SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FROM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of the earliest event reported: October 6, 1998
NET AMERICA INTERNATIONAL CORPORATION
(f/k/a Venture World, Inc.)
(Exact name of registrant as specified in charter)
DELAWARE 33-19139-NY 11-2936371
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
900 4th Avenue, Suite 2900
Seattle, Washington
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (206) 341-9090
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
Item 7. Financial Statements and Exhibits
Included are the financial statements of Net America International
Corporation and subsidiaries for the periods ended September 30, 1998, December
31, 1997 and 1996.
Exhibits.
Included are the proforma financial statements of Net America
International Corporation and subsidiaries for the periods ended September 30,
1998, December 31, 1997 and 1996.
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Financial Statements
For the Periods ended
September 30, 1998, December 31, 1997 and 1996
To the Board of Directors of
Net America International Corporation and Subsidiaries
(formerly Venture World, Inc.)
The accompanying consolidated balance sheets of Net America International
Corporation and subsidiaries (formerly Venture World, Inc.) and subsidiaries as
of September 30, 1998 and the related consolidated statements of operations,
stockholders' equity, and cash flows for the nine months ended September 30,
1998 were not audited by us and, accordingly, we do not express an opinion
on them.
The financial statements of Net America International Corporation and
subsidiaries as of December 31, 1997 and prior periods were audited by us and
we expressed an unqualified opinion on them in our report dated December 4,
1998, but we have not performed any auditing and auditing procedures since
that date.
Crouch, Bierwolf & Chisholm
December 4, 1998
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(formerly Venture World, Inc.)
Consolidated Balance Sheets
ASSETS
September 30, December 31,
1998 1997
CURRENT ASSETS
Cash $ 6,141 $ 4,373
Accounts receivable (Note 3)
Trade (net) 485,923 2,530
Other 2,500 -
Inventory (Note 3) 22,668 740
Deposits 52,000 55,270
Other 1,916 -
Total Current Assets 571,148 62,913
PROPERTY AND EQUIPMENT (Note 5) 424,283 243,826
OTHER ASSETS
Customer base 104,217 -
Other 7,500 20,458
Total Other Assets 111,717 20,458
$ 1,107,148 $ 327,197
(continued)
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(formerly Venture World, Inc.)
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
1998 1997
CURRENT LIABILITIES
Accounts payable and accrued expenses $896,728 $ 146,869
Contracts payable 173,416 -
Notes payable (Note 6) 299,638 94,062
Notes payable - related party (Note 6) 290,000 214,992
Other 33,058 -
Current Portion - LTD - 25,232
Total Current Liabilities 1,692,840 481,155
LONG TERM DEBT
Long term debt - related party (Note 7) 155,000 -
Long term debt (Note 8) - 46,274
Total Long Term Debt 155,000 46,274
STOCKHOLDERS' EQUITY
Common stock (Note 1) 10,000 488,502
Capital in excess of par value 1,505,203 -
Retained Deficit (2,255,895) (688,734)
Total Stockholders' Equity (740,692) (200,232)
$ 1,107,148 $ 327,197
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(formerly Venture World, Inc.)
Consolidated Statements of Operations
For the Nine For the For the
Months ended Year Ended Year Ended
September 30, December 31, December 31,
1998 1997 1996
REVENUE
Net Revenue $991,569 $122,655 $77,675
Cost of revenue 802,849 56,075 41,863
Gross Profit 188,720 66,580 35,812
EXPENSES
General and Administrative 1,464,008 650,814 124,096
Other Income / (Expense)
Income 114,943 - -
Expense (92,676) (9,623) (2,703)
Provision for income taxes (Note 4) - - -
NET LOSS $(1,253,021) $(593,857) $(90,98)
Net Loss Per Share (Note 1&3) $ (.54) $ (.58) $ (.25)
Average Outstanding Shares
(Note 1&3) 2,328,41 1,020,377 371,730
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(formerly Venture World, Inc.)
Consolidated Statements of Cash Flows
For the
Nine Months For the For the
Ended Year Ended Year Ended
September 30, December 31, December 31,
1998 1997 1996
Cash Flows From
Operating Activities
Net loss $(1,253,021) $(593,857) $(90,987)
Depreciation &
Amortization 66,521 71,857 19,673
(Increase) decrease
in receivables (481,248) (2,530) -
Decrease (increase)
in inventory
and other assets (59,303) (56,010) 893
Increase (decrease)
in payables
and accrued expense 970,823 131,422 15,447
Stock issued for
services 8,100 12,502 -
Net Cash Used
by Operating
Activities (748,128) (436,616) (54,974)
Cash Flow From Investing Activities
Purchase of fixed
assets (320,680) (241,105) (74,977)
Purchase of
customer base and other
tangible assets (104,217) (21,084) -
Net Cash Used by
Investing Activities (424,897) (235,189) (74,977)
Cash Flows From Financing
Activities Issuance
of common stock 494,208 331,000 135,000
Issuance (Payment)
of notes payable
and leases payable 680,585 343,781 (17,329)
Net Cash Provided
by Financing Activities 1,174,793 674,781 117,671
Net (Decrease)
Increase In Cash 1,768 2,976 (12,280)
Cash at Beginning of
Period 4,373 1,397 13,677
Cash at End of Period $6,141 $4,373 $1,397
Supplemental Cash Flow Information:
Cash Paid for:
Interest $13,486 $8,061 $2,703
Taxes $ - $ - $ -
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(formerly Venture World, Inc.)
Statements of Stockholder's Equity
For the Period January 1, 1996 to September 30, 1998
Additional
Common Stock Paid-in Retained
Shares Par Capital Deficit
Balance, January 1, 1996
(Note 1) 371,730 $10,000 $ - $ (3,890)
Capital contributed to subsidiary
corporation (Note 1) - 135,000 - -
Net loss for the period - - - (90,987)
Balance, December 31, 1996 371,730 145,000 - (94,877)
Shares issued for services 614,257 12,502 - -
Shares issued for cash 1,024,245 331,000 - -
Net loss for the period - - - (593,857)
Balance, December 31, 1997 2,010,232 488,502 - (688,734)
Shares issued for cash and
assets 1,515,775 1,026,701 - -
Net loss for the nine months - - - (1,253,021)
Reorganization Adjustment
(Note 1) 6,473,993 (1,505,203) 1,505,203 (314,140)
Balance, September 30, 1998 10,000,000 $10,000 $1,505,203 $(2,255,895)
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(formerly Venture World, Inc.)
Notes to the Consolidated Financial Statements
September 30, 1998
NOTE 1 - BACKGROUND AND HISTORY
NetAmerica International Corporation is a consolidated group of companies
including the parent corporation, NetAmerica International Corporation
(NetAmerica International), and its two subsidiaries, NetAmerica, Inc.
(NetAmerica) and PolarCap, Inc. (PolarCap). Net America, Inc. has a subsidiary,
Quantum Interlink Internet, Inc. (Quantum)
Net America International (formerly Venture World, Inc.) is a Delaware
Corporation organized on May 6, 1987 for the purpose of seeking out and
developing any general business opportunity.
NetAmerica is a Washington Corporation organized in April 1997 for the purpose
of providing access to products and services to small and medium internet
providers.
Quantum is an Idaho Corporation organized in December 1995 for the purpose of
providing access to products and services to small and medium internet
providers.
PolarCap is a California Corporation organized on April 7, 1997 for the
purpose of investing in and developing rights to a variety of software
technologies related to multimedia, development tools, and applications
technologies.
NetAmerica and PolarCap were 100% acquired by Net America International on
September 30, 1998. Together, all four companies are combined into NetAmerica
International Corporation, a consolidated group of corporations known in this
report as the Company.
The accounting for the acquisition of subsidiaries is treated as a "reverse
acquisition" whereby the control parties of the subsidiary corporations
(NetAmerica and PolarCap) take control of the parent corporation (NetAmerica
International). The balance sheet at September 30, 1998 is presented as if
the historical cost data from all four corporations are combined into one,
similar to a "pooling of interests method of accounting".
Per SEC guidelines, the balance sheet at December 31, 1997, the statements of
operations, stockholder's equity, and cash flow information for all periods is
that of the acquiring party - Net America, Inc., the Washington company and its
subsidiary, Quantum.. All such information for the parent corporation and
PolarCap, Inc. are excluded from such financial schedules.
The balance sheet shown for September 30, 1998 is the consolidated financial
statements of NetAmerica International Corporation, NetAmerica, Inc. and
PolarCap, Inc. Net loss per share is shown as totaled operating results of
NetAmerica, Inc. and subsidiary divided by total average outstanding shares of
NetAmerica. At December 31, 1997, total shares outstanding is that of
NetAmerica, which shows 2,010,232 shares outstanding (no par) with a stated
value of $488,502, including 371,730 shares issued for Quantum which had a
stated capital of $145,00 at the time of acquisition in 1997. At September
30, 1998 NetAmerica International had 10,000,000 shares outstanding
($.001par)(300,000,000 authorized) including 6,000,000 issued for the
purchase of NetAmerica (and Quantum) and 2,400,000 shares issued for the
purchase of PolarCap.
NOTE 2 - UNAUDITED INFORMATION
The information furnished herein for the nine months ended September 30, 1998
was taken from the books and records of the Company without audit. However,
such information reflects all adjustment which are, in the opinion of
management, necessary to properly reflect the results of the interim
period presented. The information presented is not necessarily indicative of
the results from operations expected for the full fiscal year.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation The consolidated financial statements include the
accounts of NetAmerica International and its subsidiaries PolarCap and
NetAmerica (including Quantum). Collectively, these entities are referred
to as the Company. All significant intercompany transactions and accounts
have been eliminated.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all highly
liquid debt instruments with a maturity of three months or less to be
equivalents.
Nonmonetary Transactions
Nonmonetary transactions are transactions for which no cash was exchanged and
for which shares of common stock were exchanged for goods or services. These
transactions are recorded at fair market value as determined by the board of
directors.
Inventories
Inventories are stated at the lower of cost (specific identification) or
market, and consists of computer and telephone components.
Accounts Receivable
Accounts receivable are shown net of the allowance for doubtful accounts.
This amount was determined to be $70,093 at September 30, 1998 and $0 at
December 31, 1997.
Earnings Per Share and Average Shares Outstanding
Earnings (loss) per share are computed based on the weighted average method.
NOTE 4 - INCOME TAXES
The Company adopted Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" in the fiscal year ended December 31, 1997 and
has applied the provisions of the statement on a retroactive basis to all the
previous years which resulted in no significant adjustment.
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" requires an asset and liability approach for financial accounting and
reporting for income tax purposes. This statement recognizes (a) the amount of
taxes payable or refundable for the current year and (b) deferred tax
liabilities and assets for future tax consequences of events that have been
recognized in the financial statements or tax returns.
NOTE 4 - INCOME TAXES (continued)
Deferred income taxes result from temporary differences in the recognition of
accounting transactions for tax and financial reporting purposes. There were no
temporary differences at September 30, 1998 and earlier years, and accordingly,
no deferred tax liabilities have been recognized for all years.
The Company had cumulative net operating loss carryforwards of approximately
$538,000 at December 31, 1997. No effect has been shown in the financial
statements for the net operating loss carryforwards as the likelihood of
future tax benefit from such net operating loss carryforwards is not
presently determinable. Accordingly, the potential tax benefits of the
net operating loss carryforwards, estimated based upon current tax rates at
December 31, 1997 have been offset by valuation reserves. The net operating
losses begin to expire in 2017.
NOTE 5 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
September 30, December 31,
1998 1997
Computer Equipment & Software $ 351,594 $ 295,859
Furniture & Fixtures 211,648 25,627
Leasehold Improvements 12,944 12,944
Accumulated depreciation (151,903) (90,604)
$ 424,283 $ 243,826
Furniture and Fixtures are being depreciated on the straight-line method over
the estimated useful lives of five (5) years. Computer equipment and software
are being depreciated on a straight line method over the estimated useful life
of 3 years. Depreciation expense for the period is $61,299 for 1998,
$70,931 for 1997, and $19,673 for 1996.
NOTE 6 - NOTES PAYABLE
Notes payable consist of the following:
September 30, December 31,
1998 1997
Note payable to an unrelated private individuals
bearing interest at 9% to 15%, various due dates
$15,398 (98) and $0 (97) secured by company
officer. $284,240 (98) and $0 (97) unsecured $299,638 $ 94,062
Note payable to company officers and directors
bearing interest at 12 to 18%. $140,000 (98) and
$182,000 (97) secured by stock of the Company,
$150,000 (98) and $32,992 (97) unsecured.
Various due dates $ 290,000 $ 214,992
NOTE 7 - LONG TERM DEBT-RELATED PARTY
The notes payable - related party consist of advances from Company officers
and directors. The balances are as follows:
September 30, December 31,
1998 1997
Notes payable bearing interest at 10%. No terms
for repayment. Unsecured. $ 155,000 $ -
The Company has yet negotiated a payment date for this class of debt. The
current anticipated plans call for repayment beyond twelve months; therefore,
the debt has been classified as long term.
NOTE 8 - LONG TERM DEBT
The Company has negotiated several leases for equipment used in the business.
Lease commitments are as follows:
December 31,
1997
Lease Payable for Computer equipment,
12% interest rate, secured by the equipment,
36 payments of $447. Purchase option $ 5,875
NOTE 8 - LONG TERM DEBT (continued)
December 31,
1997
Lease Payable for Computer equipment,
14% interest rate, secured by the equipment,
36 payments of $64. Purchase option of $1,400 1,033
Lease Payable for Telephone equipment,
12% stated interest rate, 48 payments of $528
Purchase option of $1 19,713
Lease Payable for Computer equipment,
12% stated interest rate, 36 payments of $1,565
purchase option FMV 44,885
$ 71,506
Less: Current Portion 25,232
$ 46,274
Future lease commitments are as follows:
1998 $ 32,205
1999 25,440
2000 21,990
2001 5,813
$ 85,448
Less amount
representing
interest 13,942
$ 71,506
NOTE 9 - USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements
and revenues and expenses during the reported period. In these financial
statements, assets, liabilities and earnings involve extensive reliance on
management's estimates. Actual results could differ from those estimates.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases office space in Seattle, Washington. The terms are month
to month at $8,500 per month. In December 1998, the Company signed a new lease
for approximately $12,000 per month. Quantum leases space in Provo, Utah at
$1,250 per month; month to month terms.
Disputed Accounts Payable - 1998
The Company is contemplating litigation against one of its internet backbone
providers for contract violations and loss of business. A prevailing decision
would reduce the accounts payable by $155,689. (1998 only).
The Company is also negotiating for extended ramps on its "take or pay"
contracts with its backbone providers. A favorable negotiation would reduce
the accounts payable by $35,000 and extend the company's contract term to three
years.
Minimum Purchase Agreement
The Company has entered into an agreement to purchase minimum internet access
services from a provider with a "ramp up" time period beginning in month 3
after the contract start date of September, 1997. The minimum purchase amounts
are as follows:
Month 1 $0 Month 7 $50,000
Month 2 $0 Month 8 $60,000
Month 3 $10,000 Month 9 $75,000
Month 4 $20,000 Month 10 $100,000
Month 5 $30,000 Month 11 $125,000
Month 6 $40,000 Month 12 $150,000
The Company has experienced and is expected to experience in the future a
renegotiation of these minimums.
Legal Settlement
The Company has settled a lawsuit by a former officer brought on for unpaid
salary and out of pocket expenses. The claim is being settled for $10,000.
Supplementary Schedules
Proforma Financial Statements
For the Period Ended September 30, 1998 and
December 31, 1997 and 1996
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(formerly Venture World, Inc.)
Proforma Balance Sheets
September 30, 1998
NetAmerica
International NetAmerica Quantum PolarCap Adjustments Total
ASSETS
Cash and
short term
deposits $ 1,463 $ 988 $3,786 $3,690 $ - $ 9,927
Prepaid expenses
and other
current assets 253,500 562,507 - 2,500 (253,500) 565,007
TOTAL 254,963 563,495 3,786 6,190 - 828,434
CAPITAL ASSETS - 401,507 70,238 22,776 - 494,521
OTHER ASSETS (727,388) 111,717 300 - 727,388 112,017
TOTAL $(472,425) $1,076,710 $74,324 $28,966 $ - $ 707,584
LIABILITIES AND
SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable
and accruals $ 200 $820,528 $11,199 $ 64,000 $ - $895,927
Notes and
advances payable 255,000 553,112 68,301 34,500 - 910,913
TOTAL 255,200 1,373,640 79,500 98,500 - 1,806,840
LONG TERM DEBT - 374,000 - - (253,500) 120,500
STOCKHOLDERS' EQUITY
Common Stock 10,000 874,960 145,000 411,000 (1,430,960) 10,000
Additional
paid in capital (508,145) - - - 2,158,348 1,650,203
Retained deficit (229,480) (1,545,881) (150,176) (480,534) - (2,406,071)
TOTAL $(472,425) $1,076,719 $74,324 $28,966 $ - $ 707,584
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(formerly Venture World, Inc.)
Proforma Balance Sheets
December 31, 1997
NetAmerica
International NetAmerica Quantum PolarCap Adjustments Total
ASSETS
Cash and
short term
deposits $ - $ 587 $3,786 $ 694 $ - $ 5,067
Prepaid
expenses
and other
current assets - 58,540 - - - 58,540
TOTAL - 59,127 3,786 694 - 63,607
CAPITAL ASSETS - 173,588 70,238 31,842 - 275,668
OTHER ASSETS - 20,158 300 - - 20,458
TOTAL $ - $252,873 $74,324 $32,536 $ - $359,733
LIABILITIES AND
SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable
and accruals $ 200 $135,670 $11,199 $ - $- $147,069
Notes and
advances
payable - 265,985 68,301 - - 334,286
TOTAL 200 401,655 79,500 - - 481,355
LONG TERM DEBT - 46,274 - - - 46,274
STOCKHOLDERS' EQUITY
Common Stock 50,000 343,502 145,000 248,000 - 786,502
Additional paid
in capital 171,143 - - - - 171,143
Retained
deficit (221,343) (538,558) (150,176) (215,464) - (1,125,541)
TOTAL $ - $252,873 $74,324 $32,536 $- $359,733
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(formerly Venture World, Inc.)
Proforma Consolidated Statements of Operations
For the Nine Months Ended September 30, 1998
NetAmerica
International NetAmerica Quantum PolarCap Adjustments Total
INCOME $ - $991,569 $ - $ - $ - $991,569
COST OF
INCOME - 802,849 - - - 802,849
GROSS MARGIN - 188,720 - - - 188,720
SALES GENERAL &
ADMINISTRATIVE 8,137 1,190,801 - 265,070 - 1,455,871
TOTAL 8,137 1,190,801 - 265,070 - 1,455,871
OTHER INCOME
(EXPENSE) - 22,267 - - - 22,267
NET INCOME
(LOSS) $(8,137) $(979,814) $ - $(265,070) - $(1,244,884)
Note: Quantum Income and expenses included in NetAmerica Totals.
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(formerly Venture World, Inc.)
Proforma Consolidated Statements of Operations
For the Year ended December 31, 1997
NetAmerica
International NetAmerica Quantum PolarCap Adjustments Total
INCOME $ - $22,998 $99,657 $ - $ - $122,655
COST OF INCOME - 13,680 42,395 - - 56,075
GROSS MARGIN - 9,318 57,262 - - 66,580
SALES GENERAL &
ADMINISTRATIVE 200 545,790 105,024 215,464 - 866,278
TOTAL 200 545,790 105,024 215,464 - 866,278
OTHER INCOME
(EXPENSE) - (2,086) (7,537) - - (9,623)
NET INCOME
(LOSS) $ (200) $(538,558) $(55,299)$(215,464) - $(809,321)
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(formerly Venture World, Inc.)
Proforma Consolidated Statements of Operations
For the Year ended December 31, 1996
NetAmerica
International NetAmerica Quantum PolarCap Adjustments Total
INCOME $ - $ - $ 7,775 $ - $ - $7,775
COST OF INCOME - - 41,863 - - 41,863
GROSS MARGIN - - 35,812 - - 35,812
SALES GENERAL &
ADMINISTRATIVE 1,963 - 127,547 - - 129,510
TOTAL 1,963 - 127,547 - - 129,510
OTHER INCOME (EXPENSE) - - - - - -
NET INCOME (LOSS) $(1,961) $ - $(91,735) $ - - $ (93,696)
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(formerly Venture World, Inc.)
Proforma Financial Statements
Statement of Assumptions
1 - Basis of Presentation
The purpose of the presentation of the proforma financial statements of
Net America International Corporation and Subsidiaries is to show the financial
position and results of operations as if the four corporations were combined as
one entity for the period for the two years 1996 and 1997 and the nine month
interim period to September 30, 1998.
Separate columns are used to show the financial position and results of
each company separately, adjustments, if any between the four companies, and
the resulting totals from all companies.
Net America International Corporation acquired all of the stock of Net
America and PolarCap as of September 22, 1998. NetAmerica acquired Quantum in
July 1998. The end result being that of NetAmerica International Corporation
has two subsidiaries, NetAmerica and PolarCap while NetAmerica has one
subsidiary, Quantum.
The proforma financial statements are presented as if "pooling of
interest" method of accounting was used for all business acquisitions.
