SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ to ___________________
Commission File No. 33-55254-19
VIANET TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Nevada 87-0434285
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
</TABLE>
83 Mercer Street, New York
New York 10012-4437
(Address of principal executive offices, zip code)
(212) 219-7680
(Registrant's telephone number, including area code)
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No __
There were 6,139,272 shares of the registrant's Common Stock, par value
$.001 per share, outstanding on May 14, 1999.
<PAGE>
VIANET TECHNOLOGIES, INC.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
Part 1 Financial Information
Item 1 Financial Statements
Balance Sheets of the Company (unaudited) at March 31, 1999 and December 31, 1998
3
Statement of Operations of the Company
(unaudited) for the three months ended March 31, 1999 and 1998 4
Statements of Cash Flows of the Company (unaudited) for the three months ended
March 31, 1999 and 1998
5
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3 Quantitative and Qualitative Disclosures About Market Risk 13
Item 6 Exhibits and Reports
Exhibit 11 - Calculation of Loss per Share 15
Exhibit 27 - Financial Data Schedule 16
Part 2 Legal and Capital Transactions 14
Signatures 14
</TABLE>
<PAGE>
VIANET TECHNOLOGIES, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
( U.S. Dollars, except share data)
(Unaudited)
March 31 December 31
1999 1998
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents ..................................... $ 115,725 $ 13,856
Marketable securities ......................................... 669,268 669,268
784,993 683,124
Loans due from Develcon Electronics Ltd ............................ 2,511,435 1,506,800
Accrued interest receivable ........................................ 96,490 65,375
Technology license, at cost less accumulated amortization of $28,125
405,000 427,500
$ 3,797,918 $ 2,682,799
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable .............................................. $ 353,853 $ 251,384
Convertible Demand Notes and loans payable..................... 410,000 2,909,272
Payable to Director of the Company ............................ 1,000 1,000
764,853 3,161,656
Shareholders' Equity:
Common shares, $0.01 par value,
100,000,000 shares authorized ................................
6,139,272 issued and outstanding at
March 31,1999(1998-350,000) .................................. 6,139 3,500
Series A Convertible preferred shares
(1998: authorized and issued - 250,000)........................ -- 1,000,000
Subsription receivable .......................................... (500) (990,500)
Share premium ................................................... 3,736,663 --
Retained deficit ................................................ (709,207) (491,857)
3,131,817 (478,857)
$ 3,797,918 $ 2,682,799
</TABLE>
<PAGE>
VIANET TECHNOLOGIES, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
(U.S. Dollars, except share data)
(Unaudited)
Three Months Ended March 31
1999 1998
STATEMENT OF OPERATIONS
Sales and other revenues:
<S> <C> <C>
Net sales ...................... $ -- $ --
Interest and other income ...... 34,900 --
34,900 --
Costs and expenses:
Cost of goods sold ............. -- --
General and administrative ..... 229,750 --
Amortization ................... 22,500 --
Net loss from operations for period . $(217,350) $ --
LOSS PER SHARE ...................... $ (0.49) $ 0.00
Weighted average number of shares and
common stock equivalents outstanding 440,890 350,000
</TABLE>
<PAGE>
VIANET TECHNOLOGIES,INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(Thousands of U.S. Dollars)
(Unaudited)
Three Months Ended March 31
1999 1998
Cash Flows From Operating Activities:
<S> <C> <C>
Net loss for period ................................... $ (217,350) $-
Adjustments to reconcile net loss to
net cash provided by operating activities:
Amortization of technology license ............... 22,500 --
Changes in operating assets and liabilities: .......... --
Interest receivable .............................. (31,115) --
Accounts payable and accrued liabilities ..... 102,469 --
Net cash (used in) operating activities ...... (123,496) --
Cash Flows From Investing Activities:
Loans to Develcon Electronics Limited ... (1,004,635) --
Net cash used in investing activities ........ (1,004,635) --
Cash Flows From Financing Activities:
Repayment of convertible notes payable .. (200,000) --
Proceeds from loans payable ............. 410,000 --
Proceeds from convertible notes payable . 30,000 --
Proceeds from subscription receivable ... 990,000 --
Net cash provided by financing activities .... 1,230,000 --
Net decrease in cash and cash equivalents .... 101,869 --
Cash and cash equivalents, beginning of period 13,856 --
Cash and cash equivalents, end of period ..... $ 115,725 $-
Supplemental cash flow information:
Cash paid for taxes ................................ $ 4,963 $-
Cash paid for interest ............................. $- $-
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
a.Basis of Presentation
The accompanying consolidated financial statements have been prepared by
the Company without audit in accordance with generally accepted accounting
principles for interim financial statements and with instructions to Form 10-Q
and Article 10 of Regulation S-X. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) considered necessary for a fair
presentation have been included.
The accompanying consolidated financial statements do not include certain
footnotes and financial presentations normally required under generally accepted
accounting principles and, therefore, should be read in conjunction with the
audited financial statements included in the Company's Form 10-KB as at December
31, 1998.
b. Foreign Currency Transactions
Gains and losses from foreign currency transactions are included in
selling, general and administrative expenses in the period in which they occur.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards ("SFAS") No.107, Disclosures
About Fair Value of Financial Instruments, requires disclosure of the fair value
of certain financial instruments for which it is practicable to estimate fair
value. For purposes of the disclosure requirements, the fair value of a
financial instrument is the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced sale or
liquidation. The carrying values of cash, marketable securities and accounts
payable are reasonable estimates of their fair value due to the short-term
maturity of underlying financial instruments. The carrying value of the
convertible demand notes payable are reasonable estimates of their fair value
since they were convertible into the Company's common stock at a price
equivalent to the conversion rights of the Company's Series A convertible
preferred shares.
Income Taxes
The Company accounts for income taxes under the asset and liability method
as required by SFAS No. 109, Accounting for Income Taxes. Under this method,
deferred tax assets and liabilities are determined based on the differences
between the financial reporting and income tax bases of assets and liabilities
and are measured using the enacted tax rates and laws expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Cash and Cash Equivalents
Cash and cash equivalents include cash held in banks and time deposits
having original maturities of three months or less.
Technology License
The technology license consists of purchased technology, amortized by the
straight-line method over a period of five years, the initial term of the
license agreement.
<PAGE>
Investment in Marketable Equity Securities
The Company accounts for its investments in equity securities that have
readily determinable fair values under the provisions of SFAS No. 115,
Accounting for Certain Investments in Debt and Equity Securities. Marketable
equity securities consist of shares of common stock and are stated at market
value. Management has identified the Company's marketable equity securities as
trading securities and, accordingly, unrealized gains and losses on such
securities are recorded in the statement of operations.
Subsequent to March 31, 1999, on various dates, the Company sold 65,000
shares of the approximately 83,000 shares it held at March 31, 1998 at an
average price in excess of its carrying value per share.
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.
Stock Option Plan
The Company accounted for stock options issued to employees in accordance
with SFAS No. 123, Accounting for Stock-Based Compensation, which permits
entities to continue to apply the provisions of Accounting Principles Board
("APB") Opinion No. 25 and provide pro forma net income disclosures for employee
stock option grants as if the fair value based method, as defined in SFAS No.
123, had been applied. The Company has elected to apply the provisions of APB
Opinion No. 25 and provide the pro forma disclosure required by SFAS No. 123.
Comprehensive Income
The Company reports and presents comprehensive income and its components in
accordance with SFAS No. 130, Reporting Comprehensive Income. SFAS No. 130.
requires only additional disclosures in the financial (SFAS) 128, "Earnings Per
Share" which requires presentation of both basic and statements; it does not
affect the Company's financial position or results of operations. For the period
from December 31, 1998 to March 31, 1999, there were no items of other
comprehensive income.
k. Net Loss Per Share
We follow the provisions of Statement of Financial Accounting Standards
diluted earnings per share (EPS) on the face of the statement of operations.
Basic EPS is computed using the weighted average number of common shares
outstanding during the period. The diluted EPS calculation assumes that all
stock options or contracts to issue common stock were exercised or converted
into common stock at the beginning of the period. We have excluded certain
common stock equivalents from our diluted EPS calculation during the quarters
ended March 31, 1999 and 1998 because the effect would have reduced our net loss
per share.
2. Acquisition of Develcon Electronics, Ltd.
On February 12, 1999 the Company entered into an Arrangement Agreement (the
"Arrangement") to acquire all the outstanding shares of Develcon. The
Arrangement has received the approval of the Supreme Court of British Columbia,
the Securityholders and Debentureholders of Develcon.
<PAGE>
The following information is summarized from Develcon's financial
statements as of and for the years ended August 31, 1998 and 1997:
<TABLE>
<CAPTION>
1997
(thousands of Canadian Dollars)
<S> <C> <C>
Total Assets $13,147 $15,545
Total Liabilities 13,348 11,055
Working Capital (Deficiency) (4,349) 5,042
Shareholders' Equity (Deficiency) (201) 4,490
Sales 19,158 18,907
Net Loss (4,773) (12,460)
</TABLE>
The Arrangement provides for Develcon shareholders to receive one share of
common stock of the Company for every 30.75 shares of Develcon. The Arrangement
also provides that the Develcon convertible notes payable will be converted into
5.9963 Develcon shares for each $1.00 principal amount of notes payable and that
interest which has been accrued on the convertible notes payable but not paid
shall be forgiven. These shares will also convert into Vianet shares in the
ratio of one share of the Company for every 30.75 shares of Develcon.
Additionally, effective upon closing, certain other creditors of Develcon have
agreed to either accept common stock of Vianet as payment for amounts or
portions of amounts owed to them and have restructured the repayment schedule.
In exchange for restructuring the repayment schedule of its debt, if such debt
has not been repaid by June 30, 1999, a lender of Develcon has been granted
warrants to purchase 150,000 shares of Vianet stock at the greater of $6.00 per
share or 90% of the price per share of an offering of no less than $2.5 million
completed between May 15, 1999 and June 30, 1999. The warrants become
exercisable over an approximate 24-month period and expire on June 30, 2002.
Upon completion of the Arrangement, defaults under long-term debt agreements are
expected to be cured.
On May 11, 1999, Develcon held its Annual and Special Meeting of
Shareholders, at which time the Securityholders and Debentureholders approved
the Arrangement. The Arrangement is expected to become effective on May 18,
1999.
As a result of the closing of the Arrangement, the former shareholders and
creditors of Develcon, excluding the Company, hold approximately 2.3 million
shares of the approximate 8.4 shares of common stock the Company has
outstanding.
3. Loans to Develcon
Loans to Develcon (the "Loans") at March 31, 1999 are comprised of:
<TABLE>
<CAPTION>
<S> <C> <C>
Convertible notes payable, due on demand,
with interest at Royal Bank of Canada
prime rate plus 2% $ 530,000
Notes payable, due on February 2004,
with interest at Royal Bank of Canada
prime rate plus 2% 990,718
Convertible notes payable of C$3,000,000,
Originally due on April 30, 1999, with interest at
10% per annum 990,717
----------
$ 2,511,435
---------
</TABLE>
<PAGE>
The loans were converted into common shares of Develcon contemporaneously
with Develcon becoming a wholly owned subsidiary of the Company. For the period
from December 31, 1998 to March 31, 1999 the Company recorded accrued interest
income of $31,125 in relation to these loans. The accrued interest was forgiven
and, together with the outstanding loan balances constitute a portion of the
purchase price of Develcon.
The acquisition will be accounted for as a purchase. The purchase price of
Develcon will be determined by the number of shares issued by the Company to
effect the acquisition and the amount of loans provided to Develcon.
4. SPS Technology License
The Company purchased a license for the SPS technology from NewCom
Technologies, Inc. (the "Licensor") for $450,000. The license entitles the
Company to use certain intellectual property rights. This "right to use"
includes any patents associated with the SPS technology along with the current
preferred embodiment of the patent. Royalty payments of 2.5% of Net Cash
Received, as defined in the license agreement, on products manufactured and
sold, licensed or services rendered by Vianet during the term of the license are
due to the licensor. The Company may, at its option, pay a one-time royalty fee
of $2.1 million at any time during the term. If such one time payment is made,
the license shall become perpetual and no further royalties will be due under
the license.
The license provides the Company with all the source code and documentation
required to allow the Company to integrate the technology into its products. The
license provides for quarterly updates from NewCom of the hardware/firmware for
the initial five year term of the agreement.
5. Related Party Transactions
Fees and Expenses
The Company accrued consulting fees aggregating approximately $11,000 to a
company owned by two shareholders who are also officers of the Company for
engineering and other services.
Convertible Demand Notes Payable
At December 31, 1998, the Company had convertible demand notes payable of
$2,909,272 to entities controlled by two officers and directors of the Company.
These borrowings were interest free. The convertible demand notes were
convertible into shares of common stock at a ratio of one share for every $1 of
principle amount. Of these notes $669,268 were contributed in exchange for
marketable securities and $1,355,000 was contributed in the form of loans
receivable from Develcon. In the period ended March 31, 1998, $200,000 was
repaid to one of the lenders and additional convertible demand notes of $30,000
were issued to two of the lenders.
On March 23, 1999, the notes payable were converted into common stock of
the Merged Company. Based upon the original exchange ratio of one common share
of Company common stock for every $1 of principal amount.
Other
During the period ended March 31, 1999 the Company borrowed $110,000 from a
company controlled by two officers of the Company. The loan is unsecured, bears
interest at 8% and is repayable on demand.
<PAGE>
6. Series A Convertible Preferred Stock
The authorized Series A convertible preferred stock of the Company consists
of 1,000,000 shares, of which 250,000 shares were issued and outstanding at
December 31, 1998. The Series A preferred stock was convertible into common
stock at a rate of four for one. Such shares were issued at $4.00 per share. Of
the issued and outstanding shares, 2,500 were fully paid at December 31, 1998.
The remaining subscription receivable outstanding, $990,000 was paid subsequent
to December 31, 1998.
On March 23, 1999 the Series A preferred stock was converted into common
stock. As a result, the Series A preferred shareholders received 1,000,000
shares of common stock of the merged company.
7. Merger with Vianet Technologies, Inc.
On March 16, 1999 the Company entered into a Merger Agreement with Vianet
Technologies, Inc.("Old Vianet"), a Delaware corporation, under the terms of
which the Company and Old Vianet merged through an exchange of shares (the
"Merger"). Subject to the terms and conditions of this Merger Agreement, on
March 23, 1999, the Company issued to the shareholders of Old Vianet, four
shares of fully paid and nonassessable shares of the Company's common stock,
$.001 par value ("Common Stock") per share in exchange for each share of Old
Vianet's outstanding common stock. The existing common shareholders of Old
Vianet received 1,400,000 shares of common stock of the Merged Company in
exchange for the 350,000 shares then outstanding. All shares of Old Vianet's
Series A Convertible Preferred Stock issued and outstanding immediately prior to
the Merger were deemed to have been converted into an aggregate of 250,000
shares of Old Vianet's common stock and the Series A Convertible Preferred
shareholders received 1 million shares of Common Stock of the Company. Further,
Old Vianet convertible demand notes payable holders received 2,709,272 shares of
Common Stock.For accounting purposes, Old Vianet was considered to be the
acquiror in a reverse acquisition accounted for as a purchase.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1999
This quarterly report on Form 10-Q contains forward-looking statements that
are subject to risks and uncertainties which could cause actual results to
differ materially from those expressed or implied in the statements.
Forward-looking statements (including oral representations) are statements about
future performance or results, and include any statements using the words
"believe", "expect", "anticipate" or similar words. All forward-looking
statements are only predictions or statements of current plans, which we are
constantly reviewing. All forward-looking statements may differ from actual
future results due to, but not limited to, changes in the local and overall
economy, the nature and pace of technological changes, the number and
effectiveness of competitors in the Company's markets, success in overall
strategy, changes in legal and regulatory policy, relations with ILECs and their
ability to provide delivery of services including interoffice trunking,
implementation of back office service delivery systems, the Company's ability to
identify future markets and successfully expand existing ones and the mix of
products and services offered in the Company's target markets. You should
consider these important factors in evaluating any statement contained in this
report and/or made by us or on our behalf. We have no obligation to update or
revise forward-looking statements.
The following information has not been audited. You should read this
information in conjunction with the condensed financial statements and related
notes to financial statements included in this report. In addition, please see
our Management Discussion and Analysis of Financial Condition and Results of
Operations, audited financial statements and related notes included in our
Annual Report on Form 10-K for the year ended December 31, 1998. Vianet
Technologies, Inc. is referred to as "we", "us" or "our" in this report.
Results of Operations
The Company is transitioning through a period of completing transactions.
The costs and other effects of these programs and activities are adversely
impacting current results for intended benefits of improving revenues, operating
performance and financial results in future reporting periods.No comparison for
the period for the three months ended March 31, 1998 is made since the Company
had not commenced operations at that time.
Net sales and other revenues
The Company had no net sales for the three months ended March 31, 1999.
Other revenues consisted of interest on cash deposits ($3,785)and $31,105 of
accrued interest on the Company's loans to Develcon Electronics Ltd.
Gross profit
The Companys' cost of sales was nil since there were no sales.
General and administrative
General and administrative expenses amounted to $229,750 comprised primarly
of legal and professional fees ($146,763) relating to the acquisition of
Develcon and investor relations expenses ($31,720). These expenses are expected
to reduce significantly in the second quarter after the Develcon acquisition is
completed.
Amortization
Amortization amounted to $22,500 and represents the amortization of the
Company's SPS Technology License ($450,000) over five years.
<PAGE>
Significant Transactions
Merger with Vianet Technologies, Inc.
On March 16, 1999 the Company entered into a Merger Agreement with Vianet
Technologies, Inc.("Old Vianet"), a Delaware corporation, under the terms of
which the Company and Old Vianet merged through an exchange of shares (the
"Merger"). Subject to the terms and conditions of this Merger Agreement, on
March 23, 1999, the Company issued to the shareholders of Old Vianet, four
shares of fully paid and nonassessable shares of the Company's common stock,
$.001 par value ("Common Stock") per share in exchange for each share of Old
Vianet's outstanding common stock. The existing common shareholders of Old
Vianet received 1,400,000 shares of common stock of the Merged Company in
exchange for the 350,000 shares then outstanding. All shares of Old Vianet's
Series A Convertible Preferred Stock issued and outstanding immediately prior to
the Merger were deemed to have been converted into an aggregate of 250,000
shares of Old Vianet's common stock and the Series A Convertible Preferred
shareholders received 1 million shares of Common Stock of the Company. Further,
Old Vianet convertible demand notes payable holders received 2,709,272 shares of
Common Stock.For accounting purposes, Old Vianet was considered to be the
acquiror in a reverse acquisition accounted for as a purchase.
Acquisition of Develcon Electronics, Ltd.
On May 11, 1999 the shareholders and convertible debenture ballots approved
the Plan of Arrangement under which Develcon was acquired by the Company. The
acquisition will be accomplished through a merger of Develcon with a wholly
owned subsidiary of Vianet, with a planned closing of the transaction on May 18,
1999 (the "Closing"). The Company intends to file a Form 8 - K relating to the
acquisition of Develcon within fifteen days of the Closing.
Year 2000
The Year 2000 (Y2K) issue is the result computer programs, microprocessors
and date reliant systems that may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculation causing disruption in business operations.
In an effort to assess our Y2K state of readiness we performed a complete
inventory assessment and test of all of our internal systems and external
interfaces. All of our financial, message processing and office support systems
are currently Year 2000 compliant. The Company has communicated with all of its
major customers and suppliers to determine the extent to which the Company's
interface systems are vulnerable to any failure by third parties to upgrade
their own software. The Company believes that its customers and suppliers are
addressing the issues and will timely adjust their systems. If such
modifications are not made by customers or suppliers, or are not completed in a
timely manner, the Company's operations will not be affected.
LIQUIDITY AND CAPITAL RESOURCES
The Company is considering several financing alternatives to fund its
medium and longer-term financing requirements, including anticipated accounts
receivable and inventory requirements and future R&D needs. While the Company
has, in the past, been able to maintain access to adequate external financing
sources on acceptable terms, no assurances can be given that such access will
continue. If the Company is unable to obtain short-term and long-term funding on
acceptable terms from existing financing sources or through secure new sources,
the Company's ongoing operations could be adversely impacted.
ADDITIONAL FACTORS THAT MAY EFFECT RESULTS
Future operating results may be impacted by a number of factors, including
worldwide economic and political conditions, industry specific factors, the
Company's ability to maintain access to external financing sources and its
financial liquidity, the Company's ability to timely develop and produce
commercially viable products at competitive prices, the availability and cost of
components, the Company's ability to manage expense levels, the continued
financial strength of the Company's dealers and distributors, and the Company's
ability to accurately anticipate customer demand.
<PAGE>
The Company's future success is highly dependent upon its ability to
develop, produce and market products that incorporate new technology, are priced
competitively and achieve significant market acceptance. There can be no
assurance that the Company's products will be commercially successful or
technically advanced due to the rapid improvements in information technology and
resulting product obsolescence. There is also no assurance that the Company will
be able to deliver commercial quantities of new products in a timely manner. The
success of new product introductions is dependent on a number of factors,
including market acceptance, the Company's ability to manage risks associated
with product transitions, the effective management of inventory levels in line
with anticipated product demand and the timely manufacturing of products in
appropriate quantities to meet anticipated demand. The Company competes with
established equipment manufacturers with greater financial resources and more
developed channels of distribution. No assurances can be given that the Company
will be successful in competing in this environment.
Item 3. Quantative and Qualitative Disclosures About Market Risk
We are subject to foreign currency exchange rate risk relating to receipts
from customers, payments to suppliers. We do not consider the market risk
exposure relating to foreign exchange to be material.
We do not have financial instruments which are subject to interest rate
risk and accordingly our exposure to interest rate risk is not material
Item 6. Exhibits and Reports
(a) Exhibits.
11 - Calculation of Earnings Per Share
27 - Financial Data Schedule
(b) Reports on Form 8-K:
On March 23, 1999, the Company filed a report on Form 8-K
reporting the merger with Vianet Technologies, Inc.
Part 2. Legal and Capital Transactions.
The Company is not party to any legal proceedings or changes in capital
structure.
<PAGE>
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.
VIANET TECHNOLOGIES, INC.
(Registrant)
Date: May 14, 1999 /s/ PETER G. LEIGHTON
Peter G. Leighton
President and Chief Executive Officer
EXHIBIT 11
VIANET TECHNOLOGIES, INC.
CALCULATION OF LOSS PER SHARE
<TABLE>
<CAPTION>
Three months ended Three months ended
March 31 March 31
1999 1998
Primary and Fully Diluted Loss Per Share
<S> <C> <C>
Shares in issue beginning of period ............... 350,000 350,000
Shares issued (weighted average) .................. 90,890 --
Weighted average shares in issue end of period --------- --------
440,890 350,000
Dilutive Common Stock Equivalents
(weighted average)(1) ............................. -- --
Other stock options using treasury stock method (1) -- --
--------- --------
Total weighted average common shares and
common stock equivalents(1) ....................... 440,890 350,000
--------- --------
Loss for period (U.S. Dollars) .................... $(217,350) $-
--------- --------
Loss per share (1) ............................... $ (0.49) $ 0.00
--------- --------
</TABLE>
(1) Note: Potentially dilutive common stock equivalents and other options
totalling 1,300,000 at March 31, 1999 have been excluded from the computation of
diluted net loss per common share because they are anti-diutive for the period
presented.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
VIANET TECHNOLOGIES, INC.
FINANCIAL DATA SCHEDULE
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> dec-31-1999
<PERIOD-END> mar-31-1999
<CASH> 116
<SECURITIES> 669
<RECEIVABLES> 2,607
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,798
<CURRENT-LIABILITIES> 765
<BONDS> 0
0
0
<COMMON> 3,742
<OTHER-SE> (709)
<TOTAL-LIABILITY-AND-EQUITY> 3,132
<SALES> 0
<TOTAL-REVENUES> 35
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 21
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (217)
<INCOME-TAX> 0
<INCOME-CONTINUING> (217)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (217)
<EPS-PRIMARY> (0.49)
<EPS-DILUTED> (0.49)
</TABLE>
