gross profit 0 339,900 339,900 339,900
Operating expenses:
Selling expenses 163,702 163,702 163,702
Bad debt expenses 6,717 6,717 6,717
General and administrative 0
expenses 256,218 236,097 492,315(c) 49,019 541,334
-------------------------------------------------------------------------------
Total operating expenses 256,218 406,516 662,734 49,019 711,753
--------------------------------------------------------------------------------
Net loss (256,218) (66,616) (322,834) (49,019) (371,853)
================================================================================
Basic net loss per share (0.03) (0.05)
Weighted average shares
outstanding 8,094,884 8,094,884
============== ================
</TABLE>
1. The Pro Forma Statement of Operations for the six months ended June 30,
1999 of the Registrant and six months ended June 30, 1999 of American
Internet. The Pro Forma gives effect to the acquisition as if it had
occured on December 31, 1998.
(c) Amount represents the amortization of goodwill of $1,470,559 over 15 years
using the straight line method.
Page 36
<PAGE>
ITEM 13 EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-B
The exhibits listed below and designated as filed herewith (rather than
incorporated by reference) follow the signature page in sequential order. Only
the exhibits listed are being amended by this report. All other exhibits filed
in the prior report or reports remain unchanged.
DESIGNATION PAGE
OF EXHIBIT NUMBER
AS SET FORTH OR SOURCE OF
IN ITEM 601 OF INCORPORATION
REGULATION S-B BY REFERENCE DESCRIPTION
(23) Consent of experts and counsel
.1 39 Consent of Baum & Company re audit for
year ending December 31, 1997
.2 40 Consent of Bowman & Bowman re audit for
year ending December 31, 1998
.3 41 Consent of Daszkal, Bolton & Manela, P.A.
Certified Public Accountants re audit for
short year ending June 30, 1999
- -------
* Not applicable
** None
Page 37
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERINET GROUP.COM, INC.
December 13, 1999
BY: /S/ MICHAEL HARRIS JORDAN /s/
Michael Harris Jordan
President & Director
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the Registrant and in the capacities indicated:
Signature Date Title
/s/Michael H. Jordan/s/ December 13, 1999 President, Chief Executive
Officer, Director, Executive
Committee
/s/G. Richard Chamberlin/s/ December 13, 1999 General Counsel, Director,
Executive Committee
/s/Penny L. Adams Field December 13, 1999 Director
/s/Anthony Q. Joffe /s/ December 13, 1999 Director, Audit Committee,
Executive Committee
/s/ Bruce J. Gleason /s/ December 13, 1999 Director
/s/ Saul B. Lipson December 13, 1999 Director, Audit Committee
Chair, Executive Committee
/s/ Edward Dmytryk December 13, 1999 Director
/s/ Michael A. Caputa December 13, 1999 Director
/s/ Dennis A. Berardi December 13, 1999 Director
/s/ Carol A. Berardi December 13, 1999 Director
Page 38
Baum & Company, P.A.
1515 University Drive-Suite 209
Coral Springs, Florida 33071
October 15, 1999
To the Board of Directors
AmeriNet Group.com, Inc.
Equity Growth Systems, Inc.
902 Clint Moore Road, Suite 136C
Boca Raton, Florida 33487
We consent to the use of our audit report on financial statements of Equity
Growth Systems, Inc. for the year ended December 31, 1997 in the form 10-KSB for
the year ended June 30, 1999 dated October 18, 1999.
/s/ Baum & Company, P.A.
Baum & Company, P.A.
Page 39
BOWMAN & BOWMAN, P.A.
Certified Public Accountants
1705 Colonial Blvd., Suite D-l
Fort Myers, Florida 33907
(941) 939-2301
(941) 939-1297 (Fax)
To the Board of Directors
AmeriNet Group.com, Inc.
Formerly
Equity Growth Systems, inc.
(A Development Stage Company)
3821-B Tamiami Trail, Suite 201
Port Charlotte, Florida 33952
We consent to the use of our audit report dated April 23, 1999, except Note 2
and Note 5B(b) as to which date is November 10, 1999 on the financial statements
of Equity Growth Systems, Inc. for the year ended December 31, 1998 in their
current SEC filing dated on or about this eighth day of December, 1999.
/s/ Larry Bowman
Bowman & Bowman, P.A.
Certified Public Accountants
Fort Meyers, Florida
December 8, 1999
Page 40
DASZKAL BOLTON MANELA DEVLIN & CO.
CERTIFIED PUBLIC ACCOUNTANTS
A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS
2401 N.W. BOCA RATON BOULEVARD, SUITE 100 BOCA RATON, FLORIDA 33431
TELEPHONE (561) 367-1040 FAX (561) 750-3236
JEFFREY A. BOLTON, CPA, P.A. MEMBER OF THE AMERICAN INSTITUTE
MICHAEL I. DASZKAL, CPA, P.A. OF CERTIFIED PUBLIC ACCOUNTANTS
ROBERT A. MANELA, CPA, P.A.
TIMOTHY R. DEVLIN. CPA, P.A.
MICHAEL S. KRIDEL, CPA
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use of our audit report dated October 5, 1999 in the
form 10-KSB/A of AmeriNet Group.com, Inc.(f/k/a Equity Growth Systems, inc.) and
subsidiary, for the six months ended June 30, 1999.
Boca Raton, Florida
December 10, 1999 /s/ Daszkal Bolton Manela Devlin & Co.
Daszkal, Bolton, Manela, Devlin & Co
DASZKAL BOLTON MANELA DEVLIN & CO.
CERTIFIED PUBLIC ACCOUNTANTS
A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS
2401 N.W. BOCA RATON BOULEVARD, SUITE 100 BOCA RATON, FLORIDA 33431
TELEPHONE (561) 367-1040 FAX (561) 750-3236
JEFFREY A. BOLTON, CPA, P.A. MEMBER OF THE AMERICAN INSTITUTE
MICHAEL I. DASZKAL, CPA, P.A. OF CERTIFIED PUBLIC ACCOUNTANTS
ROBERT A. MANELA, CPA, P.A.
TIMOTHY R. DEVLIN. CPA, P.A.
MICHAEL S. KRIDEL, CPA, P.A.
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use of our audit report dated October 5, 1999 in the
form 10-KSB of American Internet Technical Center, Inc. for the six months ended
June 30, 1999.
Boca Raton, Florida
October 21, 1999 /s/ Daszkal Bolton Manela Devlin & Co.
Daszkal, Bolton, Manela, Devlin & Co
Page 42
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
<CASH> 79,021
<SECURITIES> 0
<RECEIVABLES> 133,822
<ALLOWANCES> 57,160
<INVENTORY> 0
<CURRENT-ASSETS> 155,683
<PP&E> 33,656
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,674,390
<CURRENT-LIABILITIES> 137,440
<BONDS> 0
0
0
<COMMON> 80,948
<OTHER-SE> 1,456,002
<TOTAL-LIABILITY-AND-EQUITY> 1,674,390
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 256,218
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (256,218)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
