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 three month period ended March 31, 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 __
<PAGE>
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State the number of shares outstanding of each of the Issuer's classes of common
equity, as of the latest practical date:
March 31, 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 March 31, 1999, the results of its operations for
the three month periods ended March 31, 1999 and 1998, and its cash flows for
the three month period ended March 31, 1999. All such adjustments are of normal
and recurring nature.
<PAGE>
I/NET Inc.
Consolidated Statements of Earnings
(unaudited)
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Three Months Ending
-------------------
March 31, March 31,
1999 1998
----------- ----------
Revenues $ 520,618 $ 432,781
Cost of Revenues 272,894 242,226
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Gross Profit $ 247,724 $ 190,555
Selling, General, and Administrative Expenses 175,812 139,489
----------- ----------
Earnings from operations $ 71,912 $ 51,066
Interest Expense - Net of interest income of
$6,720 in 1998 and $3,908 in 1998. (9,956) (17,501)
----------- ----------
Net Earnings $ 61,956 $ 33,565
=========== ==========
Net Earnings per share $ - $ -
=========== ==========
Basic and Diluted Weighted Average Number of
Common Shares Outstanding 31,037,652 31,037,652
=========== ==========
See accompanying summary of accounting policies and notes to consolidated
financial statements
<PAGE>
I/NET, Inc.
Consolidated Balance Sheet
(unaudited)
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March 31, 1999
---------------
Assets (Note 2 and 3)
Current Assets
Cash $ 92,613
Trade Receivables 262,982
--------------
Total Current Assets $ 355,595
Office Furniture and Equipment, Net of
Accumulated Depreciation $130,808 26,324
--------------
Total Assets $ 381,919
==============
Liabilities and Capital Deficit
Current Liabilities
Accounts Payable $ 142,123
Accruals:
Commissions (Note 1) 258,000
Other 149,708
Advances from Stockholders' (Note 2) 95,500
Current maturities of long-term debt (Note 3) 696,000
--------------
Total Current Liabilities $1,341,331
Long-term Debt, less current maturities (Note 3) 459,846
--------------
Total Liabilities $1,801,177
--------------
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 (13,336,970)
--------------
Total Capital Deficit (1,419,258)
--------------
Total Liabilities and Capital Deficit $ 381,919
==============
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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Three Months Ending
---------------------------
March 31 March 31
1999 1998
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Operating Activities
Net Earnings $ 61,956 $ 33,565
Depreciation and Amortization 7,500 7,500
Changes in Assets and Liabilities
Trades Receivables (61,020) (57,281)
Accounts Payable 17,624 15,825
Accruals (13,399) 10,542
----------- ----------
Cash Provided By Operating Activities $ 12,661 $ 10,151
Investing Activities
Capital Expenditures (2,725) $ (8,016)
----------- ----------
Cash (Used In) Investing Activities $ (2,725) $ (8,016)
Financing Activities
Repayment of Stockholder Loans (5,280) (17,500)
Principle Payments on Long-Term Debt (15,890) (47,448)
----------- ----------
Cash (Used In) Financing Activities $ (21,170) $ (64,948)
----------- ----------
Decrease in Cash and Cash Equivalents $ (11,234) $ (62,813)
Cash and Cash Equivalents, Beginning of Period 103,847 135,949
----------- ----------
Cash and Cash Equivalent, End of Period $ 92,613 $ 73,126
=========== ==========
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 Careernet 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
<PAGE>
I/NET, Inc.
Summary of Accounting Policies
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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 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 March 31, 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 March 31, 1999 and 1998.
New Accounting Pronouncements
- -----------------------------
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. This
statement is effective for all fiscal quarters of fiscal years beginning after
June 15, 1999. Historically, the Company has not entered into derivative
contracts either to hedge existing risks or for speculative purposes.
Accordingly, the Company does not expect adoption of the new standard to affect
its financial statements.
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:
March 31, 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:
March 31, 1999
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Notes payable to vendors (see below) $ 820,644
Notes payable to stockholders bearing interest
at 8% and due in December, 2001, secured by all
the company's assets 335,202
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1,155,846
Less current maturities 696,000
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Total Long-term Debt $ 459,846
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<PAGE>
I/NET Inc.
Notes to Consolidated Financial Statements
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Notes Payable to Vendors
- ------------------------
Unsecured notes payable to various vendors totaling $820,644 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 March 31, 1999).
Another note in the amount of $89,062 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 $223,943 as of March 31, 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 $66,984 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 $ 696,000
2001 $ 414,000
2002 $ 51,000
2003 $ 54,000
2004 $ 37,000
<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 860,000 shares of common stock at a weighted average price of $.48
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 March 31,
1999.
5. Major Customers
The Company provided Internet products, and websight consulting services and
Career/NET support services to major customers as follows:
Three months ended March 31, 1999
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Internet Products:
IMS $ 90,000
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Websight Consulting Services:
IBM $ 184,000
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Career/NET Support Services
Career/NET L.L.C. $ 221,000
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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:
<PAGE>
I/NET Inc.
Notes to Consolidated Financial Statements
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March 31, 1999
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Deferred Tax Assets:
Accruals $ 51,000
Trademark 56,000
Net operating loss carryforwards 3,388,000
Tax Credit carryforwards 42,000
Capital loss carryforwards 24,000
Deferred Revenue -
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Total Deferred Tax Assets $3,561,000
Valuation Allowance (3,561,000)
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$ -
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As of March 31, 1999, the Company had a net operating loss carryforward
approximately $9,964,000 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.
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 three months ended March 31, 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 $24,000
and $26,000 for the three months ended March 31, 1999 and 1998 respectively.
Future minimum annual lease payments subsequent to March 31, 1999 are as
follows:
<PAGE>
I/NET Inc.
Notes to Consolidated Financial Statements
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1999 $107,000
2000 $ 93,000
2001 $ 40,000
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
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March 31, 1999 115,000 $ .65
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At March 31, 1999, 582,255 shares of common stock are reserved for the incentive
stock option plan and 35,000 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 80,000 shares outstanding is nine
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
income for 1999 and 1998 would not have been materially affected.
10. Supplemental Disclosure of Cash Flow Information
Interest paid for the three months ended March 31, 1999 and 1998 was $9,000 and
$13,000 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 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 has agreed to pay to Netscape annual development support fees
in the amount of $250,000 for a period of 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 royalties advanced. The Company recognized $390,000 of revenue from these
advances in 1998.
Litigation
The Company is involved in various legal actions arising from the normal course
of business. Management does not anticipate any material losses as a result of
these proceedings.
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
<PAGE>
I/NET, Inc.
Notes to Consolidated Financial Statements
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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.
The previously announced acquisition of Consolidated Graphics Groups, Inc. is
moving forward, and it is still the intention of both parties to have the
transaction completed in the second quarter of 1999.
13. Management's Discussion and Analysis of Financial Condition and Results of
Operation
Three months ended March 31, 1999 and 1998.
Results of Operation
Revenues for the three months ended March 31, 1999 were $520,618 compared to
$432,781 for the three months ended March 31, 1998. When analyzed by product
category, revenues of Website consulting services to IBM were $184,000 in 1999,
as compared to $201,000 in 1998. Sale of Internet products accounted for
revenues of $90,000 in 1999 and $28,000 in 1998. Revenue from the porting of
Netscape products produced revenue of $10,000 in 1999 and $200,000 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 Career/NET, L.L.C., a
Michigan Limited Liability company, the perpetual license to use and sell the
product. In consideration for granting the license, I/NET, Inc. 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, Career/NET, L.L.C. decided that it wished to be relieved of
the support agreement. In exchange for this relief it gave to I/NET, Inc. for a
$209,000 demand promissory 7% per annum interest rate note. This revenue has
been recorded during the first quarter of 1999.
<PAGE>
I/NET, Inc.
Notes to Consolidated Financial Statements
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I/NET, Inc. will continue to perform support services until July 3, 1999 for its
customary 30% of net revenues derived from the sales of the Career/NET products.
Cost of revenues increased by $31,000 as compared to 1998. The primary cause for
this increase was the hiring of additional development personnel for the
Netscape and IBM projects.
General and administrative expenses increased by $36,000 as compared to 1998.
The cause for this increase was additional travel and state taxes.
Interest expenses decreased by $8,000 due to decreased borrowings in the first
three months of 1999 as interest-bearing debt continues to be repaid.
14. Financial Condition and Liquidity
The Company's primary need for capital has been to invest in computer software
development. As of March 31, 1999 the Company's working capital deficit was
$959,000, as compared to a deficit of $1,224,000 at March 31, 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 quarter 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.
During April 1999, the Company signed an extension to its current websight
consulting agreement with IBM through the end of June, 1999.
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 currently 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,
<PAGE>
I/NET Inc.
Notes to Consolidated Financial Statements
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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.
The system has been installed for IFS's client and was operational this March.
IFS's client owns the system and will begin marketing it to offshore banks,
securities firms, trust and corporate advisors and administrators. Marketing
efforts are underway now on Grand Cayman. The Cayman Islands is recognized as
the fifth-largest financial center in the world, with assets on deposit
estimated at more than $1 trillion (U.S. dollars). The I/NET-IFS build trading
system will enable those assets to become transaction-oriented, allowing the
managers of those funds to use the Internet to invest easily throughout the
world.
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 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.
All I/Net developed software is year 2000 compliant.
"Safe Harbor" Statement Under the Private Securities Litigation Act of 1995
- ---------------------------------------------------------------------------
Certain information contained in this form 10-QSB may constitute or Statement
include forward-looking statements. Such forward-looking information involves
important known and unknown risks and uncertainties and 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
<PAGE>
I/NET Inc.
Notes to Consolidated Financial Statements
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- --------------------------------------------------------------------------------
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, I 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 From 10-QSB, which speaks only as of the
date hereof.
<PAGE>
I/NET Inc.
Notes to Consolidated Financial Statements
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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: May 4, 1999
By: ____________________________
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> 3-MOS
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Mar-31-1999
<EXCHANGE-RATE> 1
<CASH> 92,613
<SECURITIES> 0
<RECEIVABLES> 262,982
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 355,595
<PP&E> 157,132
<DEPRECIATION> 136,808
<TOTAL-ASSETS> 381,919
<CURRENT-LIABILITIES> 1,801,177
<BONDS> 0
0
0
<COMMON> 31,038
<OTHER-SE> 11,886,674
<TOTAL-LIABILITY-AND-EQUITY> 381,919
<SALES> 520,618
<TOTAL-REVENUES> 520,618
<CGS> 272,894
<TOTAL-COSTS> 272,899
<OTHER-EXPENSES> 175,812
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,956
<INCOME-PRETAX> 61,956
<INCOME-TAX> 0
<INCOME-CONTINUING> 61,956
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,956
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
