------------------------
OMB APPROVAL
SECURITIES AND EXCHANGE COMMISSION ------------------------
Washington, D.C. 20549 OMB Number:3235-0416
------------------------
FORM 10-QSB Expires: April 30,2003
------------------------
Estimated average burden
hours per response: 32.0
------------------------
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended August 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______ to ______.
Commission file number: 33-21481-FW
VentureNet Capital Group, Inc.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 76-0246940
-------------------------------- -------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
27349 Jefferson Avenue Suite 200, Temecula, California 92590
------------------------------------------------------------
(Address of principal executive offices)
(909) 296-9945
--------------------------
(Issuer's telephone number)
Internet Stock Market Resources Inc.
(Former name, former address and former fiscal year,
if changed since last report)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of latest practicable date: 26,565,777 shares of Common Stock, par
value $0.0001 per share, as of October 19, 2000.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ ]
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
VentureNet Capital Group Inc. prepred the accompanying unaudited financial
statements from its books and records. In Management's opinion, these financial
statements present fairly in all material respects our financial condition and
changes therein as of August 31, 2000, and the results of operations and cash
flows for the period, in conformity with generally accepted accounting
principles (GAAP). The financial statements do not include all information and
footnotes required by GAAP. The financial statements required by this item are
as follows:
VentureNet Capital Group Inc.
Balance Sheet
(Unaudited)
As of August 31, 2000
ASSETS
Equity securities $ 1,237,000
Note receivable on sale of
assets - discontinued operations 155,636
-----------
TOTAL ASSETS $ 1,392,636
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY IN ASSETS)
Accounts payable - related party $ 89,628
Accrued interest 8,070
Note payable to stockholder 536,000
-----------
TOTAL LIABILITIES 633,698
-----------
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 66,667
shares authorizaed; none issued
Preferred stock, Class A, $.01 par value;
933,333 shares authorized; 96,500,
issued and outstanding 965
Common Stock; $.0001 par value; 50,000,000
shares authorized; 26,565,777,
1,381,333 and 586,444 shares issued
and outstanding, respectively 2,657
Additional paid-in capital 3,512,417
Note receivable arising from the
sale of stock, including accrued interest (810,174)
Stock subscriptions receivable (650,000)
Deficit (1,296,927)
-----------
TOTAL STOCKHOLDERS' EQUITY 758,938
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,392,636
============
See accompanying notes.
<PAGE>
VentureNet Capital Group Inc.
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
August 31,
2000 1999
------ -------
EXPENSES
Web Expense 4,300 -
Office rent 5,685 -
General and administrative 10,501 -
Interest 8,070 8,729
Advertising 14,972 -
Professional fees 66,484 13,759
Compensation 12,600 -
Telephone 254 -
------- -------
TOTAL EXPENSES 122,866 22,488
------- -------
(LOSS) FROM CONTINUING OPERATIONS (122,866) (22,488)
INCOME TAXES - -
------- -------
NET (LOSS) FROM CONTINUING OPERATIONS(122,866) (22,488)
+(LOSS) INCOME FROM DISCONTINUED
OPERATIONS, NET (68,549) 80,466
------- -------
NET INCOME (LOSS) $ (191,415) $ 57,978
======= =======
BASIC AND DILUTED NET INCOME (LOSS)
PER COMMON SHARE*
CONTINUING OPERATIONS $(0.00) $(0.04)
DISCONTINUED OPERATIONS $(0.00) $ 0.13
------- ------
TOTAL $(0.01) $0.09
======= =======
|------------Number of Shares----------|
WEIGHTED AVERAGE SHARES OUTSTANDING* 26,565,777 563,111
======= =======
*Common Stock shares outstanding have been retroactively adjusted to reflect a
one-for-nine reverse split of all Common shares that occurred on June 30, 1999.
See accompanying notes.
<PAGE>
VentureNet Capital Group Inc.
STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended
August 31,
2000 1999
-------- ---------
CASH FLOW FROM OPERATING ACTIVITIES
Net (loss) income (191,415) 57,978
Adjustments to reconcile cash flow:
Depreciation and amortization - 2,870
Other 41,115 ( 3,755)
Changes in assets and liabilities
Common stock issud for services rendered: 84,444 -
Decrease (increase) in current assets:
Accounts receivable 10,400 (54,307)
Other assets
Deferred income (2,000) -
Increase (decrease) in current liabilities:
Accounts payable 58,265 8,956
Accrued and other liabilities (51,526) (19,144)
Prepaid expenses (12,500) -
Accrued interest receivable ( 6,667) -
Deferred income - (35,848)
Other liabilities - ( 1,454)
------- -------
NET CASH (USED) PROVIDED BY OPERATIONS (69,884) (44,704)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of debt - (87,565)
------- -------
NET CASH (USED) BY FINANCING ACTIVITIES - (87,565)
------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of equipment - 6,663
------- -------
NET CASH USED BY INVESTING ACTIVITIES - 6,663
------- -------
(DECREASE) INCREASE IN CASH ( 69,884) (125,606)
CASH, BEGINNING 69,884 122,786
------- -------
CASH (BANK OVERDRAFT), ENDING ( -) (2,820)
======= =======
See accompanying notes.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY
BUSINESS ACTIVITY VentureNet Capital Group, Inc.(VentureNet) is a corporation
formed under the laws of the State of Delaware.
ACCOUNTING BASIS These financial statements reflect the acquisition of equity
securities in exchange for common stock at the historical cost of Mr. Michael N.
Brette.
RECLASSIFICATIONS AND RESTATEMENTS Amounts in the prior year financial
statements have been reclassified to reflect the decision in June 2000 to sell
the certain assets and discontinue all former operations.
CASH AND CASH EQUIVALENTS For purposes of the statements of cash flows,
VentureNet considers all highly liquid debt securities purchased with maturity
of three months or less to be cash equivalents.
CONCENTRATIONS OF CREDIT RISK Financial instruments, which potentially subject
VentureNet to a concentration of credit risk, are cash and cash equivalents and
accounts receivable.
PROPERTY AND EQUIPMENT Property and equipment, consisting of furnishings and
equipment used in its current operations, is stated at cost, less accumulated
depreciation. Depreciation is begun when the assets are placed in service and
computed using the straight-line method over the estimated useful lives of the
assets, which range from five to seven years.
LONG-LIVED ASSETS Long-lived assets to be held and used are reviewed for
impairment whenever events or changes in circumstances indicate that the related
carrying amount may not be recoverable. When required, impairment losses on
assets to be held and used are recognized based on the fair value of the asset.
Long-lived assets to be disposed of, if any, are reported at the lower of
carrying amount or fair value less cost to sell.
SALES REVENUE Revenues from sales are recorded when the collection of sales
proceeds is reasonably assured and all other material conditions of the sales
are met. Income on contracts in excess of one month is deferred and recognized
monthly, pro-rata, over the term of the agreement.
ADVERTISING Advertising costs are charged to operations in the year incurred.
BASIC NET LOSS PER SHARE Basic net loss per common share is computed by dividing
the net income or loss available to Common stockholders by the weighted average
number of common shares outstanding during each period. There were no common
stock equivalents as of the years ended May 31, 2000 and May 31, 1999.
INCOME TAXES Income taxes are computed under the provisions of the Financial
Accounting Standards Board (FASB) Statement 109 No. (SFAS 109), Accounting for
Income Taxes. SFAS 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of the difference in events that have been recognized in
VentureNet's financial statements compared to the tax returns.
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with the requirements of
Statement of Financial Accounting Standards No. 107, the fair value amounts of
financial instruments have been determined based on available market information
and appropriate valuation methodology. The carrying amounts and estimated fair
values of VentureNet's financial assets and liabilities approximate fair value
due to the short maturity of the instruments. The fair value of the note payable
stockholder is estimated based on an annual interest rate of 6% and the
anticipated dates of payment and has not been increased accordingly. Fair value
estimates are subjective in nature and involve uncertainties and matters of
significant judgment; therefore, fair value cannot be determined with precision.
2. RELATED PARTY TRANSACTIONS
COMPENSATION AND CONVERSION OF SHARES The compensation to a Non-surviving
Corporation (Internet Stock Market Corp.) shareholder for his equity in that
business was $1,000,000 in the form of a promissory note payable with 6%
interest per annum, issued by the Surviving Corporation (Internet Stock Market
Resources, Inc.) This note was due upon demand by the holder, but subsequently
changed to allow VentureNet to accumulate sufficient working capital. The
shareholder was an officer and director of VentureNet during the fiscal year
ended May 31, 2000.
Subsequent to May 31, 2000, in accordance with a June 13, 2000 agreement, the
terms of the note were extended. VentureNet will repay the outstanding loan
payable of approximately $535,000 as of May 31, 2000, within 180 days, provided,
however, that if VentureNet completes any equity or debt financing before the
maturity date of the note, VentureNet shall pay twenty percent (20%) of all
gross proceeds raised in any equity or debt offering(s) within ten (10) days
from the closing of such offering(s), toward payment of the note. Interest at
the rate of 6% per annum will accrue on this note from the date of closing until
paid. If the loan is not paid timely, then the default rate of interest of 9%
per annum will accrue from the default date until paid.
PROMISSORY NOTE In connection with the public offering, the Company issued
320,000 shares of common stock in exchange for a promissory note in the amount
of $800,000. This note bears interest at 10% per annum and is due November 15,
2000. This note is collateralized by 1.2 million shares and 1.2 million warrants
of Shane Resources, Inc. In a security agreement dated, May 15, 2000, the
purchase of VentureNet's stock also pledged 30,000 shares of MedCom, Inc. of
Bellevue, WA.
STOCK SUBSCRIPTIONS RECEIVABLE In connection with the public offering, the
Company issued 221,500 shares of common stock in exchange for Stock Subscription
Agreements for an aggregate purchase price of $550,000. The due date of these
stock subscription agreements are December 31, 2000 and the notes bear interest
at 6% per annum. In the alternative, the subscribers were permitted the option
to "put" their shares back to the Company in full forgiveness of any amounts
due, and with no further recourse by the Company.
CONSULTING AGREEMENTS From time-to-time, VentureNet engages, retains, and
dismisses various consultants. The consultants provide various services
including assisting with shareholder relations, responding to inquiries, short
and long-term strategic planning, marketing VentureNet to the investment
community and identification and negotiation of potential acquisitions.
Item 2. Management's Discussion and Analysis or Plan of Operation
SAFE HARBOR STATEMENT
Certain statements in this Form 10-QSB, including information set forth under
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations constitute 'forward-looking statements' within the meaning of the
Private Securities Litigation Reform Act of 1995 (the Act). Edd Helms Group,
Inc. desires to avail itself of certain 'safe harbor' provisions of the Act and
is therefore including this special note to enable us to do so. Forward-looking
statements in this Form 10-QSB or hereafter included in other publicly available
documents filed with the Securities and Exchange Commission, reports to our
stockholders and other publicly available statements issued or released by us
involve known and unknown risks, uncertainties and other factors which could
cause our actual results, performance (financial or operating) or achievements
to differ from the future results, performance (financial or operating) or
achievements expressed or implied by such forward-looking statements. Such
future results are based upon management's best estimates based upon current
conditions and most recent results of operations.
PLAN OF OPERATION
Our business is dramatically different and not subject to comparison with the
prior year. We intend to act as an "incubator", mentor or both, for corporate
development for potentially successful pre-public and private companies through
the initial public offering or private sale stage. We will provide management
services, corporate development and structure in emerging and established
business operations which demonstrate potential for long-term capital growth and
which would benefit from public ownership. Our belief is that smaller companies,
specifically those between $2 million and $20 million in annual sales, offer the
greatest opportunity for gain, due to their inability to attract adequate
capital in the general markets, and we have the expertise in dealing with the
management and marketing problems associated with emerging firms in that size
range. Start-up companies will also be considered. Our experience is that
exceptional bargains are available for investments of that size and type of
company because of being largely overlooked by the capital markets. Decisions as
to which business opportunity to participate in will be made by management, who
may enter into investment decisions with or without the consent, vote, or
approval of the Executive Committee. To help accomplish these goals, VentureNet,
Inc. will provide substantial working capital, expenses, and fees to the
emerging companies to attempt to complete their business plan.
LIQUIDITY AND CAPITAL RESOURCES
GOING CONCERN The accompanying financial statements have been prepared assuming
VentureNet will continue as a going concern. VentureNet has suffered recurring
losses from operations and at August 31, 2000, had a working capital deficit and
a deficiency in assets. These and other factors raise doubt about VentureNet's
ability to continue as a going concern, without additional capitalization. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
MANAGEMENT'S PLANS Management has decided to address VentureNet's financial
situation by the following:
The outstanding additional offering on Form SB-2 was suspended as a result of
the acquisition discussed below, but is expected to be refiled with the United
States Securities and Exchange Commission, which would provide for VentureNet to
raise up to $10,000,000 from the general public.
Further, VentureNet acquired interests in a number of additional companies in
the computer and Internet fields for a better vertical integration and to spread
general and administrative costs over a broader base. In that regard, additional
letters of intent are being considered for signature and VentureNet is in the
process of drafting agreements and performing its due diligence.
The Company also expects to increase promotional expenditures in an effort to
increase revenues.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None material.
Item 2. Changes in Securities
On June 13, 2000, Internet Stock Market Resources Inc. agreed to exchange
25,000,000 shares of its common stock for common stock in a number of private
and public companies controlled by Michael N. Brette.
VentureNet has signed an agreement with Mr. Brette for him to contribute a
majority of his ownership in seven companies including ATI Networks, The
Hydrogiene Corp., Solutions Media, Inc. and Gramerica Food Company, Inc. The
companies are involved in various emerging and new technologies, including GPS
(Global Positioning System), Internet software applications, and web-based
marketing. Upon receiving shareholder approval, Internet Stock Market Resources,
Inc. changed its name to VentureNet Capital Group, Inc. and changed its trading
symbol to VNTN.
Mr. Brette was the Chairman and President of VentureNet.com, a consulting,
publicity, mentoring, and financing group that specialized in providing services
for emerging growth companies and financing in management expertise to
pre-public and public and merging growth companies that demonstrate high-growth
potential. The focus of VentureNet will be to assist early stage companies in
securing early stage and first round financing for consumer and technology based
enterprises.
Upon closing, in June 2000, Mr. Brette became the Chairman of the Board and
President of VentureNet. As a part of its plan to continue as a going concern,
VentureNet believes the change in control represents an opportunity to both
combining the existing structure with a synergistic effect of the products and
personnel Mr. Brette will be adding. VentureNet believes that with this
opportunity they can produce the kind of management solutions which reduce costs
and provide greater financial exposure for the future.
VentureNet has entered into a consulting agreement with the former Chairman of
the Board, Mr. Kyriakides, for one year commencing June 13, 2000 at a fee of
120,000 shares of common stock, currently valued at approximately $157,500,
payable on January 1, 2001.
An additional consulting agreement for financial and strategic matters was
entered into with a consultant, for one year commencing July 1, 2000 at a fee of
72,000 shares of common stock, currently valued at approximately $94,500,
payable on January 1, 2001.
On August 5, 2000, VentureNet entered into three other consulting agreement for
financial, strategic, and international matters with various companies, for one
year at a fee of 5,500,000 warrants, currently valued at approximately
$7,218,750, for the direct purchase of 5,500,000 shares of common stock at
$0.01. The warrants have various exercise schedules during the terms of the
agreements.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders
No matters were submitted to a vote.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - 27 Financial Data Schedule
(b) Reports on Form 8-K - four were filed
June 23, 2000 - Announced Plan of Acquisition (Exchange Agreement)
July 20, 2000 - Changed name to VentureNet, Inc. and trading
symbol to VNTN
August 7, 2000 - Amended Plan of Acquisition (Amended Exchange
Agreement).
August 28, 2000 - Changed name to VentureNet Capital Group, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VentureNet Capital Group, Inc.
(Registrant)
DATE: 10/20/00 By: /s/ Michael Brette
----------------------------
Michael Brette
Chairman/Secretary/Director
