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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-KSB
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Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended February 28, 2000
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Commission File No. 0-12597
PENN-AKRON CORPORATION
A Nevada Corporation
(IRS Employer Identification No. 11-1843262)
1355 Terrell Mill Road, Building #1466
Marietta, Georgia 30067
(770) 541-0030
Securities Registered Pursuant to Section 12(b)
of the Securities Exchange Act of 1934:
None
Securities Registered Pursuant to Section 12(g)
of the Securities Exchange Act of 1934:
Common Stock, $.01 par value
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained herein, 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]
Issuer's revenues for the fiscal year ended February 28, 2000: $-0-
The aggregate market value of the common stock of the registrant held by
nonaffiliates of the registrant (26,108,202 shares), computed using the closing
price as reported on the OTC Bulletin Board operated by Nasdaq for the issuer's
common stock on May 24, 2000, was $78,324,606. For purposes of this response,
officers, directors, and holders of 5% or more of the issuer's Common Stock are
considered affiliates of the issuer.
The number of shares outstanding of the registrant's Common Stock, as of May 24,
2000: 29,500,542 shares of $.01 par value Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
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FORWARD-LOOKING STATEMENTS
Certain statements contained in this filing are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, such
as statements relating to financial results and plans for future business
development activities, and are thus prospective. These statements appear in a
number of places in this Annual Report and include all statements that are not
statements of historical fact regarding intent, belief or current expectations
of the Company, its directors or its officers with respect to, among other
things: (i) the Company's financing plans; (ii) trends affecting the Company's
financial condition or results of operations; (iii) the Company's growth
strategy and operating strategy; and (iv) the declaration and payment of
dividends. The words "may," "would," "could," "will," "expect," "estimate,"
"anticipate," "believe," "intend," "plans," and similar expressions and
variations thereof are intended to identify forward-looking statements.
Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, many of
which are beyond the Company's ability to control. Actual results may differ
materially from those projected in the forward-looking statements as a result of
various factors. Among the key risks, assumptions and factors that may affect
operating results, performance and financial condition are the Company's
reliance on a small number of customers for a larger portion of its revenues,
fluctuations in its quarterly results, ability to continue and manage its
growth, liquidity and other capital resources issues, competition and the other
factors discussed in detail in the Company's filings with the Securities and
Exchange Commission, including the "Risk Factors" section below.
PART I
ITEM 1. BUSINESS.
HISTORY AND ORGANIZATION
Penn-Akron Corporation (the "Company") was incorporated under the laws of the
State of Delaware on December 7, 1953, under the name "Erie Reinforced Plastic
Pipe Company" with authorized common stock of 4,000,000 shares at a par value of
$.05. During 1957, the Company changed its name to "Penn-Akron Corporation" and
on May 25, 1973, the Company increased its authorized common stock to 10,000,000
shares at the same par value. On March 7, 1984, the Company reduced the par
value to $.01. On June 1, 1983, the Company initiated a one-for-ten reverse
stock split.
The Company was originally incorporated for the purpose of manufacturing plastic
pipe, but discontinued these operations in 1973 after a Chapter 11 bankruptcy
proceeding was filed on May 27, 1971 in the United States Bankruptcy Court for
the District of Connecticut. The Bankruptcy Court discharged the Company on
October 11, 1978. The Company was dormant from approximately 1973 until 1984.
On April 11, 1984, the Company's management formed a wholly-owned subsidiary
Subpac, Inc. ("Subpac"), a Texas corporation, to facilitate the acquisition of
Petroleum Basins Exploration, Inc. ("PBE"), a Nevada corporation. On May 3,
1984, the Company and Subpac entered into a reorganization agreement with PBE
whereby Subbpac was merged into PBE, with PBE being the surviving corporation.
PBE's former shareholders received one share of the Company's Common Stock for
each seven shares of PBE stock tendered.
From 1984 until approximately March 1, 1987, the Company and its wholly-owned
subsidiary, PBE, were engaged in the business of oil and gas exploration,
development and production. The prices for oil and gas declined and the Company
could not afford to continue its oil and gas exploration activities. The oil and
gas properties of the Company were leased to other entities. The Company was
unable to renew these leases once they expired. The Company's inability to
renews its leases caused the Company to go into inactivity. The Company was
statutorily dissolved by the State of Nevada in March 1987.
In May 1999, Capital Consulting of Utah, Inc. ("Capital") paid 25,000 to the
former officers and directors of the Company for a release of any debts owned by
Capital to the Company. At that time, Fred Attaya, the sole officer and sole
director of the Company resigned as an officer and director of the Company and
appointed John Chymboryk as the sole officer and director.
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In September 1999, Mr. Chymboryk resigned from all of his positions with the
Company and appointed Curtis Olsen as director, President and Chief Executive
Officer, Secretary and Treasurer of the Company. In October 1999, Mr. Olsen
appointed Allison Olsen as a director, Secretary and Treasurer and appointed
Michael Olsen as a director and Vice President.; thus constituting the
then-current management of the Company
RECENT EVENTS
Pursuant to a Merger Agreement (the "Merger Agreement") dated as of March 23,
2000, between Spherus Technologies, Inc. ("Spherus"), a Georgia corporation, and
the Company, all of the outstanding shares of common stock of Spherus were
converted on April 14, 2000 into the right to receive consideration in the
amount of 12,319,461 shares of the Company's Common Stock in a transaction in
which the Company continued as the surviving corporation and the separate
corporate existence of Spherus ceased. The Company is now doing business under
the name globalseer.com. The 12,319,461 shares of the Company's Common Stock
offered to the Spherus Shareholders represents approximately forty-two percent
(42%) of the outstanding Common Stock of the Company following the transaction.
Prior to the effectiveness of the Merger, the Company had an aggregate of
17,181,081 shares of Common Stock $0.01 par value, outstanding. Upon
effectiveness of the merger on April 14, 2000, the Company had an aggregate of
29,500,542 shares of Common Stock outstanding.
Pursuant to the Merger Agreement, the former directors of the Company resigned
after appointing a new board of directors. Pursuant to the Merger Agreement,
three (3) seats (or three/fifths of available seats if there are more than 5
seats) on the initial Board of Directors of globalseer.com were selected by the
Spherus Board of Directors. The officers of Spherus are now the officers of
globalseer.com and the Company's then-current management resigned from their
positions. See "Management" below.
As of April 14, 2000, the Company is now doing business as globalseer.com, a
publicly traded (OTCBB:PNAC) company providing single-source, media-technology
and curriculum-enhancement solutions to schools. Globalseer.com is a technology
driven company that specializes in delivering educational content to school
classrooms. Globalseer.com provides media-technology and curriculum enhancement
solutions to kindergarten through twelfth grade public and private schools.
Additionally, globalseer.com is positioning itself to provide new and expanded
sources of educational content and other learning services to both higher
education and corporate training environments.
The original concept for globalseer.com was established in 1998 under the name
Spherus Technologies, Inc. (hereinafter "globalseer.com") in response to a
request from the Metro Regional Educational Services Agency ("MRESA") in Atlanta
(a division of the Georgia Department of Education) for specialized video
curriculum enhancement for their schools. The resulting comprehensive suite of
products and services provided "on-demand" video and was referred to as the
MRESAnet 2000 project. In 1999, the MRESAnet project was awarded approximately
$22 million dollars from the federal government. In 1999, globalseer.com
recorded $20,097,000 in gross revenues resulting from its work for the MRESAnet
project.
The pilot project was implemented in 192 schools within MRESA's jurisdiction.
Stage 1 of the project was completed in 1999 with Stages 2 and 3 anticipated to
be completed over the next several years. Although globalseer.com will maintain
responsibility for continuity and contract fulfillment for the MRESAnet project
we have contracted with Lynxus, Inc. to coordinate, manage and administer
performance of the installation of the network components to the MRESA schools.
Our primary focus is to replicate the model we developed for the MRESAnet
project for use in additional school systems in Georgia and different parts of
the United States. The system model created for the project is capable of
providing direct to-the-classroom lesson planning tools, with an accompanying
library of supplemental curriculum-enhancement content.
GLOBALSEER.COM
Globalseer.com plans to become a comprehensive educational technology
integrator, providing single-source, media-technology and curriculum-enhancement
solutions to educators, students, government agencies, and businesses. Our
resources include a variety of learning enhancement tools, educational
materials, video libraries,
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programs and multimedia resources. We can provide turnkey systems including
equipment, networks, training and support; delivering curriculum-enhancing
multimedia content and lesson planning tools directly to the classroom. We
believe that industry leaders must partner with educators and school officials
at all levels in order to bring new and improved learning capabilities to the
classroom. Teachers must be free to teach without burdensome technological
encumbrances and students must have ready access to effective learning resources
to be prepared for the 21st century marketplace. Additionally, school
administrators must be able to optimize budget dollars to improve the quality of
education everywhere. We can provide schools with extraordinary learning
content, cutting edge technology, and point-and-click simplicity through the
model project we developed for MRESAnet. We plan to eventually package and
develop our own Internet content in conjunction with other media providers. We
plan on providing a "virtual library" of educational material and training tools
to our customers, available at the click of a mouse. We represent an innovative
approach to comprehensive educational communications requirements through our
consortium of associated technology providers. It is our goal to provide
full-spectrum, leading-edge, multi-user Internet working solutions to the
educational community. In addition to the obvious technological proficiencies,
the unique offering that we bring to the marketplace also includes:
- Collective Marketing
- Single Point-of-Sale
- Needs Survey and Analysis
- Integrated Component Supply
- Turn-key Project Implementation
- Technical and End-user Training
- Consolidated Billing
- Single-point Customer Support
APPLICATIONS/FUNCTIONS
We utilize the collective capabilities of major communications-related
companies, and provide a single point of contact for analysis, planning,
coordination, implementation and support of our services. Some of the combined
Internet working products and solutions, which we provide and/or facilitate,
are:
- Virtual Global Libraries
- Streaming Audio and Video
- Lesson Planning Tools/Applications
- Tutorial Planning Tools/Applications
- Video Conferencing
- Virtual Classrooms and Distance Learning
- Interactive Training
- News Feeds - Multimedia
- Electronic Management/Administration
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SERVICES/PRODUCTS
We also currently provide and/or facilitate, or plan to provide and/or
facilitate, the following services and products as part of our turnkey
video-on-demand educational network:
- Needs Analysis and Evaluation
- Consulting and Design
- Customer/Technical Support
- Communications Access and Transport
- Website Location and Functionality
- Fiber optic/Conventional Infrastructure Cabling
- Wireless Data-nets
- Global Satellite Links
- Multimedia Servers
GROWTH STRATEGY
Our present growth strategy for the globalseer.com network is:
- growth through innovative outsourcing of the primary sales
functions through regionalized or localized independent
contractors, who can enhance and further our business goals
- growth through direct sales in cases where specific learning
sales opportunities are evident
- growth through relational channels resulting from established
relationships with various industry connections
- growth through opportunistic strategic alliances, joint
ventures and/or mergers with industry related companies who
can augment, enhance and/or further our business goals
- eventually expanding our network beyond the education arena
into business and commercial environments
OUTSOURCING
We rely on a number of subcontractors and vendors in connection with the
delivery of our service. In addition to proprietary methodology, we bundle the
products and services of vendors to satisfy our customers' needs.
EMPLOYEES
As of February 28, 2000 the Company had no employees since discontinuing its
operations. We currently have three full time employees and four consultants,
in addition to our subcontractors, through whom we presently deliver most of
our services.
RISK FACTORS
In addition to the other information contained in this Report, the following
risks should be considered carefully in evaluating the Company and its business.
OUR SUCCESS DEPENDS UPON THE SUCCESSFUL DEVELOPMENT OF NEW SERVICES AND FEATURES
IN THE FACE OF RAPIDLY EVOLVING TECHNOLOGY.
Our market is characterized by rapidly changing technologies, frequent new
service introductions and evolving industry standards. The recent growth of the
Internet and intense competition in our industry exacerbate these market
characteristics. Our future success will depend on our ability to adapt to
rapidly changing technologies by continually improving the performance, features
and reliability of our network. We may experience difficulties that could delay
or prevent the successful development, introduction or marketing of new
features, content or network services. In addition, our new enhancements must
meet the requirements of our current and prospective users and must achieve
significant market acceptance. We could also incur substantial costs if we need
to modify our service
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or infrastructure to adapt to these changes.
WE HAVE AN UNPROVEN BUSINESS MODEL AND A LIMITED OPERATING HISTORY.
Because our current operating business, operating under the name globalseer.com,
was established in 1998 and did not commence material operations until 1999, we
have a limited operating history on which investors can base an evaluation of
our business and prospects. Our income potential is unproven and our business
model is unique and will continue to evolve.
An investor in our common stock must carefully consider the risks and
difficulties frequently encountered by companies in an early stage of
development, as well as the risks we face due to our participation in a new and
rapidly evolving market. Our business strategy may not be successful and we may
not successfully overcome these risks.
WE EXPECT OUR QUARTERLY FINANCIAL RESULTS TO FLUCTUATE AND OUR EARLY STAGE OF
DEVELOPMENT LIMITS OUR ABILITY TO PREDICT REVENUES AND EXPENSES PRECISELY.
Our quarterly and annual operating results are likely to fluctuate significantly
in the future due to a variety of factors, many of which are outside of our
control. Factors that might cause quarterly fluctuations in our operating
results include the factors described in the subheadings below. To respond to
these and other factors, we may need to make business decisions that could
impact our quarterly operating results. Most of our expenses, such as lease
payment obligations, employee compensation and rent, are relatively fixed in the
short term. Moreover, our expense levels are based, in part, on our expectations
regarding future revenue levels. As a result, if total revenues for a particular
quarter are below our expectations we could not proportionately reduce our
operating expenses for that quarter. Therefore, this revenue shortfall would
have a disproportionate effect on our expected operating results for that
quarter. Consequently, we believe that period-to-period comparisons of our
operating results are not necessarily meaningful, and should not be viewed as
indicators of our future performance. In addition, during future periods our
quarterly or annual operating results may fail to meet the expectations of
securities analysts or investors. In this case the trading price of our common
stock would likely decrease.
OUR BUSINESS AND FUTURE REVENUE GROWTH WILL SUFFER IF WE FAIL TO RETAIN AND GROW
OUR CUSTOMER BASE.
The success of our business will depend on our ability to add customers. Our
ability to grow our customer base depends largely on our ability to deploy our
network to additional schools. If we are unable to rapidly deploy our network to
a large number of additional schools, we will not be able to grow our core
school user base, and our ability to generate revenue and implement our strategy
will be limited.
WE ARE DEPENDENT ON THIRD PARTIES TO DEPLOY OUR NETWORK AND SUPPORT IT ONCE
INSTALLED.
We plan to rapidly deploy our network to additional schools across the country.
We have used, and plan to continue to use, third parties such as The Network
Connection, Inc., Extreme Networks, OneWeb Systems and Lynxus, Inc. to install
and support the globalseer.com network in each school. Any changes in the third
parties we contract with to install and support our network could cause delays
in the deployment of the globalseer.com network and any inability to install
schools according to our plan could limit or eliminate revenue generated from
possible sponsorships, e-commerce and network services. Further, if we do need
to hire substitute or additional third-party installers of our network we cannot
assure you that we will be able to do so on terms as favorable as our current
arrangements, or at all, which could result in higher installation costs to us
as well as potential delays in our deployment.
We also rely on third parties to provide the majority of support necessary to
maintain the globalseer.com network once installed. Any inability to maintain or
delays to the maintenance of this equipment could lead to lower revenue.
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REGULATORY AND LEGAL ISSUES SPECIFIC TO THE INTERNET.
The Internet is the subject of an increasing number of laws and regulations.
These laws or regulations may relate to liability for information retrieved from
or transmitted over the Internet, online content regulation, user privacy,
taxation and the quality of products and services. In addition, these new laws
have not yet been interpreted by the courts, and consequently their
applicability and reach are not defined. Moreover, the applicability to the
Internet of existing laws governing issues such as intellectual property is not
clearly defined.
SCHOOLS MAY USE ALTERNATIVE MEANS TO ACQUIRE INTERNET ACCESS, WHICH COULD REDUCE
OUR POTENTIAL CUSTOMER BASE AND MAY LEAD TO LOWER THAN EXPECTED REVENUES.
An immediate attraction of our network is immediate access to media via the
Internet. However, for a variety of reasons, schools may decide to use other
methods to acquire Internet access. If schools decide to use means other than
deployment of our network, it will limit our user base, and consequently we will
have lower than expected revenues.
WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL CAPITAL TO FUND OUR OPERATIONS WHEN
NEEDED.
We expect to use existing cash for general corporate purposes, including
expanding our sales and marketing activities, continuing investments in
technology and product development and other capital expenditures, as well as
working capital and other corporate expenses. Our cash requirements are large
and depend on several factors, including cash outflows due to lease obligations,
the rate of expansion of our school base, the availability of equipment leases
on competitive terms, our success in generating revenues, the growth of sales
and marketing, and other factors. If capital requirements vary materially from
those currently planned, we may require additional financing sooner than
anticipated.
Tampa Bay Financial, Inc., a large shareholder, has provided capital to us in
the last few months. Except as provided in the Merger Agreement, Tampa Bay
Financial, Inc. is not obligated to make additional capital available to us.
WE ARE DEPENDENT ON THE CONTINUED GROWTH IN USE AND POPULARITY OF OUR NETWORK
AND THE INTERNET BY OUR USERS AND OUR ABILITY TO SUCCESSFULLY ANTICIPATE THE
FREQUENTLY CHANGING TASTES OF OUR USERS.
Our business is unlikely to be successful if the popularity of the Internet and
related media in schools as an educational tool and among students in general
does not continue to increase. Even if the popularity of the Internet and
related media does increase, the success of our network in particular depends on
our ability to anticipate and keep current with the frequently changing
preferences of our users. Any failure on our part to successfully anticipate,
identify or react to changes in styles, trends or preferences of our users would
lead to reduced interest in and use of the globalseer.com network. Moreover, the
globalseer.com brand could be eroded by misjudgments in service offerings or a
failure to keep our content current with the evolving preferences of our
audience.
WE MAY BE SUBJECT TO LIABILITY FOR PUBLISHING OR DISTRIBUTING CONTENT OVER OUR
NETWORK.
We may be subject to claims relating to content that is published on or
downloaded from the globalseer.com network. Such claims might include defamation
or trademark infringement and may involve costs to defend potential claims or to
indemnify us for all liability that may be imposed. In addition, any claims like
this, with or without merit, could require us to change our network in a manner
that could be less attractive to our customers and would result in the diversion
of our financial resources and management personnel.
WE MAY NOT BE ABLE TO DELIVER VARIOUS SERVICES IF THIRD PARTIES FAIL TO PROVIDE
RELIABLE SOFTWARE, SYSTEMS AND RELATED SERVICES TO US.
We are dependent on various third parties for software, systems and related
services. Several of the third parties that provide software and services to us
have a limited operating history, have relatively immature technology and are
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themselves dependent on reliable delivery of services from others. As a result,
our ability to deliver various services to our users may suffer due to the
failure of these third parties to provide reliable software, systems and related
services to us. Additionally, we make seek to contract with alternative third
parties to the ones we have formerly used, which may or may not have a negative
effect on our operations.
FAILURE TO MANAGE THE GROWTH OF OUR OPERATIONS COULD HARM OUR BUSINESS AND
STRAIN OUR MANAGERIAL, OPERATIONAL AND FINANCIAL RESOURCES.
We plan to expand our operations. We anticipate that further significant
expansion will be required to grow our customer base if we are to be successful
in implementing our business strategy. We may not be able to implement
management information and control systems in an efficient and timely manner,
and our current or planned personnel, systems, procedures and controls may not
be adequate to support our future operations. If we are unable to manage growth
effectively, our business would suffer.
THE LOSS OF KEY PERSONNEL MAY HURT OUR ABILITY TO OPERATE OUR BUSINESS
EFFECTIVELY.
Our success depends to a significant degree upon the continued contributions of
the principal members of our sales and management departments, many of whom
perform important management functions and would be difficult to replace. The
loss of the services of any key personnel, particularly senior management, could
seriously harm our business.
IF WE ARE UNABLE TO RETAIN AND HIRE ADDITIONAL QUALIFIED PERSONNEL AS NECESSARY,
WE MAY NOT BE ABLE TO SUCCESSFULLY ACHIEVE OUR OBJECTIVES.
We may not be able to attract and retain the necessary personnel to accomplish
our business objectives, and we may experience constraints that will adversely
affect our ability to deploy the globalseer.com network in a timely fashion or
to support our users and operations. Recruiting qualified personnel is an
intensely competitive and time-consuming process.
ITEM 2. DESCRIPTION OF PROPERTY.
As of February 28, 2000, the Company did not maintain any office nor did it own
any property.
ITEM 3. LEGAL PROCEEDINGS.
In 1999, Spherus contracted with Metropolitan Regional Educational Services
Agency ("MRESA") to install Internet and satellite-based multimedia equipment
and systems in public schools in three annual phases (the "MRESA Agreement"). In
late 1999 Spherus subcontracted all the work to be done under the MRESA
Agreement to Lynxus, Inc. ("Lynxus")(the "Lynxus Agreement"). Lynxus completed
Phase I of the MRESA Agreement, but Lynxus did not receive full payment. In late
1999, a dispute arose over the continuation of Spherus' participation under the
MRESA Agreement. MRESA low level management decided to transfer the remaining
Phase II and Phase III work directly to Lynxus. Although this decision was
published on MRESA's Website no action was taken by MRESA to terminate the MRESA
Agreement.
In January 2000, Lynxus sued Spherus in the State Court of Fulton County for
breach of contract and demanded damages in the approximate amount of $1,050,000.
Spherus counter-claimed for tortious interference with contract. At
approximately the same time, Spherus demanded mediation of its claims against
MRESA for breach of contract and for debt repayment. The MRESA Agreement
provided that disputes were subject to arbitration and that mediation was a
condition precedent to such arbitration.
On April 25, 2000, counsel for Spherus, Lynxus and MRESA signed an agreement
reinstating both the MRESA Agreement and the Lynxus Agreement and providing for
interpretations to govern future implementation of the MRESA Agreement and
certain modifications to the Lynxus Agreement. The parties agreed that Lynxus
would be paid the claimed debt (already reduced by Spherus' voluntary partial
payment of $250,000) with funds due to Spherus from MRESA. Phases II and III are
now set to go forward to completion. Spherus withdrew its demand for mediation
against MRESA and the suit and countersuit were dismissed by the parties without
prejudice.
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Other than those proceedings discussed above, there are no material pending
legal proceedings to which the Company is a party or of which any of its
properties are subject; nor are there material proceedings known to the Company
to be contemplated by any governmental authority. There are no material
proceedings known to the Company, pending or contemplated, in which any
director, officer or affiliate or any principal security holder of the Company,
or any associate of any of the foregoing is a party or has an interest adverse
to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted during the fourth quarter ended February 28, 2000 to a
vote of security holders of the Company.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
A. MARKET INFORMATION
During the past several years there has been no established trading market for
the Company's common stock. After the effectiveness of the Merger Agreement, the
Company's common stock is listed and may be traded on the OTC Bulletin Board
operated by NASDAQ under the symbol "PNAC."
B. HOLDERS OF COMMON STOCK
As of May 24, 2000, the number of holders of record of the Company's common
stock was 1,457.
C. DIVIDENDS
Since its inception, the Company has not paid any dividends on its common stock
and the Company does not anticipate that it will pay dividends in the
foreseeable future.
D. RECENT SALES OF UNREGISTERED SECURITIES
Pursuant to the Merger Agreement, all of the outstanding shares of common stock
of Spherus were converted into the right to receive aggregate consideration in
the amount of 12,319,461 shares of the Company's Common Stock in a transaction
in which the Company continued as the surviving corporation and the separate
corporate existence of Spherus ceased. The 12,319,461 shares of the Company's
Common Stock offered to Spherus shareholders represented approximately forty-two
percent (42%) of the outstanding common stock of the Company subsequent to the
Merger. The Company has not filed a registration statement with the Securities
and Exchange Commission for the issuance of the Company's Common Stock to the
shareholders of Spherus.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the consolidated
financial statements of the Company (including the notes thereto) contained
elsewhere in this Report.
OVERVIEW
The Company is now doing business as globalseer.com, providing single-source,
media-technology and curriculum-enhancement solutions to schools. Globalseer.com
is a technology driven company that specializes in delivering educational
content to school classrooms. Globalseer.com provides media-technology and
curriculum enhancement solutions to kindergarten through twelfth grade public
and private schools. Additionally, globalseer.com is positioning itself to
provide new and expanded sources of educational content and other learning
services to both higher education and corporate training environments.
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The original concept for globalseer.com was established in 1998 under the name
Spherus Technologies, Inc. (hereinafter "globalseer.com") in response to a
request from the Metro Regional Educational Services Agency ("MRESA") in Atlanta
(a division of the Georgia Department of Education) for specialized video
curriculum enhancement for their schools. The resulting comprehensive suite of
products and services provided "on-demand" video and was referred to as the
MRESAnet 2000 project. In 1999, the MRESAnet project was awarded approximately
$22 million dollars from the Federal Government. In 1999, globalseer.com
recorded $20,097,000 in gross revenues resulting from its work for the MRESAnet
project.
LIQUIDITY AND CAPITAL RESOURCES
As of February 28, 2000, the Company had no operations and no assets or
liabilities.
RESULTS OF OPERATIONS
As of February 28, 2000, the Company's only activity has involved the
investigation of potential business opportunities.
RECENT EVENTS
On April 14, 2000 Spherus, currently d/b/a globalseer.com, merged with and into
the Company. Pursuant to the merger transaction, all outstanding shares of
Spherus were converted into the right to receive consideration from the Company
in the amount of 12,319,461 shares of the Company's Common Stock.
The following table sets forth selected pro forma financial data of the Company
and Spherus as of December 31, 1999, giving effect to the merger transaction, as
if it had occurred on such date, which data has been derived from the pro forma
financial statements of the Company, filed on Form 8-K with the Securities and
Exchange Commission on April 14, 2000. The pro forma financial statements of the
Company have been audited by Andersen, Andersen & Strong, L.C., independent
certified public accountants. This selected pro forma financial data is
presented for information purposes only and is not necessarily indicative of the
financial position and results of operations that would have been achieved had
the merger been completed as of the dates indicated and is not necessarily
indicative of the Company's future financial position or results of operation.
<TABLE>
<CAPTION>
As of December 31, 2000
(in thousands, except per share data) ---------- ------------ ------------ -----------
Penn-Akron Spherus Pro Forma Pro Forma
Technologies Adjustments Financial
Statements
---------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Balance Sheet Data:
Assets:
Accounts receivable $ -- $ 3,981 $ -- $3981
Other receivables -- 25 -- 25
Prepaid maintenance and training costs -- 640 -- 640
Other assets -- 265 -- 265
----- ------- ---- -------
Total Assets $ -- $ 4,911 -- $ 4,911
===== ======= ==== =======
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable 1 3,860 -- 3,861
Accrued liabilities -- 665 -- 665
Deferred maintenance and training revenue -- 640 -- 640
----- ------- ---- -------
Total Liabilities 1 5,165 -- 5,166
----- ------- ---- -------
Stockholders' equity:
Common stock 60 -- 97 157
Paid in capital 882 -- (97) 785
Retained earnings (943) (254) -- (1,197)
----- ------- ---- -------
Total stockholders' equity (1) (254) -- (255)
===== ======= ==== =======
</TABLE>
10
<PAGE> 11
<TABLE>
<S> <C> <C> <C> <C>
Total liabilities and stockholders' equity $ -- $ 4,911 $ -- $ 4,911
========= ============ ============ ===========
<CAPTION>
(in thousands, except per share data) ---------- ------------ ------------ -----------
Penn-Akron Spherus Pro Forma Pro Forma
Technologies Adjustments Financial
Statements
---------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Statement of Income Data:
Revenues $ -- $20,098 -- $20,098
Direct costs -- 18,092 -- 18,092
----- ------- ---- -------
Gross Profit -- 2,006 -- 2,006
Other expenses (5) 2,251 -- 2,251
----- ------- ---- -------
5 (250) -- (245)
Loss before provision for income taxes
Provision for income taxes -- -- -- --
===== ======= ==== =======
Net income 5 (250) -- (245)
===== ======= ==== =======
</TABLE>
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements are filed with this Report:
Report of Andersen, Andersen & Strong, Independent Certified Public
Accountants.
Balance Sheets at February 28, 2000.
Statement of Operations for the years ended February 28, 2000 and 1999.
Statement of Changes in Stockholders' Equity for the years ended
February 28, 2000 and 1999.
Statement of Cash Flows for the years ended February 28, 2000 and 1999.
Notes to Financial Statements.
11
<PAGE> 12
Board of Directors
Penn-Akron Corporation
Salt Lake City, Utah
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheets of Penn-Akron Corporation
(development stage company) at February 29, 2000 and the related statements of
operations, stockholders' equity, and cash flows for the years ended February
29, 2000, and 1999 the period March 1, 1987 (date of inception of development
stage) to February 29, 2000. 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 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 balance sheet is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet. An audit also includes assessing the
accounting principles used and significant estimates made by management as well
as evaluating the overall balance sheet 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 Penn-Akron Corporation at
February 29, 2000 and the results of operations and cash flows for the years
ended February 29, 2000, and 1999 and the period March 1, 1987 (date of
inception of development stage) to February 29, 2000, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company does not have sufficient
working capital for any of its future planned activity which raises substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are described in Note 4. These financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ Andersen, Andersen & Strong, LC
April 25, 2000
Salt Lake City, Utah
12
<PAGE> 13
PENN-AKRON CORPORATION
(DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
FEBRUARY 29, 2000
================================================================================
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ --
---------
Total Current Assets $ --
=========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Accounts payable $ 800
---------
Total Current Liabilities 800
STOCKHOLDERS' EQUITY
Common stock
10,000,000 shares authorized, at $0.01 par value;
6,025,329 shares issued and outstanding - Note 3 60,253
Capital in excess of par value 882,216
Accumulated deficit - Note 1 (943,269)
---------
Total Stockholders' Equity (Deficiency) (800)
$ --
=========
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 14
PENN-AKRON CORPORATION
( DEVELOPMENT STAGE COMPANY )
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED FEBRUARY 29, 2000, AND 1999
AND THE PERIOD MARCH 1, 1987
(DATE OF INCEPTION OF DEVELOPMENT STAGE) TO FEBRUARY 29, 2000
================================================================================
<TABLE>
<CAPTION>
MAR 1, 1987
FEB 29, FEB 28, (NOTE 1) TO
2000 1999 FEB 29, 2000
------------ ----------- -----------
<S> <C> <C> <C>
REVENUES $ -- $ -- $ --
EXPENSES 1,550 5,406 10,331
----------- ----------- --------
NET LOSS $ (1,550) $ (5,406) $(10,331)
=========== =========== --------
NET LOSS PER COMMON
SHARE
Basic $ -- $ --
----------- -----------
AVERAGE OUTSTANDING
SHARES
Basic 6,025,329 6,025,329
----------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 15
PENN-AKRON CORPORATION
( DEVELOPMENT STAGE COMPANY )
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM MARCH 1, 1987 (DATE OF INCEPTION OF DEVELOPMENT STAGE)
TO FEBRUARY 29, 2000
================================================================================
<TABLE>
<CAPTION>
CAPITAL IN
COMMON STOCK EXCESS OF ACCUMULATED
SHARES AMOUNT PAR VALUE DEFICIT
------ ------ --------- -------
<S> <C> <C> <C> <C>
BALANCE MARCH 1, 1987 (date of inception 4,778,023 $47,780 $ 707,718 $(932,938)
of development stage) - Note 1
Issuance of common stock for services
at $.01 - 1988 337,548 3,375 -- --
Net operating loss for the year ended
February 28, 1989 -- -- -- (3,375)
Issuance of common stock for payment
of debt at $.25 - July 2, 1991 709,758 7,098 170,342 --
Contribution to capital - expenses paid -- -- 5,406
by officers - 1999
Issuance of common stock into escrow
account for possible claims resulting
from errors in records - Note 3 200,000 2,000 (2,000) --
Net operating loss for the year
ended February 28, 1999 -- -- -- (5,406)
Contribution to capital - expenses-related parties -- -- 750 --
Net operating loss for the year
ended February 29, 2000 -- -- -- (1,550)
BALANCE FEBRUARY 29, 2000 6,025,329 $60,253 $ 882,216 $(943,269)
========== ======= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 16
PENN-AKRON CORPORATION
(DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED FEBRUARY 29, 2000, AND
1999 AND THE PERIOD MARCH 1, 1987 (DATE OF INCEPTION
OF DEVELOPMENT STAGE)
TO FEBRUARY 29, 2000
================================================================================
<TABLE>
<CAPTION>
MAR 1, 1987
FEB 29, FEB 28, ( NOTE 1)
2000 1999 TO FEB 29, 2000
--------- -------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $(1,550) $(5,406) $(10,331)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Change in accounts payable 800 -- 800
Issuance of common stock for expenses -- -- 3,375
Contributions to capital - expenses paid by officers 750 5,406 6,156
Net Cash Used by Operations -- -- --
------- ------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES -- -- --
------- ------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES
------- ------- --------
Net Increase (Decrease) in Cash -- -- --
Cash at Beginning of Period -- -- --
------- ------- --------
Cash at End of Period $ -- $ -- $ --
======= ======= ========
NON CASH OPERATING ACTIVITIES
Issuance of 337,548 shares of common stock for services - 1988 $ 3,375
--------
Contribution to capital - expenses paid by officers - 1999 6,156
--------
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 17
PENN-AKRON CORPORATION
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. ORGANIZATION
The Company was incorporated under the laws of the state of Delaware on December
12, 1953 under the name "Erie Reinforced Plastic Pipe Company" with authorized
common stock of 4,000,000 shares at a par value of $.05. During 1957 the name
was changed to "Penn-Akron Corporation" and on May 25, 1973 the authorized
common stock was increased to 10,000,000 shares at the same par value and on
March 7, 1984 the par value was reduced to $0.01. The Company's principal
business was the operation of is wholly-owned subsidiary, Eagle Lock
Corporation, which was engaged in the the manufacturing of auxilliary locks. On
May 27, 1971, the Company filed for protection under Chapter 11 of the Federal
Bankruptcy Code. On October 31, 1978, the Company emerged from bankruptcy and
remained inactive until 1984 when the Company formed a wholly owned subidiary to
engage in the business of oil and gas exploration. During 1987 the Company lost
its remaining assets and ceased operations and has since been inactive. On June
20, 1983 the Company completed a reverse common stock split 10 shares of
outstanding stock for one share. This report has been prepared showing after
stock split shares from inception.
The company is considered to have been in the development stage since March 1,
1987.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
On February 29, 2000, the Company had a net operating loss carry forward of
$943,269. The tax benefit from the loss carry forward has been fully offset by a
valuation reserve because the use of the future tax benefit is doubtful since
the Company has no operations and there has been a substantial change in the
stockholders. $241,075 of the loss carryforward has expired and the balance will
expire beginning in years 2000 though 2021.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
Financial instruments
The carrying amounts of financial instruments are considered by management to be
their estimated fair values. These values are not necessarily indicative of the
amounts that the Company could realize in a current market exchange.
17
<PAGE> 18
PEN-AKRON CORPORATION
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basic and Diluted Net Income (Loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if shares had been issued on the
exercise of the preferred share rights unless the exercise becomes antidilutive
and then only the basic per share amounts are shown in the report.
Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No. 130. The
adoption of this standard had no impact on the total stockholder's equity on
June 30, 1999.
Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
3. COMMON STOCK
There were errors in the stockholder records during the years 1953 through 1981
in which some of the stockholders were erroneously deleted from the stockholder
list.
On April 10, 1987 the Company completed a reverse common stock split of selected
shares, by the consent of the effected shareholders, amounting to two shares of
the outstanding stock for one share, resulting in a reduction of 3,152,877 in
the outstanding shares. The available records have been insufficient to verify
the completion of the stock split
Management has issued 200,000 shares into a reserve account to be used in the
event of any valid claims from the possible errors outlined above. Management
believes the reserve of shares of 200,000 is adequate for any possible future
claim.
18
<PAGE> 19
PEN-AKRON CORPORATION
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================
4. GOING CONCERN
The Company intends to acquire interests in various business opportunities
which, in the opinion of management, will provide a profit to the Company but it
does not have the working capital to be successful in this effort. Continuation
of the Company as a going concern is dependent upon obtaining additional working
capital and the management of the Company has developed a strategy, which it
believes will accomplish this objective through additional equity funding and
long term debt which will enable the Company to continue operations for the next
year.
5. SUBSEQUENT EVENTS
On March 13, 2000 the Corporation changed its domicile from the state of
Delaware to Nevada and changed its authorized common capital stock from
10,000,000 shares with a par value of $.01 to 100,000,000 shares with a par
value of $.001 and as part of the change the Company completed a forward stock
split of 1.75 shares for each outstanding share.
On March 14, 2000 the Company acquired commercial property valued at $2,800,000
by the issuance of 4,500,000 post split shares of the Company and the assumption
of a mortgage of $800,000.
On March 24, 2000 the Company acquired all the outstanding stock of Spherus
Technologies, Inc. in a stock for stock exchange in which the stockholders of
Spherus Technologies received 17,143,581 post stock split shares of the Company,
including 1,000,000 shares issued as commission for the acquisition. As part of
the acquisition the Company received as additional consideration $250,000 and a
loan of $250,000. After the acquisition the former shareholder's of Spherus had
received 53.2% of the outstanding shares of the Company and the total
outstanding shares of the Company after completion of the above transactions was
32,187,162 post split shares.
Spherus Technologies, Inc. is in the business of providing installations of an
internet based video distribution and multimedia network to school districts
primarily in metropolitan Atlanta, Savannah and Brunswick, Georgia.
Included in the following are summarized combined unaudited pro-forma financial
statements showing the effects the above transactions as if the acquisitions had
been completed on December 31, 1999 and includes the historical financial
accounts of each company. The combined operating statement includes those of the
Company and Spherus for the year ended December 31, 1999. All intercompany
transactions have been eliminated.
The pro-forma financial statements of operations are not indicative of the
results of operation that may be achieved in the coming year.
19
<PAGE> 20
PENN-AKRON CORPORATION AND SUBSIDIARY
COMBINED BALANCE SHEETS
DECEMBER 31, 1999
(Unaudited)
================================================================================
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash $ 500,100
Accounts receivable 1,033,431
-----------
Total Current Assets 1,533,531
EQUIPMENT - net of accumulated depreciation 4,258
-----------
REAL PROPERTY 2,800,000
OTHER ASSETS 901,326
-----------
$ 5,239,115
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,775,566
-----------
Total Current Liabilities 4,775,566
-----------
OTHER LIABILITIES 1,439,997
-----------
STOCKHOLDERS' EQUITY (976,448)
-----------
$ 5,239,115
===========
</TABLE>
20
<PAGE> 21
PENN-AKRON CORPORATION AND SUBSIDIARY
COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(IN THOUSANDS)
(Unaudited)
================================================================================
<TABLE>
<S> <C>
REVENUES $ 20,098
COST OF SALES 18,092
--------
Gross Profit 2,006
--------
EXPENSES
Administrative 1,841
Interest 415
Provision for doubtful accounts receivable 2,973
--------
5,229
--------
NET LOSS $ (3,223)
========
</TABLE>
21
<PAGE> 22
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There has been no occurrence requiring a response to this Item.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
MANAGEMENT OF THE COMPANY
The Company's Board of Directors currently consists of five (5) persons. The
directors are elected by the Company's shareholders at each annual meeting of
shareholders to hold office until their successors are elected and qualified.
The executive officers are appointed by the Board of Directors of the Company
and hold office at the pleasure of the Board. Executive officers devote their
full time to the affairs of the Company.
There are no arrangements or understandings whereby the directors or the
executive officers of the Company are elected and there are no family
relationships between any of such persons.
The following table sets forth, as of May 24, 2000, certain information
regarding the directors and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION HELD
---- --- -------------
<S> <C> <C>
Kenneth M. Herman 34 President, Secretary and Director
Christopher J.S. Baker 35 Chief Financial Officer and Director
Patty P. Harris 44 Director
Michael K. Molen 43 Director
Frank Pitts 49 Director
</TABLE>
Biographical Information
Set forth below is certain information concerning each of the directors and
executive officers of the Company. Unless otherwise indicated, the principal
occupation listed for each individual has been his principal occupation for the
past five years.
KENNETH HERMAN
PRESIDENT, SECRETARY AND DIRECTOR
Kenneth Herman serves as our President and a member of the Board of Directors.
Mr. Herman is an original founder of Spherus Technologies. Mr. Herman has been
responsible for business development, vendor relationships, technology
implementations, planning, capital procurement, sales and marketing segments,
and pertinent day-to-day operations. Prior to Spherus Technologies, Mr. Herman
founded and served as a key executive of World Telecom, Inc., one of the first
international callback companies in the world that exceeded $40 million of
annual revenue within 12 months of operations beginning. Additionally, Mr.
Herman has been a technical director for venture capital consortiums both in the
United States and Europe, specializing in the high-tech market. Mr. Herman's
duties included assessing financial and technical materials/products, developing
marketing and management strategies, and coordinating capital investment. He
holds a Bachelor of Science, Industrial Management, from the University of
Maryland.
22
<PAGE> 23
CHRISTOPHER J.S. BAKER
CHIEF FINANCIAL OFFICER AND DIRECTOR
Christopher Baker joined us in 1999 and serves as our Chief Financial Officer
and a member of our Board of Directors. Mr. Baker is responsible for our
day-to-day financial affairs and reports directly to the Board of Directors. Mr.
Baker's duties also include asset and cash management and allocation, corporate
finance and reporting activities, financial planning and budgeting, investor
relations, and business development. Prior to joining us, Mr. Baker worked with
Atlin Investments from 1997 through 1999, in an entrepreneurial role, where he
structured deals and obtained financing for companies in the high-tech,
Internet, media and real estate industries. Mr. Baker has worked with
institutions, specialist boutiques, venture capital firms and private investors.
Prior to Atlin Investments, Mr. Baker worked directly within the business empire
of a senior member of the Saudi royal family. Mr. Baker was headquartered in
London, England, and worked with and reported directly to the CEO, and was
responsible for investment management, including equity and real estate
investments, acquisitions, and financial placements in conjunction with large
banks and institutions. Mr. Baker has an MBA from the University of Chicago. He
also holds degrees from The London School of Economics and The University of
York.
PATTY P. HARRIS
DIRECTOR
Patty P. Harris has served as founder and president of Profile America, Inc.
since she founded the company in 1994. Profile America, Inc. is a provider of
content for the sales training and sales support systems at BellAtlantic/GTE,
Ameritech, BellSouth, and U.S. West, and Sprint. Prior to founding Profile
America, Harris founded Atlanta Research Group, Inc. ("ARG") and served as its
President until 1994. ARG specialized in the collection of data for a wide
variety of clientele. In her 20 years of experience conducting research and
analysis, Ms. Harris has worked with Fortune 100 companies as well as
high-technology start-ups. Ms. Harris' research has been instrumental in setting
strategies to introduce new products, penetrate new markets, and expand market
share for existing products.
MICHAEL K. MOLEN
DIRECTOR
Mr. Molen is currently serving as Sanswire.Net's President and CEO and is
directing the company's worldwide rollout of its high-speed, last-mile, wireless
telecommunications products and services. During the first quarter of 2000, Mr.
Molen co-founded Sanswire.Net of Latin America to offer high-speed, wireless
access to the Internet throughout Latin America. Mr. Molen is also the
co-founder and Director of Sanswire Digital Communications, LLC, a developer and
manufacturer of digital compression technology for the wireless cable industry.
In 1999, Mr. Molen initiated the design and construction of The Genesis Network,
one of the worlds largest virtual private networks (VPN) that will accommodate
voice traffic throughout the world. In 1995, Mr. Molen was appointed to the
Board of Advisors of Digital Broadcast Corporation, a wireless cable MSO in the
United States.
FRANK PITTS
DIRECTOR
Mr. Pitts is the President of Omni Electrical Products, Inc ("Omni") a power
quality consulting firm based in Tennessee. Mr. Pitts has been with Omni since
1995. At Omni, Mr. Pitts advises and consults engineers with the design and
construction of electrical systems. Mr. Pitts is a Certified Public Accountant
and worked for over twenty years in the public accounting and financial
management information systems fields.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's directors,
certain of the Company's executive officers, and persons who own more than 10%
of the outstanding Common Stock of the Company to file with the Securities and
Exchange Commission reports of changes in ownership of the Company's Common
Stock held by such persons. Directors, officers, and greater than 10%
shareholders are also required to furnish the Company with copies of all forms
they file under this regulation. Since the Company ceased operations, the
Company has had no representations from any person, who at any time, during the
last fiscal year, was a director, officer, or beneficial owner of more than 10%
of any class of equity securities of the registrant registered pursuant to
Section 12, that they filed on a timely basis any reports required to be filed
pursuant to Section 16(a).
23
<PAGE> 24
ITEM 10. EXECUTIVE COMPENSATION.
There has been no compensation awarded to, earned by, or paid to any of the
executive officers of the Company during the fiscal year ended February 28,
2000, or the two prior fiscal years.
DIRECTORS' FEES
The Company's present policy is not to pay any cash compensation to its
directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of May 24, 2000 by (i) each person
known by the Company to be the beneficial owner of more than five percent (5%)
of the outstanding Common Stock; (ii) each director of the Company; (iii) each
Named Executive Officer (as defined herein); and (iv) all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT OF % OF
COMMON STOCK COMMON STOCK
NAME BENEFICIALLY OWNED(1) BENEFICIALLY OWNED
---- --------------------- ------------------
<S> <C> <C>
Kenneth M. Herman 2,990,890 10.1%
President, Secretary and Director
Christopher J.S. Baker 1,500,000 5.1%
Chief Financial Officer and Director
Michael K. Molen 0 *
Director
Patricia P. Harris 0 *
Director
Frank Pitts 10,000 *
Director
John Julian 1,883,230 6.4%
Tampa Bay Financial, Inc.(2) 5,846,791 19.8%
Catalyst Communications, Inc.(3) 4,500,000 15.3%
ASFT, Inc.(4) 1,570,331 5.3%
All directors and Named Executive Officers as a group (5 4,884,120 16.6%
persons)
</TABLE>
-----------------------
* Less than 1% of outstanding shares.
(1) "Beneficial Ownership" includes shares for which an individual,
directly or indirectly, has or shares voting or investment power or
both and also includes options which are exercisable within 60 days of
May 1, 2000. Unless otherwise indicated, all of the listed persons have
sole voting and investment power over the shares listed opposite their
names. Beneficial ownership as reported in the above table has been
determined in accordance with Rule 13d-3 of the Securities Exchange Act
of 1934. Pursuant to the Rules of the Securities and Exchange
Commission, certain shares of the Company's Common Stock that a
beneficial owner has the right to acquire within 60 days pursuant to
the exercise of stock options or warrants are deemed to be outstanding
for the purpose of computing the percentage ownership of such owner but
are not deemed
24
<PAGE> 25
outstanding for the purpose of computing the percentage ownership of
any other person. Based upon 29,500,542 outstanding shares of common
stock (subsequent to the effectiveness of the merger)
(2) Tampa Bay Financial, Inc. is located at 355 Interstate Boulevard,
Sarasota, Florida 34240.
(3) Catalyst Communications, Inc. is located at 355 Interstate Boulevard,
Sarasota, Florida 34240. These shares were issued subsequent to
February 28, 2000.
(4) ASFT, Inc. is located at 7701 Iguana Drive, Sarasota, Florida 34241.
25
<PAGE> 26
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There were no transactions, or series of similar transactions, during the last
two fiscal years, or proposed transactions, or series of proposed similar
transactions, to which the Company was or is to be a party, in which the amount
exceeds $60,000, and in which any director, executive officer, or any security
holder who is known by the Company to own of record or beneficially more than 5%
of any class of the Company's Common Stock, or any member of the immediate
family of any of the foregoing persons, has an interest.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Exhibits.
The following exhibits are filed with or incorporated by reference into this
report. The exhibits which are denominated by an asterisk (*) were previously
filed as a part of, and are hereby incorporated by reference from (1) the
Company's original registration statement on Form 10, filed with the Securities
and Exchange Commission on June 18, 1984, file number 0-12597 (referred to
herein as the "1984 Registration Statement); (2) the Company's Form 8 amendment
to its registration statement on Form 10, filed with the Securities and Exchange
Commission on January 14, 1985, file number 0-12597 (referred to herein as the
"1985 Amendment"); and (3) a Current Report on Form 8-K for the Registrant
(referred to herein as "2000 8-K"). Except as otherwise indicated, the exhibit
number corresponds to the exhibit number in the referenced document.
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
2.1 Certificate of Incorporation (1984 Registration Statement)
2.2 Certificate of Amendment (1984 Registration Statement)
2.3 Reorganization Agreement dated May 3, 1984 (1984 Registration Statement)
2.4 Bylaws of the Company (1984 Registration Statement)
2.5 Amendment to Bylaws (1985 Amendment)
2.6 Merger Agreement between Spherus Technologies, Inc. and the Company
(2000 8-K).
2.7 Nevada Certificate of Merger between Spherus Technologies, Inc. and the Company
(2000 8-K).
2.8 Georgia Certificate of Merger between Spherus Technologies, Inc. and the Company.
(2000 8-K).
3.1 Form of Common Stock Certificate (1984 Registration Statement).
23.1 Consent of Andersen, Andersen & Strong, L.C.
27.1 Financial Data Schedule (for SEC use, only).
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were required to be filed for the fourth quarter of 1999.
The Company did file a report on Form 8-K on April 14, 2000.
26
<PAGE> 27
SIGNATURES
In accordance with the requirements of Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, in the City of Marietta, State of
Georgia on May 24, 2000.
PENN-AKRON CORPORATION
/s/ Kenneth M. Herman
--------------------------------------
By: Kenneth M. Herman
President and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed by the following persons on behalf of the Registrant in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Kenneth M. Herman President, Secretary and May 24, 2000
------------------------------- Director
Kenneth M. Herman (principal executive officer)
/s/ Christopher J.S. Baker Chief Financial Officer and May 24, 2000
------------------------------- Director
Christopher J.S. Baker (principal financial officer and
principal accounting officer)
/s/ Patricia P. Harris Director May 24, 2000
----------------------------------
Patricia P. Harris
</TABLE>
27
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
23.1 Consent of Andersen, Andersen & Strong, L.C.
27.1 Financial Data Schedule (for SEC use, only)
</TABLE>
28
