<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-KSB
(Mark One)
(X)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996.
OR
( )TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_________________to________________
Commission file Number 333-5862
NET LNNX, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1726390
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
324 Datura Street, Suite 150, West Palm Beach, FL 33401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (561)659-1196
Securities registered pursuant to Section 12(b) of the Exchange Act:
Name of exchange
Title of each class on which registered
None None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common stock, no par value
(Title of Class)
<PAGE>
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports) and (2)
has been subject to such filing requirements for the past 90 days. Yes_X_ No___
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-K [ ]
State issuer's revenues for its most recent fiscal year..$00.00
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days. (See definition of affiliate in Rule 12b-2 of the Exchange Act).
As of April 12, 1997 the aggregate market value of common stock, no par value,
held by non-affiliates was $441,369 (588,493 shares at an average between the
bid and asked of $0.75)
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date................
As of April 12, 1997, there were 1,624,876 shares of common stock, no par value,
issued and outstanding.
PART I
Item 1.Description of Business
(a)Business Development
The registrant was organized as Chester County Security Fund, Inc. under
the laws of Pennsylvania on April 15, 1968. Corporate Investment Company
("CIC") purchased, as a wholly owned subsidiary, the outstanding shares of the
registrant and in 1986, CIC distributed the outstanding stock of the registrant
to its shareholders as a one share stock for stock dividend. Prior to 1996, the
registrant was a holding company conducting virtually no business operation,
other than its efforts to seek merger partners.
In January 1996, the registrant, in a stock for stock exchange, acquired a
majority interest in Communications/USA, Inc.("Comm/USA"). Also, in February
1996, the registrant formed a wholly owned subsidiary, TrueNet Corporation.
These transactions, as more fully described below, proved to have only limited
success for the registrant; therefore, the registrant disposed of its interest
in Comm/USA and TrueNet Corporation in January of 1997. Other than maintaining
<PAGE>
its good standing status in the State of Pennsylvania, and seeking prospective
businesses or assets to acquire, from the time of such dispositions to the date
of this Report, the Company has had no business operations.
In January 1996, the registrant entered into an agreement to exchange
approximately 83.5% of its no par value common stock for approximately 60% of
the common stock of Comm/USA. On January 31, 1997, the registrant's approved
the Purchase Agreement dated January 17, 1997 between the registrant and Palm
Capital, Inc. ("Palm") to transfer to Palm 2,550,000 shares of Comm/USA, a
Florida corporation, which represented One Hundred Percent (100%) of the
registrant's ownership interests of Comm/USA (the "Transaction").
The Transaction was negotiated at "arms length" and the consideration paid
represents a fair market value. Raul E. Balsera ("Balsera") and Robert Feiman
("Feiman"), both officers and shareholders of Palm, were both affiliate
shareholders of the registrant prior to the Transaction. Also, Balsera served
as Chief Financial Officer of the registrant and Comm/USA prior to the
Transaction. As consideration for the Comm/USA stock transfer, Palm agreed to
deliver to the registrant any and all of the Registrant's stock held by Palm,
Balsera and Feiman, plus any and all options or other rights to the registrant's
common stock, plus the sum of $500,000, secured by 1,250,000 shares of Comm/USA
common stock. The consideration is payable as follows: (i) the sum of $25,000
in cash; and (ii) a 7% interest promissory note in the amount of $475,000 with
12 monthly payments of $9,000 per month, 12 monthly payments of $12,000 per
month, and a balloon payment of the balance due on March 1, 1999. Palm also
agreed to the assumption of Comm/USA's liabilities.
Comm/USA, through its wholly owned subsidiary CommTel/USA, Inc., owns and
operates Voice-Tel franchises which comprises the West Coast of Florida from
Tampa Bay to Naples, and the East Coast of Florida from Cocoa to Stuart. Voice-
Tel is in the interactive voice messaging industry and sells its products to
both local customers and national accounts. Voice -Tel is the largest
interactive voice messaging company in the United States, operating a digital
Telecommunications network through independently owned franchises. The system
operates on proprietary software which was created by Centigram Communications
Corporation. Comm/USA operates in the following sales territories:(i)the cities
of Tampa, St. Petersburg, Clearwater, Largo, Bradenton, and Sarasota; and (ii)
the Metropolitan Statistical Areas of Lakeland-Winter Haven, Melbourne-
Titusville-Palm Bay, Fort Pierce, Fort Myers-Cape Coral, and Naples.
In January 1997, the registrant entered into a Sale and Purchase Agreement
with The Banana Corporation, Inc. ("BCI") to transfer to BCI One Hundred Percent
(100%) of the common stock and assets of the registrant's wholly owned
subsidiary, TrueNet Corporation ("TrueNet"), a Florida corporation. TrueNet
operates as an internet service provider in West Palm Beach, FL. The transaction
was negotiated at "arms length" and the consideration paid represents a fair
market value.
As consideration for the TrueNet stock and asset transfer, BCI transferred
to the registrant Ten Percent (10%) (100,000 shares)of BCI's common stock which,
pursuant to agreement, is restricted for a period of Thirty Six (36) months. The
restrictions may lapse in the event of certain events. BCI reserved the right to
<PAGE>
repurchase from the Registrant up to Fifty Thousand (50,000) shares of such
common stock at a price of $1.50 per share within One (1) year of the date of
execution of the Sale and Purchase Agreement. BCI also granted the Registrant
an option, in the event BCI does not exercise the abovementioned repurchase
option, to purchase an additional Ten Percent (10%) (100,000 shares) of the
common stock of BCI, at a price of $1.50 per share.
In April 1997, pursuant to a separate agreement, the registrant purchased
Ten Percent (10%) (100,000) shares of BCI's newly formed operating subsidiary,
Banana Online, Inc. at a price of $0.145 per share, and exchanged its interest
of 100,000 shares of BCI for 100,000 shares of Banana Online, Inc. and BCI's
cancellation of the registrant's indebtedness.
(b) Business of Issuer
Other than maintaining its good standing status in the State of
Pennsylvania, and seeking prospective businesses or assets to acquire, from the
time of the abovementioned dispositions and acquisitions to the date of this
Report, the registrant has had no business operations.
Item 2.Properties.
The executive and business office of the registrant consist of office
space located at 324 Datura Street, Suite 150, West Palm Beach, FL 33401.
Item 3. Legal Proceedings.
No material legal proceedings are pending of which the registrant is a
party.
Item 4.Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of the registrant's securities holders
during the fourth quarter of the registrant's fiscal year.
PART II
Item 5.Market for Common Equity and Related Stockholders Matters.
(a)Market Information
Registrant's Common Stock has been traded on the over-the-counter market
since May 1989. The following table sets forth the range of high and low bid
quotations for each quarterly period in the fiscal year ended December 31, 1996,
1995 as reported by over-the-counter market quotations. The quotations reflect
inter-dealer prices, without retail mark-up, mark down or commission and may not
represent actual transactions.
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
High Low
Bid Asked Bid Asked
1995
1st Quarter $ .05 $ .25 $ .05 $.25
2nd Quarter $ .05 $ .25 $ .05 $.25
3rd Quarter $ .05 $ .25 $ .05 $.25
4th Quarter $ .05 $ .25 $ .05 $.25
1996
1st Quarter $5.50 $6.75 $4.25 $5.50
2nd Quarter $10.00 $11.00 $4.00 $5.375
3rd Quarter $8.625 $9.50 $3.25 $5.00
4th Quarter $5.50 $6.75 $1.375 $1.875
</TABLE>
(b)Holders
As of April 1, 1996, there were approximately 2,084 holders of record of
the registrant's common stock.
(c)Dividends
No cash dividends were declared or paid on the registrant's common stock for
the last 2 fiscal years. No restrictions limit the registrant's ability to pay
dividends on its common stock.
Recent Sales of Unregistered Securities
On January 29, 1996 the registrant granted two individual persons
("Optionees") a 1 year option ("Option") to each purchase 25,000 shares of the
registrant's common stock, no par value, at a price of $0.20 per share pursuant
to identical option agreements entered into by each of the Optionees. On July
25, 1996, the Optionees exercised their Option and the Optionees each purchased
25,000 shares of the registrant's common stock at $0.20 per share. The
consideration paid by each of the Optionees consisted of a $5,000 demand
promissory note made to the registrant bearing an interest rate of 8% per annum.
No commissions were paid, and no underwriting discounts were provided, by the
registrant in connection with the abovementioned transactions. The registrant
relied upon section 4(2) of the securities Act of 1933, as amended (the "Act"),
to exempt the transaction from the registration requirements of the Act.
In January 1996, and in September 1996, an individual purchased an aggregate
of 20,000 (10,000 and 10,000 respectively) shares of the registrants common
stock, no par value, at a price of $0.005 per share. The consideration paid by
such purchaser consisted of an aggregate amount of $100 cash, and an agreement
by such individual to act as a market maker for the registrant's common stock.
No commissions were paid, and no underwriting discounts were provided, by the
registrant in connection with the abovementioned transactions. The registrant
relied upon section 4(2) of the securities Act of 1933, as amended (the "Act"),
to exempt the transaction from the registration requirements of the Act.
<PAGE>
Item 6.Management's Discussion and Analysis or Plan of Operation.
(a)Plan of Operation
During 1996, the registrant invested in a subsidiary and operated it for
most of 1996. In January of 1997, the registrant sold the subsidiary for
consideration of $500,000 and the assumption of the subsidiary's liabilities.
The consideration is payable as follows: (i) the sum of $25,000 in cash; and(ii)
a 7% interest promissory note in the amount of $475,000 with 12 monthly payments
of $9,000 per month, 12 monthly payments of $12,000 per month, and a balloon
payment of the balance due on March 1, 1999.
Also during 1996, the registrant formed a wholly owned subsidiary, which was
never profitable. Consequently, such wholly owned subsidiary was sold in January
of 1997 for consideration of $150,000 paid in the form of stock of a privately
held corporation.
The registrant is presently a holding company conducting virtually no
business operation, other than its efforts to seek merger partners or
acquisition candidates. It receives a cash flow from the abovementioned 7% note
receivable. Further, the registrant received a capital infusion in March of
1997, and anticipates an additional capital infusion prior to effectuating a
merger or acquiring an acquisition target. No assurances can be made that the
registrant will receive this additional cash infusion since, as of the date of
this report, no binding commitments have yet been received by the registrant for
such.
Until such time as the registrant closes a merger or acquisition
fransaction, with the exception of professional fees and costs for such a
transaction, the registrant expects that it will incur only minor operating
costs in 1997. The registrant expects that it will meet its cash requirements
until such time as a merger or acquisition transaction occurs. The registrant
has been operated by new management since January 1997. To the best of such new
management's knowledge, the registrant's past liabilities have been paid to the
satisfaction of all creditors, with the exception of two creditors which have
made claims to the registrant in the approximate aggregate amount of $57,000.
Upon investigation, the registrant considers such claims to be meritless, and as
of the date of this report, no legal action has been brought against the
registrant in connection with such claims, although suit has been threatened by
both such creditors. In the event such creditors bring legal action against the
registrant, and either or both are successful in such actions against the
registrant, depending upon the costs involved and the monetary damage awards
obtained against the registrant, the registrant might have difficulty meeting
its cash requirements. Also, although the registrant's management has conducted
what they consider a thorough investigation of all potential liabilities of the
registrant, management may not be aware of all the registrant's outstanding
liabilities; therefore, in the event present, material, unknown liabilities
exist, the registrant might have difficulties meeting its cash flow requirements
in the event it is required to pay such liabilities.
Item 7. Financial Statements
Financial Statements of Registrant are attached as Appendix A (following
Exhibits) and included as part of this Form 10-KSB Report. A list of said
<PAGE>
Financial Statements is provided in response to Item 13 of this Form 10-KSB
Report.
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
Not applicable
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange
Act.
(a)Identity of directors and executive officers.
<TABLE>
<S> <C> <C> <C>
Name Age Position Director Since
- -------------------- --- ------------------------- ---------------
Ronald W. Hayes, Jr. 30 chairman of board/
president/director January 1997
Ronald P. Perella 52 executive vice pres./
secretary/director January 1997
Frederick A. Hall 58 director January 1997
</TABLE>
Each director is elected until the next Annual Meeting of shareholders and
until his successor is qualified.
(b)Business experience of directors and executive officers.
Ronald W. Hayes, Jr. has served as chairman of the board, president and a
director of the registrant since January 1997. He is in charge of implementing
the registrant's acquisition strategy. From 1994 to 1997, Mr. Hayes served as
president and chairman of R. H. Financial Services, Inc. an investment services
company which provided investment banking, brokerage and consulting services.
From 1994 to 1995 Mr. Hayes served as a director of Action Products, Inc., a
Nasdaq listed company. From 1991 to 1995, he was employed as a stockbroker and
office manager with Prudential Securities and First Montauk Securities, Inc.
Ronald P. Perella has served as executive vice president, secretary and a
director of the registrant since January 1997. From 1994 to January 1997, Mr.
Perella was vice president and assistant general manager of Fort Pierce Jai Alai
Fronton. From 1991 to 1995 Mr. Perella served as a director of Florida Gaming
Corp, a Nasdaq listed company.
Frederick A. Hall has served as a director of the registrant since January
1997. In addition to serving as a director of the registrant, since January
1995, Mr. Hall serves a director of portfolio servicing at Capital Asset
Research Corporation, the largest buyer of delinquent property tax liens. Mr.
<PAGE>
Hall manages a $38,000,000 portfolio of tax liens for the City of New York and
a $2,100,000 portfolio of tax liens for the City of Harrisburg, PA. From 1973
to 1995, Mr. Hall owned a publishing company which specialized in statistical
reference publications.
Section 16(a) Beneficial Ownership Reporting Compliance.
To the best of registrant's knowledge, Robert C. Hackney, a former officer,
director and beneficial owner of more than 10% of the registrant's common stock,
failed to file required Form 3 in January 1996.
Item 10.Executive Compensation.
As president of the registrant during 1996, Robert C. Hackney received no
salary or other compensation in connection with his employment as such. During
1996, Mr. Hackney had no employment agreement with the registrant. No other
executive officer of the registrant earned or was paid aggregate cash
compensation in excess of $100,000 during the year ended December 31, 1996.
Pursuant to Instruction (5) to Item 402(a)(2) no table or column is provided in
this Item 11 to this Report.
Item 11.Security Ownership of Certain Beneficial Owners and Management.
(a)The names, addresses, amount and nature of beneficial ownership and
percent of such ownership of persons known to the registrant to be beneficial
owner of more than five percent (5%) of any class of Registrant's voting
securities are as follows:
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Title of Class Name and Address Amount and Nature Percent of class
of Beneficial Owner Of Beneficial Owner
<S> <C> <C> <C>
common Robert & Cyndee 309,714 shares (D) 19.%
Hackney, JTWROS 4119
Lakespur Circle S.,
Palm Beach Gardens,
FL 33410 (1)
common Ronald W. Hayes, Jr. 686,383 shares (D,I) 42.2%
1090 Powell Dr.,
Singer Island, FL
33404 (2)(3)
common Ronald P. Perella 300,000 shares (D) 18.5%
162 N.E. Twylite
Terrace PSL, FL
34983 (2)
common Louis E. Selman 250,000 shares (D) 15.4%
19575 Trails End
Terrace, Jupiter,
FL 33458
</TABLE>
<PAGE>
________________________________
(1)All shares of common stock are subject to a voting trust
agreement which remains in effect until December 31, 1998. This
agreement provides that R H Financial Services, Inc., a Florida
corporation wholly owned by Ronald W. Hayes, Jr., the registrant's
president, possess all rights, including the right to vote all
shares, whatsoever, in connection with the shares, other than the
right to receive dividends payable on such shares.
(2)Includes the right to purchase up to 100,000 shares of the
registrant's common stock at any date prior to January 31, 1997.
(3)Includes the right to vote, through R H Financial Services,
Inc., 309, 714 shares of common stock owned by Robert and Cyndee
Hackney, JTWROS.
(b)The names, addresses, amount and nature of beneficial ownership and
percent of such ownership of officers and directors of the registrant to be
beneficial owner of more than five percent (5%) of any class of Registrant's
voting securities are as follows:
<TABLE>
<CAPTION>
(1) (2) (3) (4)
Title of Class Name and Address Amount and Nature Percent of class
of Beneficial Owner Of Beneficial Owner
<S> <C> <C> <C>
common Ronald W. Hayes, Jr. 686,383 shares (D,I) 42.2%
director, president
1090 Powell Dr.,
Singer Island, FL
33404 (2)(3)
common Ronald P. Perella 300,000 shares (D) 18.5%
director, executive
vice president,
162 N.E. Twylite
Terrace PSL, FL
34983 (2)
common Frederick A. Hall 100,000 shares (D) 6.1%
director, 1700 Palm
Beach Lakes, Blvd.,
Suite 1100, West Palm
Beach, FL 33401 (1)
common All officers and 1,086,383 shares (D) 66.8%
directors as a group
(2)(3)
</TABLE>
<PAGE>
_____________________________
(1)Includes the right to purchase up to 100,000 shares of the
registrant's common stock at any date prior to January 31, 1997.
(2)Includes Ronald W. Hayes, Jr. right to vote, through R H
Financial Services, Inc., 309, 714 shares of common stock owned by
Robert and Cyndee Hackney, JTWROS.
(3)Includes the right, as a group, to purchase up to 300,000
shares of the registrant's common stock at any date prior to
January 31, 1997.
Item 12.Certain Relationships and Related Transactions.
In January 1996, the registrant entered into an agreement
to exchange approximately 83.5% of its no par value common stock
for approximately 60% of the common stock of Communications/USA,
Inc. ("Comm/USA"). On January 31, 1997, the registrant's approved
the Purchase Agreement dated January 17, 1997 between the
registrant and Palm Capital, Inc. ("Palm") to transfer to Palm
2,550,000 shares of Comm/USA, a Florida corporation, which
represented One Hundred Percent (100%) of the registrant's
ownership interests of Comm/USA (the "Transaction").
The Transaction was negotiated at "arms length" and the
consideration paid represents a fair market value. Raul E. Balsera
("Balsera") and Robert Feiman ("Feiman"), both officers and
shareholders of Palm, were both affiliate shareholders of the
registrant prior to the Transaction. Also, Balsera served as Chief
Financial Officer of the registrant and Comm/USA prior to the
Transaction. As consideration for the Comm/USA stock transfer, Palm
agreed to deliver to the registrant any and all of the Registrant's
stock held by Palm, Balsera and Feiman, plus any and all options or
other rights to the registrant's common stock, plus the sum of
$500,000, secured by 1,250,000 shares of Comm/USA common stock.
The consideration is payable as follows: (i) the sum of $25,000 in
cash; and (ii) a 7% interest promissory note in the amount of
$475,000 with 12 monthly payments of $9,000 per month, 12 monthly
payments of $12,000 per month, and a balloon payment of the balance
due on March 1, 1999. Palm also agreed to the assumption of
Comm/USA's liabilities.
Comm/USA, through its wholly owned subsidiary CommTel/USA,
Inc., owns and operates Voice-Tel franchises which comprises the
West Coast of Florida from Tampa Bay to Naples, and the East Coast
of Florida from Cocoa to Stuart. Voice-Tel is in the interactive
<PAGE>
voice messaging industry and sells its products to both local
customers and national accounts. Voice -Tel is the largest
interactive voice messaging company in the United States, operating
a digital telecommunications network through independently owned
franchises. The system operates on proprietary software which was
created by Centigram Communications Corporation. Comm/USA operates
in the following sales territories: (i) the cities of Tampa, St.
Petersburg, Clearwater, Largo, Bradenton, and Sarasota; and (ii)
the Metropolitan Statistical Areas of Lakeland-Winter Haven,
Melbourne-Titusville-Palm Bay, Fort Pierce, Fort Myers-Cape Coral,
and Naples.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits.
(3)(i)Articles of Incorporation (incorporated by reference
to Registrant's Form 10-K Report for the year ended December 31,
1983, Exhibit (3)(A), File No. 0-6553)
(3)(ii)By-Laws(incorporated by reference to Registrant's
Form 10-K report for the year ended December 31, 1983, Exhibit
(3) (B), File No. 0-6503)
(9)Voting Trust Agreement
(11)Earnings per share (See Apendix A)
(b)Reports on Form 8-K.
During the last quarter of the year ended December 31, 1996,
no reports on Form 8-K were filed by registrant.
(c)Financial Data Schedule.
Appendix A
Financial Statements.
The following Audited Financial Statements of Registrant are
filed as part of this Form 10-KSB Report:
<PAGE>
NET LNNX, INC.
FINANCIAL STATEMENTS
December 31, 1996
<PAGE>
NET LNNX, INC.
TABLE OF CONTENTS
For the Year Ended December 31, 1996
INDEPENDENT AUDITOR'S REPORT Front
FINANCIAL STATEMENTS
<TABE>
[S] [C]
Consolidated Balance Sheets 1
Consolidated Statement of Operations 2
Consolidated Statement of Shareholders' Equity 3
Consolidated Statement of Cash Flows 4
Notes to Consolidated Financial Statements 5
<PAGE>
Independent Auditor's Report
The Board of Directors and Shareholders
Net Lnnx, Inc.
West Palm Beach, Florida
I have audited the accompanying consolidated balance sheets of Net
Lnnx, Inc. as of December 31, 1996 and 1995, and the related
consolidated statements of operations, shareholders' equity, and
cash flows for the years ended December 31, 1996, 1995 and 1994.
These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these
financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statements referred to in the first
paragraph present fairly, in all material respects, the
consolidated financial position of Net Lnnx, Inc. as of December
31, 1996 and 1995 the results of its consolidated operations and
cash flows for years ended December 31, 1996, 1995 and 1994 in
conformity with generally accepted accounting principles.
/s/ Dick Gates, CPA
- ----------------------
Dick Gates, CPA
April 7, 1997
West Palm Beach, Florida
<PAGE>
Net Lnnx, Inc.
BALANCE SHEETS
December 31, 1996 and 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
- -------- ---- ----
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 25,044 $ 2,164
----------- -----------
Total current assets 25,044 2,164
Property and equipment, net 9,138 ---
Net assets of continued operations 450,400 ---
----------- -----------
$ 484,582 $ 2,164
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
- ------------------------------------ ---- ----
Current liabilities:
<S> <C> <C>
Accounts payable $ 36,866 $ ---
Accrued expenses 4,544 ---
----------- -----------
Total current liabilities 41,410 ---
Shareholders' equity:
Preferred stock - no par value, 5,000,000 shares
authorized, no shares issued or outstanding --- ---
Common stock - no par value, 20,000,000 authorized,
1,472,626 and 165,000 issued and outstanding at
December 31, 1996 and 1995 respectively 1,000 1,000
Additional paid-in capital 896,285 ---
Retained earnings (deficit) (454,113) 1,164
----------- -----------
443,172 2,164
----------- -----------
$ 484,582 $ 2,164
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Net Lnnx, Inc.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1994
1996 1995 (Unaudited)
---- ---- ----
<S> <C> <C> <C>
Operating revenues $ --- $ 150 $ 264
Operating expenses 376,848 336 ---
----------- ----------- ------------
Operating income (loss) - continued
operations (376,848) 336 ---
----------- ----------- ------------
Discontinued operations
Loss from operations of sold subsidiaries,
net of income tax benefits (33,429) --- ---
Loss on disposal of discontinued
subsidiaries, net of income tax benefits (45,000) --- ---
----------- ----------- ------------
(78,429) --- ---
----------- ----------- ------------
Net income (loss) $ (455,277) $ (186) $ 264
=========== =========== ============
Number of shares used in earnings
per common share computation 1,330,099 3,300,000 3,300,000
=========== =========== ============
Income (loss) per common share:
Continuing operations $ (0.28) $ --- $ ---
=========== =========== ============
Discontinued operations $ (0.06) $ --- $ ---
=========== =========== ============
Net income $ (0.34) $ --- $ ---
=========== =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Net Lnnx, Inc.
STATEMENTS OF SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Common Stock
------------------------- Additional Retained
Paid-in Earnings
Shares Amount Capital (Deficit) Total
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1993 3,300,000 $ 1,000 $ --- $ 1,086 $ 2,086
Net income --- --- --- 264 264
---------- ----------- ----------- ----------- ---------
Balance at December 31, 1994 3,300,000 1,000 --- 1,350 2,350
Net loss --- --- --- (186) (186)
---------- ----------- ----------- ----------- ---------
Balance at December 31, 1995 3,300,000 1,000 --- 1,164 2,164
Reversed 1 for 20 split of
stock (3,135,000) --- --- --- ---
Exchanged stock for a 55%
Interest in unconsolidated
affiliate 942,959 --- 267,910 --- 267,910
Common stock issued for cash 60,000 --- 205,000 --- 205,000
Common stock exchanged for
professional fees 251,095 --- 203,375 --- 203,375
Common stock exchanged for
subsidiary deb t 53,572 --- 220,000 --- 220,000
Net income (loss) --- --- --- (455,277) (455,277)
---------- ----------- ----------- ----------- ---------
Balances at December 31, 1996 1,472,626 $ 1,000 $ 896,285 $(454,277) $443,172
========== =========== =========== =========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
Net Lnnx, Inc.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1994
1996 1995 (Unaudited)
---- ---- ----
Cash flows from operating activities
<S> <C> <C> <C>
Net income (loss) $ (455,277) $ (186) $ 264
Adjustments to reconcile net income
(loss) to net cash provided by (used
for) operating activities:
Depreciation 1,660 --- ---
Capital contributions in exchange for
professional fees 203,375 --- ---
Capital contributed in exchange for
subsidiary's debt 220,000 --- ---
Acquisition of subsidiary 267,910 --- ---
Net assets of discontinued operations (450,400) --- ---
Change in operating assets and
liabilities:
Accounts payable 36,866 --- ---
Accrued expenses 4,544 --- ---
----------- ----------- -----------
Net cash provided by operating
activities (171,322) (186) 264
----------- ----------- -----------
Cash flows from investing activities
Acquisition of equipment (10,798) --- ---
Proceeds from issuance of common stock 205,000 --- ---
----------- ----------- ----------
Net cash provided for investing
activities 194,202 --- ---
----------- ----------- -----------
Net increase (decrease) in cash 22,880 (186) 264
Cash at beginning of year 2,164 2,350 2,086
----------- ----------- -----------
Cash at end of year $ 25,044 $ 2,164 $ 2,350
=========== =========== ===========
Supplemental of cash flow information:
No interest nor income taxes paid.
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
December 31, 1996
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Purpose - Net Lnnx, Inc. (the "Company") was
organized as Chester County Security Fund, Inc. ("Chester")
December 31, 1988 under the laws of Pennsylvania as a wholly owned
subsidiary of Corporate Investment Company ("CIC"). On May 5,
1989, CIC distributed the outstanding stock of Chester to its
shareholders as a one share stock for stock dividend. Chester was
a holding company conducting virtually no business operation other
than its efforts to seek merger partners.
In January, 1996, the Company in a stock for stock exchange,
acquired a majority interest in Communications/USA, Inc. The
Company also formed a wholly owned subsidiary, TrueNet, Inc.
These transactions are more fully described in Note 4.
After the Company acquired and formed its subsidiaries, it changed
its name to Net Lnnx, Inc. and had a 1 for 20 reverse stock split.
Principles of Consolidation - The consolidated financial
statements include the accounts of the Company and subsidiaries.
All significant intercompany transactions and balances have been
eliminated in consolidation.
Cash and Cash Equivalents - Represents actual balances in banks
or invested in liquid short term investments with maturities of
three months or less when purchased. All of the balances are owned
by the Company and are not encumbered in any manner.
Concentration of Credit Risk - The Company extends credit to
customers, generally located in South Florida, on an unsecured
basis in the normal course of business. The Company has policies
governing the extension of credit and collection of amounts due
from customers.
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
amounts reported in the financial statements and accompanying
notes. Management believes that the estimates utilized in
preparing its financial statements are reasonable and prudent.
Actual results could differ from those estimates.
Property and Equipment - Property and equipment are recorded at
cost. The equipment is depreciated over its estimated useful life.
Repairs and maintenance are expensed.
Compensated Absences - Compensated absences have not been accrued
as they cannot be reasonably estimated.
Income Taxes - Income taxes are provided for the tax effects of
transactions reported in the financial statements. No differences
exist between book and tax transactions. The Company accounts for
income taxes in accordance with Financial Accounting Standards #
109.
Earnings per Common Share - Earnings (loss) per common share was
computed by dividing net income applicable to common stock by the
weighted average number of shares of common shares outstanding
during the period. There are no common stock equivalents or other
dilutive securities outstanding.
<PAGE>
2 - ACQUISITION AND DISPOSITION OF ASSETS
Communications/USA, Inc. - In January, 1996, the Company
exchanged approximately 83.5% of its no par common stock for 55% of
the common stock of Communications/USA, Inc. ("CUSA"). CUSA owns
and operates voice messaging franchises in the Voice -Tel system.
CUSA operated as a consolidated subsidiary.
On January 31, 1997, the shareholders of the Company approved a
Purchase Agreement dated January 17, 1997 with Palm Capital, Inc.
("Palm") to transfer to Palm 2,550,000 shares of CUSA representing
100% of the Company's investment in CUSA (the "Transaction").
The Transaction was negotiated at "arms length" although the
officers and shareholders of Palm were both shareholders of the
Company prior to the Transaction. As consideration for the CUSA
stock transfer, Palm agreed to deliver to the Company all of the
Company's stock held by Palm and its shareholders, plus any options
of other rights to the Company's common stock, plus the sum of
$500,000, secured by 1,250,000 shares of CUSA's common stock. The
$500,000 is payable in cash of $25,000 and a promissory note of
$475,000 with interest at 7% payable monthly beginning March 1,
1997 of 12 payments at $9,000, 12 payments at $12,000, and a
balloon payment of the balance due on March 1, 1999. Palm also
agreed to the assumption of CUSA's liabilities.
The expected cost in 1997 from the disposal of this subsidiary is
expected to be $25,000 which was accrued at year end.
TrueNet, Inc. - On January 31, 1997, the Company entered into a
sale and purchase agreement (the "Agreement") with the Banana
Corporation, Inc. ("BCI") to transfer to BCI 100% of the common
stock and assets of the Company's wholly owned subsidiary, TrueNet.
As consideration, BCI transferred to the Company 10% (100,000
shares) of BCI's common stock. BCI reserves the right to
repurchase from the Company up to 50,000 shares at $1.50 per share
within a year of the date of execution of the Agreement. BCI also
granted the Company an option, in the event BCI does not repurchase
its shares, to purchase an additional 10% of it's common stock, at
a price of $1.50 per share.
The estimated loss of $61,600 from disposal of this subsidiary,
consisting of the anticipated loss of $220,600 offset by the
consideration of the sale of $150,000 (net of taxes of $9,000)
expected to be realized to completion of the sale has been
recognized in the fourth quarter of 1996. Potential tax benefits
from the loss on disposition were not recognized at this time since
the ultimate realization of the tax benefits is dependent upon the
Company generating future capital gains.
The net assets of the discontinued operations consist of the
following:
<TABLE>
<CAPTION>
CUSA TrueNet Total
<S> <C> <C> <C>
Accounts receivable $ --- $ 2,648 $ 2,648
Equity in Communications/USA, Inc. 426,800 --- 426,800
Subscription receivable --- 10,000 10,000
Investment in BCI --- 150,000 150,000
Income tax benefit --- 9,000 9,000
Accounts payable --- -76,553 -76,553
Accrued expenses --- -26,495 -26,495
Reserve for expenses of disposal -25,000 -20,000 -45,000
-------- ---------- ----------
$ 401,800 $ 48,600 $ 450,400
</TABLE>
<PAGE>
3 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<S> <C> <C>
1996 1995
Computers equipment $ 5,798 $ ---
Voice messaging equipment - leased 5,000 ---
---------- --------
10,798 ---
Less accumulated depreciation 1,660 ---
---------- --------
$ 9,138 $ ---
</TABLE>
Depreciation expense for the 1996 and 1995 was $ 1,660 and $ 0
respectively.
4 - CHANGES IN STOCKHOLDER'S EQUITY
In addition to the exchange of its no par common stock for a 55%
interest in CUSA, the Company exchanged stock for various
professional fees and services. The value of the securities was
set by the value that its common stock was trading at the time of
the exchange. The Company also exchanged 53,572 shares of stock to
settle CUSA's debt in the amount of $220,000. The value of the
exchange approximated the market value of the stock.
5 - FAIR VALUE OF FINANCIAL INSTRUMENTS
FAS No. 107 "Disclosure about Fair Value of Financial Instruments"
requires the Company to report the fair value of financial
instruments, as defined. Assets and liabilities, which are
recorded at contractual amounts that approximate market value,
include cash and cash equivalents, receivables, certain other
assets and prepaid expenses, payables and short-term and long-term
debt. The market value of such items are not materially sensitive
to shifts in market interest rates because of the limited term to
maturity of these instruments and their interest rates.
6 - INCOME TAXES
At December 31, 1996, the Company recorded deferred tax assets
resulting from net operating losses of $376,848 less a valuation
allowance of $376,848. The losses can be carried forward 15 years
to the year 2011.
7 - COMMITMENTS
The Company has no employment nor consulting agreements with
shareholders or management.. The Company has also agreed to
<PAGE>
compensate its President and Executive Vice-President $75,000 and
$65,000 respectively in the event a takeover or change of control
occurs before December 31, 1997 and those officers do not have
positions with the new company. The agreements also allow for the
Company to pay reasonable business expenses.
8. - SUBSEQUENT EVENTS
Subsequent to the year end, the Company discovered that payroll
taxes had not been paid for the fourth quarter. Penalties and
interest will be due, but have not been accrued due to difficulty
of estimation. The penalties and interest are not expected to be
material.
The Company owed management approximately $32,000 in compensation
as of December 31, 1996 and has accrued that expense. Subsequent
to year end, the Company issued 37,000 shares of stock to settle
this obligation.
The Company experienced cash flow problems during its fourth
quarter of 1996. The sale of its investment and subsidiary greatly
improved its cash flow. They also have a new investor who has
purchased stock and deposited $100,000 in March of 1997. That
capital infusion has paid the Company's liabilities and allowed it
to seek other business opportunities. The new management team is
committed to a course of acquisitions and is actively seeking new
investments.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized:
NET LNNX, INC.
By:/S/ Ronald W. Hayes, Jr.
--------------------------------------
Ronald W. Hayes, Jr., President
Date: April 14, 1997
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following on behalf
of the registrant and in the capacities and on the dates
indicated.
By: /S/Ronald W. Hayes, Jr.
--------------------------------
Ronald W. Hayes, Jr., President
By: /S/Ronald P. Perella
---------------------------------
Ronald P. Perella, Executive Vice
President, Secretary
Date: April 14, 1997
<PAGE>
VOTING TRUST AGREEMENT
This Voting Trust Agreement, made this 31st day of December 1996,between
Robert C. Hackney, hereinafter called the "Stockholder",and R H Financial
Services, Inc. hereinafter called the "Trustee".
RECITALS
A. The Stockholder represents that he is the owner of 314,000 shares of
capital Stock of Net Lnnx, Inc., a Pennsylvania corporation, hereinafter called
the "Corporation".
B. In order to provide for the smooth and efficient operation of the
Corporation, to prevent conflicts, and to avoid deadlocks, the Stockholder deem
it to be in the best interests of the Corporation and of all the Stockholders
thereof that this Agreement be executed.
NOW, THEREFORE, in consideration of the foregoing recitals, the Stockholder,
in consideration of the mutual promises contained herein, hereby agree with the
Trustee, ant the Trustee hereby agree with the Stockholder, as follows:
Section One. Transfer of Stock to Trustee.
The Stockholder shall deposit the number of shares of capital stock referred
to above and the certificates therefor, together with sufficient instruments
duly executed for the transfer thereof to the Trustee, and shall receive in
exchange therefor certificates hereinafter provided for. Upon the making of
such deposit, all shares represented by the stock certificates so deposited
shall be transferred on the books of the Corporation to the name of the Trustee,
who is hereby authorized and empowered to cause such transfers to be made, and
also to cause any further transfers to be made that may become necessary, due to
a change in the identity of any Trustee, as hereinafter provided.
Section Two. Trustee's Control Over Stock.
During the period this Agreement remains in force, the Trustee shall possess
legal title to the shares deposited, and shall be entitled to exercise all
rights whatsoever, including the right to vote in person or by proxy, in respect
of any and all deposited shares. However, the holder of a Trust Certificate
issued by the Trustee shall be entitled to receive payments equal to any and all
dividends collected by the Trustee with respect to shares of stock deposited by
him.
Section Three. Voting Trust Certificate.
On deposit by the Stockholder of a certificate or certificates for shares of
stock hereunder, accompanied by instruments of transfer, the Trustee shall
deliver to such Stockholder a Voting Trust Certificate for the same number of
shares of stock as that represented by the certificate or certificates
deposited. Such Voting Trust Certificates shall be in substantially the
following form:
<PAGE>
VOTING TRUST CERTIFICATE
NO. 001 314,000 Shares
This certifies that Robert C. Hackney has deposited Three Hundred
Fourteen Thousand (314,000) share of the capital stock of Net Lnnx, Inc.
with the undersigned as Trustee under a Voting Trust Agreement dated
December 31, 1996, between holders of capital stock of Net Lnnx, Inc. and
their heirs, assigns and successors, and the undersigned, as Trustee.
This certificate and the interest represented hereby is transferable only
on the books of the Trustee upon presentation and surrender hereof. The
holder of this certificate takes it subject to all the terms and
conditions of the aforesaid Voting Trust Agreement and bocomes a party
to such Agreement and is entitled to the benefits thereof.
Executed by the undersigned Trustee on the ______day of______, 1996.
_______________________________________
R H Financial Services, Inc., Trustee
By: Ron W. Hayes, Jr., President
Section Four. Additional Stock
After this Agreement has taken effect, the Trustee may from time to time
receive any additional fully paid shares of the capital stock of the Corporation
on the same terms and conditions as are set forth in this Agreement and in
respect to such shares so received the Trustee shall issue and deliver
certificates substantially in the form set forth above, entitling the holder to
all the rights above spicified.
Section Five. Dividends
All dividends that may accrue on the stock deposited hereunder shall be
distributed pro rata among the holders of the Voting Trust Certificates,
in the proportion they are entitled thereto.
Section Six. Rights of Trustee
During the period this Agreement remains in effect, the Trustee shall posses
and shall be entitled to exercise, in person or by proxy, all rights and powers
of absolute owners in respect to all the stock of the Corporation deposited with
him, including the right to vote on, to take part in, and consent to, any
corporate or stockholders' actions of any kind whatsoever, and to receive
dividends and distributions of the stock. The Trustee's right to vote shall
include the right to vote for the election of directors and in favor of or in
opposition to any resolution or proposed action of any character whatsoever that
may require the consent of Stockholders.
Section Seven. Election of Directors
For so long as this Agreement may remain in effect, the Trustee hereunder
shall vote the stock deposited hereunder to effect the election of and to
continue in office a Board of Directors consisting of Ronald W. Hayes, Jr.,
Robert C. Hackney, and any such additional persons as the Trustee shall
designate.
<PAGE>
Section Eight. Termination of Voting Trust
On December 31, 1998, unless the Trustee exercises their right, which is
hereby expressly granted to him, to terminate this Agreement at any time prior
to that date, the Trustee shall distribute the stock of the Corporation held by
him to the holders of the Voting Trust Certificates in proportion to their
respective holdings on surrender of their certificates to the Trustee, and
this Agreement shall thereupon terminate.
Setion Nine. Sale or Purchase of Stock or Cerificate by Trustee
Nothing contained herein shall deprive the Trustee of the privilege to be
enjoyed by other depositors of selling or otherwise disposing of Voting Trust
Certificates as they see fit or of purchasing additional certificates or of
purchasing additional stock and selling it.
Section Ten. Compensation of Trustee
The Trustee shall not be entitled to any compensation.
Section Eleven. Resignation fo Trustee
If the Trustee shall resign, be dissolved or liquidated, or otherwise cannot
act, this Trust shall terminate.
Section Twelve. Voting by Trustee
The Trustee shall have full power to vote for the election of Directors of the
Corporation, on all matters that may require the vote of the Stockholders.
If any question arises on which the Trustee desires the opinion of the Voting
Trust Certificate Holders, a meeting may be called by the Trustee. At such
meeting, the owners of majority in interest of the Voting Trust Certificates may
indicate their preference to the Trustee.
Section Thirteen. Trustees' Liability for Negligence
The Trustee shall not be liable for acts or missions in acting on any paper,
document or signature beleived by them to be genuine and to have been signed by
the proper party. They shall not be liable for any error of judgment nor for
any mistake of fact or law, nor for anything which they may do or refrain from
doing in good faith, except , however, that the Trustee shall be liable for his
own willful neglect or malfeasance. The Trustee may consult with legal counsel
and any action under this Agreement taken or suffered in good faith by them in
accordance with the opinion of counsel shall be conclusive on the parties to
this Agreement. The Trustee shall at all times be fully protected and be
subject to no liability in respect thereto.
<PAGE>
Section Fourteen. Amendment or Termination of Voting Trust
This Agreement may be amended or terminated at any time prior to the
termination date provided herein, by an instrument in writing duly executed
and witnessed by the owners and holders of the trust certificates representing
100 percent of the shares of stock deposited hereunder.
Setion Fifteen. Acceptance of Trust by Trustee
The Trustee hereby accept this Trust subject to all the terms and conditions
hereof, and agrees that he will exercise his powers and perform his duties as
herein set forth. Nothing contained herein, however, shall be construed to
prevent the Trustee from resigning and discharging himself from the Trust.
Section Sixteen. Dissolution or Liquidation
In the event of the dissolution or liquidation, eitther partial or total, of
the Corporation, the Trustees shall receive the monies, securities, rights or
property to which the Shareholders of the Corporation are entitled, and shall
distribute it among the Voting Trust Certificate Holders in proportion to their
interests, as shown by the books of the Trustee.
Section Seventeen. Endorsement on Stock
Each certificate representing shares held by any of the parties hereto shall
contain a statement or legend that the shares represented by the certificate are
subject to the provisions of a Voting Trust Agreement.
Section Eighteen. Severability
This Agreement shall not be severable in any way, but it is specifically
agreed that if any provision should be held to be invalid, the invalidity shall
not affect the validity of the remainder of this Agreement.
Section Nineteen. Entire Understanding
This Agreement contains the entire understanding of the parties hereto and
supersedes any prior agreement, either oral or written, and any amendment or
modification or termination of this Agreement must be in writing and signed by
all the parties hereto.
Section Twenty. Conflict of Interest
The Trustee, any firm or corporation of which he may be a member, agent or
employee, and any corporation, trust or association of which he may be a
trustee, stockholder, director, officer, agent or employee, may contract with,
or become pecuniarily interested, directly or indirectly, in any matter or
transaction to which the Corporation, or any subsidiary or controlled or
affiliated corporation, may be a party, or in which he may be concerned, as
fully and freely as though the Trustee was not Trustee hereunder. The Trustee,
his employees or agents, may act as directors or officers of the Corporation or
any subsidiary or controlled or affiliated corporation.
<PAGE>
Section Twenty-One. Records
The counterpart of the Voting Trust Agreement and the copy of such record so
deposited with the Corporation shall be subject to the same right of examination
by a shareholder of the Corporation, in person or by agent or attorney, as are
the books and records of the Corporation, and such counterpart and such copy of
such record shall be subject to examination by any holder of record of Voting
Trust Certificates either in person or by agent or attorney, at any reasonable
time for any proper purpose.
Section Twenty-Two Construction
This Agreement is intended by the parties to be governed and construed in
accordance with the laws of the State of Florida.
Section Twenty-Three Benefit
This Agreement shall be binding on and inure to the benefit of the heirs,
executors, administrators and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and
seals the day and year first above written. Signed in the Presence of:
WITNESS: TRUSTEE:
/s/ Barbara A. Bennett RH FINANCIAL SERVICES, INC.
- --------------------------------
Barbara A. Bennett /s/ Ronald W. Hayes
---------------------------------
Ronald W. Hayes, Jr., President
STOCKHOLDER:
/s/ Robert C. Hackney
---------------------------------
Robert C. Hackney
<PAGE>
VOTING TRUST CERTIFICATE
NO. 001 314,000 Shares
This certifies that Robert C. Hackney has deposited Three Hundred
Fourteen Thousand (314,000) share of the capital stock of Net Lnnx, Inc.
with the undersigned as Trustee under a Voting Trust Agreement dated
December 31, 1996, between holders of capital stock of Net Lnnx, Inc. and
their heirs, assigns and successors, and the undersigned, as Trustee.
This certificate and the interest represented hereby is transferable only
on the books of the Trustee upop presentation and surrender hereof. The
holder of this certificate takes it subject to all the terms and
conditions of the aforesaid Voting Trust Agreement and bocomes a party
to such Agreement and is entitled to the benefits thereof.
Executed by the undersigned Trustee on the 31 day of December, 1996.
/s/ Ronald W. Hayes, Jr.
- -------------------------------------
R H Financial Services, Inc., Trustee
By: Ron W. Hayes, Jr., President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF NET LNNX, INC. FOR THE YEAR ENDED DECEMBER 31
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 25,044
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 25,044
<PP&E> 9,138
<DEPRECIATION> 0
<TOTAL-ASSETS> 484,582
<CURRENT-LIABILITIES> 41,410
<BONDS> 0
0
0
<COMMON> 896,285
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 484,582
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> (78,429)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (455,277)
<EPS-PRIMARY> (.28)
<EPS-DILUTED> 0
</TABLE>
