UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-KSB
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission File No. 33-19139-NY
NETAMERICA INTERNATIONAL CORPORATION
(Formerly Venture World, Ltd.)
(Exact name of Registrant as specified in its charter)
DELAWARE 11-2936371
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2 EMBARCADERO CENTER, SUITE 200 SAN FRANCISCO, CA 94111
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code: (415) 646-8033
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 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.
[X ] YES [ ] NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not 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-K or any amendment to
this Form 10-K. [ X ]
Revenue for the year ended 1998: $ 2,214.
Based upon the closing price of the registrant's Common Stock as of April 13,
1999 the aggregate market value of the Common Stock held by non-affiliates of
the registrant is $73,443,014
As of April 13, 1999 the number of shares outstanding of the Registrant's
Common Stock was 11,869,578. Documents incorporated by reference: Not
applicable.
TABLE OF CONTENTS
PAGE
PART I
Item 1. Description of Business 3
Item 2. Description of Properties 6
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders
7
PART II
Item 5. Market for Common Equity and Related 7
Stockholder Matters
Item 6. Management's Discussion and Analysis or Plan of Operations 8
Item 7. Financial Statements 9
Item 8. Changes in and Disagreements with Accountants 22
On Accounting and Financial Disclosure
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act. 22
Item 10. Executive Compensation 23
Item 11. Security Ownership of Certain Beneficial Owners and 24
Management
Item 12. Certain Relationships and Related Transactions 25
PART IV
Item 13. Exhibits and Reports on Form 8-K 26
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARY
PART I
ITEM 1. DESCRIPTION OF BUSINESS
CORPORATE HISTORY
The Company was originally incorporated as Venture World, Ltd. on May 6,
1987 under the laws of the State of Delaware for the purpose of developing or
acquiring general business opportunities. In March, 1989 it raised $250,000
(approximately $185,000 net after expenses and commissions) through a
federally registered "blind-pool" public offering registered with the
Securities and Exchange Commission on Form S-18.
On May 22, 1998, at a special meeting of stockholders, a majority of the
shareholders of the Company voted to approve an amendment to the Company's
Articles of Incorporation to change the Company's name from Venture World,
Ltd. to a name selected by the Board of Directors and to effect a 250 to 1
reverse split. The Company did not have any material operations for the six
years prior to the May 1998 shareholder meeting.
On September 30, 1998, the Company acquired PolarCap, Inc. As a result of
this acquisition, PolarCap, Inc. became a wholly owned subsidiary of the
Company. PolarCap, Inc. is a California corporation organized in April
1997 for the purpose of investing in and developing rights to a variety of
software technologies related to multimedia, development tools, and
applications technologies. Douglas D. Cole, President and Chief Executive
Officer of PolarCap, Inc. was appointed Director and Chairman of the Company
in August 1998. In October 1998, Venture World Ltd. changed its name to
NetAmerica International Corporation. In August, September and October 1998
the Company obtained Bridge Loans (the "Bridge Loans"), pursuant to which the
Company borrowed a total of $463,000 (four hundred sixty three thousand
dollars). The bridge lenders received a promissory note bearing interest at
the rate of 10% per annum plus an inducement premium of one share of common
stock for each $1 borrowed, plus a conversion feature, one share of common
stock for every $1 loaned to the Company.
In November 1998, the Company commenced a private placement to raise a
maximum of $4,500,000 by selling 2,812,500 shares at $1.60 per share.
Between November 2, 1998, and March 1, 1999, the Company raised $1,704,200
from private equity offerings of a total of 1,065,125 shares of restricted
Company Common Shares to twenty-one accredited investors. The Shares were
sold at a subscription price of $1.60 per Share. Net of offering expenses
related to the offering, the Company received $1,533,780 in cash, of which
approximately $1,377,349 has been advanced to A-1 Internet, Inc. as working
capital and for debt repayment.
In September 1998, in connection with the acquisition of PolarCap, and in
connection with the Company's strategy to acquire and consolidate ISPs, the
Company entered into an acquisition agreement pursuant to which (among other
things) the Company agreed to purchase the outstanding stock of Net America,
Inc., a Washington corporation which was subsequently agreed to be renamed A1
Internet, Inc. ("A1 Internet") in exchange for 4,770,426 shares of the
Company's common stock and the assumption of certain liabilities. A1 Internet
is a Washington corporation organized in April 1997 for the purpose of providing
access to products and services to small and medium Internet providers.
Gregory K. Martin, President and Chief Executive Officer of A-1 Internet,
Inc., was appointed Director, President, Chief Executive Officer and Chief
Financial Officer of the Company in September 1998. William Fritts, Chairman
of A-1 Internet, Inc., was appointed Director in October 1998. On December
18, 1998, Gregory K. Martin was terminated as an officer and director
of the Company and William Fritts was appointed President and Chief Executive
Officer. In January, 1999 William Fritts resigned from the Board of
Directors. On December 18,1998 Edward Mooney was appointed as a member of
the Board of Directors.
Management of the Company determined in March 1999 that it was not in the
interest of the Company to complete the purchase of A1 Internet's stock. On
March 16, 1999, the Company and A1 Internet entered into an agreement to
abandon the stock purchase. A1 Internet has acknowledged that certain
representations made to the Company in the acquisition agreement between them
have provided to be inaccurate and, for that reason and others, the Company
has no obligation to complete the purchase of A1 Internet's shares as
contemplated by the acquisition agreement. In pursuing the proposed purchase
between August 1998 and the end of March 1999, the Company made cash advances
to A1 Internet in an aggregate principal amount of approximately $1,377,349;
issued approximately 179,418 shares of the Company's common stock to settle and
discharge obligations owed by A1 Internet to creditors; and issued options to
purchase approximately 1,000,000 shares of the Company's common stock to
compensate individuals and entities for services performed for the benefit of
the Company and A1 Internet.
The Company was informed that on March 23, 1999, A1 Internet entered into
an agreement with another prospective acquirer, to sell substantially all of
its assets in exchange for shares of common stock and assumption of certain
liabilities, including A1 Internet's obligations to the Company. In a letter
agreement between the Company and A1 Internet, the Company has confirmed that,
if the acquisition of A1 Internet's assets is completed in accordance with
the letter of intent, it is the Company's current intent, subject to a due
diligence investigation of the prospective acquirer, to accept a promissory
note and shares of the prospective acquirer common stock as payment in full
for all obligations of A1 Internet to the Company. Such promissory note would
be made by the acquiring company, would have an original principal amount of
between $700,000 and $850,000, would bear no interest and would be payable in
twelve equal monthly installments. If the original principal amount of such note
is less than $850,000, the Company would expect to receive shares of common
stock of the acquirer having a value equal to the shortfall at fixed price of
$7.50 per share (which price may be significantly higher than the actual
market value of such shares). After the A1 Internet recission agreement was
reached, the management of the Company authorized a stock adjustment bonus of
50% to all the investors and bridge loan holders who had purchased or loaned
the Company money between August 1, 1998 and March 31, 1999. The stock bonus
was awarded retroactively and made the effective purchase price of the private
placement memorandum stock holders from $1.60 to $1.07, and the bridge loan
holders conversion effective combination incentive/conversion cost from
$.50 to $.34. A total of 936,773 shares were issued for the stock bonus;
463,000 to the bridge loan holders and 473,773 to the private placement
purchasers.
The Company has also agreed to issue up to 2,750,000 shares of Company
common stock to A1 Internet, subject to certain performance conditions
described in the agreements between the Company and A1 Internet relating
primarily to customer acquisition and performance agreements.
A1 Internet has also agreed to change its corporate name from "Net
America, Inc." to "A1 Internet, Inc." and to assign and transfer to the
Company all of its right, title and interest in and to the name "NetAmerica." A
search of the U.S. Patent and Trademark Office's registry reveals that one or
more other parties may have registered trademarks sufficiently similar to
"NetAmerica" that those registration could be a significant obstacle to the
Company's registration, and continued use, of the name "NetAmerica" and
related trademarks. The Company has, however, obtained rights to the Internet
domain name NetAmerica.com.
The Company has refocused its strategy away from acquisition and
consolidation of ISPs and will seek to concentrate its business development
efforts and management and financial resources on the development efforts
and management and financial resources on the development of value-added
Internet services and applications (See "Descriptions of Business").
BUSINESS OF THE COMPANY
NetAmerica International Corporation (and its subsidiary ; "-commerce
applications for Internet service providers (ISPs), long distance carriers,
network operators, corporations and other resellers and marketers of Internet
and telecommunications services. The Company seeks to develop a suite of
value-added Internet products and services through a combination of
acquisitions of wholly-owned or majority-owned operating subsidiaries,
strategic investments in companies developing proprietary Internet-based
technologies or services, internal product licensing agreements,
interconnection and Internet backbone agreements with Internet service
companies and international carriers, and other strategic agreements with key
vendors in North America, Europe and other major markets.
Over the past five years a number of international carriers and
telecommunications network providers have developed advanced fiber optic
networks in the United States and Europe, linked via undersea and terrestrial
fiber optic cable systems. These fiber optic networks provide enhanced
capabilities for transmission of voice, data, multimedia, Internet and other
broadband communications. In addition, over the past three years Internet
Protocol (IP) has emerged as an important transmission technology for carriers
and network operators seeking to increase network efficiency. These and
other technological advances coincide with the emergence of the Internet and the
World Wide Web (WWW) as increasingly important components of the way that
individuals, small businesses, large corporations and organizations
communicate and conduct business.
According to TeleGeography 1999, it is estimated that over 100 million
persons worldwide utilize the Internet for communications or commerce. The
number of sites on the world wide web has increased to 2.2 million in 1998
from 250,000 in 1996. Internet hosts totaled 36.7 million in July 1998.
According to industry sources, worldwide Internet traffic is expected to
continue to double annually. Significantly, the number of telephone lines
worldwide is expected to increase to approximately 1.4 billion fixed and
wireless lines worldwide. The Company believes that these factors, along with
increased deregulation of telecommunications services in many countries in
Europe and Latin America, will create increasing demand for additional
Internet products and services.
The Company seeks to position itself as an integrated provider of multiple
next generation Internet-based applications. The Company will seek to develop
emerging products and services such as voice over Internet (VOIP), Internet
fax, web-based commerce and other bandwidth-intensive multimedia distribution
applications. NetAmerica believes that these emerging applications will be in
demand among businesses, marketers, corporate customers and ISPs themselves
seeking to benefit from operating efficiencies, additional revenue streams,
or both.
NetAmerica's strategy is to focus its development and marketing efforts on
business-to-business Internet applications, primarily to develop services that
enable ISPs, corporations and telecommunications resellers to expand and
enhance their Internet and e-commerce service offerings to end-users.
Through internal development and through services contracted through other
providers, the Company will seek to develop core capabilities based on (a)
physical hosting of selected Internet-based applications, (b) virtual
hosting of advanced software-based Internet services, and (c) other network
devices and technologies that enhance customers use of the Internet.
Through this approach, the Company believes that it can cost effectively
create a portfolio of Internet products and services that can be offered
separately, or bundled together to create unique service offerings. The
Company intends to market its services in the United States and in selected
international markets primarily through three distinct channels: (a) on a
wholesale basis to ISPs and other telecommunications operators, (b) to
independent distributors and resellers of telecommunications services, and (c)
direct sales to corporate customers and large marketing partners.
The Company will seek to enter into strategic alliances, licensing
agreements, and other business relationships with core network operators,
Internet backbone providers, telecommunications services companies and other
providers of targeted Internet services to develop the ability to offer
products that may include Internet business-to-business services such as:
Web Hosting, Content Hosting and Distribution
Co-Location and Managed Network Services
E-Commerce Hosting and Transaction Services
Virtual ISP Services
Commercial Internet Access
Internet-based Voice and Data Services
Filtering, Screening, Searching and Database Services.
The Company believes that demand for each of these services, separately and
in various combinations, will continue to grow as individuals and businesses
expand their use of Internet-based communications and commerce.
Through network access and interconnection agreements with Internet
backbone providers and other planned network and service agreements with
telecommunications network providers and providers of outsourced technical
and administrative support services, and, in time, through the planned
development of owned or leased network points of presence (POPs) in the United
States and in Europe, the Company will seek to develop the ability to offer
Virtual ISP (VISP) services to marketers, resellers and distributors. VISP
services are expected to enable telecommunications providers, resellers and
marketers to offer ISP services to their end-user customers. The Company
believes that a large potential market exists to offer VISP services
on a wholesale basis to service providers and re-marketers in the United
States and in international markets. The Company intends to utilize
acquisitions and international strategic relationships with telecommunications
and marketing partners to achieve market entry and market penetration in
global markets for its VISP and other Internet application services.
ACQUISITIONS AND STRATEGIC ALLIANCES
The Company will seek to identify acquisition opportunities in the United
States, Europe and other international markets where it can acquire majority
interest in operating companies already offering one or more business-to-
business applications or services. As of the date of this report, the
Company has entered into acquisition discussions with companies in the U.S.
and Europe, but has not entered into a definitive agreement with any
acquisition target.
In addition to acquisitions of operating companies, the Company intends to
identify companies with which it may enter into strategic relationships that
may include a combination of exclusive and non-exclusive licensing
agreements, marketing or co-marketing agreements, strategic minority
investments. As of the date of this report, the Company has entered into
discussions regarding potential strategic relationships that may include
investments by or into NetAmerica, but has not entered into any definitive
agreement for such relationships.
ITEM 2. PROPERTIES
The Company currently leases office space at 2 Embarcadero Center, Suite
200, San Francisco, California, which serves as the Company's corporate
headquarters. The lease expires in 2000 and provides for monthly lease
payments of $1,000.
ITEM 3. LEGAL PROCEEDINGS
The Company has been named in a lawsuit brought by the former landlord
for corporate offices utilized by A1 Internet. In the opinion of management
this lawsuit will not have a material adverse effect on the consolidated
financial statements or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
On May 22, 1998, at a special meeting of stockholders, a majority of the
shareholders of the Company voted to approve an amendment to the Company's
Articles of Incorporation to change the Company's name from Venture World,
Ltd. to a name selected by the Board of Directors and to effect a 250 to 1
reverse split.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's Common Stock has been traded on the OTC Electronic Bulletin
Board under the symbol the Company since December 18, 1998. Prior to December
18, 1998, there was no known public trading in the Company's Common Stock.
The following table reflects the high and low bid prices of the Company's
Common Stock as reported by the OTC Electronic Bulletin Board from December
18, 1998 to April 13, 1999. Such prices are inter-dealer quotations without
retail mark-ups, mark-downs or commissions, and may not represent actual
transactions.
. HIGH LOW
1998 CALENDAR PERIOD:
1st Quarter N/A N/A
2nd Quarter N/A N/A
3rd Quarter N/A N/A
4th Quarter 5 3/8 4 1/2
1999 CALENDAR PERIOD:
1st Quarter (through April 13, 1999) 7 4 3/8
As of April 13, 1999, there were 141 stockholders of record.
The Company does not presently pay cash or any other dividends on its
Common Stock and anticipates that, for the foreseeable future, no cash
dividends will be paid on its Common Stock.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
History and Current Operations
The Company was formed in May 1987 to seek, investigate and acquire an
interest in business opportunities. In May, 1989 it raised $250,000 ($185,000
net of expenses) to seek and/or fund business opportunities.
From May, 1989 until September 1998 the Company has no significant
operations.
In September of 1998, the Company acquired PolarCap, Inc. a
privately-held California corporation PolarCap, Inc. was organized in April,
1996, for the purpose of investing in and developing rights to a variety of
software technology related to multimedia search engines as well as
development tools and applications technologies. On September 30, 1998 the
Company issued approximately 2,400,000 shares of its common stock in
exchange for all the outstanding common stock of PolarCap, Inc.
Also in September 1998, the Company negotiated, later rescinded by mutual
written agreement, to acquire all of the outstanding stock of A-1 Internet,
Inc. A-1 Internet is an Internet services provider based in Seattle,
Washington. Between the time the Company agreed to purchase A-1 Internet,
September 30, and the time the recession agreement was reached (March 16,
1999), the Company advanced A-1 Internet $ 1,377,341 A-1 Internet has since
negotiated with another prospective acquirer to purchase all of its
assets and liabilities of A-1 with proceeds of up to $850,000 to be returned
to the Company.
The Company has not had any long-term successful business operation and
is currently seeking additional funding to concentrate its efforts in
marketing and selling a wide range of hosting services and value added
applications to corporations, e-commerce companies and Internet service
providers (ISPS). The Company is in an early stage of development and is
subject to all the risk inherent in the establishment of a new business
enterprise. To address these risks, the Company must, among other things,
complete development and establish market acceptance for its products and
services, respond to competitive developments, continue to attract, retain and
motivate qualified personnel and obtain substantial additional capital to
support the expenses of developing and marketing new products. The Company
also intends to identify and recruit additional management. There is no
assurance that the Company will successfully attract sufficient capital or
management with which to execute its strategy.
Results of Operations
The Company had no operations for the first nine months of the year. In
the 4th quarter, the Company acquired PolarCap and began operation to acquire
or establish an Internet business. During 1998, the Company reports a loss
of $(1,116,953) compared to a loss of $(200) for 1997. Almost all of the
loss for 1998 occurred in the fourth quarter from the activities of the
subsidiary and a total write off of advances to A-1 Internet ($885,000)
and a write down of goodwill from the purchase of PolarCap, Inc. ($44,855).
The Company may experience future losses from the advances to A-1 Internet if
the negotiated sale of assets and liabilities of A-1 is not consummated or
of the note payable to the Company associated with that proposal
transaction is not issued or passed proves to be partially or wholly
uncollectible. The Company's current overhead is from consulting and
employment contracts in place for management services for $75,000 per month .
Liquidity and Capital Resources In the Fourth Quarter the Company was in the
process of developing products and identifying acquisition targets and
potential strategic relationships. The Company obtained financing
of $1,180,000 from the issuance of common stock and $463,000 from the issuance
of bridge loans to a related party up to December 31, 1998. These funds
were used primarily to cover the operating loss of $(1,116,953) which
included cash advances to A-1 Internet, Inc. Subsequent to December 31, 1998,
the Company has obtained $524,200. In additional funding from the issuance
of common stock.
The Company had working capital of $461,954 at December 31, 1998 compared
to $(200) on December 31, 1997. The Company intends to seek additional
financing of approximately $5,000,000 for working capital and to fund
acquisitions and strategic investments for the current fiscal year. The
Company is currently seeking additional financing, but there is no guarantee
that such financing will be available. Should the Company not be able to
arrange such financing in the next 12 months, operations would have to be
curtailed. Should the Company ultimately be unable to arrange any financing
they would be forced to cease operations and dissolve the Company.
ITEM 7. FINANCIAL STATEMENTS
(a)(1) FINANCIAL STATEMENTS. The following financial statements are included
in this report:
Report of Crouch, Bierwolf & Chisholm, Certified Public Accountants
Balance Sheet as of December 31, 1998.
Statement of Operations - For the years ended December 31, 1998 and December
31, 1997 and for the period from May 6, 1987 to December 31, 1998.
Statement of Stockholders' Equity - For the period from May 6, 1987 to
December 31, 1998.
Statement of Cash Flows - For the years ended December31, 1998 and December
31, 1997 and for the period from May 6, 1987 to December 31, 1998.
Notes to Financial Statements
(a)(2) FINANCIAL STATEMENTS SCHEDULES. The following financial statement
schedules are included as part of this report:
None
INDEPENDENT AUDITOR'S REPORT
To the
Board of Directors and Stockholders
of NetAmerica International Corporation
We have audited the accompanying Balance Sheet of Net America International
Corporation and subsidiary (a Delaware Corporation) (a development stage
company) as of December 31, 1998 and the related statements of operations,
stockholders' equity, and cash flows for the years ended December 31, 1997
and 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The accompanying financial statements for the
period May 6, 1987 (inception) to December 31, 1996 were audited by another
auditor, whose report, dated April 4, 1997, expressed an unqualified opinion
on those statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the 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. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Net America International
Corporation and subsidiary at December 31, 1998, and the results of its
operations and cash flows for the years 1998 and 1997 in conformity with
generally accepted accounting principles.
Crouch, Bierwolf & Chisholm
March 31, 1999
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheet
ASSETS
December 31,
1998
CURRENT ASSETS
Cash (Note 2 & 10) $ 528,516
Interest receivable 1,638
Advances to affiliate (Note 7) -
Total Current Assets 530,154
PROPERTY AND EQUIPMENT (Note 4) 6,875
OTHER ASSETS
Goodwill (Note 6) 41,117
$ 578,146
(Continued)
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheet (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
1998
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 68,200
Total Current Liabilities 68,200
COMMITMENTS AND CONTINGENCIES (Note 11) -
STOCKHOLDERS' EQUITY
Common stock (Note 1 & 8) 7,243
Capital in excess of par value 2,140,999
Retained (Deficit) Accumulated During
Development Stage (1,338,296)
Less: Subscriptions Receivable (Note 9) (300,000)
Total Stockholders' Equity 509,946
$ 578,146
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARY
(A Development Stage Company)
Statements of Operations
For the period
For the Year For the Year from May 6,
Ended Ended 1987 (inception)
December 31, December 31, to December 31,
1998 1997 1998
REVENUE
Interest Income $ 2,214 $ - $ 44,606
EXPENSES
Selling, General
& Administrative 174,176 200 432,481
Bad Debt (Note 7) 885,000 - 885,000
Depreciation and
amortization 4,363 - 9,793
Interest 10,773 - 10,773
Loss from write down of
Goodwill (Note 6) 44,855 - 44,855
Total Expenses 1,119,167 200 1,382,902
Income (Loss) Before Taxes 1,116,953 (200) (1,338,296)
Taxes (Note 3) - - -
INCOME (LOSS) $ (1,116,953) $ (200) $(1,338,296)
Loss Per Common Share
(Note 2) $ (0.68) $ -
Weighted Average Number of Shares (Note 2)
1,636,919 200,000
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Statements of Stockholders' Equity
For the Period May 6, 1987 (inception) to December 31, 1998
Common Accumulated
Stock Deficit during
Purchase Common Par Paid-in Development Subscriptions
Warrants Shares Value Capital Stage Receivable
Shares issued
to officers
and others - 150,000 150 $27,745 $ - $-
Public offering
25,000 units at
$10.00 per unit 5,000 50,000 50 249,950 - -
Offering costs - - - (64,402) - -
Net (loss) for
May 6, 1987 to
December 31, 1990 - - - - (72,877) -
Balance,
December 31, 1990 5,000 200,000 200 213,293 (72,877) -
Net (loss) for year ended
December 31, 1991 - - - - (56,562) -
Balance,
December 31, 1991 5,000 200,000 200 213,293 (129,439) -
Net (loss) for year ended
December 31, 1992 - - - - (56,408) -
Balance,
December 31, 1992 5,000 200,000 200 213,293 (185,847) -
Net (loss) for year ended
December 31, 1993 - - - - (28,329) -
Balance,
December 31, 1993 5,000 200,000 200 213,293 (214,176) -
Net (loss) for year ended
December 31, 1994 - - - - (2,445) -
Balance,
December 31, 1994 5,000 200,000 200 213,293 (216,621) -
Net (loss) for year ended
December 31, 1995 - - - - (2,561) -
Balance,
December 31, 1995 5,000 200,000 200 213,293 (219,182) -
Warrants
expired (Note 2) (5,000) - - - - -
Capital
contributions - - - 6,350 - -
Net (loss) for year ended
December 31, 1996 - - - - (1,961) -
Balance,
December 31, 1996 - 200,000 200 219,643 (221,143) -
Contribution
by Officer/Directors - - - 1,300 - -
Net (loss) for year ended
December 31, 1997 - - - - (200) -
Balance,
December 31, 1997 - 200,000 200 220,943 (221,343) -
(continued)
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Statements of Stockholders' Equity
For the Period May 6, 1987 (inception) to December 31, 1998
Common Accumulated
Stock Deficit during
Purchase Common Par Paid-in Development Subscriptions
Warrants Shares ValueCapital Stage Receivable
Balance,
December 31, 1997 - 200,000 200 220,943 (221,343) -
Shares issued
for services at $.001 - 1,000,000 1,000 - - -
Shares issued
for acquisition at $.001
(Note 6) - 2,400,000 2,400 - - -
Shares issued for conversion
of debt at $.34
(Note 8) - 1,399,773 1,400 473,299 - -
Shares issued
for services
at $1.00 - 87,000 87 86,913 - -
Shares
issued for
cash at $1.07 - 1,106,250 1,106 1,178,894 - -
Less: offering costs - - - (118,000) - -
Shares issued for note receivable
at average
price of $0.29
(Note 9) - 1,050,000 1,050 298,950 - -
Subscriptions receivable at year end
(Note 9) - - - - - (300,000)
Net (loss) for year ended
December 31, 1998 - - - - (1,116,953) -
Balance,
December 31, 1998 - 7,243,023 $7,243 $2,140,999 $(1,338,296) $(300,000)
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Statements of Cash Flows
For the period
For the Year For the Year from May 6,
Ended Ended 1987 (inception)
December 31, December 31, to December 31,
1998 1997 1998
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net(Loss) $(1,116,953) $ (200) $(1,338,296)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
4,363 - 9,558
Bad Debt (Note 7) 885,000 - 885,000
Write off of Goodwill
(Note 6) 44,855 - 44,855
Stock for Services 88,926 - 88,926
Stock for Interest 10,773 - 10,773
(Increase) Decrease in accounts
receivable and other advances
(921,138) - (921,138)
Increase (Decrease) in accounts payable
and accrued expenses 4,000 (1,100) 4,200
Total (1,000,174) (1,300) (1,216,122)
CASH FLOWS FROM INVESTING
ACTIVITIES
Payment for purchase of equipment - - (4,495)
Payment for purchase of organizational cost - - (700)
Cash purchased by stock
acquisition of subsidiary 3,690 - 3,690
Total 3,690 - (1,505)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Loans and other debt 463,000 - 463,000
Paid-in capital contributions - 1,300 7,650
Proceeds from stock sales 1,180,000 - 1,457,895
Less: public offering costs (118,000) - (182,402)
Total 1,525,000 1,300 1,746,143
INCREASE (DECREASE) IN CASH 528,516 - 528,516
CASH - beginning of period - - -
CASH -end of period $ 528,516 $ - $ 528,516
Supplementary Cash Flow Information
Cash Paid for:
Interest $ - $- $-
Taxes $ - $- $-
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 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 subsidiary, PolarCap, Inc. (PolarCap).
Net America International (formerly Venture World, Ltd.) is a Delaware
Corporation organized on May 6, 1987 for the purpose of seeking out and
developing any general business opportunity.
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.
PolarCap was 100% acquired by Net America International on September 30, 1998.
Together, both companies are combined into NetAmerica International
Corporation, a consolidated group of corporations known in this report as the
Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation The consolidated financial statements include the
accounts of NetAmerica International and its subsidiary, PolarCap.
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 fiar market value as determined by the board of
directors.
Earnings Per Share and Average Shares Outstanding
Earnings (loss) per share are computed based on the weighted average method.
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 3 - 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.
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 December 31, 1998 and earlier years; accordingly,
no deferred tax liabilities have been recognized for all years.
The Company has cumulative net operating loss carryforwards of approximately
$900,000 at December 31, 1998. 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,
1998 have been offset by valuation reserves in the same amount. The net
operating losses begin to expire in 2007.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and Equipment consists of the following:
December 31,1998
Computer Equipment & Software $7,500
Less: Accumulated depreciation (625)
$6,875
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 for the period is $625 for 1998.
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 5 - 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 reporting period. In these financial
statements, assets, liabilities and earnings involve extensive reliance on
management's estimates. Actual results could differ from those estimates.
NOTE 6 - ACQUISITION OF SUBSIDIARY / GOODWILL
On September 30, 1998, the Company purchased all of the outstanding stock of
PolarCap, Inc. for 2,400,000 shares of stock. The equity of PolarCap at
September 30, 1998 was $(87,310). The value of the stock was issued at
$.001, par value, for a total purchase price of $2,400. All of the assets of
PolarCap were established at estimated fair market value leaving a value of
$89,710 for goodwill that was to be written off over three years. By the end
of the year, the Company determined that $44,855 of the value of goodwill
would be expensed in the current period based on the estimated continued value
and use of PolarCap and its corporate image, operations, and personnel
talent. Amortization expense for the period is $3,738.
NOTE 7 - ADVANCES TO AFFILIATE / BAD DEBT
At the same time that the Company negotiated a purchase of 100% of the
ownership of PolarCap, Inc. (See Note 7), the Company negotiated, and
laterrecinded by mutual agreement, a purchase of 100% of the ownership of A-1
Internet, Inc., an Internet services provider company based in Seattle,
Washington. Between the time the Company agreed to purchase and the time the
recission agreement was reached (March, 1999), the Company advanced $885,000
up to December 31, 1998 and $492,349 between Janaury 1, 1999 and March 31,
1999. Once the recission agreement was reached, the advances became a
receivable and, at the same time, A-1 began to negotiate for the sale
of all of its assets and liabilities, which resulted in an agreement with a
third party for the sale with the proceeds of up to $850,000 that would be
returned to the Company. Management has established a reserve of $885,000 in
anticipation of any or all possible losses from the agreement.
NOTE 8 - COMMON STOCK TRANSACTIONS
All stock transactions conducted during the year for which no cash was
exchanged and for which shares of stock were exchanged for assets or goods
and services were recorded at fairmarket value of the stock as best determined
by the board of directors.
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 8 - COMMON STOCK TRANSACTIONS (continued)
Common stock transactions during the year are as follows:
During the year, the shareholders of the Company approved a one for 250
reverse stock split. All stock transactions presented in this financial
statement has been retroactively changed to reflect this stock split.
1,000,000 shares of stock were issued for services for a total value of
$1,000 ($.001)(May to August).
2,400,000 shares of stock were issued for the purchase of PolarCap, Inc. for
a total value of $2,400 ($.001 per share).(September)
1,399,773 shares of stock were issued for the conversion of $463,000 in
advances made to the Company and $10,762 in accrued interest.($.34)(September
to December)
87,000 shares of stock were issued for services rendered. ($1.00)(December).
1,106,250 shares of stock were issued for $1,180,000 cash. ($1.07).(December).
1,050,000 shares of stock were issued for $300,000 in notes to related
parties and consultants.($.29 average)(December) See Note 10.
NOTE 9 - NOTE RECEIVABLE - RELATED PARTY
In December, 1998, the Company sold 1,050,000 shares to two members of the
board of directors and one outside consultant in exchange for notes payable
with the following terms:
Shares Price Total
500,000 $.05 $ 25,000
300,000 $.50 150,000
250,000 $.50 125,000
1,050,000 300,000
NOTE 10 - CONCENTRATION OF RISK
On December 31, 1998, the Company had funds deposited in two different
accounts that exceeded the FDIC insured limits on bank accounts. Such funds
that exceeded those limitations in the two accounts were $119,017 and
$309,500.
NET AMERICA INTERNATIONAL CORPORATION AND SUBSIDIARY
Notes to the Consolidated Financial Statements
December 31, 1998
NOTE 11 - COMMITMENTS AND CONTINGENCIES
As part of the purchase of A-1 Internet, Inc. (see note 8), the Company agreed
to assist with the negotiations for settlement of debt for A-1. After the
first of the year, the Company assisted in the negotiation for conversion of
A-1 notes payable of $156,545 for 156,113 shares of common stock and accounts
payable of $209,744 for 23,305 shares of common stock and 10 payments of
$10,487.20 for total cash payments of $104,871.50. The Company also
negotiated $30,000 of PolarCap debt for 30,000 shares.
The Company has entered into a 12 month, renewable lease for office space in
San Francisco for $1,000 per month.
The Company has been named in a lawsuit over a lease agreement signed for
office space in Seattle, Washington, related to the business of A1 Internet.
Management is contesting the lawsuit and does not expect any adverse affect
from the litigation.
NOTE 12 - OPTIONS FOR PURCHASE OF COMMON STOCK
During 1998, the Company awarded options for the purchase of 100,000 shares of
stock with and exercise price of $2.00 per share.
NOTE 13 - SUBSEQUENT EVENTS
After the end of the year, the Company has issued additional shares of stock
and options for shares of stock in the following denominations:
Stock Options 250,000 Shares @ $.05
650,000 Shares @ $1.60
Stock 250,000 Shares @ $1.00
2,284,500 For $1.07
To date, none of the options had been exercised.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The following table sets forth the names, ages and positions of all directors
and executive officers of the Company as of April 13, 1999:
Name Age Office with the Company
Douglas D. Cole 43 Chairman of the Board
of Directors,
Chief Executive Officer and Secretary
Edward P. Mooney 39 Director/Executive
Vice President
DOUGLAS D. COLE has served as Director and Chairman since August 1998.
For the past twenty years Mr. Cole has worked in the information technology
industry, with focus on sales and marketing. He has successfully completed
numerous acquisitions and strategic partnerships with various companies. He
is a current member of the Board of Directors of VR1, a privately-held
Boulder, Colorado company engaged in the business of Internet multi-player
games, Intelliquis, a publicly-held company in software wholesale, HALO, a
NASDAQ listed company engaged in the software business and RedFish Telemetrix,
a privately-held Irvine, California company engaged in the business of long
distance optimization hardware. He has served as the President and CEO of
PolarCap, Inc., a privately held California company since inception. From
1995 to 1996 Mr. Cole served as President and CEO of Starpress, Inc. from 1995
to 1996, after Great Bear Technology Company, a publicly held California
company, acquired it. He served as President and CEO of Great Bear from 1992
through 1995. From 1985 through 1991 he served as President, CEO and
Executive Vice President of Insight Development Corporation, a company engage
in the business of network printing utilities for Hewlett Packard. From 1977
through 1985 he served as Vice President of Sales and Marketing of The David
Jamison Carlyle Corporation. Mr. Cole graduated from the University of
California, Berkeley, in 1978 with a Bachelor of Arts degree in Social Science.
EDWARD MOONEY has served as Director since December 18, 1998, and has
served as its Executive Vice President since April 1, 1999. Mr. Mooney served
as President and Chief Executive Officer of WorldPort Communications, Inc.
from October, 1996 until April, 1998 served as Director of WorldPort from
October, 1996 until June, 1998 and from October 1998 until March 1999
performed various corporate and business development functions for WorldPort.
WorldPort is an international telecommunications network operator with
operations in Europe and North America. Since September, 1993, Mr. Mooney
has served as Associate Director for Maroon Bells Capital Partners, Inc.,
where he has specialized in strategic planning, corporate valuations, corporate
governance and financial analysis. From 1989 until 1992, Mr. Mooney served as
Director of Research for American Business Ventures, Inc. a business
development and management consulting firm that served publicly traded and
privately-held companies. From 1984 until 1989, Mr. Mooney was a research
assistant for A.B. Laffer Associates, an economic research and consulting firm.
Mr. Mooney has also served as a consultant, member of the board of directors,
and in management positions for various publicly held and privately held
companies in the telecommunications, retailing, and transportation
industries. Mr. Mooney holds a Bachelor of Arts degree in Geography from
San Francisco State University and a Master of Arts degree in Education from
California State University, Long Beach
COMMITTEES
During 1999, the Company's Board of Directors intends to establish three
committees. The Audit Committee will recommend the appointment of auditors
and oversee the accounting and internal audit functions of the Company and
will review and pass upon all transactions with affiliates and other persons
having a material interest in the Company. The Compensation Committee, will
administer the Company's 1999 Stock Option Plan and will determine executive
officer salaries and bonuses. The Executive Committee will consider such
business and strategic matters as may be referred to it by the Company's
management or the Board of Directors from time to time.
ITEM 10. EXECUTIVE COMPENSATION.
Two of the Company's directors, Mr. Douglas Cole and Edward Mooney, have
entered into employment agreements with the Company. Mr. Cole receives
$14,000 per month plus reimbursement of expenses. The employment agreement
may be terminated upon, upon three-month, notice. Mr. Mooney is paid
$10,000 per month plus reimbursement of expenses. The employment agreement
with Mr. Mooney may be terminated by the Company upon six months written
notice. Mr. Mooney's agreement contains provisions for bonuses and additional
compensation related to certain performance criteria.
From October 1998 to January 1999 William Fritts served as Director of
the Company. From October 1998 to March 1999, Mr. Fritts was paid a
consulting fee of $5000 per month, plus expenses.
From September to December of 1998, Gregory Martin served as Director,
President, Chief Executive Officer and Chief Financial Officer of the Company.
During that period Mr. Martin was paid an annual salary of $100,000. In
December of 1998 Mr. Martin resigned as an officer and director of the
Company. Per the termination letter, Mr. Martin was paid six months of salary
and health insurance and fifty thousand (50,000) shares of Common Stock in
the Company.
During the past year, two former officers of the Company each received
380,000 shares of common stock as compensation for services over the past two
years. These shares have been registered with the Securities and Exchange
Commission on Form S-8.
Each member of the Board of Directors receives $100 per board meeting,
plus out-of-pocket expenses. In addition, according to the Company's By-Laws,
the Company's directors are permitted to receive fixed fees and other
compensation for their services as directors, as determined by the Board of
Directors. As of the date of this Memorandum, no amounts have been paid to
directors of the Company in such capacity as of the date of this Memorandum.
The Company is currently evaluating a compensation plan for existing and
future directors, which could include stock options to be issued to directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth information as of April 13, 1999, with respect
to the number of shares of the Company's Common Stock beneficially owned by
the directors and officers of the Company, by all officers and directors of
the Company as a group, and by each shareholder known by the Company to be
the beneficial owner of more than 5% of the outstanding Common Stock of the
Company, the only class of voting securities outstanding. Unless otherwise
specified, each individual has sole voting and investment power with respect
to the shares beneficially owned.
<TABLE>
<S> <C> <C>
NAME & ADDRESS OF AMOUNT & NATURE OFBENEFICIAL OWNERSPERCENT
BENEFICIAL OWNERS OF CLASS
Maroon Bells Capital 2,950,971 26.73%
Partners, Inc.
(Note 1)
Nathan Drage Escrow 1,579,574 13.31%
(Note 2)
Douglas D. Cole, Chairman, CEO 632,649 5.57%
(Note 3)
Edward Mooney, Director, 500,000 4.21%
Executive VP
(Note 4)
Malcolm E. Rogers 600,000 5.05%
Thedore Swindells 2,950,971 26.73%
(Note 5)
Hornblower Captital 1,012,500 8.53%
Partners, Inc.
(Note 6)
John Steinmetz 1,012,500 8.53%
(Note 7)
TOTAL SHARES 11,869,578
</TABLE>
NOTES:
Includes 1,002,971 shares of common stock held by Thedore Swindells. Mr
Swindells is a general partner of Maroon Bells Capital Partners(MBCP). MBCP
disclaims beneficial ownership of these shares. Also includes 250,000
shares owned by family members Mr. Swindells. MBCP disclaims benefical
ownership of these shares.
222,579 shares held by Douglas Cole. Nathan Drage Escrow disclaims
beneficial ownership of these shares.
Includes 222,579 shares of common stock held by Nathan Drage Escrow. Mr.
Cole may be deemed to be the beneficial owner of the shares. Includes
options exercisable for 100,000 shares of common stock at $1.60.
Includes options exercisable for 100,000 shares at $1.60.
Includes 1,920,000 shares of common stock held by (MBCP). Mr. Swindells may
be deemed to be the beneficial owner of the shares held by MBCP. Also
includes 250,000 shares of common stock held by the family of Mr. Swindells.
Includes 487,500 shares of common stock held by John Steinmetz. Hornblower
Capital Partners, Inc. disclaims beneficial ownership of these shares.
Includes 525,000 shares of common stock held by HornBlowers Capital
Partners, Inc. Mr. Steinmetz may be deemed beneficial owner of these shares.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Due to the closely held nature of the Company, it has engaged in certain
transactions with its officers, directors, principal shareholder and
affiliates. The Company believes that each of the transactions described below
was entered into on terms no less favorable to the Company than could have
been obtained from unaffiliated third parties. All future transactions
between the Company and its officers, directors, principal shareholders and
affiliates will be reviewed and passed upon by the Audit Committee of the
Board of Directors.
On December 15, 1998, the Company entered into an advisory agreement with
Maroon Bells Capital Partners, Inc. ("MBCP"). Pursuant to the advisory
agreement, MBCP will be paid a monthly advisory fee, deferred until the
Company has completed certain debt or equity financing criteria. In addition,
MBCP will be paid a success fee upon the completion of certain merger and
acquisition and business development activities on behalf of the Company.
On September 30, 1998, the Company acquired PolarCap, Inc., a California
corporation, in exchange for approximately 2,400,000 shares of the Company's
common stock. Prior to the acquisition Douglas D. Cole, Chairman of the
Board of the Company was an officer and director of PolarCap, Inc., and
received 89,077 shares of Common Stock as a result of the acquisition.
Under a common stock purchase agreement dated December 20, 1998, Douglas
Cole purchased 250,000 shares of common stock at a price of $0.50 per share.
The Note is secured by the common stock with an interest rate of six and
one-half percent (6 1/2 %) A.P.R., principal and interest due in two years
December 20, 2001.
Under a common stock purchase agreement dated December 20, 1998 Edward Mooney
purchased 400,000 shares of common stock for a securred promissory note
("the Note") at an average price of $0.2188 per share. The Note is secured
by the common stock with an interest rate of six and one-half percent
(6 1/2 %) A.P.R., principal and interest due in two years December 20, 2001.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
Exhibit Number Description of Documents
23 Consent of Independent Auditors.
(B) Reports on Form 8-K
December 12, 1998 Financial Statements
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this amendment to its Annual Report on Form 10-KSB to be
signed on its behalf by the undersigned, thereunto duly authorized.
NETAMERICA INTERNATIONAL CORPORATION
/s/ Douglas D. Cole
Dated: April 14, 1999 By: ______________________________
Douglas D. Cole
Chairman of the Board
We hereby consent to the use of our audit report of NetAmerica International
Corporation dated March 31, 1999 for the year ended December 31, 1998 in the
Form 10KSB Annual Report for the year 1998.
s/s Crouch, Bierwolf & Chisholm
Salt Lake City, UT
April 14, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 528,516
<SECURITIES> 0
<RECEIVABLES> 1,638
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 530,154
<PP&E> 7,500
<DEPRECIATION> 625
<TOTAL-ASSETS> 578,146
<CURRENT-LIABILITIES> 68,200
<BONDS> 0
0
0
<COMMON> 2148242
<OTHER-SE> (1638296)
<TOTAL-LIABILITY-AND-EQUITY> 578,146
<SALES> 0
<TOTAL-REVENUES> 2214
<CGS> 0
<TOTAL-COSTS> 1119167
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,773
<INCOME-PRETAX> (1116953)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1116953)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1116953)
<EPS-PRIMARY> (.68)
<EPS-DILUTED> (.68)
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