SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the Quarter ended September 30, 1999Commission File No. 33-27652-NY
BusinessNet Holdings Corp.
(formerly BusinessNet International Inc.)
(Exact name of registrant as specified in its charter)
Delaware 22-2946374
(State or other jurisdiction of
incorporation or organization) (IRS Employer Identification No.)
1 Bannisters Wharf, Newport, RI 02840
(Address of Principal Executive Offices)
Registrant's telephone number, including area code:(401) 841-5294
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 shorter period that the registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes: _ No: X
Transitional Small Business Disclosure Format:
Yes: X No: _
The number of shares outstanding of the registrant's common stock, $.01 par
value, as of September 30, 1999 is 2,122,964.
<PAGE>
BusinessNet Holdings Corp.
(Formerly BusinessNet International, Inc.)
INDEX
Page
Part I Financial Information
Balance Sheet - September 30, 1999 2
Statements of Operations - Three Months Ended
Sept. 30, 1999 and Sept. 30, 1998 3
Statements of Operations - Nine Months Ended
Sept. 30, 1999 and Sept. 30, 1998 4
Statements of Cash Flows - Nine Months Ended
Sept. 30, 1999 5
Notes to Financial Statements 6
Management's Discussion and Analysis of financial
Conditions and results of operations 7-9
Part II Other Information
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of
Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signature Page 11
<PAGE>
BUSINESSNET HOLDINGS CORP.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 1999
(Unaudited)
ASSETS
Current assets
Cash $ 1,323
Stock Subscription Receivable 100,000
Inventory 41,795
Total current assets 143,118
Production rights and syndication costs 535,790
Investment in Docunet, at cost, held for investment 107,500
Fixed assets, net of accumulated depreciation of $100 2,946
TOTAL ASSETS 789,354
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses 48,569
Total current liabilities 48,569
Contingent Liabilities -
Stockholders' Equity
Common Stock, $.001 Par Value, 50,000,000 shares authorized;
2,122,964 issued and outstanding at September 30, 1999 21,229
Additional Paid-In Capital 944,542
Retained Deficit Subsequent to Reorganization (12/31/97) (224,986)
Total Stockholders' Equity 740,785
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 789,354
See notes to the condensed consolidated financial statements.
BUSINESSNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Three Months Ended
September 30,
1998 1999
Income from Operations $ - $ -
Total income - -
Selling, general and administrative expenses 25,522 105,739
Depreciation and amortization - 100
Total expenses 25,522 105,839
Income (loss) before income taxes (25,522) (105,839)
Income taxes - -
Net income (loss) $ (25,522) $ (105,839)
Per share data:
Earnings (Loss) $ (.040) $ (.054)
Average number of shares outstanding 632,960 1,949,080
See notes to the condensed consolidated financial statements.
BUSINESSNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
Nine Months Ended
September 30,
1998 1999
Income from Operations $ - $ -
Total income - -
Selling, general and administrative expenses 75,272 124,739
Depreciation and amortization - 100
Total expenses 75,272 124,839
Income (loss) before income taxes (75,272) (124,839)
Income taxes - -
Net income (loss) $ (75,272) $ (124,839)
Per share data:
Earnings (Loss) $ (.119) $ (.076)
Average number of shares outstanding 632,960 1,638,786
See notes to the condensed consolidated financial statements.
BUSINESSNET HOLDINGS CORP.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
1998 1999
Cash flows from operating activities:
Net (loss) $ (75,625) $ (124,839)
Adjustments for non-cash items
Issuance of common stock for services 71,250 40,000
Depreciation - 100
Changes in assets and liabilities
Increase in accounts payable and
accrued expenses 3,728 23,195
(Increase) in inventory - (41,795)
Net cash (used in) provided by operations (647) (103,340)
Cash flows (used in) investing activities:
Equipment - (3,046)
Investment in production rights and syndication
costs - (535,790)
- (538,836)
Cash flows from financing activities:
Proceeds from the issue of common stock - 508,000
- -
Net cash from financing activities - 508,000
Net increase (decrease) in cash (647) (134,177)
Cash, beginning of period 647 135,500
Cash, end of period $ - $ 1,323
See notes to the condensed consolidated financial statements.
BUSINESSNET HOLDINGS CORP.
(Formerly BusinessNet International, Inc.)
Notes to Consolidated Financial Statements
September 30, 1999
NOTE A. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These include the consolidated accounts of the Company's
60% owned subsidiary, Omnicast Corp. Additionally, earnings per share have been
adjusted for 1998 giving effect to an equivalent amount of shares for the stock
dividend of the new share for each one share held on July 13, 1999. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. For further
information, refer to the financial statements and footnotes thereto included in
the Registrant Company annual report on form 10-K for the year ended
December 31, 1998.
Supplemental Cash Flow Information:
September 30,
1998 1999
Common stock issued and
charged to deferred offering costs $ - $12,500
Common stock exchanged for
Investment in Docunet $ - $107,500
NOTE B. DURING THE YEAR, THE COMPANY ADOPTED FASB STATEMENT NO. 130 -
REPORTING COMPREHENSIVE INCOME.
Statement No. 130 required the reporting of comprehensive income and its
components in addition to net income from operations. Comprehensive income is
a more inclusive financial reporting methodology that includes disclosure of
certain financial information that historically has not been recognized in the
calculation of net income. To date, FASB Statement No. 130 does not have a
material effect on the Company's financial position or the results of
operations.
NOTE C. RELATED PARTY TRANSACTIONS
The issuance of stock during the nine months ended September 30, 1998 was to the
Company's acting president for services. The Company leases its administration
offices from the Company's prior acting president and current legal counsel for
$5,000 annually on a monthly basis, of which $3,750 of rent and $22,500 of legal
fees were included in the expense for the nine months ended September 30, 1999.
NOTE D. OTHER ASSETS
The production rights and syndication costs capitalized are expected to be
amortized commencing with the completion of and/or the recording of revenues
associated with the Company's 'Itchykoo '99" project.
The investment in Docunet, held for investment represents a less than 5% stake
of the investee, Docunet, or 80,000 shares. The cost recorded was the value of
the 10,000 shares of the Company's stock on date of the exchange of shares with
Docunet, August 16, 1999. Docunet is a privately held corporation contemplating
an initial public offering from a major investment banking firm.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying condensed consolidated
financial statements.
GENERAL INTRODUCTION
BusinessNet Holdings Corp. is presently structured as a technology holding
company which is seeking to acquire and/or develop start-up companies providing
information technology services and applications including Internet Services,
on-line entertainment content and programming, e-commerce and multi-media
telecommunication services to the United States and International business
communities.
Recent Reorganization
On June 5, 1996, the Registrant acquired 100% of the issued and outstanding
stock of BusinessNet U.K. Limited (formerly, Dubesco U.K. Limited), a United
Kingdom corporation from Morten Skjelborg and affiliates. BusinessNet Europe
was subsequently established as a holding company 100% owned by the
Registrant, and Mr. Skjelborg became Chairman of the Registrant.
During 1997, a financial reorganization of the Registrant's foreign subsidiaries
was required as a result of the failure of subsidiary Options Invest Danmark A/S
to obtain a required financial services license from the Government of Denmark.
As a result of this financial reorganization, the Registrant has discontinued
its European business operations effective September 30, 1997. The
Registrant at present has no administrative or operating control of any of
the former subsidiary operations.
On August 1, 1998 the Registrant changed its name to BusinessNet Holdings Corp.,
and undertook a reverse-split of its Common Stock on the basis of one new Share
for each fifty (50) issued and outstanding Shares.
Share Dividend Declared
On July 13, 1999, The Registrant announced today that its Board of Directors had
approved a Common Stock dividend of one (1) Share of Common Stock for each one
(1) Share of Common Stock held of record as of the close of business on July 23,
1999, payable on July 30, 1999. As a result of the payment of this dividend,
the number of Shares of Common Stock of the Registrant increased from 917,482
to 1,974,964 as of July 30, 1999.
Executive Offices Relocated to Newport, RI
In May, 1999, the Registrant relocated its executive and administrative offices
to 1 Bannister's Wharf, Newport, RI 02840. The telephone number is (401) 841-
5294.
Present Business Operations
Management of the Registrant is presently undertaking to explore various options
to acquire and/or develop new business operations for the Registrant, including
mergers with or acquisitions of other business corporations.
<PAGE>
On May 11, 1999, the Company announced that it had acquired a 60% controlling
interest in Omnicast Corp., developer of omnicastlive.com, an Internet
entertainment content producer and web site. In exchange for its controlling
interest, the Company has agreed to provide its subsidiary Omnicast Corp. with
$2 million in working capital to immediately launch on the Internet its full-
time, video-based transactional network via on-line services.
Through a license agreement with The Classic Rock Network, and other
prospective licensing agreements, omnicastlive.com will provide scheduled
on-line video events such as live concerts, interviews with classic rock
artists, concert videos-on-demand, and an e-commerce component to market
music and music-related products as well as sponsor advertising.
RESULTS OF OPERATIONS AND PLAN OF OPERATIONS
Nine Months Ended September 30, 1999 vs. September 30, 1998
The Company has yet to record revenues since its reorganization, effective
December 31, 1997.
The Company, through its recent acquisition of its 60% subsidiary, Omnicast
Corporation, has invested over $535,000 in the production costs and syndication
rights for production costs of the "Itchykoo '99" Classic Rock music festival
and over forty hours of high-definition television (HDTV) video and music
recordings. During the nine months the Company reported a loss of $124,839
primarily consisting of administrative expenses. Additionally Omnicast
acquired the rights to distribute and an inventory for its re-sale catalogue
of photos of Bruce Springsteen, who is scheduled to be inducted into the Rock
and Roll Hall of Fame during the fourth quarter.
The Registrant's business activities were inactive during the corresponding
prior nine months ended September 30, 1998 except for administrative and legal
functions to assure the continuation of corporate status.
With over forty hours of HDTV video footage of over thirty classic rock
artists, OMNICAST will produce a pay-per-view concert event featuring the
best of "Itchykoo Park '99" for an Internet pay-per-view broadcast, and is
presently negotiating with significant television distribution outlets for
re-broadcast of the program as a cable television pay-per-view and for a
series of broadcast programs. OMNICAST will also pursue domestic and
international video and merchandise sales.
Plan of Operations
The Company has raised its present working capital from private equity
transactions and has formed a subsidiary, Omnicast Corporation (in May of 1999)
for the purpose of acquiring entertainment rights to market media productions
and media related products. The Company, through its subsidiary, also has
opened its website, www.Omnicast.com. As a holding company, the Company
believes it can maintain sufficient capital to fund the projects of its
subsidiary during the next twelve months.
EFFECT OF INFLATION ON OPERATION
The Registrant is at present undertaking no business operations and therefore is
not subject to the potential effects of inflation.
SEASONALITY
The Registrant is at present undertaking no business operations and therefore is
not subject to the potential effects of inflation.
CAPITAL RESOURCES AND LIQUIDITY
During the year ended December 31, 1997, the Company discontinued the operations
of its foreign operating subsidiaries and at December 31, 1998 the Company had
a working capital surplus of $110,125. As of September 30, 1999, the Company
had a working capital surplus of $94,549. The stock subscription receivable was
received in full on October 3, 1999. Management plans on raising additional
equity in private transactions and exercises of existing stock options.
YEAR 2000 ISSUES
Many computer systems and software programs, including several used by the
Company may require modification and conversion to allow date code fields to
accept dates beginning with the year 2000. Major system failures or erroneous
calculations can result if computer systems are not year 2000 compliant.
The Company is in the process of evaluating the computer systems they now have
in use and does not anticipate a major undertaking to be compliant.
Forward looking and other statements
Forward looking statements above and elsewhere in this report that suggest that
the Company will increase revenues through its failings joint venture become
profitable and are subject to risks and uncertainties. Forward-looking
statements include the information concerning possible or assumed future
results of operations and cash flows. These statements are identified by
words such as "believes," "expects," "anticipates" or similar expressions.
Such forward looking statements are based on the beliefs of BusinessNet
Holdings Corp. and its Board of Directors in which they attempt to analyze
the Company's competitive position in its industry and the factors affecting
its business, including management's evaluation of its resource properties.
Stockholders should understand that each of the foregoing risk factors, in
addition to those discussed elsewhere in this document and in the documents
which are incorporated by reference herein, could affect the future results
of BusinessNet Holdings Corp., and could cause those results to differ
materially from those expressed in the forward-looking statements contained
or incorporated by reference herein. In addition there can be no assurance
that BusinessNet Holdings Corp. and its Board have correctly identified and
assessed all of the factors affecting the Company's business.
<PAGE>
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
The Registrant is presently not engaged in any legal proceedings, nor is
management aware of any existing claim or controversy which could result in
legal proceedings against the Registrant. However, management is currently
reviewing its legal options with respect to recouping some portion of its
investment in BusinessNet Europe, Ltd.
Item 2. Changes in Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
SEE "Subsequent Event: Acquisition of Internet Broadcast Rights")
Item 6. Exhibits and Reports on Form 8-K
See Current Report on Form 8-K dated August 1, 1999
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BUSINESSNET HOLDINGS CORP.
(Registrant)
Date: December 1, 1999 By: Rounsevelle W. Schaum /s/
Rounsevelle W. Schaum, President
Date: December 1, 1999 By: Kenneth Brown, /s/
Kenneth Brown, Secretary
<PAGE>
Exhibit 27.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,323
<SECURITIES> 0
<RECEIVABLES> 100,000
<ALLOWANCES> 0
<INVENTORY> 41,795
<CURRENT-ASSETS> 43,118
<PP&E> 3046
<DEPRECIATION> 100
<TOTAL-ASSETS> 789,354
<CURRENT-LIABILITIES> 48,569
<BONDS> 0
0
0
<COMMON> 21,229
<OTHER-SE> 719,556
<TOTAL-LIABILITY-AND-EQUITY> 789,785
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 105,839
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (105,839)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (105,839)
<EPS-BASIC> (.054)
<EPS-DILUTED> (.054)
</TABLE>
