FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report:
RETURN ON INVESTMENT CORPORATION
Delaware 033-36198 22-3038309
1825 Barrett Lakes Blvd., Suite 260, Kennesaw, Georgia 30144
770-517-4750
FORMERLY NET/TECH INTERNATIONAL, INC.
Former address: 1 West Front Street, Suite 30, Red Bank, NJ 07701
<PAGE>
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
The audited financial statements for Results Oriented Integration Corporation,
the business acquired by the Company in the merger of August 10, 2000 follow.
<PAGE>
RESULTS ORIENTED
INTEGRATION CORPORATION
D/B/A ROI CORPORATION
================================================================================
FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2000 AND 1999
<PAGE>
RESULTS ORIENTED
INTEGRATION CORPORATION
D/B/A ROI CORPORATION
================================================================================
FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 2000 AND 1999
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
CONTENTS
================================================================================
REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 2-3
FINANCIAL STATEMENTS
Balance sheets 4
Statements of operations 5
Statements of shareholders' equity (capital deficit) 6
Statements of cash flows 7
Notes to financial statements 8-18
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of Results Oriented Integration Corporation d/b/a ROI Corporation
We have audited the accompanying balance sheet of Results Oriented Integration
Corporation d/b/a ROI Corporation as of June 30, 2000, and the related statement
of operations, shareholders' equity (deficit) and cash flows for the year then
ended. 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.
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 ROI Corporation as of June 30,
2000 and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
/s/ BDO Seidman, LLP
October 6, 2000
2
<PAGE>
GUY R. WILCOX
CERTIFIED PUBLIC ACCOUNTANT
2270 CASTLE LAKE DRIVE
TYRONE, GEORGIA 30290
(770) 632-9933 O FAX (770) 632-0194
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Results Oriented Integration Corporation
I have audited the accompanying balance sheets of Results Oriented Integration
Corporation as of June 30, 1999 and 1998, and the related statements of income,
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Results Oriented Integration
Corporation as of June 30, 1999 and 1998, and the results of its operations and
its cash flows for the years then ended in conformity with generally accepted
accounting principles.
By: /s/ Guy R. Wilcox, CPA
October 28, 1999
3
<PAGE>
<TABLE>
<CAPTION>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
BALANCE SHEETS
=======================================================================================
June 30, 2000 1999
---------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
CURRENT
Cash $ 28,568 $ --
Accounts receivable, less allowance for
doubtful accounts of $51,800 in 2000 612,308 400,322
Prepaid expenses and other current assets 131,503 --
---------------------------------------------------------------------------------------
Total current assets 772,379 400,322
PROPERTY AND EQUIPMENT, NET 939,685 1,222,717
---------------------------------------------------------------------------------------
$ 1,712,064 $ 1,623,039
=======================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY (CAPITAL DEFICIT)
CURRENT LIABILITIES
Note Payable $ 200,000 $ --
Accounts payable 104,673 63,020
Accrued expenses 230,076 50,000
Current portion of long - term debt due shareholder 198,484 203,711
Current portion of long - term debt - other 22,292 17,233
Deferred revenue 683,062 179,277
Other 72,000 64,698
---------------------------------------------------------------------------------------
Total current liabilities 1,510,587 577,939
Long - term debt due shareholder, less current portion 490,548 661,612
Long - term debt - other, less current portion 16,701 38,993
Other long - term liabilities 257,025 329,025
---------------------------------------------------------------------------------------
Total liabilities 2,274,861 1,607,569
---------------------------------------------------------------------------------------
COMMITMENTS
SHAREHOLDERS' EQUITY (CAPITAL DEFICIT)
Common stock, no par value (10,000,000 shares
authorized, 6,118,918 and 5,333,200; issued
and outstanding, respectively) 5,039 1,333
Additional paid in capital 84,511 --
Retained earnings (deficit) (652,347) 14,137
---------------------------------------------------------------------------------------
Total shareholders' equity (capital deficit) (562,797) 15,470
---------------------------------------------------------------------------------------
$ 1,712,064 $ 1,623,039
=======================================================================================
See accompanying notes to financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
STATEMENTS OF OPERATIONS
==============================================================================================
Years ended June 30, 2000 1999
----------------------------------------------------------------------------------------------
REVENUE
<S> <C> <C>
License fees $ 1,642,569 $ 976,038
Support and update services 534,174 273,324
Other 16,522 56,011
----------------------------------------------------------------------------------------------
Total revenues 2,193,265 1,305,373
----------------------------------------------------------------------------------------------
EXPENSES
General and administrative (including non-cash compensation
Expense of $84,511 in 2000) 2,355,047 1,078,085
Sales and marketing 419,651 144,324
----------------------------------------------------------------------------------------------
Total operating expenses 2,774,698 1,222,409
----------------------------------------------------------------------------------------------
(Loss) income from operations (581,433) 82,964
Interest expense (85,051) (57,837)
----------------------------------------------------------------------------------------------
NET (LOSS) INCOME BEFORE TAXES ON INCOME (LOSS) (666,484) 25,127
TAXES ON INCOME (LOSS) -- --
----------------------------------------------------------------------------------------------
NET (LOSS) INCOME $ (666,484) $ 25,127
==============================================================================================
BASIC AND DILUTED (LOSS) EARNINGS PER COMMON SHARE $ (0.11) $ 0.01
==============================================================================================
BASIC AND DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 6,064,414 4,789,160
==============================================================================================
See accompanying notes to financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
STATEMENTS OF SHAREHOLDERS' EQUITY (CAPITAL DEFICIT)
YEARS ENDED JUNE 30, 2000 AND 1999
==============================================================================================
Common Stock Additional Retained
---------------------- Paid-In Earnings
Shares Amount Capital (Deficit) Total
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, June 30, 1998 2,456,667 $ 500 $ -- $ (10,990) $ (10,490)
Issuance of common stock 3,498,740 833 -- -- 833
Net income -- -- -- 25,127 25,127
----------------------------------------------------------------------------------------------
BALANCE, June 30, 1999 5,955,407 1,333 -- 14,137 15,470
Stock options exercised 163,511 3,706 84,511 -- 88,217
Net loss -- -- -- (666,484) (666,484)
----------------------------------------------------------------------------------------------
BALANCE, June 30, 2000 6,118,918 $ 5,039 $ 84,511 $(652,347) $(562,797)
==============================================================================================
See accompanying notes to financial statements.
</TABLE>
6
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
STATEMENTS OF CASH FLOWS
================================================================================
Years ended June 30, 2000 1999
--------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net (loss) income $ (666,484) $ 25,127
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Non-cash compensation expense 84,511 --
Depreciation and amortization 323,464 222,883
Changes in operating assets and liabilities:
Accounts receivable (211,987) (290,194)
Prepaid expenses and other current assets (131,503) --
Accounts payable 41,652 58,467
Accrued expenses 180,076 50,000
Deferred revenues 503,785 179,277
--------------------------------------------------------------------------------
Cash provided by operating activities 123,514 245,560
--------------------------------------------------------------------------------
INVESTING ACTIVITY
Purchase of property and equipment (40,431) (900,000)
--------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from the exercise of stock options 3,706 --
Proceeds from the issuance of common stock -- 833
Advances (repayments) of long term debt (193,523) 791,884
Advances under the note payable 200,000 --
Other liabilities (64,698) (138,277)
--------------------------------------------------------------------------------
Cash (used in) provided by financing activities (54,515) 654,440
--------------------------------------------------------------------------------
NET INCREASE IN CASH 28,568 --
CASH, beginning of year -- --
--------------------------------------------------------------------------------
CASH, end of year $ 28,568 $ --
================================================================================
See accompanying notes to financial statements.
7
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SUMMARY OF NATURE OF OPERATIONS
SIGNIFICANT
ACCOUNTING Results Oriented Integration Company d/b/a ROI
POLICIES Corporation (the "Company") develops software for the
IBM AS400 computer system and provides related
services. The software is categorized as "e-transaction
middleware" meaning that it processes electronic
transactions primarily related to credit card and check
processing as part of retail, mail order, and Internet
e-commerce applications.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, net of
accumulated depreciation and amortization. Depreciation
is provided using the straight-line method over the
estimated useful lives of the assets, generally ranging
from three to seven years. Leasehold improvements are
amortized using the straight-line method over the
lesser of the lease term and the estimated useful lives
of the related assets.
Long-lived assets are evaluated for impairment when
events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable
through the estimated undiscounted future cash flows
resulting from the use of these assets. When any such
impairment exists, the related assets will be written
down to fair value.
REVENUE RECOGNITION
The Company recognizes product revenue upon shipment if
persuasive evidence of an arrangement exists, delivery
has occurred, the fees are fixed and determinable and
collectibility is probable.
8
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
During 2000 and 1999, a majority of revenues were
derived from the shipment of software (license fees).
License fees are recognized as revenue once the
underlying software is accepted by the customer and/or
installed. This is the time at which the Company
believes that revenue as described above, has occurred.
Maintenance and support revenue is deferred and
recognized ratably over the contractual maintenance
period, generally one year.
INCOME TAXES
The Company accounts for income taxes in accordance
with Statement of Financial Accounting Standards (SFAS)
No. 109, Accounting for Income Taxes, which requires an
asset and liability approach. This approach results in
the recognition of deferred tax assets (future tax
benefits) and liabilities for the expected future tax
consequences of temporary differences between the book
carrying amounts and the tax basis of assets and
liabilities. The deferred tax assets and liabilities
represent the future tax return consequences of those
differences, which will either be deductible or taxable
when the assets and liabilities are recovered or
settled. Future tax benefits are subject to a valuation
allowance when management believes it is more likely
than not that the deferred tax assets will not be
realized.
(LOSS) EARNINGS PER SHARE
Basic earnings per share is computed using the
weighted-average number of common shares outstanding
during the period. Diluted earnings per share is
computed using the weighted-average number of common
and common equivalent shares outstanding during the
period, if dilutive.
As a result of the net loss incurred in the year ended
June 30, 2000, 9,300 stock options were antidilutive
and accordingly, were excluded from the computation of
loss per share. There were no common equivalent shares
outstanding in the year ended June 30, 1999.
9
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
USE OF ESTIMATES
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that
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.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board
issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133
establishes accounting and reporting standards
requiring that every derivative instrument, including
certain derivative instruments imbedded in other
contracts, be recorded in the balance sheet as either
an asset or liability measured at its fair value. The
statement also requires that changes in the
derivative's fair value be recognized in earnings
unless specific hedge accounting criteria are met. SFAS
No. 137 delayed the effective date of SFAS No. 133 to
fiscal years beginning after June 15, 2000. The Company
expects that the adoption of SFAS No. 133 will not have
a material impact on its financial position or results
of operations.
FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company has a number of financial instruments,
including cash, trade receivables, trade payables, a
note payable and long term debt none of which are held
for trading purposes. The Company estimates that the
fair value of the financial instruments does not differ
materially from the aggregate carrying values recorded
in the balance sheet. The estimated fair value amounts
have been determined by the Company using available
market information and appropriate valuation
methodologies. Considerable judgment is required in
interpreting market data to develop these estimates of
fair value and, accordingly, the estimates are not
necessarily indicative of the amounts that the Company
could realize in a current market exchange.
10
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
RISKS AND UNCERTAINTIES
The Company is subject to risks and uncertainties in
the normal course of business including customer
acceptance of its products, rapid technological
changes, delays in introducing and market acceptance of
new products, competition, e-business developments,
ability to attract and retain qualified personnel,
ability to protect its intellectual property, and other
matters inherent in the software industry.
2. PROPERTY AND Property and equipment are summarized by major
EQUIPMENT classifications as follows at June 30:
2000 1999
-------------------------------------------------------
Computer equipment $ 38,955 $ 38,955
Furniture and fixtures 70,343 54,150
Purchased software 1,543,521 1,524,282
-------------------------------------------------------
1,652,819 1,617,387
Less accumulated depreciation
and amortization (713,134) (394,670
-------------------------------------------------------
$ 939,685 $ 1,222,717
-------------------------------------------------------
3. NOTE PAYABLE The Company has a line of credit, due on October 15,
2000, with a bank with interest at the bank's prime
rate (9.5% at June 30, 2000) plus 1%. Advances under
the line of credit are limited to a maximum of
$200,000. The balances outstanding under this line of
credit at June 30, 2000 and 1999, were $200,000 and $0,
respectively. The line of credit is secured by
substantially all of the Company's assets as well as
personal guarantees signed by two shareholders of the
Company. Subsequent to year-end, amounts due under the
line of credit were paid-off and the line was allowed
to expire (see Note 12).
11
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
4. LONG TERM DEBT Long term debt consisted of the following June 30:
2000 1999
-------------------------------------------------------
Note payable to shareholder
due January 2004 with interest
fixed at 7.25%, payable in
monthly installments of
$17,928, secured by
substantially all of the
Company's assets. $ 663,255 $ 823,919
Note payable to a bank due
March 2002 with interest fixed
at 8.75% payable in monthly
installments of $1,923,
secured by substantially all
of the Company's assets. 38,993 56,226
Unsecured Credit Card advances
by a shareholder requiring
monthly payments at rates
varying from 9% to 9.7%. 25,777 41,404
-------------------------------------------------------
Total notes payable 728,025 921,549
Less current portion of
long-term debt (220,776) (220,944)
-------------------------------------------------------
$ 507,249 $ 700,605
-------------------------------------------------------
Maturities of long term debt are as follows:
Year Amount
-------------------------------------------------------
2001 $220,776
2002 202,354
2003 199,569
2004 105,326
-------------------------------------------------------
$728,025
-------------------------------------------------------
12
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
5. ACCRUED EXPENSES Accrued expenses consisted of the following at June 30:
2000 1999
-------------------------------------------------------
Payroll $ 79,932 $ --
Consulting fees 150,000 50,000
Other 144 --
-------------------------------------------------------
$ 230,076 $ 50,000
-------------------------------------------------------
6. STOCK OPTION PLAN In January 1999, the Company adopted its incentive
stock option plan (the "plan") whereby total options to
purchase 3,000,000 shares may be granted to key
employees at a price not less than fair market value at
the time the options are granted and are exercisable
after the employee has been with the Company for a
period of one or two years. The options are exercisable
for a period not to exceed ten years. Information
regarding the option plan is as follows:
Weighted
Average
Exercise
Shares Price
-------------------------------------------------------
Outstanding as of June 30, 1999 - -
Granted 179,811 .03
Exercised (163,511) .03
Cancelled (7,000) .03
-------------------------------------------------------
Outstanding as of June 30, 2000 9,300 .03
-------------------------------------------------------
The weighted average fair value of options granted
during the year ended June 30, 2000 was $0.48 per
share. The weighted average remaining life of options
outstanding at June 30, 2000 was 4.5 years. As of June
30, 2000, 9,300 options were exercisable.
The Company applies Accounting Principles Board Opinion
No. 25 (APB No. 25), Accounting for Stock Issued to
Employees and related interpretations in accounting for
its stock option plans. Options granted to employees
and directors are accounted for under APB No. 25 and
compensation expense is recognized for the intrinsic
value of the options granted.
13
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
As noted above, the plan states that shares may be
granted to employees at a price not less than fair
market value at the time of the grant. Notwithstanding
the foregoing, it has been subsequently determined that
the fair market value of options issued during the year
ended June 30, 2000 was $.50 per share. This was caused
by the Company's eventual reverse merger into a public
shell subsequent to year-end, which created a public
market for the newly combined companies' stock. As a
result, compensation expense of $84,511 was recorded
during the year ended June 30, 2000 to reflect the
options granted at a discount.
The Company has adopted the disclosure-only provisions
of SFAS No. 123, "Accounting for Stock-Based
Compensation". Had compensation cost been determined
based on the fair value at the grant date for awards in
2000, consistent with the provisions of the Standard,
the Company's net (loss) income and (loss) income per
share would have changed as indicated by the pro forma
amounts below:
Years Ending June 30, 2000 1999
-------------------------------------------------------
Net (loss) income, as reported $(666,484) $25,127
Pro forma (668,282) 25,127
-------------------------------------------------------
Basic and diluted (loss)
income per share, as reported $(0.11) $0.01
Pro forma (0.11) 0.01
-------------------------------------------------------
The fair value of stock options used to compute pro
forma net loss applicable to common shareholders and
loss per share disclosures is the estimated present
value at grant date using the Black-Scholes
option-pricing model with the following weighted
average assumptions for 2000: expected volatility of
75% for all years; a risk free interest rate of 5.94%,
and an expected option life of 5 years.
14
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
7. INCOME TAXES Provisions for federal and state income taxes in the
statements of operations consist of the following:
Years Ending June 30, 2000 1999
-------------------------------------------------------
Deferred federal income
tax benefit $ (223,900) $ (2,000)
Deferred state income
tax benefit, net of
federal tax benefit (41,000) (400)
Change in valuation
allowance 264,900 2,400
-------------------------------------------------------
$ -- $ --
-------------------------------------------------------
As of June 30, 2000 and 1999, deferred tax assets
(liabilities) comprised the following:
Years ended June 30, 2000 1999
-------------------------------------------------------
DEFERRED TAX ASSETS
Net operating loss
carryforward $ 301,000 $ 146,000
Stock option compensation
not currently deductible 33,800 --
Reserves not currently
deductible 33,600 --
-------------------------------------------------------
Total deferred tax assets 368,400 146,000
-------------------------------------------------------
DEFERRED TAX LIABILITIES
Accrual to cash conversion -- (82,000)
Accumulated depreciation (93,500) (54,000)
-------------------------------------------------------
Total deferred tax liabilities (93,500) (136,000)
-------------------------------------------------------
Net deferred tax asset 274,900 10,000
Valuation allowance (274,900) (10,000)
-------------------------------------------------------
$ -- $ --
-------------------------------------------------------
15
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
The Company has net operating loss carryforwards
available to reduce future taxable income, if any, of
approximately $751,000. The benefits from these
carryforwards expire through 2020. As of June 30, 2000,
management believes it cannot be determined that it is
more likely than not that these carryforwards and its
other deferred tax assets will be realized, and
accordingly, fully reserved for these deferred tax
assets. Differences between the effective income tax
rate and statutory income tax rates are not material.
8. STOCK SPLITS On November 1, 1999, the Board of Directors declared a
3.35-for-1 stock split to stockholders of record of the
Company's Common Stock on that date. In addition to the
stock split on November 1, 1999, the Board of Directors
declared a one-for-three reverse stock split to
shareholders of record on that date. These splits were
declared due to the pending reverse merger which
occurred subsequent to year-end (Note 12).
All references to share and per share data and have
been restated to reflect the stock split and reverse
stock split. The statements of Shareholders' Equity
(Capital Deficit) reflect the actual share amounts
outstanding for each period presented.
9. CONCENTRATION Financial instruments, which potentially subject the
OF CREDIT RISK Company to concentration of credit risk, consist
principally of trade receivables. The Company places
its cash with high quality financial institutions and,
by policy, limits the amounts of credit exposure to any
one financial institution.
As of June 30, 2000 the Company's net accounts
receivable are approximately $612,000. The Company
believes any risk of accounting loss is significantly
reduced due to provision considered at the date of sale
for returns and allowances and ongoing credit
evaluations of its customers' financial condition as
deemed necessary. The Company generally does not
require cash collateral or other security to support
customer receivables.
10. COMMITMENTS The Company leases its facility and certain equipment
under operating leases.
Subsequent to year-end the Company entered into a lease
agreement on its new facility that expires in July
2005. The lease requires monthly payments of $13,115
commencing July 21, 2000 and escalates at a rate of 4%
per year. Commitments relating to this lease agreement
are included in the lease commitments schedule below.
16
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
Future minimum rental payments of the Company's long
term leases as of June 30, 2000, inclusive of the new
facility lease, are as follows:
Year Amount
-------------------------------------------------------
2001 $ 148,918
2002 163,342
2003 169,846
2004 176,634
2005 183,752
Thereafter 9,898
-------------------------------------------------------
Total $ 852,390
-------------------------------------------------------
Rent expense relating to these operating leases was
approximately $49,200 and $23,800 for 2000 and 1999,
respectively.
The company is committed to a third party to remit
payment on a monthly basis of $6,000 per month or 12.5%
of the gross monthly sales collections from a specified
revenue source. These payments are required until a sum
of $580,000 has been paid. This amount was accrued upon
the consummation of the agreement. The amounts
outstanding at June 30, 2000 and 1999 are included in
other long-term liabilities.
11. PENSION PLAN The Company adopted a 401(k) retirement plan on March
9, 1998. The plan covers all employees who are at least
21 years of age with one or more years of service. The
Company currently makes a discretionary matching
contribution of 25% of the employee's contributions
elected as a salary deferral by eligible employees. The
Company's matching contributions for the years ended
June 30, 2000 and 1999 were $0 and $15,030,
respectively.
17
<PAGE>
RESULTS ORIENTED INTEGRATION CORPORATION
D/B/A ROI CORPORATION
NOTES TO FINANCIAL STATEMENTS
================================================================================
The Company also sponsors a defined contribution profit
sharing plan covering substantially all eligible
participants. Contributions are decided by the board of
directors each year, however, contributions cannot
exceed 15% of each eligible employee's salary.
Contributions were $0 and $23,000 for the years ended
June 30, 2000 and 1999, respectively.
12. SUBSEQUENT On August 10, 2000, the Company completed a merger with
EVENTS Net/Tech International ("Net/Tech"), a Delaware
corporation. For accounting purposes, the merger will
be treated as the merger of Net/Tech by ROI (reverse
acquisition). As such, in conjunction with the
acquisition, the historical financial statements of ROI
will replace the historical financial statements of
Net/Tech. Prior to the reverse acquisition, Net/Tech
was a public shell corporation with no significant
operations.
Immediately after the reverse merger, the company
entered into a private placement agreement whereby the
public company offered 2 million shares of its common
stock at a rate of $2.50 per share to private
investors. In accordance with the private placement the
company raised approximately $5 million dollars in
August 2000 to fund operations and to further expand
the company.
13. SUPPLEMENTAL 2000 1999
DISCLOSURE OF -------------------------------------------------------
CASH FLOW
INFORMATION Cash paid for interest during
the year $85,051 $57,943
18
