UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-QSB
Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the
quarterly period ended September 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.)
2500 North Military Trail Suite 225, Boca Raton, Florida 33431
--------------------------------------------------------------
(Address of principal executive offices)
33487
-----
(Zip Code)
Issuer's telephone number: (561) 998-3435
--------------
State the number of shares outstanding of each of the small business
issuer's classes of common equity, as of the latest practicable date. As of
December 31,1999, there were 10,430,126 shares of the small business issuer's
common stock outstanding.
Transitional Small Business Disclosure Format (Check one): Yes No x
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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,
Wriwebs.com, Inc., maintains a web site at http://www.wriwebs.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.
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Table of Contents & Cross Reference Sheet
Part Item Page
Number Number Number Caption
I 1 Financial Statements
4 Condensed Consolidated Financial Statements
5 Condensed Consolidated Balance Sheet (Unaudited) as
of December 31, 1999
6 Condensed Consolidated Statements of Operations
(Unaudited), for the Six Months Ended December 31,
1999 and 1998, and for the three months ended
December 31, 1999 and 1998.
7 Condensed Consolidated Statements of Cash Flows
(Unaudited) for the Six Months Ended December 31,
1999 and 1998
8 - 11 Notes to Condensed Consolidated Financial Statements
2 Management's Discussion and Analysis or Plan of Operation
12 Plan of Operation
12 General
13 Recent Developments Pertaining to Plan of Operation
13 Results of Operations
14 Liquidity and Capital Resources
II 1 15 Legal Proceedings
2 15 Changes in Securities
3 * Defaults Upon Senior Securities
4 * Submission of Matters to Vote of Securities Holders
5 18 Other Information
6 21 Exhibits and Reports on Form 8-K
- - -------------
* Not Applicable
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Part I - Financial Information
Item 1. Financial Statements:
AMERINET GROUP.COM, INC. AND SUBSIDIARY
(f/k/a EQUITY GROWTH SYSTEMS, INC.)
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PERIOD ENDED DECEMBER 30, 1999 AND 1998
TABLE OF CONTENTS
Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheet (Unaudited)
as of December 31, 1999...................................... 5
Condensed Consolidated Statements of Operations (Unaudited),for the Six
Months Ended December 31, 1999 and 1998, and for the
Three Months Ended December 31, 1999 and 1998.................. 6
Condensed Consolidated Statements of Cash Flows (Unaudited) for the
Six Months Ended December 31, 1999 and 1998.................... 7
Notes to Condensed Consolidated Financial Statements............ 8-11
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999
(UNAUDITED)
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash $ 51,103
Accounts receivable, net 1,908
Accounts receivable - WRIwebs.com, Inc. 100,000
Inventory 149,683
-------
Total current assets 302,694
-------
Property and equipment, net 139,879
-------
Other assets:
Goodwill, net 3,917,437
Loan costs, net 4,687
Investment in WRIwebs.com, Inc. 741,353
Deposits 11,100
---------
Total other assets 4,674,577
---------
Total assets $5,117,150
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 75,387
Accrued expenses 436,725
Loans payable - other 275,800
-------
Total current liabilities 787,912
-------
Equity subject to potential redemptions 748,104
-------
Stockholders' equity:
Preferred stock, no par value, 5,000,000 shares
authorized, -0- issued and outstanding -
Common stock, $0.01 par value, 20,000,000
shares authorized, 10,195,199 shares issued
and outstanding 101,952
Outstanding stock options 17,270
Additional paid in capital 8,363,834
Accumulated deficit (4,901,922)
-----------
Total stockholders' equity 3,581,134
-----------
Total liabilities and stockholders' equity $5,117,150
==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998 AND
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
12/31/99 12/31/98 12/31/99 12/31/98
Revenues earned $ 36,709 $ - $ 204,878 $ -
Cost of revenues earned 88,969 - 158,078 -
-------- --------- --------- ----------
Gross profit (loss) (52,260) - 46,800 -
Selling, general and administrative expenses 907,000 - 799,816 -
Depreciation and amortization 151,129 - 212,453 -
Goodwill - charges and transactions - - 522,201 -
---------- --------- ---------- ---------
Total operating expenses 1,058,129 - 1,534,470 -
---------- --------- ---------- ---------
Income (loss) from operations (1,110,389) - (1,487,670) -
----------- --------- ----------- ---------
Other income (expense):
Interest expense (22,500) - (22,500) -
Equity in losses of subsidiary (6,751) - (6,751) -
------- --------- ---------- --------
Total other income (expense) (29,251) - (29,251) -
-------- --------- ----------- --------
Provision for income taxes - - - -
-------- --------- ----------- --------
Loss from discontinued operations - (545,147) - (544,696)
-------- --------- ----------- --------
Net loss $(1,139,640) $ (545,147) $(1,516,921) $ (544,696)
============ =========== ============ ==========
Basic loss per share $ (0.14) $ (0.13) $ (0.19) $ (0.13)
------------ ----------- ------------ -----------
Weighted average shared outstanding 8,237,444 4,174,778 8,193,324 4,174,778
============ =========== ============ ===========
Fully diluted loss per share $ (0.14) $ (0.13) $ (0.19) $ (0.13)
------------ ----------- ------------ -----------
Fully diluted average shares outstanding 8,237,444 4,222,191 8,193,324 4,222,191
============ ========== ============ ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<S> <C> <C>
1999 1998
Cash flows from operating activities:
Net cash used by operations $ (624,300) $ (292,850)
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment (20,506) -
Cash overdraft acquired in acquisition (9,262) -
----------- -----------
Net cash used by investing activities: (29,768) -
----------- -----------
Cash flows from financing activities:
Common stock issued for cash, net of costs 326,150 35,000
Capital contributions 25,000
(Increase) decrease in mortgage and notes receivable - 1,570,888
Increase (decrease) in mortgage and notes payable 275,000 (1,299,828)
----------- -----------
Net cash provided by financial activities 626,150 306,060
----------- -----------
Net increase (decrease) in cash (27,918) 13,210
Cash at beginning of period 79,021 (28)
----------- -----------
Cash at end of period $ 51,103 $ 13,182
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 2,938 $ -
=========== ===========
Non-cash transactions affecting investing and
financing activities:
Common stock issued for equipment 7,500 -
=========== ===========
Common stock issued for interest 15,000 -
=========== ===========
Common stock issued for acquisitions 2,348,273 -
=========== ===========
Contribution of professional services $ 452,725 $ -
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required for complete financial
statements. In the opinion of management, all adjustments necessary for a fair
presentation of the results for the interim periods presented have been
included.
These results have been determined on the basis of generally accepted accounting
principles and practices applied consistently with those used in the preparation
of the Company's Annual Financial Statements for the year ended June 30, 1999.
Operating results for the three and six months ended December 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
June 30, 2000.
It is recommended that the accompanying condensed financial statements be read
in conjunction with the consolidated financial statements and notes thereto
include in the Company's 1999 Annual Report on Form 10-K.
NOTE 2 - ACQUISITIONS
American Internet Technical Center, Inc.
During October, 1999, the Company renegotiated its agreement with AITC's former
principal stockholders, who agreed to return 932,756 of the 1,486,736 AmeriNet
shares originally issued to them in exchange for release from their multi-year
employment agreements and $48,000, payable in six monthly installments of $8,000
each, beginning October, 1999, and agreed to the cancellation of all rights to
receipt of additional, performance-based shares. Consequently, Yankee Companies,
Inc. returned 94,602 shares of common stock initially issued as part of the AITC
acquisition for $4,800. The company plans to retire these shares of common
stock. In November 1999, the Company merged AITC into WRIwebs.com, Inc. The
surviving corporation is accounted for under the equity method of accounting.
Trilogy International, Inc.
On December 1, 1999, the Company, through a wholly owned subsidiary, acquired
all of the outstanding common stock of Trilogy International, Inc. (a
development stage company). As consideration, the Company issued 1,817,273
shares of common stock to the shareholders of Trilogy, and will issue 181,727
shares to Yankee as consideration for its assistance in completing the
acquisition. In addition, the Company has agreed to provide up to $900,000 in
financing to Trilogy within 180 days after completion of the acquisition and the
filing of the required reports with the United States Securities and Exchange
Commission.
The acquisition was accounted for using the purchase method of accounting. The
results of operations are included in the consolidated statement of operations
since the date of the acquisition. Goodwill of $4,028,376 was recorded in this
transaction and is being amortized over three (3) years, using the straight-line
method.
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 2 - ACQUISITIONS, continued
The following summarizes the fair value of the Trilogy's assets acquired and the
liabilities on the date of the acquisition:
Accounts receivable $ 2,132
Inventory 154,941
Property and equipment 134,185
Loan closing costs 4,792
Deposits 11,100
Accounts payable (171,451)
Checks outstanding in excess of bank balance (9,262)
Accrued expenses (484,947)
Outstanding stock options (17,270)
-------------
Net liabilities $ (375,780)
=============
WRIwebs.com, Inc.
On November 30, 1999, the Company merged American Internet Technical Center,
Inc. with WRIwebs.com, Inc ("WRI"). As consideration, the Company issued 531,000
shares of its common stock to the shareholders of WRI and will issue 53,100
shares of common stock to Yankee. In addition, the Company has agreed to provide
up to $300,000 in financing within 120 days after the completion of the merger
and the filing of the required reports with the United States Securities and
Exchange Commission.
The Company accounts for the investment in WRIwebs.com, Inc. under the equity
method. The company recognizes 20 percent of WRI's net losses.
WRI Subject to Partial Re-Acquisition Rights
In connection with the acquisition, the agreement provides that the current
majority stockholder of WRI retains the right, for a period of two years
starting on the 182nd day following completion of the Merger, to exchange all of
his Amerinet securities issued pursuant to the agreement, including dividends or
distributions based on the ownership thereof, for between seventy and eighty
percent of the Surviving Corporation's Common Stock. The Surviving Corporation
would repay all funds advanced to it or it's affiliates or designees directly or
indirectly by or through Amerinet together with:
(a.) Interest at the rate of six percent per annum from the day of funding,
concurrently with the exercise of the Caputa option or
(b.) Over a period of twenty four months, in equal installments, starting on the
date of the exercise of the option, together with interest at the rate of
eight percent per annum, payable first, and after all the interest has been
paid of principle. Such repayment obligation is secured through a pledge of
assets of the Surviving Corporation either having a value equal to 150% of
the aggregate indebtedness or comprised of all of the Surviving
Corporation's Capital Stock, in either case using forms of notes and
security agreements mutually agreed to by Amerinet and the Surviving
Corporation; and, the payment is guaranteed by Mr. Caputa.
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 3 - 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.
Effective November 30, 1999, the Company merged its wholly owned subsidiary
American Internet Technical Center, Inc. with WRIwebs.com, Inc.; the surviving
Corporation is accounted for under the equity method. As a result, the Company
can no longer consolidate American Internet Technical Center, Inc., and the
unamortized portion of the goodwill relating to this acquisition was reduced
from $614,484 to zero.
At December 31, 1999, the excess of the fair value of the net assets of Trilogy
International, Inc. is $4,028,376 and is recorded as goodwill, and is being
amortized on a straight-line basis over three (3) years. The accumulated
amortization at December 31, 1999 was $110,940.
NOTE 4 - STOCKHOLDERS' EQUITY
During the three months ended December 31, 1999, the Company issued common stock
for cash and consideration for acquisition and services.
(a) The Company issued 667,000 shares of common stock for cash during the three
months ended December 31, 1999. The total amount obtained from the issuance
was $300,250.
(b) The Company issued a total of 2,348,273 shares for the acquisition of
Trilogy and WRI.
(c) The Company issued 15,000 shares to Xcel Associates as consideration for
the loan. The Company recorded $22,500 as interest expense.
(d) In connection with the renegotiation with AITC, Yankee returned 94,602
shares of common stock it received as compensation for services related to
the acquisition for $4,800.
During the three months ended September 30, 1999, the company issued its common
stock for cash and in exchange for equipment as follows:
(a) On July 22, 1999, 7,500 shares of common stock were issued for equipment
purchased. This transaction resulted in $6,075 of fixed assets expense,
which was capitalized.
(b) The Company issued 90,000 shares of common stock for cash during the three
months ended September 30, 1999. The total amount obtained from the
issuance was $27,500.
(c) On September 8, 1999, Xcel Associates 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. As required under Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Corporations" (FASB No. 123), this option
is to be valued under the Fair Value Based Method, and results in stock
issuance costs of $174,570.
(d) Additional paid-in capital of the Company increased by $192,115. This
increase was due to a capital contribution of professional services
provided to the company during the three-month period July 1, 1999 through
September 30, 1999.
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AMERINET GROUP.COM, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 5 - BORROWINGS
During the second quarter the Company borrowed $200,000 from various
shareholders and other related parties. The notes carry various interest rates
and are due on demand.
On September 27, 1999, Xcel Associates ("Xcel) loaned AITC $75,000; the note is
due on December 31, 1999. In lieu of interest, Xcel subsequently received 15,000
shares of the Company's common stock, in November 1999. Yankee has 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 AITC. Additionally, the Company will issue 3,500 shares of its
common stock to Yankee Companies as compensation.
NOTE 6 - INVESTMENTS IN WRIWEBS.COM, INC., AT EQUITY
The condensed financial data of WRIwebs.com, Inc. is presented for the period
December 1, 1999 (the effective date of the merger) to December 31, 1999.
Summary of Operations
Revenue $ 91,282
Costs and expenses (125,040)
----------------
Net loss $ (33,758)
----------------
Amerinet's equity in net losses $ (6,751)
----------------
Balance Sheet Data
Assets
Current assets $ 91,480
Non-current assets 68,688
----------------
Total assets $ 160,168
----------------
Liabilities and Shareholders' Equity
Current liabilities $ 355,187
Non-current liabilities 34,000
Shareholders' equity (229,019)
----------------
Total liabilities and shareholders' equity $ 160,168
--------------
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Item 2. Management's Discussion and Analysis or Plan of Operation
Plan of Operation
General
The Registrant is currently a holding company with two operating
subsidiaries, Wriwebs.com, Inc. (formerly known as American Internet Technical
Center, Inc.), and Trilogy, International, Inc. Through its current officers and
directors, the Registrant is also involved in providing consulting services to
client companies that desire to attain public trading status, in exchange for
the issuance of a percentage of the client's securities directly to the
Registrant's stockholders after such securities have been registered with the
Commission as required by the Securities Act and the Exchange Act. In addition
to obtaining a benefit for the Registrant's stockholders directly through their
receipt of securities of the client companies, the Registrant hopes to develop
relationships with its consulting clients that, in appropriate instances, will
lead to their acquisition by the Registrant or to the establishment of ongoing
business relationships with subsidiaries of the Registrant. In no instance,
however, does the Registrant intend to become involved with any control over the
business operations of such clients unless they are acquired by the Registrant.
The Registrant seeks to acquire operating companies that can benefit from
the Registrant's public reporting and trading status, from the experience of the
Registrant's directors, from synergy resulting from consolidation of
non-operating aspects of the subsidiaries' business at the holding company
level, from the related operations of the Registrant's subsidiaries and from the
resulting ability to concentrate on the continued development of their core
businesses without the distractions required to operate independently in an
extensive regulatory environment. As a holding company, the Registrant provides
its subsidiaries with centralized functions such as:
Over the next fiscal year, the Registrant plans to acquire additional
companies and recruit operating and research and development personnel that are
complementary to WRI, and Trilogy, and its current operating subsidiaries. The
Registrant is currently a party to letter of intent with Custom Software
Systems,Inc. ("CSSI") which it hopes will provide the research and development
capabilities called for under the Registrant's strategic plan (see Part II, Item
5 for more detailed information).
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Recent Developments Pertaining to Implementation of Plan of Operation
The Registrant's ability to continue as a going concern is dependent upon
its ability to attain a satisfactory level of profitability and to continue to
have access to suitable financing. As stated in the 10- QSB for the period ended
September 30, 1999 and 10-KSB for the period ending June 30, 1999, in order for
the Registrant to re-attain profitable operations, management will have to
re-establish internal service and capabilities, diversify the services offered,
focus on new challenges and take advantage of new opportunities. Management
believes that such capabilities are in place through the assistance of Yankees
and Xcel.
In conjunction with implementation of the required operating reforms, the
Registrant totally restructured its transaction with American Internet,
recovering most of the securities issued in exchange for American Internet's
capital stock and terminating all rights to additional consideration, and
acquired Wriwebs.com, Inc., a Florida corporation ("WRI") through a merger with
American Internet which became effective on November 12, 1999 (see Part II, Item
5). The acquisition of WRI provided the internal operational requirements that
American Internet required in order to arrest its declining operations and
increasing losses. The acquisition was effected in exchange for 531,000 shares
of the Registrant's common stock, with up to an additional 150,000 shares of
common stock issuable based on WRI's operational results over the next three
years. While WRI was merged into American Internet, WRI's officers and directors
assumed control over all of the merged companies' assets and operations and
American Internet's name was changed to Wriwebs.com, Inc. (for purposes of this
report, the merged entities will be referred to as "New WRI"). The Registrant
provided New WRI with $100,000 in expansion capital at closing on the merger and
has provided it with an additional $97,500 as of the date of this report. It
expects to invest up to an additional $102,500 during the fiscal year ending on
June 30, 2000, based on New WRI's performance. Like American Internet, WRI is
engaged in the design, sale and hosting of Internet web sites. Unlike American
Internet, it performed almost all functions in house and is implementing a plan
to upgrade the quality and complexity of its web sites in order to attract more
profitable business.
On December 1, 1999 the Registrant acquired a second subsidiary, Trilogy
International, Inc., a Florida corporation ("Trilogy"). The acquisition involved
an exchange of 1,817,273 shares of the Registrant's common stock with Trilogy's
then current stockholders and assumption of options to purchase Trilogy common
stock which will allow the holders to purchase an aggregate of 338,940
additional shares of the Registrant common stock at $0.75 per share. The
Registrant has provided Trilogy with $413,000 in funding since its acquisition
and expects to provide up to an additional $487,000 during the fiscal year
ending on June 30, 2000, based on Trilogy's performance. Trilogy markets a
proprietary line of wholesome, clinically tested non-toxic pet care products
under the label "Trilogy's Best Friends, formulated by Trilogy's chief product
development officer, Jane Bicks, DVM. Dr. Bicks is a pioneer of natural medicine
and a nationally recognized veterinarian. She has authored three books and
appeared as a veterinary expert on CBS' 48 Hours, ABC's Good Morning Show,
Animal Planet's Petsburgh, QVC's Pet Shops and the Home Shopping Network's Pet
Solutions. Trilogy also markets consumer dietary supplements through its
"Essence of Life Colostrum Formula" with Astragalus, a nutritional supplement
that supports a healthy immune system. Detailed information concerning Trilogy
can be found at its Internet web site at
Results of Operations
Because WRI's former principal stockholder has an option to acquire between
70% and 80% WRI's common stock until November 11, 2001, by repaying all advances
from the Registrant (with interest) and returning all securities or other
distributions received from the Registrant, generally accepted accounting
principals do not permit consolidation of WRI's financial statements with those
of the Registrant. Rather, the WRI acquisition is accounted for as though the
Registrant acquired between 20% and 30% of WRI's common stock as an investment.
The stock purchase option was designed to provide the former controlling
stockholder of WRI with an opportunity to reconsider his decision to become
associated with the Registrant should he find that the relationship was not
working to his satisfaction. While no assurances can be provided that the option
will not be exercised, management of the Registrant believes that all parties
are satisfied with their current relationship and would be surprised if such
option were exercised.
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During the three months ended December 31, 1999 the Registrant reported
revenue of approximately $36,709 as compared to revenue from all sources (other
than WRI) of $0.00 during the comparable three month period in 1998. WRI's
revenue for the three months ended December 31, 1999 was $262,860.
During the three months ended December 31, 1999 the Registrant's cost of
revenues (excluding WRI) was approximately $88,969 as compared to no cost of
revenue during the comparable three month period in 1998. The increase was
attributed to discontinued operations in the prior year and a change of business
in the current year. During the three months ended December 31, 1999, WRI's cost
of revenues was approximately $137,986.
During the three months ended December 31, 1999 the Registrant (excluding
WRI) reported a net loss of approximately $(1,139,640) or $(0.14) loss per
share, compared to $(545,147) net loss or $(0.13) in the comparable three month
period in 1998. During the three months ended December 31, 1999, WRI reported a
net loss of approximately $(38,270). If the WRI financial statements had been
consolidated with the Registrant's then the loss per share for the period ended
December 31, 1999 would have been $(0.14).
A majority of the current periods loss ($782,812 of the $1,139,640 loss)
was attributable to the accounting treatment required under generally accepted
accounting principles for the accounting of "goodwill" and "re-valuation of
stock options received for services rendered." Yankees provided services worth
$260,610 for the quarter ended December 31, 1999, which were treated as an
expense and then as a donation of an equivalent sum by Yankees to the
Registrant's capital. The goodwill adjustment to the profit and loss statement
accounted for $522,202 and the treatment of Yankees' services accounted for
$260,610 of the $1,139,640 loss for the period.
Liquidity and Capital Resources
The Registrant (excluding WRI) had cash on hand in the amount of $51,103 at
December 31, 1999 compared to $13,182 at December 31, 1998. The working capital
deficit increased from $(138,479) at September 30, 1998 to $(485,218) at the end
of the current period. The working capital increase was related principally to
the structural difference between the prior business of the Registrant and the
current business activities. The Registrant and Trilogy have accumulated a net
deficit of $(4,901,922) since their inception in 1964 and 1998 respectively.
The financial results of WRI's operations would have had a material impact
on Registrant's liquidity and capital resources if its financial statements had
been consolidated with the Registrant's. The Registrant's cash on hand would
have been increased to $56,720 at December 31, 1999 compared to $17,184 at
December 31, 1998 and its working capital deficit is $(682,926) at the end of
the current period.
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The Registrant continues to provide its subsidiaries, including WRI with
required capital principally from funds obtained through private placement of
its common stock to current stockholders and from loans from stockholders,
including Yankees and Xcel. It expects to obtain the bulk of its current capital
requirements through Xcel's exercise of a warrant to purchase 1,000,000 shares
of the Registrant's common stock at $0.75 per share at such time as the shares
of common stock underlying the option are registered with the Commission. The
Registrant intends to file a registration statement on Commission Form S-3
registering such underlying shares during February of 2000.
Part II - Other Information
Item 1. Legal Proceedings
Neither the Registrant nor its subsidiaries have been involved in any
material legal proceedings, except as disclosed in the Registrant's report on
Form 10-KSB for the fiscal year ended June 30, 1999, or disclosed on the Form
10-QSB for the quarter ending September 30, 1999 and the Form 8-KSB filed on
December 16, 1999.
Item 2. Changes in Securities
c. Recent sales of unregistered securities
Since October 1, 1999, the Registrant sold the securities listed in the
tables below without registration under the Securities Act in reliance on the
exemption from registration requirements cited. All footnotes follow the last
table.
Common Equity
<TABLE>
<S> <C> <C> <C> <C> <C>
Number of Total Registration
Shares Offering Total (3) Exemption
Date Sold Subscriber Consideration Discounts Relied on
- - ---- ----- ---------- ------------- --------- ---------
October 7 15,000 Xcel (4) (5) None (2)
October 26 190,000 Bolena (6) $95,000 (7) None (2)
October 26 110,000 K. Walker (6) $55,000 (7) None (2)
November 12 100,000 Vanessa Radcliffe (6) $50,000 None (2)
November 12 531,000 (8) (8) None (1)
November 12, 53,100 Yankees (9) None (1)
December 1 1,817,273 (10) (10) None (1)
December 1 181,727 Yankees (9) None (1)
November 19 200,000 Yankees (12) None (1)
December 16 67,000 Joseph Radcliffe (11) None (1)
</TABLE>
Consequently, as of December 31, 1999, 10,430,126 shares of the
Registrant's common stock was outstanding.
Page 15
<PAGE>
Common equity subject to outstanding options or warrants to purchase, or
securities convertible into, common equity of the Registrant.
During the period starting on October 1, 1999 and ending on December 31,
1999, the Registrant reserved 522,834 additional shares of its common stock for
issuance in conjunction with obligations incurred during such period. The
following table provides summary data concerning such obligations, options and
warrants:
<TABLE>
<S> <C> <C> <C> <C>
Designation Nature of Exercise or Number of
or Holder The Security Conversion Shares Currently
Security Price Reserved Date
Former WRI Stockholders (12) (13) 150,000 November 11, 1999
Former Trilogy Stockholders (13) (14) 338,940 December 1, 1999
Yankees (13) (14) 33,894 December 1, 1999
- - -------
</TABLE>
(1) Section 4(2) of the Securities Act. In each case, the subscriber was
required to represent that the shares were purchased for investment
purposes, the certificates were legended to prevent transfer except in
compliance with applicable laws and the transfer agent was instructed
not to permit transfers unless directed to do so by the Registrant,
after approval by its legal counsel. In addition, each subscriber was
directed to review the Registrant's filings with the Commission under
the Exchange Act and was provided with access to the Registrant's
officers, directors, books and records, in order to obtain required
information.
(2) Section 4(6) of the Securities Act. In each case, the subscriber was
required to represent that the shares were purchased for investment
purposes, the certificates were legended to prevent transfer except in
compliance with applicable laws and the transfer agent was instructed
not to permit transfers unless directed to do so by the Registrant,
after approval by its legal counsel. Each subscriber was directed to
review the Registrant's filings with the Commission under the Exchange
Act and was provided with access to the Registrant's officers,
directors, books and records, in order to obtain required information;
and, a Form D reporting the transaction was filed with the Commission.
(3) No commissions or discounts were paid to anyone in conjunction with the
sale of the foregoing securities, except that Yankees exercised
preferential subscription rights granted by the Registrant in its
consulting agreement, or Yankees may be entitled to compensation based
on the terms of its Consulting Agreement with the Registrant.
(4) Xcel Associates, Inc., a New Jersey corporation.
(5) Non-qualified stock options and incentive stock options, the terms of
which, including price, will be determined prior to issuance. It is
anticipated that the exercise price will be 85% or greater of the last
transaction price reported on the OTC Bulletin Board or other
designated quotation medium on the date of grant.
(6) Part of a private placement of up to 900,000 shares of the Registrant's
common stock for up to $700,000, the initial 400,000 shares being
placed at $0.50 per share and the remaining 500,000 shares to be placed
for $1.00 per share. As of November 12, 1999, only the initial 200,000
shares have been subscribed for.
(7) Stock purchase warrant.
Page 16
<PAGE>
(8) The 531,000 shares of the Registrant's common stock were issued to the
capital stockholders of WRI in consideration for the merger of WRI into
American Internet and the cancellation of all of WRI's capital stock.
(9) Shares issued to Yankees and certain of its personnel at the direction
of Yankees, in consideration for its services in locating WRI and
Trilogy, structuring and negotiating each acquisition, and integration
of its operations in a revised strategic plan for the Registrant,
pursuant to the Yankee Companies Consulting Agreement.
(10) The 1,453,818 shares of the Registrant's common stock were issued to
the capital stockholders of Trilogy pursuant to the terms of a Merger
Agreement, and an additional 363,455 shares are reserved and
distributed pursuant to the escrow instructions pursuant to the terms
of the Merger Agreement, in consideration for the merger of Trilogy
into a subsidiary of the Registrant and the cancellation of all of
Trilogy's capital stock.
(11) Part of a private placement of up to 500,000 shares of the Registrant's
common stock for up to $200,250, the initial 67,000 shares being placed
at $0.75 per share and the remaining shares to be placed for $0.75 per
share to Joseph Radcliffe, his designees or assigns, or members of the
board of directors desiring to participate in the offering, their
designees or assigns or persons or entities approved by the Board of
Directors. Any of the shares not purchased by any of the above would be
offered to Yankees at the preferred rate pursuant to the Yankee's
consulting agreement.
(12) A private placement in which Yankees paid $50,000 for 200,000 shares of
the Registrant's common stock. Yankees has preferential rights to
subscribe for securities offered by AmeriNet pursuant to the Yankees
Consulting Agreement dated November 11, 1998, amended November 23,
1999. Pursuant to this amended agreement, authorizes Yankees to receive
shares in conformity with a price equal to 50% of the price paid by
other subscribers.
(13) Rights to receive additional shares of the Registrant's common stock
based on the post merger performance of WRI and American Internet as a
single corporate entity. The shares will constitute a potential
additional component of the consideration for all of the capital stock
of WRI (see Part II, Item 5).
(14) 338,940 shares of the Registrant's common stock is reserved pursuant to
an Exchange Ratio established by Section 1.6(B)(3) of the Trilogy
Merger Agreement, Schedule 1.6(B)(3) wherein Trilogy International
Warrants of former Trilogy stockholders may be redeemed and exchanged
for Registrant's common stock. An additional 33,894 shares are to be
reserved for Yankees pursuant to the Yankees Consulting Agreement.
Consequently, as of December 31, 1999, 4,726,814 shares of the Registrant's
common stock were reserved for future issuance.
Page 17
<PAGE>
Item 5. Other Information
Material Subsequent Events
CSSI:
As a material subsequent event, on January 28, 2000, the Registrant signed
a letter of intent to acquire Custom Software Systems, Inc., a Virginia
corporation now headquartered in Houston, Texas ("CSSI"). CSSI was formed in
1990 and is a high technology software business with extensive experience in
designing and developing database driven web applications and Intranet
solutions. CSSI staff helped pioneer Intranet and Extranet applications for NASA
beginning in 1994, including document and multi-media repositories, JAVA
client-server systems, and dynamic database-HTML generators. CSSI has extensive
experience in system analysis, product integration, database integration,
multi-media repository management and full life-cycle support including task
management, documentation, customer interface, and staff training. CSSI's staff
members have extensive backgrounds in Internet, database, client-server,
re-engineering, decision support and real time systems and have helped lead
several critical successful projects for government and commercial clients
including four NASA International Space Station information systems prime
contractors (e.g., the Boeing Company, and Indyne Inc. in support of the Johnson
Space Center Imagery Processing and Support System). CSSI was the e-commerce
theater sponsor at the 1999 Information Technology Exposition and Conference in
Austin Texas. CSSI's current corporate capacities encompass all the prevalent
Internet software and tools, databases, hardware platforms, application
development and scripting languages including JAVA, Javascript, HTML. Cold
Fusion, ASP, C, C++, Visual basic, Oracle, SqlServer, Access, Msql, MySQL, Unix,
NT and MVS.
As currently envisioned, the Registrant, either directly or through WRI (if
its principal stockholder waives current rights described in Part I, Item 2)
would acquire all of CSSI's capital stock in exchange for $600,000 in shares of
the Registrant's common stock based on its last transaction price. The
Registrant would invest up to $400,000 in CSSI over a 180 day period following
the completion of the CSSI audit required under the Exchange Act. CSSI's
shareholders would also be granted partial disassociation rights similar to
those described in Part I, Item 2, as to WRI. CSSI's management would have the
right to waive the partial disassociation rights without the consent of the
former CSSI shareholders, and, in such event, the former shareholders of CSSI
would be eligible to receive additional shares of the Registrant's common stock
based on CSSI having attained certain net, pre-tax profits, targets during a
specified period. Day to day control of CSSI operations would remain with the
current shareholders of CSSI who would have the contractual right to elect three
fourths of its directors, provided that the participation of the Registrant's
designees to CSSI's board of directors would be required to constitute a quorum.
In addition, CSSI would be prohibited from making material changes in its
operations and the CSSI designees to its board of directors would be required to
fully comply with all applicable laws and their fiduciary duties to the
Registrant.
As of December 31, 1999, CSSI had a net tangible book value of
approximately $75,000, and had gross sales of $900.000 and a net loss before
taxes of $25,000 for the most recent fiscal year (unaudited). Since July of
1999, CSSI has expended a material quantity of its income, time and resources to
implement its diversification strategy which reduced its profitability for the
period. However, such investments, especially in conjunction with the synergy
expected to result from an association with the Registrant and its other
subsidiaries, are expected to greatly improve CSSI's profitability over a
relatively brief period of time.
Page 18
<PAGE>
A copy of the letter of intent with CSSI is filed as an exhibit to this
report, see Part II, Item 6(a).
15c2-11 Domain name Rights
As a material subsequent event, on February 9, 2,000, the Registrant
acquired an exclusive license to develop commercial and civic applications for
the domain names 15c2-11.com, 15c2-11.net, 15c2-11.org and 15c2-11.cc. The names
are derived from Rule 15c2-11 under the Exchange Act which deals with the
information that must be publicly available before brokerage firms may
participate in making markets for publicly traded securities and the anticipated
applications revolve around the concept of a publicly accessible information
depository system.
The license agreement anticipates that the Registrant will delegate the
design, development and operation of the anticipated Internet site or sites to
Wriwebs.com, Inc., its wholly owned subsidiary ("WRI"). The Registrant acquired
the rights from its strategic planning consultant, Yankees, in consideration for
a 5% royalty. Payment of the royalty will be deferred and accrued until the
Registrant can make the required payments from consolidated profits. The term of
the license is concurrent with Yankees' consulting agreement and any renewals or
extensions thereof, after which the rights and all derivations therefrom would
revert to Yankees.
As currently contemplated, non-reporting public companies would be
permitted to list information statements meeting the requirements of Rule
15c2-11 for periods of three to six months at the Internet sites developed for
such purpose, after which they would have to be renewed with current
information. The information would be protected from modification by
non-authorized persons, to the extent technologically feasible. In addition,
auditors, attorneys, transfer agents and other providers of services to public
companies would be permitted to direct advertisements to the public companies
listed. Brokerage firms and other providers of services to investors would be
permitted to direct advertisements to public visitors to the sites. The
Registrant anticipates that listing companies will be charged reasonable fees
designed to cover operating costs but that site visits will be free.
Advertisements are expected to be the principal source of potential profits.
Accuracy of the information on the site will be the responsibility of the
companies that list it; however, the Registrant is contemplating the feasibility
of establishing a preliminary review process designed to promote the development
of qualitative standards geared to the requirements of Commission Regulation SB
and generally accepted accounting practices, other than audit requirements, as
long as such process does not subject the Registrant to additional liability.
The projects will endeavor to meet standards imposed for registered
information depository systems by the Commission or the NASD; however, because
such standards have not been developed, no assurances can be provided that they
will be met, or that the Commission's current proposals dealing with registered
information depository systems will ever be adopted or implemented.
A copy of the license agreement with Yankees is filed as an exhibit to this
report, see Part II, Item 6(a).
Page 19
<PAGE>
Fourth Amendment to Lockup and Voting Agreement
The Amended Lock Up and Voting Agreement previously reported was further
amended on December 22, 1999. The Fourth Amendment to the Lock Up Agreement
empowers and directs the Registrant's president to authorize persons subject to
the Lock-Up Agreement to sell common stock that would be otherwise subject to
the Lock Up Agreement, provided the proceeds from the sale of stock are loaned
to, or reinvested in, Registrant for the purposes of paying obligations of the
Registrant, including but not limited to, payments due under the Wriwebs, Inc.,
or Trilogy International, Inc., acquisition documents.
A copy of the fourth amendment to the lockup and voting agreement is filed
as an exhibit to this report, see Part II, Item 6(a).
Designation Page
of Exhibit Number
as Set Forth or Source of
in Item 601 of Incorporation
Regulation S-B By Reference Description
Item 6. 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.
Designation Page
of Exhibit Number
as Set Forth or Source of
in Item 601 of Incorporation
Regulation S-B By Reference Description
(9) Voting trust agreement
.5 23 Fourth Amendment to Lock Up and Voting
Agreement.
(10) Material Contracts:
.40 28 License Agreement with Yankees
.41 35 Custom Software Systems, Inc. Letter of
Intent
(21) 22 Subsidiaries of the Registrant
(27) 39 Financial data schedule
- - -------
* Not applicable
Page 20
<PAGE>
(b) Reports on Form 8-K Filed During Quarter Ended December 31, 1999
During the calendar quarter ended December 31, 1999, the Registrant filed
the following reports on Form 8-K with the Commission:
Financial
Items Reported Date Filed Statements Included
2,5 and 7 December 16, 1999 No
5 and 7 (amended) January 26, 2000 8-K;(see 10-QSB for the quarter
ending September 30, 1999 for
further information on WRI)
Audited Financial Statements
of WRI for the years ended
December 31, 1998, and Unaudited
Financial Statements for the
nine months ended September 30,
1999 in conjunction with the
acquisition of Wriwebs, Inc on
November 11, 1999. Also
Registrant's Pro Forma Combined
Balance Sheets at December 31,
1998; Pro Forma Combined
Statements of Operations for the
twelve months ended December 31,
1998 and three and six months
ended September 30, 1999.
5 and 7 (amended) February 8, 2000 8-K (A); Audited Financial
Statements of Trilogy for the
years ended December 31, 1998,
and Unaudited Financial
Statements for the nine months
ended September 30, 1999 in
conjunction with the acquisition
of Trilogy, on December 1, 1999.
Also Registrant's Pro Forma
Combined Balance Sheets at
December 31, 1998; Pro Forma
Combined Statements ofOperations
for the twelve months ended
December 31, 1998 and six months
ending June 30, 1999, and three
months ending September 30,1999.
Signatures
In accordance with the requirements of the Exchange Act, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
AmeriNet Group.com, Inc.
February 14, 2000
By: /s/ Michael Harris Jordan /s/
---------------------
Michael Harris Jordan
President & Director
Page 21
<PAGE>
Additional Information
Registrant
AmeriNet Group.com, Inc.
Corporate Headquarters:
-----------------------
2500 North Military Trail, Suite 225; Boca Raton, Florida 33431
Telephone Number: (561) 998-3435; Facsimile Transmission (561) 998-3425
E-mail [email protected]
Officers
President, Michael Harris Jordan; Secretary, Vanessa H. Lindsey
Acting General Counsel, G. Richard Chamberlin, Esquire
Board of Directors
------------------
Michael Harris Jordan * +
G. Richard Chamberlin, Esquire *
Edward Carl Dmytryk **
Saul B. Lipson ** +
Anthony Q. Joffe * **
Penny Adams Field
J. Bruce Gleason
Michael A. Caputa
Dennis A. Birardfi
Carol A. Birardi
Subsidiary:
Wriwebs.com, Inc.
a Florida corporation
245 North Ocean Boulevard, Suite 201; Deerfield Beach,
Florida 33441 Telephone (954) 360-0636, Fax (954) 360-0377;
and, web site www.wriwebs.com;
Subsidiary
Trilogy International, Inc.
A Florida corporation
526 SE Dixie Highway; Stuart, Florida 34994
Telephone (561) 781-7278, Fax (561) 781-7282 and web site:
[email protected]
Independent Public Accountants:
Daszkal, Bolton & Manela, P.A.
240 West Palmetto Park Road, Suite 300; Boca Raton, Florida 33432
Telephone (561) 367-1040: Facsimile Transmission (561) 750-3236;
e-mail [email protected]
----------------------
Transfer Agent:
Liberty Transfer Company
191 New York Avenue, Huntington, New York 11743
Telephone (516)-385-1616: Facsimile Transmission (516) 385-1619
Exhibits to the Form 10-QSB are available on the Securities and Exchange
Commission's web site located at www.sec.gov in the EDGAR archives, on the
Registrant's website located at www.amerinetgroup.com and will be provided
subject to payment of copying and transport charges to stockholders of the
Registrant upon written request addressed to Michael Harris Jordan, President;
AmeriNet Group.com, Inc.; 2500 North Military Trail, Suite 225-C; Boca Raton,
Florida 33431.
The Securities and Exchange Commission has not approved or disapproved
of this Form 10-QSB and Quarterly Report to Stockholders nor has it passed upon
its accuracy or adequacy.
- - --------
+ Committee chairperson
* Executive Committee Member
** Audit Committee Member
Page 22
Fourth Amendment to Lock-Up & Voting Agreement
This Fourth Amendment to Lock-Up & Voting Agreement, (the "Agreement,"
respectively) is made and entered into by and among AmeriNet Group.com, Inc., a
Delaware corporation formerly operating as Equity Growth Systems, inc., with a
class of securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended ("AmeriNet" and the "Exchange Act," respectively) and the
officers directors and principal stockholders of AmeriNet made signatories to
this Amendment (the "Holding Company's Principals"), AmeriNet and AmeriNet's
Principals being sometimes hereinafter collectively referred to as the "Parties"
and each being sometimes hereinafter generically referred to as a "Party").
Preamble:
WHEREAS, AmeriNet and AmeriNet Principals are desirous of further
amending the Lock-Up & Voting Agreement, to permit the President of
AmeriNet to authorize the sale of additional shares of AmeriNet common
stock (the "Excepted Shares"), should any of the signatories below be
willing to sell the Excepted Shares; and
NOW, THEREFORE, in consideration of the premises, as well as the mutual
covenants hereinafter set forth, the Parties, intending to be legally
bound, hereby amend the Agreement as follows:
The provisions of this Agreement are hereby agreed to amend and modify
the Lock-Up & Voting Agreements as amended however except as specifically
modified the prior Lock-Up & Voting Agreement as amended is to remain in full
force and effect.
A. Notwithstanding anything in the Lock-Up & Voting Agreement, as
amended, to the contrary, the president of AmeriNet is hereby
authorized, empowered and directed to authorize persons subject
to this Lock-Up Agreement to sell common stock that would be
otherwise subject to the Lock Up Agreement, provided the proceeds
from the sale of stock are loaned to, or reinvested in, AmeriNet
for the purposes of paying obligations of AmeriNet, including but
not limited to, payments due under the WriWebs, Inc., or Trilogy
International, Inc., acquisition documents..
B. Notwithstanding anything in the Lock-Up & Voting Agreement, as
amended, to the contrary, nothing in this Agreement shall be
interpreted as an agreement by the Holding Company's Principals
to engage in any concerted or group activities involving the
Holding Company's common stock, as determined for purposes of
Commission Rule 144, or Sections 13, 14 or 16 of the Exchange
Act.
Page 23
<PAGE>
In Witness Whereof, the Parties have caused this Supplement to be executed
effective as of the date last set forth below.
Signed, sealed and delivered
In Our Presence:
AmeriNet Group.com, Inc.
- - ---------------------------------
_________________________________ By: /s/ Michael H. Jordan
________________________________
Michael Harris Jordan, President
(Corporate Seal)
Attest: /s/ Vanessa Lindsey
________________________________
Vanessa Lindsey, Secretary
Dated: December 28, 1999
AmeriNet's Principals:
- - ---------------------------------
/s/ Charles Scimeca
- - -------------------------------- --------------------------
Charles Scimeca
Dated: December 28, 1999
- - ---------------------------------
/s/ Anthony Q. Joffe
- - --------------------------------- -------------------------
Anthony Q. Joffe
Director and Stockholder
Dated: December 28, 1999
- - ---------------------------------
/s/ Penny Adams Field
- - --------------------------------- --------------------------
Penny Adams Field
Director and Stockholder
Dated December 28, 1999
- - ---------------------------------
/s/ J. Bruce Gleason
- - --------------------------------- -------------------------
J. Bruce Gleason
Director and Stockholder
Dated: December 28, 1999
Page 24
<PAGE>
- - ---------------------------------
/s/ Michael Umile
- - --------------------------------- --------------------------
Michael Umile, Stockholder
Dated: December 28, 1999
- - ---------------------------------
/s/ G. Richard Chamberlin
- - --------------------------------- --------------------------
G. Richard Chamberlin Esquire
Director and Stockholder
Dated: December 28, 1999
- - ---------------------------------
/s/ Edward Granville-Smith
- - --------------------------------- --------------------------
Edward Granville-Smith,
Stockholder on his own behalf
and on behalf of his affiliates
Dated: December 28, 1999
- - ---------------------------------
/s/ Jerry C. Spellman
- - --------------------------------- --------------------------
Jerry C. Spellman, Stockholder
on his own behalf and on behalf
of his affiliates
Dated: December 28, 1999
- - ---------------------------------
/s/ Cybdi N. Calvo
- - --------------------------------- --------------------------
Cyndi N. Calvo, on her own behalf
and as a trustee for the Calvo
Family Spendthrift Trust,
Stockholders
Dated: December 28, 1999
- - ---------------------------------
/s/ William A. Calvo, III
- - --------------------------------- --------------------------
William A. Calvo, III, on his own
behalf and as a trustee for his
children, William, Alexander &
Edward, Stockholders
Dated: December 28, 1999
Page 25
<PAGE>
- - ---------------------------------
/s/ Leoanrd M. Tucker
- - --------------------------------- --------------------------
Leonard Miles Tucker, on his
own behalf and on behalf of
Carrington Capital Corp.,
Stockholders
Dated: December 28, 1999
- - ---------------------------------
/s/ Michelle Tucker
- - --------------------------------- --------------------------
Michelle Tucker, on her own
behalf, on behalf of Blue Lake
Capital Corp., and as a trustee
for her children Shayna and
Montana, Stockholders
Dated: December 28, 1999
- - ---------------------------------
/s/ Joseph D. Radcliffe
- - --------------------------------- --------------------------
Joseph D. Radcliffe, on his own
behalf and on behalf of his
affiliates, Stockholder
Dated: December 28, 1999
- - ---------------------------------
/s/ Dennis V. Radcliffe
- - --------------------------------- --------------------------
Dennis V. Radcliffe, on his own
behalf and on behalf of his
affiliates, Stockholder
Dated: December 28,1999
- - --------------------------------
/s/ Michael J. Radcliffe
- - --------------------------------- --------------------------
Michael J. Radcliffe, on his own
behalf and on behalf of his
affiliates, Stockholder
Dated: December 28, 1999
Page 26
<PAGE>
- - ---------------------------------
/s/ Vanessa Radcliffe
- - --------------------------------- -------------------------
Vanessa Radcliffe, on her own
behalf and on behalf of her
affiliates, Stockholder
Dated: December 28, 1999
The Yankee Companies, Inc.
- - ---------------------------------
_________________________________ By: /s/ Leonard M. Tucker
_______________________________
Leonard Miles Tucker, President
(Corporate Seal)
Attest: /s/ William A. Calvo, III
______________________________
William A. Calvo, III, Secretary
Dated: December 28, 1999
Page 27
License Agreement
This License Agreement (the "Agreement") is made and entered into by and
between The Yankee Companies, Inc., a Florida Corporation (the "Licensor") and
AmeriNet Group.com, Inc., a Delaware corporation (the "Licensee;" the Licensor
and the Licensee being sometimes hereinafter collectively referred to as the
"Parties").
Preamble:
WHEREAS, the Licensee desires to obtain the exclusive right to develop and
use the domain names 15c2-11.com, 15c2-11.net, 15c2-11.org and 15c2-11.cc (the
"Licensed Domain Names") that are currently held by the Licensor; and
WHEREAS, the Licensor is agreeable to granting the Licensee such rights
during the term of this Agreement, provided that the Licensee agrees to abide by
the following terms and conditions;
NOW THEREFORE, in consideration of the premises, as well as for the sum of
$10.00 and other good and valuable consideration, the value of which is hereby
acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:
Witnesseth:
Article One
Assignment
1.1 Consideration
Subject to the conditions hereinafter set forth, the Licensor hereby
assigns the Licensed Domain names to the Licensee and the Licensee hereby
accepts the assignment from the Licensor, pursuant to the following terms:
(a) Term
This License shall be for a term concurrent with the balance of the term of
the current consulting agreement between the Licensor and the Licensee, and any
renewals or extensions thereof, at the termination whereof, all rights to the
Licensed Domain Names, together with all business applications, agreements,
intellectual property rights or other tangible or intangible property or
property rights developed by the Licensee or for the Licensee or with the
consent of the Licensee in conjunction with the Licensed Domain Names, or any
successors or derivatives thereof (collectively and generically hereinafter
referred to as the "Domain Name Assets"), shall revert to the Licensor, in
consideration for a payment equal to the deficit, if any, between the out of
pocket costs actually incurred to develop the Domain Name Assets by the
Licensee, as reported to the Licensor within the period staring 60 days and
ending 30 days prior to the end of the term of this Agreement.
(b) Consideration
As consideration for the assignment of the Licensed Domain names, the
Licensee hereby agrees to fully develop all commercial and civic applications
for the Domain names on a timely basis and to pay to the Licensor a monthly
royalty fee in a sum equal to 5% of the gross proceeds obtained from any
commercial uses of the Domain Names (the "Royalty"), provided that payments of
the Royalty shall be deferred and accrued until such times as the Licensor's
consolidated operations generate profits adequate to make payments of the
Royalty on a current basis, and amortized payments of accrued but unpaid Royalty
in a sum acceptable to the Licensor, after meeting all other debt service
commitments.
Page 28
<PAGE>
Article Two
Development by Wriwebs.com, Inc.
The Parties hereby agree that the Licensee will assign the operational
aspects of the project contemplated hereby to its wholly owned subsidiary,
Wriwebs.com, Inc., a Florida corporation ("WRI"), which will immediately
undertake the project and commence development of the required Internet sites,
programs, procedures and applications required to commercially develop the
Licensed Domain Names as information depositories for public company information
that will, on an ongoing basis, meet the informational requirements of Rule
15c2-11 promulgated by the United States Securities and Exchange Commission
("Rule 15c2-11" and the "Commission," respectively) under authority of Section
15 of the Securities Exchange of 1934, as amended (the "Exchange Act"), and that
the Licensee and WRI will take all reasonable steps required to assure that the
sites meet the requirements of Rule 15c2-11, or any successor or related rules,
including rules or bylaw provisions of the National Association of Securities
Dealers, Inc., a Delaware corporation, or its subsidiaries and affiliates or
their successors in interest.
Article Three
Confidentiality & Competition
3.1 General Provisions.
(a) The Licensee acknowledges that, in and as a result of its entry into this
Agreement, it will make use of confidential information of special and
unique nature and value relating to the Licensed Domain names and strategic
plans associated therewith and such other matters as the Licensor's trade
secrets, systems, procedures, manuals, confidential reports, service
providers, sources and funders and, will be developing business aspects
thereof in which the Licensor shall have exclusive proprietary rights upon
termination of this Agreement; consequently, as material inducement to the
entry into this Agreement by the Licensor, the Licensee hereby covenants
and agrees that it shall not, at anytime during the term of this Agreement,
any renewals thereof and for two years following the final term of this
Agreement, directly or indirectly, use, divulge or disclose, for any
purpose whatsoever, any of such confidential information except on a need
to know basis, pursuant to provisions designed to protect the licensor's
current and residuary rights under this Agreement.
(b) In the event of a breach or threatened breach by the Licensee of any of the
provisions of this Article Three, the Licensor, in addition to and not in
limitation of any other rights, remedies or damages available to the
Licensor, whether at law or in equity, shall be entitled to a permanent
injunction in order to prevent or to restrain any such breach by the
Licensee, or by the Licensee's partners, directors, officers, stockholders,
agents, representatives, servants, employers, employees, affiliates and/or
any and all persons directly or indirectly acting for or with it.
3.2 Special Remedies.
In view of the irreparable harm and damage which would undoubtedly occur to
the Licensor and its clients as a result of a breach by the Licensee of the
covenants or agreements contained in this Article Three, and in view of the lack
of an adequate remedy at law to protect the Licensor's interests, the Licensee
hereby covenants and agrees that the Licensor shall have the following
additional rights and remedies in the event of a breach hereof:
(a) The Licensee hereby consents to the issuance of a permanent injunction
enjoining it from any violations of the covenants set forth in this Article
Three; and
Page 29
<PAGE>
(b) Because it is impossible to ascertain or estimate the entire or exact cost,
damage or injury which the Licensor or its clients may sustain prior to the
effective enforcement of such injunction, the Licensee hereby covenants and
agrees to pay over to the Licensor, in the event it violates the covenants
and agreements contained in this Article Three, the greater of:
(i) Any payment or compensation of any kind received by it because of such
violation before the issuance of such injunction, or
(ii) The sum of One Thousand Dollars per violation, which sum shall be
liquidated damages, and not a penalty, for the injuries suffered by
the Licensor or its clients as a result of such violation, the Parties
hereto agreeing that such liquidated damages are not intended as the
exclusive remedy available to the Licensor for any breach of the
covenants and agreements contained in this Article Three, prior to the
issuance of such injunction, the Parties recognizing that the only
adequate remedy to protect the Licensor and its clients from the
injury caused by such breaches would be injunctive relief.
3.3 Cumulative Remedies.
The Licensee hereby irrevocably agrees that the remedies described in this
Article Three shall be in addition to, and not in limitation of, any of the
rights or remedies to which the Licensor and its clients are or may be entitled
to, whether at law or in equity, under or pursuant to this Agreement.
3.4 Acknowledgment of Reasonableness.
(a) The Licensee hereby represents, warrants and acknowledges that it has
carefully read and considered the provisions of this Article Three and,
having done so, agrees that the restrictions set forth herein are fair and
reasonable and are reasonably required for the protection of the interests
of the Licensor, its members, officers, directors, agents and employees;
consequently, in the event that any of the above-described restrictions
shall be held unenforceable by any court of competent jurisdiction, the
Licensee hereby covenants, agrees and directs such court to substitute a
reasonable judicially enforceable limitation in place of any limitation
deemed unenforceable and, the Licensee hereby covenants and agrees that if
so modified, the covenants contained in this Article Three shall be as
fully enforceable as if they had been set forth herein directly by the
Parties.
(b) In determining the nature of this limitation, the Licensee hereby
acknowledges, covenants and agrees that it is the intent of the Parties
that a court adjudicating a dispute arising hereunder recognize that the
Parties desire that these covenants not to compete or circumvent be imposed
and maintained to the greatest extent possible.
3.5 Exclusivity.
(a) Neither the Licensee nor WRI shall not be required to devote all of their
business time to development, implementation and operation of commercial
and civic applications for the Licensed Domain Names, rather they shall
devote such time as is reasonably necessary.
(b) Notwithstanding the foregoing, the Licensee and WRI shall be deemed
fiduciaries of the Licensor and in conjunction with such status, shall be
bound by the partnership opportunities doctrine as though the Licensee and
WRI were partners with the Licensor (despite the absence of such legal
relationship) and shall in all cases respect the confidentiality of
information to which the Licensee or WRI becomes privy as a result of the
rights granted under this Agreement and its implementation.
Page 30
<PAGE>
Article Four
Miscellaneous
4.1 Notices.
(a) All notices, demands or other communications hereunder shall be in writing,
and unless otherwise provided, shall be deemed to have been duly given on
the first business day after mailing by United States registered or
certified mail, return receipt requested, postage prepaid
To the Licensor :
The Yankee Companies, Inc.
2500 North Military Trail, Suite 225; Boca Raton, Florida 33431 Attention:
Leonard Miles Tucker, President Telephone (561) 998-3435, Fax (561) 998-4635;
and, e-mail [email protected]; and
The Yankee Companies, Inc.
1941 Southeast 51st Terrace; Ocala, Florida 34471
Attention: Vanessa H. Lindsay; Chief Administrative Officer
Telephone (352) 694-9179; Fax (352) 694-9178; and, e-mail
[email protected]
To AmeriNet
AmeriNet Group.com, Inc.
2500 North Military Trail, Suite 225; Boca Raton, Florida 33431
Attention: Michael Harris Jordan, President
Telephone (561) 998-3435, Fax (561) 998-4635; and, e-mail
[email protected]; and to
Wriwebs.com, Inc.
245 North Ocean Boulevard, Suite 201; Deerfield Beach, Florida 33441
Attention: Michael A. Caputa, President
Telephone (954) 360-0636; Fax (954) 360-0377; e-mail [email protected]
(b) Copies of notices will also be provided to such other address or to such
other person as any Party shall designate to the other for such purpose in
the manner hereinafter set forth.
(c) (1) The Parties acknowledge that the Licensor has acted as scrivener for
the Parties in this transaction but that it is neither a law firm nor
an agency subject to any professional regulation or oversight.
(2) The Licensor has advised all of the Parties to retain independent
legal and accounting counsel to review this Agreement on their behalf.
4.2 Amendment.
No modification, waiver, amendment, discharge or change of this Agreement
shall be valid unless the same is in writing and signed by the Party against
which the enforcement of said modification, waiver, amendment, discharge or
change is sought.
4.3 Merger.
(a) This instrument contains all of the understandings and agreements of the
Parties with respect to the subject matter discussed herein.
(b) All prior agreements whether written or oral, are merged herein and shall
be of no force or effect.
Page 31
<PAGE>
4.4 Survival.
The several representations, warranties and covenants of the Parties
contained herein shall survive the execution hereof and shall be effective
regardless of any investigation that may have been made or may be made by or on
behalf of any Party.
4.5 Severability.
If any provision or any portion of any provision of this Agreement, or the
application of such provision or any portion thereof to any person or
circumstance shall be held invalid or unenforceable, the remaining portions of
such provision and the remaining provisions of this Agreement or the application
of such provision or portion of such provision as is held invalid or
unenforceable to persons or circumstances other than those to which it is held
invalid or unenforceable, shall not be effected thereby.
4.6 Governing Law and Venue.
This Agreement shall be construed in accordance with the laws of the State
of Florida but any proceeding arising between the Parties in any matter
pertaining or related to this Agreement shall, to the extent permitted by law,
be held in Broward County, Florida.
4.7 Litigation.
(a) In any action between the Parties to enforce any of the terms of this
Agreement or any other matter arising from this Agreement, the prevailing
Party shall be entitled to recover its costs and expenses, including
reasonable attorneys' fees up to and including all negotiations, trials and
appeals, whether or not litigation is initiated.
(b) In the event of any dispute arising under this Agreement, or the
negotiation thereof or inducements to enter into the Agreement, the dispute
shall, at the request of any Party, be exclusively resolved through the
following procedures:
(1)(A) First, the issue shall be submitted to mediation before a
mediation service in Broward County, Florida, to be selected by
lot from six alternatives to be provided, three by the Licensor
and three by the Licensee.
(B) The mediation efforts shall be concluded within ten business days
after their initiation unless the Parties unanimously agree to an
extended mediation period;
(2) In the event that mediation does not lead to a resolution of the
dispute then at the request of any Party, the Parties shall submit the
dispute to binding arbitration before an arbitration service located
in Broward County, Florida to be selected by lot, from six
alternatives to be provided, three by the Licensor and three by the
Licensee.
(3)(A) Expenses of mediation shall be borne by the Licensee, if
successful.
(B) Expenses of mediation, if unsuccessful and of arbitration shall
be borne by the Party or Parties against whom the arbitration
decision is rendered.
Page 32
<PAGE>
(C) If the terms of the arbitral award do not establish a prevailing
Party, then the expenses of unsuccessful mediation and
arbitration shall be borne equally by the Parties.
4.8 Benefit of Agreement.
(a) This Agreement may not be assigned by without the prior written consent of
the Licensor.
(b) Subject to the restrictions on transferability and assignment contained
herein, the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the Parties, their successors, assigns,
personal representative, estate, heirs and legatees.
4.9 Captions.
The captions in this Agreement are for convenience and reference only and
in no way define, describe, extend or limit the scope of this Agreement or the
intent of any provisions hereof.
4.10 Number and Gender.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the Party or
Parties, or their personal representatives, successors and assigns may require.
4.11 Further Assurances.
The Parties hereby agree to do, execute, acknowledge and deliver or cause
to be done, executed or acknowledged or delivered and to perform all such acts
and deliver all such deeds, assignments, transfers, conveyances, powers of
attorney, assurances, recipes, records and other documents, as may, from time to
time, be required herein to effect the intent and purposes of this Agreement.
4.12 Status.
Nothing in this Agreement shall be construed or shall constitute a
partnership, joint venture, agency, or lessor-lessee relationship; but, rather,
the relationship established hereby is that of licensor and licensee.
4.13 Counterparts.
(a) This Agreement may be executed in any number of counterparts.
(b) Execution by exchange of facsimile transmission shall be deemed legally
suffi cient to bind the signatory; however, the Parties shall, for
aesthetic purposes, prepare a fully executed original version of this
Agreement, which shall be the document filed with the Securities and
Exchange Commission.
4.14 License.
(a) This Agreement is the property of the Licensor and the use hereof by the
Parties is authorized hereby solely for purposes of this transaction.
(b) The use of this form of agreement or of any derivation thereof without the
Licensor' prior written permission is prohibited.
(c) The interpretation of this Agreement shall not be directly or indirectly
affected in any manner as a result of its authorship.
Page 33
<PAGE>
In Witness Whereof, the Parties have executed this Agreement, effective as
of the last date set forth below.
Signed, Sealed & Delivered
In Our Presence
The Yankee Companies, Inc.
a Florida corporation
- - --------------------------
__________________________ By: /s/ Leonard M. Tucker
___________________________
Leonard Miles Tucker, President
(CORPORATE SEAL)
Attest: /s/ William A. Calvo, III
__________________________
William A. Calvo, III, Secretary
Dated:February 9, 2000
AmeriNet Group.com, Inc.
a Delaware corporation.
- - --------------------------
__________________________ By: /s/ Michael H. Jordan
___________________________
Michael H. Jordan, President
(CORPORATE SEAL)
Attest: /s/ Vanessa H. Lindsey
__________________________
Vanessa H. Lindsey, Secretary
Dated:February 9, 2000
Wriwebs.com, Inc.
a Florida corporation.
- - --------------------------
__________________________ By: /s/ Michael A. Caputa
___________________________
Michael A. Caputa, President
(CORPORATE SEAL)
Attest: /s/ Jeffery B. Levy
__________________________
Jeffrey B. Levy
Secretary & General Counsel
Dated:February 9, 2000
page 34
Administrative Offices
The Yankee Companies, Inc.
A Florida corporation
- - --------------
Leonard Miles Tucker Boca Raton Office
President & Chief Executive Officer Crystal Corporate Center
2500 North Military Trail,
Suite 225
William A. Calvo, III, L.L.M. Boca Raton, Florida 33431
Vice President & Treasurer Telephone (561) 998-2025
Fax Number (561) 998-3425
E-Mail [email protected]
Please respond to Boca Raton address
Vanessa H. Lindsey Ocala Office
Secretary & Chief Administrative Officer 1941 Southeast 51st Terrace
Ocala, Florida 34471
G. Richard Chamberlin Telephone (352) 694-9182
General Counsel Service (352) 368-6525
Mobile Number (352) 895-0452
Fax Number (352) 694-9178
E-Mail [email protected]
January 21, 2000
Mr. Warren C. Badgley, Jr.
President
Custom Software Systems, Inc.
1700 El Camino Real, Suite 300
Houston, Texas 77058
Re: Acquisition by AmeriNet Group.com, Inc. ("AmeriNet")
Dear Mr. Badgley:
Pursuant to our latest conversation on Thursday an association of Custom
Software Systems, Inc. ("CSSI") with AmeriNet and its wholly owned subsidiary,
Wriwebs.com, Inc. ("WRI"), would be very positive. After considering each
prospective parties' concerns, I believe that a transaction structured along the
lines of an acquisition of CSSI by AmeriNet (possibly through WRI but in
exchange for AmeriNet securities) as proposed below would meet CSSI objectives
and be acceptable to AmeriNet's board of directors.
CSSI needs an investment of $400,000 and assurances that if it is not
satisfied in its association with AmeriNet and WRI, a comfortable prearranged
plan of disassociation will permit the parties to part without undue
complications by "spinning off" CSSI as its own public company. AmeriNet needs
to protect its investment in CSSI and all parties need to provide a mechanism
for accurately measuring CSSI's value. We believe the following proposal meets
these concerns. If you find it acceptable, we will present it to AmeriNet and
WRI on your behalf and secure its immediate consideration. If, as we expect,
this letter is accepted and executed on AmeriNet's and WRI's behalf it will be
deemed to be a non-binding letter of intent, the parties will proceed to conduct
due diligence investigations and Yankees will arrange for the preparation of
proposed definitive agreements.
Page 35
<PAGE>
Proposed Terms
1. A. CSSI will consolidate all current operations of its affiliates and
related business enterprises (if any) permitting consolidation of
their financial statements pursuant to generally accepted auditing
procedures ("GAAP"), the consolidated entity being hereinafter
referred to as "CSSI+."
B. CSSI+ will have a net tangible book value of not less than $100,000,
not more than $20,000 in net current payables (the excess of current
payables over current receivables), not more than $50,000 in net long
term payables (the excess of long term payables over long term
receivables), $779,000 in gross sales and approximately $29,000 in
pre-tax profits.
2. AmeriNet will acquire all CSSI+'s common stock in exchange for $600,000 in
shares of AmeriNet's common stock, valued at its average last transaction
price as reported on the OTC Bulletin Board during the ten days preceding
closing; however, the valuation would be subject to adjustment based on
CSSI+'s subsequent performance measured against its anticipated performance
during a pre-determined multi year period.
3. AmeriNet would invest $400,000 in CSSI+ over a 180 day period following the
completion of the CSSI+ audit, based on the following schedule.
A. $100,000 at closing
B. $100,000 within 60 days after the completion of the CSSI+ audit.
C. $100,000 within 120 days after the completion of the CSSI+ audit.
D. $100,000 within 180 days after the completion of the CSSI+ audit.
4. In the event that within the period commencing six months after the closing
and ending two years following the closing CSSI+'s former stockholders, by
majority vote, determine that they are not satisfied with their association
with AmeriNet and WRI, then, subject to repayment of all funds advanced or
invested by AmeriNet or its designees in CSSI+, the return of all the
AmeriNet shares issued to the CSSI+ stockholders and the return of all
additional distributions based on status as AmeriNet stockholders, they
will have the contractual right to require AmeriNet to effect a
disproportionate spin out of CSSI+'s common stock to the former
stockholders of CSSI+ on the following terms:
A. If CSSI+ former stockholders determine to spin-out during the period
starting 6 months and one day through 12 months following the closing:
(1) The original CSSI+ shareholders would receive 80% of the spin-out
shares and AmeriNet or its designees would retain 20%; and
(2) All funds invested by AmeriNet or its designees would be
converted to debt paying interest at 8% from the original date of
funding, amortized and paid over a consecutive 24 month period
starting on the 30th day after notice of intent to spin-out and
will be secured by the spin out shares distributed to the former
CSSI+ stockholders.
Page 36
<PAGE>
B. If CSSI+ former stockholders determine to spin-out during the period
starting 12 months and one day through 2 years following closing,
then, either:
(1) (a) The original CSSI+ shareholders would receive 70% of
spun-out shares and AmeriNet or the designees would retain
30%; or
(b) If the decision to spin out is based on an offer from a
third party to acquire CSSI at a then current cash value of
$2,500,000 or more, the original CSSI+ shareholders would
receive 80% of spun-out shares and AmeriNet or the designees
would retain 20%; and, in either case
(2) All funds invested by AmeriNet or its designees would be
converted to debt paying interest at 8% from the original date of
funding, amortized and paid over a consecutive 24 month period
starting on the 30th day after notice of intent to spin-out and
will be secured by the spin out shares distributed to the former
CSSI+ stockholders.
5. CSSI's management shall have the right to waive the spin-out option without
the consent of the former CSSI+ stockholders, and, in such event, the
former shareholders of CSSI+ shall be eligible to receive additional shares
of AmeriNet's common stock based on CSSI+ having attained the following
certain net, pre-tax profits, targets, during the times specified:
Time Period Net Pre-tax Profits Additional Shares
January 1, 2000 to June 30,2000 $50,000 50,000;
July 1, 2000 to June 30,2001 $200,000 50,000; and
July 1, 2001 to June 30, 2002 $300,000 50,000.
6. A. Control of the CSSI+ operation would remain with the current
stockholders of CSSI+ who would have the contractual right to elect
three fourths of its directors, provided that the participation of the
AmeriNet and WRI designees to CSSI+'s board of directors would be
required to constitute a quorum, CSSI+ would not have the right to
make material changes in its operations (on which its valuation was
based), and the CSSI+ designees to its board of directors could not
engage in any violations of law or of fiduciary duties to AmeriNet or
WRI.
B. All former stockholders of CSSI+ who would also serve as executive
offic ers thereof would be parties to long term employment agreements,
on terms negotiated by the parties and acceptable to AmeriNet and WRI
concurrently with negotiation of the definitive acquisition agreement.
Page 37
<PAGE>
Of course the forgoing proposal is a bare outline but we believe that it
will be sufficient to form the basis of a letter of intent for an appropriate
"engagement period". If you find this proposal acceptable as the basis to begin
formal negotiations with AmeriNet and WRI, please sign a copy of this letter in
the spaces provided and return it to us for submital to AmeriNet and WRI's
boards of directors.
Looking forward to a mutually profitable relationship, we are
Very truly yours,
The Yankee Companies, Inc.
/s/ Leonard M. Tucker
Leonard Tucker
President
The forgoing is acceptable in principal and we authorize you to arrange for
the immediate preparation of proposed definitive agreements.
Custom Software Systems, Inc.
/s/ Warren C. Badgley
-------------------
Warren C. Badgley, Jr.
President
Dated: January 2, 2000
AmeriNet Group.com, Inc.
/s/ Michael H. Jordan
-------------------
Michael H. Jordan
President
Dated: January 2, 2000
Wriwebs.com, Inc.
/s/ Michael A. Caputa
-------------------
Michael A. Caputa
President
Dated: January 2, 2000
Page 38
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Jun-30-2000
<PERIOD-START> Sep-30-1999
<PERIOD-END> Dec-31-1999
<CASH> 51,103
<SECURITIES> 0
<RECEIVABLES> 1,908
<ALLOWANCES> 0
<INVENTORY> 149,683
<CURRENT-ASSETS> 302,694
<PP&E> 143,300
<DEPRECIATION> 3,421
<TOTAL-ASSETS> 5,117,150
<CURRENT-LIABILITIES> 787,912
<BONDS> 0
0
0
<COMMON> 101,952
<OTHER-SE> 3,479,182
<TOTAL-LIABILITY-AND-EQUITY> 5,117,150
<SALES> 36,709
<TOTAL-REVENUES> 36,709
<CGS> 88,969
<TOTAL-COSTS> 1,058,129
<OTHER-EXPENSES> 6751
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 82,500
<INCOME-PRETAX> (1,139,640)
<INCOME-TAX> 0
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<CHANGES> 0
<NET-INCOME> (1,139,640)
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