<PAGE>
UNITED STATES
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 March 31, 2000 Commission 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 (I.R.S. Employer
incorporation or organization Identification Number)
6 Prospect Street, Suite 36, Midland Park, NJ 07432
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (201) 493 - 0248
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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 each of the registrant's classes of common
stock as of June 15, 2000 is of one class of $.01 par value common stock
was 5,263,924.
<PAGE>
BusinessNet Holdings Corp.
(Formerly BusinessNet International, Inc.)
INDEX
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Page
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PART I FINANCIAL INFORMATION
Balance Sheet - March 31, 2000 2
Statements of Operations - Three Months Ended
March 31, 1999 and 2000 3
Notes to Financial Statements 5
Management's Discussion and Analysis of financial
Conditions and results of operations 6
PART II OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of
Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
Signature Page 9
</TABLE>
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BUSINESSNET HOLDINGS CORP.
CONDENSED BALANCE SHEET
MARCH 31, 2000
(Unaudited)
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ASSETS
Current assets
Cash $ 431
Accounts receivable 53,255
Inventory 9,865
---------
Total current assets 63,551
Fixed assets, net of accumulated
depreciation of $1,871 44,358
---------
Patents and licensing rights, net of
accumulated amortization of $195,975 5,683,277
---------
Investment in unconsolidated subsidiary,
Sunrise Television, Inc. 1,615,712
---------
OTHER ASSETS
Entertainment assets, production rights and
inventory 646,945
Investment in WHYWAIT.com, Inc. common stock,
80,000 shares at cost, held for investment 107,500
Investment in Linuxlabs, Inc. 6% convertible
preferred stock, held for investment 300,000
Deposits and other assets 217,492
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Total other assets 1,271,937
---------
TOTAL ASSETS $8,678,835
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses 226,723
---------
Total current liabilities 226,723
Other notes payable 162,056
Short term note, expected to convert
to equity 500,000
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Stockholders' Equity
Common Stock, $.001 Par Value, 50,000,000
shares authorized; 5,117,964 issued
and outstanding at March 31, 2000 51,180
Additional Paid-In Capital 9,545,229
Preferred Stock 300,000
Retained Deficit Subsequent to
Reorganization (1-1-98) (2,106,353)
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Total Stockholders' Equity 7,790,056
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TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $8,678,835
=========
</TABLE>
See notes to the condensed consolidated financial statements.
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BUSINESSNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
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From
January 1,
1998
(Date of
Three Months Ended Reorganization)
March 31, to
----------------------- March 31,
1999 2000 2000
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Revenue -- Eye America $ 58,917 58,917
---------- ---------- ----------
Operating Expenses 32,710 46,633
Selling, general and administrative expenses 4,500 451,703 636,929
Depreciation and amortization - 197,540 197,845
Non-Cash charges for Stock-based expansion - - 1,296,575
---------- ---------- ----------
Total expenses 4,500 681,953 2,177,982
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Loss from operations (4,500) (623,036) (2,119,065)
---------- ---------- ----------
Other income (expenses)
Interest expense (3,000) (3,000)
Income from unconsolidated subsidiary - 15,712 15,712
---------- ---------- ----------
Net loss $ (4,500) $ (610,324) $(2,106,353)
========== ========== ==========
Per share data:
Loss $ (.0057) $ (.1476)
========== ==========
Average number of shares outstanding 776,482 4,132,909
========== ==========
</TABLE>
See notes to the condensed consolidated financial statements.
<PAGE>
BUSINESSNET HOLDINGS CORP.
(Formerly BusinessNet International, Inc.)
Notes to Consolidated Financial Statements
March 31, 2000
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. 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.
NOTE B. LOSS PER COMMON SHARE, BASIC AND DILUTED
The Company accounts for net loss per common share in accordance
with the provisions of Statements of Financial Accounting Standards
("SFAS") No. 128 "Earnings per Share" ("EPS"). SFAS No. 128 reflects
the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock that then
shared in the earnings of the entity. Common equivalent shares have
been excluded from the computation of diluted EPS since their
effect is antidilutive.
Loss per share are based on the weighted average shares outstanding
for all periods presented giving retroactive recognition for reverse
stock split of 1 share for each 50 shares held on August 1, 1998 and
the stock dividend in July, 1991 of 917,482 shares for both periods
presented.
NOTE C. RELATED PARTY TRANSACTIONS
The issuance of stock in the quarter ended March 31, 1998 was to the
Company's acting president for services. The Company leases its
administration offices from the Company's president for $5,000 on a
monthly basis, of which $1,250 was included in expense for the quarter
ended March 31, 1999.
NOTE D. Investments in Unconsolidated Entities at Cost
At March 3, 2000, the Company's investments in Docunet, Inc. and
Linuxlabs, Inc. are carried at cost. These companies are privately
held and although both contemplate completing their initial public
offering or another capital event in 2000, no quoted market for
their common or preferred stock is available.
Additionally, both Docunet and Linuxlabs have a limited operating
history and no public financial information is available at this
time. Management believes its interest, as convertible to common
shares, in each company, will exceed the carrying value when these
company's become publicly traded.
NOTE E. Purchase of Subsidiary
On January 31, 2000, the Company issued 2,000,000 shares of its
common stock in exchange for all of the issued and outstanding
shares of Eye America, Inc. (formerly Chemko), a ______ corporation.
The transaction is an acquisition accounted for as a purchase of Eye
America, Inc. pursuant to APB 16. The excess (approximately
$879,252) of the total acquisition cost over the recorded value of
assets acquired was allocated to patents and licensing rights and
will be amortized over ten years effective January 31, 2000.
Pursuant to the agreement of merger, Eye America, Inc. has become a
wholly owned subsidiary.
<PAGE>
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 focusing its business plan and acquisition program on the
high-growth and high-margin consumer optical industry. Management believes
that its recent acquisitions within this industry has provided the Company
with a state-of-the-art research and development facility, a new lens
production facility for the patented SOLERA-TM- line of fashion photochromic
lenses, and new capabilities for manufacturing and distributing laboratory
equipment, chemicals and supplies to the worldwide optical industry.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 VS. MARCH 31, 1999
The Company reported no revenue in 1998 and 1999, and recorded its initial
revenue in the Eye America subsidiary during the March, 2000 quarter.
The Company reported a net loss of $610,724 during the quarter ended March
31, 2000 vs. $4,500 for the prior period. This represents a loss per share of
$.1476 in 2000 vs. $.0057 in 1999.
Total expenses increased from $4,500 in 1999 to $681,953 in 2000 as the
Company commenced operations.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
(Continued)
EYEAMERICA, INC. SUBSIDIARY
On January 30, 2000, the Company completed its acquisition of Chemko Optical
Supplies, Inc., a Hudson, FL based optical technology company, through an
exchange of shares of Common Stock. This subsidiary, which has been renamed
EyeAmerica, Inc., recently developed and was awarded the first (and only)
process patent that allows the conversion of popular plastic CR-39 lenses into
photochromic sunglass lenses, which will be offered in a variety of fashion
colors under the "SOLERA-TM-" brand-name. The lenses will be available in both
non-prescription (planar) and prescription form, and will also be available as a
polarized lens.
The CR-39 plastic lenses, renowned for their durability and optical
precision, represent 57% of all lenses sold in the United States with about
$4.6 billion in retail sales in 1998. The patented SOLERA-TM- photochromic
tinting process permits lenses to change shade and darken as brightness
levels increase, and provide comfort from glare. Until the application of the
Company's patented process chemistry to the more widely available CR-39 lens,
photochromic tinting was restricted to inferior polycarbonate and glass
lenses, and color choices solely in gray or brown.
About 15.5% of all lenses processed in the United States, or $1.3 billion at
retail in 1998, are photochromic lenses, with a compound growth rate of 12%
per year (by pairs sold). The EyeAmerica photochromic patent substantially
expands the market for photochromic lenses to the most popular plastic lenses
and a full spectrum of fashion colors. The founder of the Company, George
Kohan, has been an optical industry pioneer for 40 years, and created the
first one-hour eye wear company which was later sold to Pearle Vision in
1970. Mr. Kohan has joined the Company as Vice President for Research and
Development.
SPIN-OFF OF SUNRISE ENTERTAINMENT, INC. SUBSIDIARY
As a result of Management's decision to re-focus the Company's business
operations on the optical technology industry, the Company announced on January
18, 2000 that it had received shareholder approval to distribute its 40%
interest in its Sunrise Entertainment, Inc. subsidiary to BusinessNet
shareholders, subject to receipt of a ruling from the Internal Revenue Service
to the effect that for United States federal income tax purposes no gain or loss
will be recognized by holders of BusinessNet Common Stock upon receipt of
Sunrise Entertainment Common Stock. The fixing of the Shareholder Record Date
for this distribution will be delayed until the receipt of such ruling.
Sunrise Entertainment specializes in high-definition television (HDTV)
production and distribution. Its most recent project in the high-definition
programming market is "LIVING LEGENDS OF ROCK & ROLL: LIVE FROM ITCHYKOO PARK",
the first major rock & roll festival to be shot in HDTV format. The programming
has been packaged as both a two-hour special, complete with artists' interviews,
and as a 90-minute, music-only version edited for NHK Enterprises America for
broadcast on the NHK Japan Network. Sunrise will also begin distribution of its
extensive library of finished products, as well as projects in development.
The distribution of shares and listing of Sunrise Entertainment, Inc. will take
place upon the completion of the appropriate securities registrations.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
(Continued)
SUBSEQUENT EVENTS AND ACQUISITIONS
On May 2, 2000, the Company announced that it had completed an equity financing
of $2 million through a private sale of 7% of the Common Stock of its
EyeAmerica, Inc. subsidiary. MG Securities of Dallas, TX acted as Placement
Agent for the transaction. The proceeds of this transaction will be utilized to
complete the world-wide launch of EyeAmerica's new product line and to increase
manufacturing capacity.
On May 2, 2000, the Company announced that it had acquired True-Lite, Inc.,
an optical supplies manufacturer and laboratory headquartered in Boca Raton,
FL. The Boca Raton facility is presently being expanded to serve as the
primary manufacturing, warehouse and distribution facility for the Company's
"SOLERA-TM-" product line, and will utilize a custom-designed, automated
computer-aided manufacturing process. Mr. Al de Rojas, the CEO of True-Lite,
Inc. and a well-known innovator of lens and resin technology with over thirty
years of experience in the ophthalmic industry, has been named Vice President
of Manufacturing for EyeAmerica.
On May 16, 2000, the Company completed its acquisition of Action Services,
Inc. (ASI), a Knoxville, TN-based optical products manufacturer and
distributor with sales offices in Knoxville, TN and Miami, FL. The Company
has merged the operations of ASI with those of EyeAmerica's CHEMKO division,
two former competitors, to create one of the largest chemical and technology
suppliers to opticians, ophthalmologists, optometrists and optical
laboratories worldwide.
On June 13, 2000, the Company announced that it had agreed to acquire FB Optical
Mfg., Inc., a St. Stephen, MN-based optical equipment manufacturer, through an
exchange of shares. Established in 1981, FB Optical manufactures and has
installed hundreds of optical laboratories in the United States, and sells a
proprietary optical surfacing system for glass, plastic and polycarbonate lenses
throughout the world. Major U.S. customers include the optical laboratories of
the Eyecare Centers of America and Sears retail chains. Mr. Keith West,
President of FB Optical, has over 44 years of expertise in optical equipment
manufacturing. A past President of the Optical Laboratories Association and of
Benson Optical Company, Mr. West will be joining the Board of Directors of
BusinessNet's EyeAmerica, Inc. subsidiary.
CHANGE OF NAME TO INVICTA CORPORATION
On June 13, 2000, the Company announced that it had received shareholder
approval to change the name of the corporation to Invicta Corporation effective
at the close of business on June 30, 2000, with a new trading symbol to be
announced later.
OTHER INVESTMENTS
OMNICAST CORP.
Management of the Company is presently undertaking to explore various options to
sell its assets which are not synergistic to the Company's focus on optical
technology. These assets include a 60% controlling interest in Omnicast Corp.,
developer of fanclubmusic.com, an Internet entertainment content producer and
web site which is developing a full-time, video-based transactional network via
on-line services. The principal asset of Omnicast Corp. is its $600,000
investment for production costs of the "Itchykoo `99" Classic Rock music
festival and over forty hours of high-definition television (HDTV) video and
music recordings, but it has not had any revenues to date.
DOCUNET, INC.
On August 17, 1999, the Company exchanged 10,000 Shares of its Common Stock for
80,000 Shares of Common Stock of Docunet, Inc., and the right to exchange an
additional 20,000 Shares of Common Stock.
Docunet, Inc. is a privately-held Internet-based e-commerce company that has a
patented technology and proprietary "Super ATM" machine that will be capable of
issuing airline tickets, event tickets, and prepaid phone cards as well as cash.
Docunet's initial focus is on the U.S. travel industry, where its Personal
Travel Agent (PTA) system search engine software allows end users to reduce
transaction time and to self-process travel reservations and itineraries over
the Internet while providing them with instantaneous access to a database of
pricing, scheduling and seat availability information.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
(Continued)
PLAN OF OPERATIONS
We anticipate 2000 to show the first material sales volume since the
reorganization primarily due to sales from the Eyeamerica, Inc. subsidiary. We
also anticipate the Company's shared investment in the Itchykoo Park production
in the Omnicast and Sunrise subsidiaries to begin commercial release and in turn
provide a return on the Company's investment in the production. It is also
anticipated that either Docunet or Linuxlabs, Inc., or both, will complete their
initial IPO in 2000.
EFFECT OF INFLATION ON OPERATION
Management believes inflation had no material effect on operations
during 1999 and 1998.
SEASONALITY
Management believes seasonality had no material effect on
operations during 1999 and 2000.
CAPITAL RESOURCES AND LIQUIDITY
At March 31, 2000 the Company had a $500,000 Bridge financing which
is expected converted to equity in the second quarter, 2000. The Company
expects that it will develop and/or acquire new business operations in the
future, and that it will finance its capital requirements in the future
through equity offerings, cash generated from acquired operations and
borrowings from possible new credit facilities. The Company's independent
auditor's report on the December 31, 1999 financial statements includes a
going concern qualification based on the Company's lack of capital and losses
since the reorganization.
At March 31, 2000 the Company had a working capital deficit of
$163,162. Based upon present lack of business operations or financial
commitments, management believes that the Registrant's financial condition is
adequate for the foreseeable future as it believes it can raise equity
capital through the issuance of common stock until such time it obtains
profitable operations.
There can be no future assurance, that the Registrant's future business
operations will generate sufficient cash flow from operations or that future
working capital borrowings will be available in sufficient amounts and required
time frames to accomplish all of the Registrant's potential future operating
requirements.
DISCLOSURES REGARDING FORWARD-LOOKING STATEMENTS
The disclosures included in this Form 10-QSB, incorporated documents
included by reference herein and therein, contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These
statements are identified by words such as "expects", "very satisfactory",
"confident" and words of similar import. Forward-looking statements are
inherently subject to risks and uncertainties, many of which cannot be
predicted with accuracy and some of which might not even be anticipated.
Future events and actual results, financial and otherwise, may differ
materially from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in this Form 10-KSB and other matters detailed from
time-to-time in the Company's Securities and Exchange filings, including the
Company's periodic filings on Form 10-QSB and Form 10-KSB.
<PAGE>
RISK FACTORS WHICH MAY AFFECT OUR BUSINESS
We have a limited operating history upon which you can evaluate our
performance. Before investing in our common stock, you should consider the risks
and difficulties we may encounter as an early-stage company in the new and
rapidly evolving e-commerce market. These risks include our ability to:
- implement our business model;
- anticipate and adapt to rapid changes in our markets;
- attract new customers and maintain customer satisfaction;
- introduce new and enhanced Web sites, services, products and
alliances;
- minimize technical difficulties, system downtime and the
effect of Internet brown-outs; and
- manage the timing or promotions and sales programs.
If we do not successfully manage these risks, our business will suffer.
We cannot assure you that we will successfully address these risks or that our
business strategy will be successful.
WE MAY NEED ADDITIONAL CAPITAL TO CONTINUE OUR BUSINESS IF WE DO NOT GENERATE
ENOUGH REVENUE.
We require substantial working capital to fund our business and may
need more in the future. We will likely experience negative cash flow from
operations for the foreseeable future. If we need to raise additional funds
through the issuance of equity, equity-related or debt securities, your rights
may be subordinate to other investors and your stock ownership percentage may be
diluted. We cannot be certain that additional financing will be available to us.
OUR MANAGEMENT'S EXPERIENCE IN THE E-COMMERCE INDUSTRY IS LIMITED AND WE MAY
FAIL TO HIRE, RETAIN AND INTEGRATE KEY PERSONNEL.
Our success depends on the expertise of our key technical, sales and
senior management personnel. The Company's senior management has limited
experience operating and managing on-line stores engaged in the sale of various
merchandise.
Our success depends on our ability to continue to attract, retain and
motivate skilled employees who can effectively manage an online business.
Competition for qualified e-commerce employees is intense. We may be unable to
retain our present key employees in the future. We may experience difficulty in
hiring and retaining skilled employees with appropriate qualifications. Our
business will be harmed if we fail to attract and retain key employees.
OUR OPERATING RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS.
Our revenues and operating results may vary significantly from quarter
to quarter due to a number of factors. Many of these factors are outside our
control and include:
- timing of production and market acceptance of our products;
- fluctuations in consumer purchasing patterns and advertising
spending;
- changes in the growth rate of Internet usage and online user
traffic levels;
- actions of our competitors;
- the timing and amount of costs relating to the expansion of
our operations and acquisitions of technology or business; and
- general economic and market conditions.
<PAGE>
Because we have a limited operating history, our future revenues are
difficult to forecast. A shortfall in revenues will damage our business and
would likely affect the market price of our common stock. Our limited operating
history and the new and rapidly evolving Internet market make it difficult to
ascertain the effects of seasonality on our business. If seasonal and cyclical
patterns emerge in Internet purchasing, our results of operations from quarter
to quarter may vary greatly and may cause our business to suffer.
WE MAY NOT BE ABLE TO SUCCESSFULLY COMPETE AS WE FACE INTENSE COMPETITION FROM
INTERNET-BASED AND RETAIL-BASED BUSINESS.
We cannot assure you that we will be able to compete successfully or
that competitive pressures will not damage our business. Our competition
includes:
- traditional retailers;
- Web sites maintained by online retailers of similar
merchandise; and
- Internet portals and online service providers that feature
shopping services, such as America Online, Yahoo!, Excite and
Lycos.
We believe that our ability to compete depends on many factors,
including:
- The quality of our products;
- the market acceptance of our products, Web sites and online
services; and
- the success of our sales and marketing efforts.
Our competitors may be larger than us and may have substantially
greater financial, distribution and marketing resources. In addition, our
competitors may be able to secure products from vendors on more favorable terms,
fulfill customer orders more efficiently and adopt more aggressive pricing or
inventory availability policies than we can.
WE MAY BE UNABLE TO SUPPORT INCREASED VOLUME ON OUR WEB SITES.
A key element of our strategy is to generate a high volume of traffic
on our Web sites. However, growth in the number of users of our online stores
may strain or exceed the capacity of our computer systems and lead to declines
in performance or system failures.
We must also introduce additional or enhanced features and services to
attract new users to our online stores. These new services or features may not
function well and we may need to significantly modify the design of these
services to correct errors. If users encounter difficulty with or do not accept
our services or features, our business would be damaged.
WE NEED TO EFFECTIVELY MANAGE GROWTH OF OUR OPERATIONS.
Our success depends upon effective planning and growth management.
Excluding part-time employees, at December 31, 1999 we had a total of six
employees. We intend to continue to increase the scope of our operations and the
number of our employees. We also face challenges associated with upgrading and
maintaining our information systems and internal controls, particularly those
related to our purchase and receipt of inventory. If we do not successfully
implement and integrate these new systems or fail to scale
<PAGE>
these systems with our growth, we may not have adequate, accurate and timely
forecasting and financial information.
WE MAY BE LIABLE FOR BREACHES OF ONLINE SECURITY.
Consumer concerns over the security of transactions conducted on the
Internet or the privacy of users may inhibit the growth of the Internet and
online commerce. We will rely on encryption and authentication technology
licensed from third parties to securely transmit confidential information, such
as customer credit card numbers. A compromise or breach of our technology used
to protect customer transaction data may occur. Furthermore, our servers may be
vulnerable to computer viruses, physical or electronic break-ins and similar
disruptions.
We may need to expend significant additional capital and other
resources to protect against a security breach or to alleviate problems caused
by any breaches or to alleviate problems caused by any breaches. Our business
and your investment may be harmed if security measures do not prevent security
breaches. This is a risk in e-commerce. Under current credit card practices, a
merchant is liable for fraudulent credit card transactions where, as is our
case, merchant does not obtain a cardholder's signature. A failure to adequately
control fraudulent credit card transactions would injure our business.
WE MAY BE SUED REGARDING PRIVACY CONCERNS.
Any penetration of our network security or misappropriation of our
users' personal or credit card information could subject us to liability. We may
be liable for claims based on unauthorized purchases with credit card
information, impersonation or other similar fraud claims. Claims could also be
based on other misuses of personal information, such as for unauthorized
marketing purposes. These claims could result in litigation.
In addition, the Federal Trade Commission and several states have
investigated the use by Internet companies of personal information. In 1998, the
U.S. congress enacted the Children's Online Privacy Protection Act of 1998. The
Federal Trade Commission has not yet promulgated regulations interpreting this
act. We depend upon collecting personal information from our customers and we
believe that the promulgation of regulations under this act will make it more
difficult for us to collect personal information from some of our customers. We
could incur expenses if new regulations regarding the use of personal
information are introduced or if our privacy practices were investigated.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD BURDEN OUR BUSINESS.
The adoption or modification of laws or regulations applicable to the
Internet could harm our business. The U.S. Congress recently passed laws
regarding online children's privacy, copyrights and taxation. The law governing
the Internet, however, remains largely unsettled. New laws may impose burdens on
companies conducting business over the Internet. It may take years to determine
whether and how existing laws governing intellectual property, privacy, libel
and taxation apply to the Internet and online advertising. In addition, the
growth and development of online commerce may prompt calls for more stringent
consumer protection laws, both in the United States and abroad. We also may be
subject to regulation not specifically related to the Internet, including laws
affecting direct marketers.
<PAGE>
WEB SECURITY CONCERNS MAY HINDER ONLINE E-COMMERCE AND ADVERTISING.
The need to securely transmit confidential information such as credit
card and other personal information over the Internet has been a significant
barrier to e-commerce and communications. Any publicized compromise of security
could deter people from accessing the Web or from using it to transmit
confidential information. Furthermore, decreased online traffic and sales as a
result of general security concerns could cause advertisers to reduce their
amount of online spending. Such security concerns could reduce our market for
e-commerce.
OUR STOCK PRICE COULD BE EXTREMELY VOLATILE, AS IS TYPICAL OF INTERNET-RELATED
COMPANIES.
Our stock price has been volatile and is likely to continue to be
volatile. The stock market has experienced significant price and volume
fluctuations, and the market price of securities of technology companies,
particularly Internet-related companies, have been highly volatile.
The market price for BusinessNet's stock is likely to be highly
volatile and subject to wide fluctuations in response to the following factors:
- actual or anticipated variations in our quarterly operating
results;
- announcements of technological innovations or new products or
services by us or our competitors;
- changes in financial estimated by securities analysts;
- conditions or trends in e-commerce;
- changes in the economic performance or market valuations of
other media, Internet, e-commerce or retail companies;
- announcements by us or our competitors of significant
acquisitions, strategic partnership, joint ventures or capital
commitments;
- additions or departures of key personnel;
- release of lock-up or other transfer restrictions on our
outstanding shares of common stock or sales of additional
shares of common stock; and
- potential litigation.
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted against such a company. The institution of such litigation against us
could result in substantial costs to us and a diversion of our management's
attention and resources.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Registrant and its subisidaries are at present not involved in
any legal proceedings, nor are any legal proceedings anticipated.
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
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
NONE
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Company caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, and filed in reliance on Section 12-b25.
BUSINESSNET HOLDINGS CORP.
June 21, 2000 by: /s/ Joseph DeGise
---------------------------------
Joseph DeGise
Chairman
June 21, 2000 by: /s/ Leslie Bocskor
---------------------------------
Leslie Bocskor
President, Acting CFO
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
June 21, 2000 by: /s/ Joseph DeGise
---------------------------------
Joseph DeGise, Director
June 21, 2000 by: /s/ Leslie Bocskor
-----------------------------
Leslie Bocskor, President and
Director
June 21, 2000 by: /s/ Kenneth Brown
-----------------------------
Kenneth Brown, Secretary and
Director
June 21, 2000 by: /s/ Charles Phillips
-----------------------------
Charles Phillips, Director
