U.S. Securities and Exchange Commission
Washington D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d)OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _____________________to_____________________
Commission File No. 0-23806
I/NET, INC.
(Name of Small Business Issuer in its Charter)
DELAWARE 87-0046720
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(State or Other Jurisdiction of (IRS Employer I.D. No.)
incorporation or organization)
643 West Crosstown Parkway
Kalamazoo, Michigan 49008
(Address of Principal Executive Officers)
Issuer's Telephone Number: (616) 344-3017
Indicate by check mark whether the Issuer (1) has filed all reports required to
be filed by Section 13 or 15 (d) of the Exchange Act of 1934 during the
preceding 12 months (or for 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.
(1) Yes X No __ (2) Yes X No __
State the number of shares outstanding of each of the Issuer's classes of common
equity, as of the latest practical date:
June 30, 1999
31,037,652
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
The consolidated financial statements included herein have been prepared by
I/NET, Inc. without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and notes thereto included in I/NET's 1998 annual report on Form
10-KSB.
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary to present fairly the financial
position of the Company as of June 30, 1999, the results of its operations for
the six month periods ended June 30, 1999 and 1998, and its cash flows for the
six month period ended June 30, 1999 and 1998. All such adjustments are of
normal and recurring nature.
<PAGE>
I/NET, Inc.
Consolidated Balance Sheet
(unaudited)
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- --------------------------------------------------------------------------------
June 30, 1999
---------------
Assets (Note 2 and 3)
Current Assets
Cash $ 53,380
Trade Receivables 274,500
---------------
Total Current Assets $ 327,880
Office Furniture and Equipment, Net of
Accumulated Depreciation $88,832 25,206
---------------
Total Assets $ 353,086
===============
Liabilities and Capital Deficit
Current Liabilities
Accounts Payable $ 86,170
Accruals:
Commissions (Note 1) 258,000
Other 157,820
Advances from Stockholders' (Note 2) 95,500
Current maturities of long-term debt (Note 3) 693,000
---------------
Total Current Liabilities $1,290,490
Long-term Debt, less current maturities (Note 3) 432,781
---------------
Total Liabilities $1,723,271
---------------
Commitments and Contingencies (Notes 8 and 11) -
Capital Deficit
Common Stock $.001 par value; Authorized 50,000,000 Shares:
Issued and outstanding 31,037,652 31,038
Additional Paid in Capital 11,886,674
Deficit (13,287,897)
---------------
Total Capital Deficit (1,370,185)
---------------
Total Liabilities and Capital Deficit $ 353,086
===============
See accompanying summary of accounting policies and notes to consolidated
financial statements
<PAGE>
I/NET, Inc.
Consolidated Statements of Earnings
(unaudited)
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- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
--------------------- --------------------
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
--------- --------- --------- ---------
Revenues $373,931 $450,351 $894,549 $883,132
Cost of Revenues 182,273 242,178 455,167 484,405
--------- --------- --------- ---------
Gross Profit $191,658 $208,173 $439,382 $398,727
Selling, General, and Administrative
Expenses 123,484 95,555 299,296 235,043
--------- --------- --------- ---------
Earnings from operations $ 68,174 $112,618 $140,086 $163,684
Interest Expense - Net of interest
income of $4,504 in 1999 and $4,607
in 1998. (19,101) (23,557) (29,057) (41,058)
--------- ---------- --------- --------
Net Earnings 49,073 89,061 $111,029 $122,626
========= ========== ========= =========
Net Earnings per share $ - $ - $ - $ -
========= ========== ========= =========
See accompanying summary of accounting policies and notes to consolidated
financial statements
<PAGE>
I/NET, Inc.
Consolidated Statements of Cash Flows
(unaudited)
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Six Months Ended
--------------------------
June 30 June 30
1999 1998
----------- -----------
Operating Activities
Net Earnings $ 111,029 $ 122,626
Depreciation and Amortization 8,619 15,000
Changes in Assets and Liabilities
Trades Receivables ( 72,538) (95,284)
Accounts Payable ( 38,330) 58,457
Accruals (5,287) (14.646)
------------ -----------
Cash Provided By Operating Activities $ 3,493 $ 86,153
Investing Activities
Capital Expenditures (2,725) $ (8,016)
------------ -----------
Cash (Used In) Investing Activities $ (2,725) $ (8,016)
Financing Activities
Repayment of Stockholder Loans (17,800) (33,998)
Principle Payments on Long-Term Debt (33,435) (78,030)
------------ -----------
Cash (Used In) Financing Activities $ (51,235) $(112,028)
Decrease in Cash and Cash Equivalents $ (50,467) $ (33,891)
Cash and Cash Equivalents, Beginning of Period 103,847 135,939
------------ -----------
Cash and Cash Equivalent, End of Period $ 53,380 $ 102,048
============ ===========
See accompanying summary of accounting policies and notes to consolidated
financial statements
<PAGE>
I/NET, Inc.
Summary of Accounting Policies
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Basis of Presentation
- ----------------------
The consolidated financial statements include the accounts of the Company,I/NET,
Inc., (a Delaware Corporation) and its wholly-owned subsidiary I/NET, Inc., (a
Michigan Corporation). Only the subsidiary remains an active Company and
therefore the consolidated financial statements presented within are those of
the subsidiary.
Description of the Business
- ---------------------------
The Company operates two segments consisting of Website consulting services
and development of Internet computer software products and Internet Resume
Management Service. The Company does not operate based upon product lines but as
one business unit. Its major customers are International Business Machines
(IBM), International Marketing Strategies (IMS) and Career/NET L.L.C. (See Note
5)
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
- -------------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid investments with maturity of three months or less when purchased to be
cash equivalents.
Office Furniture, Equipment and Depreciation
- --------------------------------------------
Office equipment and furniture are stated at cost. Depreciation is computed
principally by the straight-line method for financial reporting purposes over
the estimated useful lives of the assets and by accelerated methods for tax
purposes.
Developed Computer Software
- ---------------------------
Software development costs are accounted for in accordance with the provisions
of Statement of Financial Accounting Standard (SFAS) No. 86, "Accounting
for the Cost of Computer Software To Be Sold, Leased or Otherwise Marketed."
Software development costs and certain product enhancements, when significant,
are capitalized subsequent to the establishment of technological feasibility
for the product and prior to the products general release to customers.
Costs incurred prior to technological feasibility or subsequent to the product's
general release to customers, as well as selling, general, and administrative
costs associated with the products, are expensed as incurred.
Fair Value of Financial Instruments
- -----------------------------------
The Company's financial instruments consist of cash, receivables, notes payable,
accounts payable and long-term debt. Due to the short-term nature of the items,
other than long-term debt and the variable interest rates on a substantial
portion of the long-term debt, management estimates that carrying amounts of the
Company's financial instruments approximate their fair values at June 30 , 1999.
Revenue Recognition
- -------------------
Revenues for the sale of the Company's Internet products are recognized when the
product has been accepted by the customer. The Company's records it's revenue
from Websight consulting contracts as billed on a monthly basis as time and
expenses are incurred. Revenues from Career/NET are recorded as earned.
Earnings Per Share
- ------------------
Earnings per share amounts have been calculated using the weighted average
number of common shares outstanding, for the respective periods. Outstanding
warrants and options were not dilutive at June 30, 1999 and 1998.
See accompanying notes to consolidated financial statements.
<PAGE>
I/NET Inc.
Notes to Consolidated Financial Statements
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1. Commissions
- ---------------
During a prior year, the Company agreed to release a distributor from its
exclusive contract to distribute certain I/NET products. In exchange for this
release, I/NET agreed to pay a 7.5% commission to the distributor of I/NET's
sales of certain products sold through September 30, 1999 but at a minimum of
$250,000 and a maximum amount of $500,000.
2. Short-term Advances from Stockholders
- -----------------------------------------
Advances from stockholders consist of:
June 30, 1999
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Non-interest bearing notes payable to
stockholders, due on demand $ 20,500
Secured stockholder's advances bearing
interest at 8%, and are due on demand 75,000
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$ 95,500
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3. Long-term Debt Long-term debt consists of:
- ----------------------------------------------
June 30, 1999
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Notes payable to vendors (see below) $ 797,732
Notes payable to stockholders bearing interest
at 8% and due in December, 2001, secured
by all the Company's assets 328,049
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1,125,781
Less current maturities 693,000
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Total Long-term Debt $ 432,781
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Notes Payable to Vendors
- ------------------------
Unsecured notes payable to various vendors totaling $797,732 are due in various
installments and at varying interest rates.
Two notes totaling $440,655 are due on demand. These notes bear interest at the
prime rate plus 2% (effectively 9.75% at June 30, 1999).
Another note in the amount of $82,610 is due in monthly installments at the rate
of 5% of the previous months cash receipts (as defined) but at a minimum of
$2,000 bi-monthly. The principle balance of this note was due in September 1996.
The Company is in default on repayment on this note but continues to make
repayments as required by the original note. This note bears interest at 8% and
is classified as current.
A vendor note in the amount of $216,808 as of June 30, 1999, calls for monthly
installments of 5% of the previous month's cash receipts (as defined) but at a
minimum rate of $10,000 bi-monthly and bears interest at the prime rate plus 2%.
Final payment, assuming minimum payments only, is November 2003.
Another vendor note in the amount of $57,659 is due in monthly installments of
5% of the previous month's cash receipts (as defined) but at a minimum rate of
$3,000 monthly and bears interest at 10%. Final payment, assuming minimum
payments only, is March 2001.
Aggregate maturities of long-term debt over the next five years assuming
repayment of stockholders' advances (Note 2) and notes are as follows:
2000 $ 693,000
2001 $ 399,000
2002 $ 50,000
2003 $ 55,000
2004 $ 24,000
<PAGE>
I/NET, Inc.
Notes to Consolidated Financial Statements
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4. Stock Warrants
- -------------------
During prior years, the Company sold common stock for cash, trademark, and
extinquishment of debt. In connection with these sales, underwriters were issued
warrants for 770,000 shares of common stock at a weighted average price of $.43
and are exercisable for five years, expiring in 1999. In 1997, the Company
issued 460,000 additional warrants at prices ranging from $.50 to $1.00 with a
weighted average price of $.69. These warrants were issued in connection with
obtaining the right for the Company to port certain Netscape Communications
Corporation Netscape Internet Products to the IBM AS/400 platform. These
warrants expire in 2000. Outstanding warrants were not dilutive at June 30,
1999.
5. Major Customers
- --------------------
The Company provided Internet products, and websight consulting services and
Career/NET support services to major customers as follows:
Six months ended June 30, 1999 1998
- --------------------------------------------------------------------------------
Internet Products:
IMS $221,000 $139,000
IBM $ 10,000 $325,000
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$231,000 $464,000
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Websight Consulting Services:
IBM $413,000 $347,000
- --------------------------------------------------------------------------------
Career/NET Support Services
Career/NET L.L.C. $234,000 $ -
- --------------------------------------------------------------------------------
6. Taxes on Income
- --------------------
Income taxes are calculated using the liability method specified by Statement
of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes."
Deferred income taxes reflect the net effects of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets are as follows:
June 30, 1999
- --------------------------------------------------------------------------------
Deferred Tax Assets:
Accruals $ 54,000
Trademark 56,000
Net operating loss carryforwards 3,372,000
Tax Credit carryforwards 42,000
Capital loss carryforwards 24,000
- --------------------------------------------------------------------------------
Total Deferred Tax Assets $ 3,548,000
Valuation Allowance (3,548,000)
- --------------------------------------------------------------------------------
$ -
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As of June 30, 1999, the Company had a net operating loss carryforward of
approximately $9,916,000 and investment tax credit carryforwards of
approximately $42,000 available to reduce future taxable income and taxes,
respectively. These carryforwards expire from 1999 through 2011.
<PAGE>
I/NET, Inc.
Notes to Consolidated Financial Statements
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- --------------------------------------------------------------------------------
7. Employee Benefit Plan
- --------------------------
The Company has a profit sharing defined contribution pension plan covering
substantially all employees. Under the plan, employees may make tax deferred
voluntary contributions which, at the discretion of the Company Board of
Directors, may be matched within certain limits by the Company. In addition, the
Company may make additional discretionary contributions to the plan as profit
sharing contributions. All contributions to the plan are limited by applicable
Internal Revenue Code regulations. There were no Company contributions charged
against operations during the six months ended June 30, 1999 or 1998.
8. Operating Leases
- ---------------------
The Company leases its facilities and certain equipment under
non-cancelable operating leases. Rental expense under these leases was
approximately $55,000 and $52,000 for the six months ended June 30, 1999 and
1998 respectively. Future minimum annual lease payments subsequent to June 30,
1999 are as follows:
1999 $100,000
2000 $ 84,000
2001 $ 20,000
9. Incentive Stock Option Plan
- --------------------------------
The Company maintains an incentive stock option plan that provides for the
granting of options to officers and other key employees at an exercise price not
less than 100% of the fair market value on the date of the grant. Twenty percent
of the options become exercisable each year following the date they were
granted, and can remain outstanding for five years following the day they become
fully vested. Options outstanding are summarized as follows:
Weighted Average
Shares Price Per Share
- --------------------------------------------------------------------------------
June 30, 1999 115,000 $ .65
- --------------------------------------------------------------------------------
At June 30, 1999, 582,255 shares of common stock are reserved for the
incentive stock option plan and 55,000 options were vested and exercisable. The
remaining weighted average contractual life on these options is six years. The
remaining weighted average contractual life of the 60,000 shares outstanding is
eight years.
Under SFAS No. 123, "Accounting for Stock Based Compensation", the Company is
required to provide pro forma information regarding net income and earnings per
share as if compensation cost for the Company's stock option plan had been
determined in accordance with the fair based method prescribed in SFAS No. 123.
The Company estimates the fair value of each stock option at the grant date by
using the Black-Scholes option-pricing model with the following assumptions used
for its' most recent grant in 1997: expected volatility of 93 percent; risk-free
interest rate of 6.4 percent, and an expected option life of 10 years. Net
earnings for 1999 and 1998 would not have been materially affected.
10. Supplemental Disclosure of Cash Flow Information
- ------------------------------------------------------
Interest paid for the six months ended June 30, 1999 and 1998 was $17,000 and
$24,000 respectively. The Company paid no income taxes
during 1999 and 1998.
<PAGE>
I/NET, Inc.
Notes to Consolidated Financial Statements
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- --------------------------------------------------------------------------------
11. Contingencies
- -------------------
Royalties
---------
On September 30 1997, the Company entered into a software license agreement
wherein Netscape Communications Corp. (Netscape) granted to the Company the
right to port certain of its Internet Server products to the IBM AS/400
platform. This agreement is for a period of three years and allows the Company
to market and distribute the ported products upon their modification to the
AS/400 platform.
In exchange for this license agreement, I/NET has agreed to pay minimum
royalties to Netscape in the amount of $3,000,000 according to the following
repayment schedule:
Paid by IBM on behalf of I/NET in October, 1997 $ 250,000
Paid by IBM on behalf of I/NET in September 30, 1998 $ 750,000
September 30, 1999 $1,000,000
September 30, 2000 $1,000,000
IBM Corporation has guaranteed to Netscape the above listed royalties in the
event that product sales are insufficient to repay amounts due under this
agreement.
In addition, I/NET had agreed to pay to Netscape a development support fee in
the amount of $250,000 for a period of three years. Netscape has agreed to
waive its fee for two years. IBM has provided advances against royalties in the
amount of $600,000. These amounts will be reimbursed to IBM after deduction of
Netscape royalties in the amount of 10% of total revenue received from sale of
the ported products. If the revenue from the sales of these Netscape products
are insufficient, I/NET will not have to repay any of these advanced royalties.
The Company recognized $325,000 of revenue from these advances in 1998 and
$10,000 in 1999.
Litigation
----------
From time to time the Company has been involved in various legal actions
arising from the normal course of business. Management does not anticipate any
material losses as a result of these actions.
12. Continue Existence
- ------------------------
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The company has
suffered recurring losses from operations in prior years, has a significant
working capital deficit, and requires additional capital to continue its product
development. Management believes the Company will continue as a going concern
and is actively marketing its products, which would enable the Company to meet
its current obligations and provide additional funds for continued new product
development. In addition, management is currently negotiating several additional
contracts for its services and products. However, there can be no assurance
these activities will be successful.
13. Acquisition
- ----------------
The previously announced acquisition of Consolidated Graphics Group, Inc. is
moving forward, and it is the intention of both parties to have the
transaction completed in the third quarter of 1999. However, there can be no
assurances that the acquisition will be completed in the third quarter as
planned or at all.
<PAGE>
I/NET, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and Results of
Operation
- --------------------------------------------------------------------------------
Six months ended June 30, 1999 and 1998.
Results of Operations
---------------------
Revenues for the six months ended June 30, 1999 were $894,549 compared to
$883,132 for the six months ended June 30, 1998. When analyzed by product
category, revenues of Website consulting services to IBM were $413,000 in 1999,
as compared to $347,000 in 1998. Sale of Internet products accounted for
revenues of $221,000 in 1999 and $139,000 in 1998. Revenue from the porting of
Netscape products produced revenue of $10,000 in 1999 and $325,000 in 1998.
During 1998, I/NET, Inc., signed a licensing agreement and supplemental
support services agreement for its previously developed Career/NET product, an
Internet resume management service. These agreements allowed the licensee, the
perpetual license to use and sell the product. In consideration for granting the
license, I/NET would receive 30% of the net revenues received by the licensee.
In exchange for these revenues, I/NET, Inc. would perform all programming,
websight design and development, upgrades and websight improvements.
During March 1999, the licensee decided that it wished to be relieved of the
support agreement. In exchange for this relief, it gave to I/NET a $209,000
demand promissory note, bearing 7% interest per annum. This revenue has been
recorded during 1999 and is included in trade receivables as of June 30, 1999.
I/NET, Inc. continued to perform support services until July 17, 1999 for its
customary 30% of net revenues derived from the sales of the Career/NET
products. The Company has negotiated a fee for service agreement for the period
following July 17, 1999.
Cost of revenues decreased by $29,000 as compared to 1998. The primary cause for
this decrease was the renegotiation of fees charged to I/NET for the use of
vendor software.
General and administrative expenses increased by $64,000 compared to 1998. The
cause for this increase was additional travel expenses and higher state
operating taxes.
Interest expenses decreased by $12,000 due to decreased borrowings in the first
six months of 1999 as interest-bearing debt continues to be repaid.
Financial Condition and Liquidity
- ---------------------------------
The Company's primary need for capital has been to invest in computer
software development. As of June 30, 1999 the Company's working capital deficit
was $963,000, as compared to a deficit of $1,140,000 at June 30, 1998. The
resulting decrease in working capital deficit has been provided by earnings in
1999 and 1998.
Sales of the Netscape server which was introduced during the first quarte of
1999 have been less than anticipated. The Company is working with Netscape and
IBM to find additional delivery methods for this product. Sales of this product
may not impact earnings until the third quarter 1999 at the earliest, if at all.
During April 1999, the Company signed an extension to its current websight
consulting agreement with IBM through the end of March, 2000.
In April 1999, the Company announced a 10-year contract with Internet
Financial Services, Ltd. (IFS), a privately held Internet software and services
company based in the Cayman Islands that specializes in web site design, hosting
and servicing of financial transactions for offshore clients and business. IFS
contracted with I/NET to design and develop the first-ever Internet based
offshore asset management and trading system for one of IFS's clients.
The system is operational and allows trading in stocks, bonds, mutual funds and
options on North American exchanges. Later this year, IFS plans to offer users
the ability to trade on additional exchanges throughout the world (e.g. London,
Hong Kong, Frankfurt and Tokyo) as well as the ability to trade
commodities, currencies and annuities all on the same system. IFS earns
fee-for-service revenue from its clients on every transaction that flows through
the system. Under the terms of the agreement, these fees will be split equally
between IFS and I/NET. In addition, I/NET will provide ongoing technical support
for all of the IFS web sites. There have been no revenues generated from this
contract to date.
The Company believes that the additional sales provided by the above
mentioned agreements, the continued development of new products, together with
the renegotiations of its defaulted debt, should provide the Company with
sufficient working capital to market its products, which would enable the
Company to meet its current obligations and provide additional funds for
continued new product development. In addition, management is currently
negotiating several additional contracts for its services and products. However,
there can be no assurance these activities will be successful.
<PAGE>
I/NET, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
All I/NET developed software is year 2000 compliant. All I/NET internal computer
software is year 2000 compliant.
The Company is in the process of reviewing the insurance, regulatory and legal
implications as they relate to the year 2000. The Company at this time does not
anticipate that the costs associated with this review will be material to the
Company's financial condition or results of operations.
"Safe Harbor" Statement Under the Private Securities Litigation Act
- --------------------------------------------------------------------
Certain information contained in this Form 10-QSB may constitute or include
forward-looking statements. Such forward-looking information involves important
known and unknown risks and uncertainties and of 1995 other factors that may
cause the actual results, performance, or achievements of the Company to be
materially different from any future, results, performance, or achievements
expressed or implied by such forward-looking statements. These risks and
uncertainties include, but are not limited to, uncertainties relating to
economic conditions; possible future acquisitions and divestitures;
technological changes and developments in the competitive environment in which
the Company operates; spending patterns of the Company's customers; success of
the Company in negotiations with its lenders; size, timing, and recognition of
revenue from significant orders; ability of the Company to successfully
implement its business strategy of developing and licensing client/server
decision support application software designed to address specific industry
markets; new product introductions and announcements by the Company's
competitors; changes in Company strategy; product life cycles, cost and
continued availability of third party software and technology incorporated into
the Company's products; potential obsolescence of the Company's existing
products or services; cost and availability of developers, success in and
expense associated with the development, production, testing, marketing, and
shipping of products, including a failure to ship new products and technologies
when anticipated, failure of customers to accept these products and technologies
when planned, and any defects in products; perceived absolute or relative
overall value of the Company's products by the company's customers, including
features, quality, and pricing compared to other competitive products; amount,
and rate of growth in, the Company's selling, general and administrative
expenses; occurrence of any expenditures and expenses, including depreciation
and research and development expenses costs and other effects of legal and
administrative cases and proceedings (whether civil or criminal), settlements,
and investigations, claims, and changes in those items; developments or
assertions by or against the Company relating to intellectual property rights;
adoption of new, or changes in, accounting policies and practices and the
application of such policies and practices; and effects or changes within the
Company's organization or in compensation and benefit plans. Since the purchase
of the Company's products is relatively discretionary and involves a commitment
of capital, in the event of any downturn in any potential customers' business or
the economy in general, purchases of the Company's products may be deferred or
canceled. Further, the Company's expense levels are based, in part, on its
expectations as to future revenue and a significant portion of the Company's
expenses do not vary with revenue. As a result, if revenue is below
expectations, results of operations are likely to be materially adversely
affected. Shareholders are cautioned not to place undue reliance on the
forward-looking statements made in the Form 10-QSB, which speaks only as of the
date hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following person on behalf of the
registrant and in the capacities and on the dates indicated:
I/NET, Inc.
Date: July 28, 1999
By: /s/ Stephen J. Markee
------------------------------------
Stephen J. Markee
Director, President, CEO and CFO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000789860
<NAME> I/NET
<MULTIPLIER> 1
<CURRENCY> $
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Jun-30-1999
<EXCHANGE-RATE> 1
<CASH> 53,380
<SECURITIES> 0
<RECEIVABLES> 274,500
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 327,880
<PP&E> 114,038
<DEPRECIATION> 88,832
<TOTAL-ASSETS> 353,086
<CURRENT-LIABILITIES> 1,290,490
<BONDS> 0
0
0
<COMMON> 31,038
<OTHER-SE> 11,886,674
<TOTAL-LIABILITY-AND-EQUITY> 353,086
<SALES> 894,549
<TOTAL-REVENUES> 894,549
<CGS> 455,167
<TOTAL-COSTS> 455,167
<OTHER-EXPENSES> 299,296
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,057
<INCOME-PRETAX> 111,029
<INCOME-TAX> 0
<INCOME-CONTINUING> 111,029
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111,029
<EPS-BASIC> .00
<EPS-DILUTED> .00
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