SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________________ to _______________________
Commission file number 0-25276
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QUIKBIZ INTERNET GROUP, INC.
- --------------------------------------------------------------------------------
Exact name of small business issuer as specified in its charter
Nevada 88-0320364
------ ----------
(State or other jurisdiction I.R.S. Employer Identification No.
of incorporation)
5310 NW 33rd Drive, Suite 212, Ft. Lauderdale, FL 33309
-------------------------------------------------------
(Address of principal executive offices and Zip code)
(954) 739-7005
--------------
(Issuer's telephone number, including area code)
ALGORHYTHM TECHNOLOGIES CORPORATION
-----------------------------------
(Former name, former address and former fiscal year, if changed since last
report
Securities registered under Section 12(b) of the Exchange Act:
Title of each class Name of each exchange on which registered
_________________________________ _________________________________________
_________________________________ _________________________________________
Securities registered under Section 12(g) of the Exchange Act:
Common Stock
---------------------------------------------------------------
(Title of class)
---------------------------------------------------------------
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
<PAGE>
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ] State issuer's revenues for its most
recent fiscal year. $140,355.00
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. As of May 29, 1998 the value of the
voting common equity held by non-affiliates was $515,600.
Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.
(ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS)
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by Court. Yes No
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: May 29, 19987: 12,535,240 shares of
common stock.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe them
and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The list
documents should be clearly described for identification purposes (e.g., annual
report to security holders for fiscal year ended December 24, 1990).
Transitional Small Business Disclosure Format (check one): Yes No [x]
<PAGE>
PART I
Item 1. Description of Business.
QuikBIZ Internet Group, Inc. (the "Company") is a Nevada corporation.
It was originally incorporated in 1984 in Utah under the name Sunwest Industries
Inc. In 1994 the Company was merged with International Training Education Corp.
("ITEC") changing its name to ITEC and reincorporating in Nevada. In 1996 the
Company changed its name to DigiMedia USA, Inc. In May 1997 the Company merged
with Nitros Franchise Corporation ("Nitros") and changed its name to Nitros.
Thereafter in July 1997 the Company changed its name to Algorhythm Technologies
Corporation. In July 1998 the Company changed its name to QuikBIZ Internet
Group, Inc.
As a result of the Company's merger with Nitros Franchise Corporation
in May 1997 and the change in management that accompanied the merger, the
Company changed its business, by focusing on internet related businesses and by
becoming a holding company. The Company phased out its prior business, which at
that time consisted of its CD ROM training division.
During the balance of 1997 the Company implemented its new business
strategy by acquiring, in November, A.D.S. Advertising Corp. d/b/a The Smith
Agency of Ft. Lauderdale, FL, a fully integrated marketing and advertising
company, specializing in electronic media including internet web sites.
Subsequent to the end of 1997, in April 1998, the Company's subsidiary,
Capital Network of America Corp., a company that will be offering financial
advisory services, commenced operations.
The Company's subsidiaries are as follows:
The Smith Agency
- ----------------
The Smith Agency has been in business since 1983 and was founded by its
President Andrew Smith, who is also the President of the Company. It is a fully
integrated marketing and advertising firm providing its clients with a range of
services including: website design, television commercials, radio commercials,
all aspect of print advertisement and production, public relations and
promotions.
In 1997 86% of its revenue was derived from five clients who were
either on retainer or who had contracted for services billed on an hourly basis.
Included among the five clients were St. Joseph's/Candler Health System which
accounted for 28% of revenue and St. Patrick Hospital which accounted for 20% of
revenue. The balance of revenue was derived from services provided on individual
projects. The Smith Agency is continuing its relationship with four of the five
clients in 1998, the only exception being St. Patrick which has been replaced by
Hopey The Hound Dog which will account for approximately 10% of revenue in 1998.
It is expected that these five clients will provide 90% of the revenue in 1998.
The agreements with these five clients can be terminated at any time.
The Smith Agency has a working cash management account (WCMA) with
Merrill Lynch, providing it with a revolving line of credit of up to $100,000.
At the end of 1997 $95,081.55 of the $100,000 was used. The interest on the line
of credit is one percent (1%) above prime.
In 1996 The Smith Agency had revenue of $1,491,000 and in 1997 revenue
increased to $1,645,554. Based upon previous experience, though there is no
assurance, it is expected that revenue will increase in 1998.
Capital Network of America Corp.
- -------------------------------
In April 1998, the Company's subsidiary, Capital Network of America
Corp. ("Capital") commenced operations, offering financial advisory services.
Capital will provide clients, who are expected to be small and middle market
companies (up to $20,000,000 in revenue), with among other services, assistance
in obtaining financing, including private financing over the internet.
<PAGE>
The officers of Capital have agreed to pay its expenses for a period of
up to one year and to defer their salaries until such time as Capital has
revenue to meet these obligations. To date the officers have contributed
approximately $9,000.00 toward expenses and each officer (there are 3 officers)
has deferred approximately $25,000.00 in salary.
Nitros Franchise Corporation
- ----------------------------
Nitros Franchise Corporation ("Nitros") is not presently in operation.
Its plan is to develop eateries that will feature home made ice cream and will
have web TV at each table enabling patrons to explore the world wide web through
the internet.
Nitros's development and implementation of its business is dependent
upon the raising of sufficient capital. There is no assurance if any capital
will be raised or if obtained that it will be sufficient capital or when such
capital will be obtained.
Competition
- -----------
The Company's subsidiaries are subject to competition from companies
and individuals providing similar services. Many of these competitors have far
greater resources, including capital and employees, and many have greater and/or
more influence with potential clients. However, the Company believes, though
there is no assurance, that its subsidiaries will be able to maintain and/or
establish their niche in the market place due to the experience of its
subsidiaries' management, although they will continue to and/or will experience
significant competition from other firms and/or individuals who are better
established and have greater financial resources.
Employees
- ---------
The Company has no employees. All personnel are employed by the
Company's subsidiaries. At the present time The Smith Agency has eight employees
and Capital Network of America Corp. has three employees, its officers.
Forward Looking Statements
- --------------------------
The matters discussed in this Item except for historical information
are forward looking statements that are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
statements are dependent on a number of risks and uncertainties that could cause
actual results to differ materially from those in the forward looking
statements. These risks and uncertainties include, the impact of competitive
services, changes in market and/or economic conditions, loss of clients,
inadequacy of funds on hand or access thereto. The Company does not intend to
provide updated information about the matters referred to in these forward
looking statements, other than in the context of future quarterly and annual
reports.
Item 2. Properties.
The Company's executive offices are located at 5310 NW 33rd Avenue,
Suite 212, Ft. Lauderdale, FL. The offices are leased by and are the offices of
the Company's wholly owned subsidiary, A.D.S. Advertising Corp. d/b/a The Smith
Agency and consist of approximately 2,476 square feet. The present monthly rent
is $3,098.74 which consists of rent $1,770.34, building maintenance $1,153.00,
and sales tax $175.40. The lease expires on January 31, 2001.
The Company's subsidiary, Capital Network of America Corp. is
subleasing space, on a month to month basis, from Festus Stacy Foundation, 6550
North Federal Highway, suite 250, Ft. Lauderdale, FL. The rent is $535.00 per
month. Douglas A. Stepelton, an officer and director of Capital Network of
America Corp. is the Trustee of Festus Stacy Foundation.
<PAGE>
Item 3. Legal Proceedings.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The Company's common stock is traded primarily on the NON-NASDAQ OTC
("Pink Sheets") and also on the NASDAQ OTC Bulletin Board. The following table
sets forth the high and low bid prices of the Company's common stock for each
quarter for the years 1996 and 1997 and the first quarter of 1998 through March
26, 1998. As of June 26, 1998 there were 420 holders of record of the Company's
common stock. The Company has not paid any dividends during the past two years.
The information was obtained from the National Quotation Bureau. The
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.
Common Stock:
Year High Low
- ---- ---- ---
1996
First Quarter .59375 .15625
Second Quarter 1.25 .25
Third Quarter .9375 .3125
Fourth Quarter .625 .28125
1997
First Quarter .32 .15
Second Quarter (Apr. 1 thru May 13) .14 .125
Second Quarter (May 14 thru June 30) 1.375 .875
(after a 1 for 7 Reverse split)
Third Quarter .875 .25
Fourth Quarter .21875 .125
1998
Jan. 2 thru Mar. 26 .16 .09375
November and December 1997 the Company issued 400,000 shares at $.10 per share
pursuant to Rule 506 of Regulation D and Section 4(2) of the Securities Act of
1933, as amended (the "Act").
October 1997 issued 20,000 shares in consideration of the waiving of any right
that an individual may have had to the return of $5,000.00 paid to the Company
for services to be performed by the Company. The shares were issued pursuant to
Sec. 4(2) of the Act.
September 1997 issued 518,955 shares at $.25 per share pursuant to Sec. 4(2) of
the Act. (see Certain Relationships and Related Transactions).
June 1997 issued 288,153 shares for consulting services, pursuant to
Sec. 4(2) of the Act. (see Certain Relationships and Related Transactions).
May 1997 issued 57,142 shares for consulting services pursuant to
Sec. 4(2) of the Act.
<PAGE>
Item 6. Management's Discussion and Analysis or Plan of Operation.
Results of Operations
- ---------------------
For the year ended December 31, 1997 the Company had sales of $140,355
as against sales of $25,905 for the year ended December 31, 1996 and $50,345 for
the year ended December 31, 1995. The sales for 1997 were solely attributable to
the Company's subsidiary, The Smith Agency, which the Company acquired in
November 1997 and was the only revenue that the Company had from operations in
1997. In 1997 the Company had general and administrative expenses of $105,818 as
against $72,587 in 1996 and $60,238 in 1995. The increase was attributable to
the acquisition of The Smith Agency.
In 1997 the Company had a gross profit of $13,652 as against none in
1996 and 1995, again this was attributable to the Company's subsidiary.
Liquidity and Capital Resources
- -------------------------------
The Company's cash on hand at the end of 1997 was $40,498 as against
$32,079 in 1996 and $105.00 in 1995. The increase in the cash on hand at the end
of 1997 over 1996 was a result of the Company raising $40,000 in a private
placement of its securities in November and December 1997.
Accounts receivable of $92,016 as of the end of 1997 was attributable
to The Smith Agency. As was the outstanding line of credit of $95,082. The
increase of the accounts payable to $246,074 in 1997 as against none in 1996 and
$26,675 in 1995 was attributable to the acquisition of The Smith Agency and the
note payable of $225,000 was attributable to the acquistion of the rights to the
Nitros Franchise theme restaurant concept.
As a result of the Company's merger with Nitros Franchise Corporation
in May 1997 and the change in management that accompanied the merger, the
Company changed its business, by focusing on internet related businesses and by
becoming a holding company. The Company phased out its prior business, which at
that time consisted of its CD ROM training division.
Management anticipates that The Smith Agency will be able to meet its
financial requirements from its operations in 1998. In regard to the Company's
financial obligations, it is anticipated that the Company will have to seek to
raise capital. There is no assurance if any capital will be raised or if
obtained that it will be sufficient or when such capital will be obtained.
Similarly, the development and implementation of the Company's subsidiary,
Nitros Franchise Corporation's business is dependent upon the raising of
sufficient capital. There is no assurance if any capital will be raised or if
obtained that it will be sufficient or when such capital will be obtained. In
addition, Management will be seeking to make acquisitions, which due to the
Company's cash position at the present time, would have to be acquired through
an exchange of stock.
In April 1998, the Company's subsidiary, Capital Network of America
commenced operations. During the first year of operations, the officers of the
subsidiary have agreed to pay the expenses until there is sufficient revenue
produced by the subsidiary, for a period of not more then one year. The officers
have also agreed not to take any salaries until the subsidiary has revenue. The
salaries will be accrued. This arrangement is part of Management's plan to have
the Company's subsidiaries be self sufficient and to be responsible for their
financial obligations.
<PAGE>
Item 7. Financial Statements.
<TABLE>
<CAPTION>
QuickBIZ Internet Group, Inc.
(Formerly known as Algorhytm Technologies Corporation)
Consolidated Balance Sheet as of December 31, 1997
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
CURRENT ASSETS:
Cash 40,498 32,079 108
A/R 92,018 - 54,256
Other Receivable 151,167 21,428
TOTAL CURRENT ASSETS 283,683 53,507 54,364
FIXED ASSETS:
Net Property & Equipment 12,291 835 92,016
Copyright 32,236 32,236 32,236
Accum Amort (6,447) (4,298) (2,149)
TOTAL FIXED ASSETS 38,080 28,773 122,103
OTHER ASSETS
Organizational Cost 52,668 52,668 52,668
Accum Amort (31,602) (21,068) (10,534)
Security Deposits 5,761 1,075 1,075
Goodwill 218,326
Franchise Rights(Nitros) 225,000
Other Investments 21,595
TOTAL OTHER ASSETS 491,748 32,675 43,209
TOTAL ASSETS 813,511 114,955 219,676
----------- ----------- ------------
LIABILITIES
Accounts Payable 246,074 - 26,675
Note Payable 225,000 16,667 16,667
Accrued Expenses 34,261 - 63,222
Notes payable off. - 16,607
Line of Credit 95,082 - -
TOTAL LIABILITIES 600,417 16,667 123,171
SHAREHOLDERS' EQUITY:
Convertible Preferred Stock, $.001 par value
12% Cumulative,Authorized 3,000 Shares
Issued and Outstanding 441,441,597 17,248 17,248 23,348
Common Stock, $.002 par value
Authorized 25,000,000 Shares
Issued and Outstanding
10,766,439, 1,722,322, 985,402 21,533 3,445 1,971
Additional Paid in Capital 1,706,549 1,496,676 1,316,632
Retained Earnings (1,532,236) (1,419,081) (1,245,446)
TOTAL EQUITY 213,094 98,288 96,505
TOTAL LIABILITIES & EQUITY 813,511 114,955 219,676
----------- ----------- ------------
</TABLE>
See Accountants' Audit Report and Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
QuickBIZ Internet Group, Inc.
(Formerly known as Algorhytm Technologies Corporation)
Consolidated Income Statement as of December 31, 1997
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Revenue:
Sales 140,355 25,905 50,345
Cancelled Sales - (57,400) -
Misc Income - - 698
Total Revenue 140,355 (31,495) 51,043
Cost of Goods Sold 126,703 0 -
Gross Profit 13,652
Expenses:
Research & Development 19,381 52,816 24,295
Marketing 13,659 4,720
General & Administrative 105,818 72,587 60,238
Total Operating Expenses 125,199 139,062 89,253
Loss from Operations (111,547) (170,557) (38,210)
Loss on Disposition 0 (3,078) -
Interest 1,608 0 -
Loss on Deposit 0 0 -
Net Loss (113,155) (173,635) (38,210)
Net Loss applicable to Common Stock (113,155) (173,635) (38,210)
Net Loss Per Share (0.02) (0.20) (0.05)
Weighted Average Common
Shares Outstanding 5,477,322 850,870 718,747
</TABLE>
See Accountants' Audit Report and Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
QuickBIZ Internet Group, Inc.
(Formerly known as Algorhytm Technologies Corporation)
Consolidated Statement of Stockholders' Equity
Common Stock Amount Preffered Stock Amount Additional Deficit Accumulated
Shares Shares Paid-in ------- Total
------------ ------ --------------- ------ Capital Shareholders'
---------- Equity
-------------
<S> <C> <C> <C> <C> <C> <C> <C>
Bal. Nov.12, 1991 4,023,039 300 0 0 0 0 300
Net Loss from Inception
to Dec.31, 1991 (3,998) (3,998)
Bal. Dec.31, 1991 4,023,039 300 (3,998) (3,698)
Net Loss for the Year (20,038) (20,038)
Bal. Dec.31, 1992 4,023,039 300 (24,036) (23,736)
Net Loss for the Year (9,246) (9,246)
Bal. Dec. 31,1993 4,023,039 300 (33,282) (32,982)
Issuance of Pref Stock 968 1 1
Issuance of Common 1,008,188 78 965,412 965,490
Pref Dividend 37,860 37,860
Net Loss for the Year (1,173,954) (1,173,954)
Bal. Dec.31, 1994 5,031,227 3,370 968 37,861 962,420 (1,207,236) (203,585)
Issuance of Common 1,736,737 1,163 337,077 338,240
Conversion of Pref 129,850 87 (371) (14,513) 14,486 60
Net Loss for the Year (38,210) (38,210)
Bal. Dec.31, 1995 6,897,814 4,620 597 23,348 1,313,983 (1,245,446) 96,505
Issuance of Common 4,503,811 3,420 171,973 175,393
Conversion of Pref 54,600 37 (156) (6,100) 6,088 25
Net Loss for the Year (173,635) (173,635)
Bal. Dec.31, 1996 12,056,225 8,077 441 17,248 1,492,044 (1,419,081) 98,288
Adj Reverse split 7:1 1,722,322 (4,632) 28,961 24,329
(Common Par Value (.002)
Issuance of Common 6,744,117 13,488 185,544 199,032
Acquistion 2,300,000 4,600 4,600
Net Loss for the Year (113,155) (113,155)
Bal. Dec.31, 1997 10,766,439 21,533 441 17,248 1,706,549 (1,532,236) 213,094
</TABLE>
See Accountants' Audit Report and Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
QuickBIZ Internet Group, Inc.
(Formerly known as Algorhytm Technologies Corporation)
Consolidated Statement of Cash Flows
12/31/97 12/31/96 12/31/95
-------- -------- --------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income (113,155) (173,635) (38,210)
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 13,153 49,168 38,382
(Increase) Decrease in Accounts Receivable (92,018) 54,256 (53,906)
(Increase) Decrease in Prepaid Expenses 9,410
(Increase) Decrease in Other Assets (599,346) (21,428) 11,918
Increase (Decrease) in Accounts Payable 246,074 (26,675) (10,325)
Increase (Decrease) in Other Liabilities 259,261 (79,829) (430,294)
Total Adjustments (172,876) (24,508) (434,815)
Net Cash Provided (Used) By Operating Activities (286,031) (198,143) (473,025)
Cash Flows from Investing Activities:
Acquisition of Smith Agency (11,926)
Release from Debt for Property 54,695 223,093
Deferred Organization Costs (50,000)
Net Cash Provided (Used) By Investing Activities (11,926) 54,695 173,093
Cash Flows from Financing Activities:
Proceeds from Issuance of Stock 227,961 175,419 338,300
Increase (Decrease) in Long Term Liabilities 78,415 (36,286)
Net Cash Provided (Used) by Financing Activities 306,376 175,419 302,014
Net Increase (Decrease) in Cash 8,419 31,971 2,082
Cash at Beginning of Period 32,079 108 (1,974)
Cash at End of Period 40,498 32,079 108
</TABLE>
See Accountants' Audit Report and Notes to Financial Statements
<PAGE>
NOTE 1 - BACKGROUND
QuikBIZ Internet group, Inc. (the "Company") is a Nevada corporation. It was
originally incorporated in 1984 in Utah under the name Sunwest Industries, Inc.
In 1994 the company was merged with International Training Education Corp.
("ITEC") changing its name to ITEC and reincorporating in Nevada. In 1996 the
Company changed its name to DigiMedia USA, Inc. In May 1997 the Company merged
with Nitros Franchise Corporation ("Nitros") and changed its name to Nitros.
Thereafter in July 1998 the Company changed its name to QuikBIZ Internet Group,
Inc.
As a result of the Company's merger with Nitros Franchise Corporation in May
1997 and the change in management that accompanied the merger, the Company
changed its business, by focusing on internet related businesses and by becoming
a holding company. The Company phased out its prior business, which at that time
consisted of its CD ROM training division.
During the balance of 1997 the Company implemented its new business strategy by
acquiring, in November, A.D.S. advertising Corp. d/b/a The Smith Agency of Ft.
Lauderdale, FL, a fully integrated marketing and advertising company,
specializing in electronic media including internet web sites.
Subsequent to the end of 1997, in April 1998, the company's subsidiary, Capital
Network of America, Corp., a company that will be offering financial advisory
services, commenced operations.
The Company's subsidiaries are as follows:
The Smith Agency
- ----------------
The smith agency has been in business since 1983 by its President Andrew Smith,
who is also the President of the Company. It is a fully integrated marketing and
advertising firm providing its clients with a range of services including:
website design, television commercials, radio commercials, all aspect of print
advertisement and production, public relations and promotions.
In 1997 86% of its revenue was derived from five clients who were either on
retainer or who had contracted for services billed on an hourly basis. Included
among the five clients were St. Joseph's/Candler Health System which accounted
for 28% of revenue and St. Patrick Hospital which accounted for 20% of revenue.
The balance of revenue was derived from services provided on individual
projects. The Smith Agency is continuing its relationship with four of the five
clients in 1998, the only exception being St. Patrick which has been replaced by
Hopey the Hound Dog which will account for approximately 10% of revenue in 1998.
It is expected that these five clients will provide 90% of the revenue in 1998.
The agreements with these five clients can be terminated at any time.
<PAGE>
The Smith agency has a working cash management account (WCMA) with Merrill
Lynch, providing it with a revolving line of credit of up to $100,000. At the
end of 1997 $95,081.55 of the $100,000 was used. The interest on the line of
credit is one percent (1%) above prime.
In 1996 The Smith Agency had revenue of $1,491,000 and in 1997 revenue increased
to $1,645,554. Based upon previous experience, though there is no assurance, it
is expected that revenue will increase in 1998.
Capital Network of America Corp.
- -------------------------------
In April 1998, the Company's subsidiary, Capital Network of America, Corp.
("Capital") commenced operations, offering financial advisory services. Capital
will provide clients, who are expected to be small and middle market companies
(up to $20,000,000 in revenue), with among other services, assistance in
obtaining financing, including private financing over the internet.
The officers of Capital have agreed to pay its expenses for a period of up to
one year and to defer their salaries until such time as Capital has revenue to
meet these obligations. To date the officers have contributed approximately
$9,000.00 toward expenses and each officer (there are 3 officers) has deferred
approximately $25,000.00 in salary.
Nitros Franchise Corporation
- ----------------------------
Nitros Franchise Corporation ("Nitros") is not presently in operation. Its plan
is to develop eateries that will feature home made ice cream and will have web
TV at each table enabling patrons to explore the world wide web through the
internet.
Nitros' development and implementation of its business is dependent upon the
raising of sufficient capital. There is no assurance if any capital will be
raised or if obtained that it will be sufficient capital or when such capital
will be obtained.
Competition
- -----------
The Company's subsidiaries are subject to competition from companies and
individuals providing similar services. Many of these competitors have far
greater resources, including capital and employees, and many have greater and/or
more influence with potential clients. However, the Company believes, though
there is no assurance that its subsidiaries will be able to maintain and/or
establish there niche in the market place due to the experience of its
subsidiaries management, although they will continue to and/or will experience
significant competition from other firms and/or individuals who are better
established and have greater financial resources.
Employees
- ---------
The company has no employees. All personnel are employed by the Company's
subsidiaries. At the present time The Smith Agency has eight employees and
Capital Network of America Corp. has three employees, its officers.
Forward Looking Statements
- --------------------------
The matters discuss this Item except for historical information are forward
looking statements that are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These statements are dependent
on a number of risks and uncertainties that could cause actual results to differ
materially from those in the forward looking statements. These risks and
uncertainties include, the impact of competitive services, changes in market
and/or economic conditions, loss of clients, inadequacy of funds on hand or
access thereto. The Company does not intend to provide updated information about
the matters referred to in these forward looking statements, other that in the
context of future quarterly and annual reports.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
- -------------------
Revenue from contracts are recognized at the time the products are delivered and
services are rendered and accepted by the customer. Prospective losses on
contracts and provided for when they become known.
Property and Depreciation
- -------------------------
Property and equipment are recorded at cost. Depreciation is provided for using
the straight-line method over the estimated useful life of the assets which
range from five to seven years. Expenditures for maintenance and repairs are
charged to income as incurred. Major expenditures for betterments and renewals
are capitalized. The carrying amounts of assets sold or retired and related
accumulated depreciation are eliminated in the year of disposal and the
resulting gains and losses are included in income.
Loss Per Share
- --------------
Loss per share is calculated by dividing net loss by the weighted average Common
shares outstanding during each period. Common stock equivalents are not included
as their effect is anti-dilutive.
Income Taxes
- ------------
Certain income and expense items are accounted for differently for financial
reporting purposes and for income tax purposes. Deferred taxes in recognition of
timing differences are not reflected in the financial statements as the Company
has operating loss carry forwards.
<PAGE>
In February 1992, the Financial Accounting Standards Board adopted Statements of
Financial Accounting Standards No. 109, "Accounting for income Taxes", which
supersedes SFAS No. 96. The company has adopted this pronouncement in its
financial statements for the period ended December 31, 1997.
Statements of Cash Flows
- ------------------------
For purposes of the statements of cash flows, the Company generally considers
all highly liquid securities with a maturity or redemption option of three
months or less, to be cash equivalents. The Company has not paid any income
taxes due to losses in each year.
NOTE 3 - LONG-TERM DEBT
The Company has no long term debt. The Company issued 25,000 common shares as
consideration to rescind a 12% per annum subordinated note in the amount of
$16,667 payable to one investor.
NOTE 4 - CAPITAL STOCK
In February 1996, in conjunction with the name of the Company being changed to
DigiMedia USA, Inc., the Articles of Incorporation were amended to increase the
authorized shares of Common Stock to 75,000,000 shares. In May 1997 in
conjunction with the merger with and name change to Nitros Franchise Corp., the
Articles of Incorporation were amended to decrease the authorized shares of
Common Stock to 25,000,000 with a par value of $.002.
In May 1994, the Company offered in a private placement 300 units each
consisting of (i) 10 shares of Preferred Stock, (ii) 2,874 shares of Common
Stock, and (iii) 5 Warrants, each of which entitles the holder, for a period of
two years from the initial issuance date, to purchase 575 shares of Common Stock
at a price of $1.50 per share.
The Preferred Stock calls for the payment of a cumulative dividend at the rate
of $120 per share per annum, when and as declared by the Board of Directors,
payable quarterly. Each share of Preferred is convertible into 287 shares of
Common Stock ($3.52 per share). The Preferred is redeemable in whole or in part,
at the option of the holder, at a price of $1,000 per share plus accrued
cumulative dividends 30 days after the completion of a successful initial public
offering of the Company's securities, should this occur. The Preferred is also
callable at the option of the Company. The holders are entitled to preference in
liquidation over holders of Common Stock at $1,000 per share plus accrued
dividends.
96.8 Units were sold. The proceeds to the Company aggregated $968,000. In
connection with such sale, 968 shares of Preferred Stock, 278,203 shares of
Common Stock, and 484 Warrants were issued.
During 1996, 371 shares of issued Preferred Stock had been converted and
canceled, by option of the holder, leaving 597 shares of Preferred Stock issued.
<PAGE>
During 1997, 156 shares of issued Preferred Stock had been converted and
canceled, by option of the holder, leaving 441 shares of Preferred Stock issued.
In July 1998, the Company entered into an agreement with Mr. Kirk Girrbach to
return and cancel 375,849 Common shares issued by the Company in exchange for
the Company rescinding the $93,962.25 receivable for said shares. In July 1998,
the Company entered into an agreement with Mr. Gene Farmer to return and cancel
228,820 Common shares issued by the Company in exchange for the Company
rescinding the $57,205 receivable for said shares.
NOTE 5 - PROVISION FOR INCOME TAXES
The Company has experienced cumulative net losses since inception, which are
available through December 31, 2010. Deferred income taxes will be provided in
the future for the temporary differences arising from accounting for contract
revenue on the completed contract method for income tax purposes and the
percentage of completion method for financial reporting purposes.
NOTE 6 - STOCK OPTIONS
The Company has not adopted a stock option plan. However, specific grants have
been made to individuals. In May 1997, the Company granted Messrs. Kirk
Girrbach, Gene Farmer, Douglas Stepelton, and David Bawarsky 2-year options to
purchase 100,000; 100,000; 100,000; and 300,000 shares of Common Stock,
respectively, with an exercise price of $0.15/share for consulting services. In
November 1997 the Company granted Mr. Andrew Smith a 2-year option to purchase
200,000 shares of Common Stock registered under Form S-8 at par value.
NOTE 7 - COMMITMENTS
The Company ended its lease for its administrative facilities under a lease
running through March 1, 1997 at a monthly cost of $600. The Company has no
lease obligations for its current administrative facilities.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; Compliance
with Section 16(a) of the Exchange Act.
Information with the respect to the Company's directors, and executive officers
as of June 30, 1998 is set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C>
Andrew D. Smith 40 President, director
David Bawarsky 43 CEO, Secretary, director
Dr. Bohdan Moroz 60 Director
Kirk J. Girrbach 40 Treasurer, Director, President of subsidiary
Douglas A. Stepelton 53 Vice President, Treasurer, director of subsidiary
Dr. Anthony J. Ard 44 Vice President, Secretary, director of subsidiary
</TABLE>
Andrew D. Smith has been President and a director of the company since November
1997. Mr. smith is founder, in 1983, and President of the Company's wholly owned
subsidiary A.D.S. Advertising Corporation d/b/a The Smith Agency, a fully
integrated marketing and advertising company, concentrating primarily on
electronic advertising. The Company acquired The Smith Agency in November 1997.
In April 1998 Mr. Smith was appointed a director of the Company's wholly owned
subsidiary, Capital Network of America, Corp.
David Bawarsky has been CEO since May 1997, Secretary since November 1977 and a
director since March 1997 of the Company. Mr. Bawarsky was President of the
Company from May 1997 to November 1997. From July 1997 to March 1997 Mr.
Bawarsky was President and director of Telephonetics International, Inc. a
Florida company engaged in the business of telephone advertising. Mr. Bawarsky
was a consultant to the Company from 1995 to 1997. Since 1991 Mr. Bawarsky has
been the President and principal owner of Quiklab Multimedia Centers, Inc., a
Florida company, which provides multimedia services and products. From 1991 to
1997 Mr. Bawarsky was vice President of Videotape Supply Company, Inc., a
Florida company in the business of manufacturing video tapes. He was also an
independent video consultant from 1990 to 1997.
Dr. Bohdan Moroz has been a director of the Company since November 1997. Since
1992 he has been a licensed and practicing physiatrist at Holy Cross Hospital in
Ft. Lauderdale, FL. He is a member of the American Medical Association, Canadian
Royal College of Physical Medicine & Rehabilitation, American Congress of
Physical Medicine & Rehabilitation, and the Broward County Medical Association.
Kirk J. Girrbach has been a director of the Company since April 1998. Since
April 1998 he has been the President, CEO and a director of the Company's wholly
owned subsidiary Capital Network of America Corp., a company providing financial
advisory services. Mr. Girrbach is a lawyer and since 1990 has conducted a law
practice in Ft. Lauderdale, FL., concentrating in the areas of securities,
construction law, contracts and real estate. From November 1991 to May 1997 Mr.
Girrbach was the President and a director of the Company. From December 1985 to
April 1994 he was a certified police officer/detective with the Ft. Lauderdale
Police Department and was a court certified expert in the area of code
enforcement. Mr. Girrbach is a member of the American Bar Association and the
Association of Trial Lawyers of America.
<PAGE>
Douglas A. Stepelton has been a Vice president, Treasurer and a director of the
Company's wholly owned subsidiary Capital Network of America Corp., a company
providing financial advisory services, since April 1998. From November 1994 to
May 1997 he was a director and the director of Marketing for the Company. Mr.
Stepelton was owner of Stepelton Financial Corporation, a licensed mortgage
company in Pompano Beach, FL from 1983 to 1994. He is also the owner of Blue
Ridge Glen, Inc., a Christmas tree farm in Cashiers, NC. Mr. Stepelton is a past
president of the Mortgage Broker's Association of Broward County, FL and of the
Urban League of Broward County, FL.
Dr. Anthony J. Ard has been Vice President, Secretary and director of the
Company's wholly owned subsidiary Capital Network of America Corp., a company
providing financial advisory services, since April 1998. Dr. Ard is a physician
and since July 1986 has been employed as an Emergency Physician by Broward
General Medical Center (Florida), Level 2 Regional Trauma Center. Dr. Ard is a
Fellow of American College of Emergency Physicians.
Directors are elected annually by the shareholders and hold office
until the next annual meeting and until their respective successors are elected
and qualified. Executive officers are elected by the Board of Directors. Mr.
Sherman is the step-son of Mr. Bawarsky. There are no other family relationships
among any of the Company's directors and executive officers.
ITEM 10. EXECUTIVE COMPENSATION
The CEO of the Company did not receive any compensation in 1996 and
1997; and no executive officer received compensation in excess of $100,000.
The directors of the Company did not receive any compensation in 1997.
Employment Agreements
The Company accepted the resignations of Messrs. Girrbach and Farmer as
executive officers and directors in May of 1997, and their employment agreements
were terminated with no further obligation on behalf of the Company. On October
30, 1997, effective upon the acquisition of A.D.S. Advertising Corp. d/b/a The
Smith Agency, by the Company, A.D.S. Advertising Corp., entered into an
employment agreement with its President Andrew D. smith, who became the
Company's president and a director upon the acquisition becoming effective. The
employment provides for a salary of $100,000 plus a performance bonus and the
use of a motor vehicle.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth information as of May 29, 1998 of the
Company's Common Stock with respect to the shares owned by its officers,
directors, both individually and as a group, and by the record and/or beneficial
owners of more that 5% of the outstanding amount of such stock.
<TABLE>
<CAPTION>
Name and Address Amount and nature of
of beneficial owner beneficial ownership Percentage of Class
- ------------------- -------------------- -------------------
<S> <C> <C>
David Bawarsky 5,478,867(1) 42.69%
6184 Vista Linda Lane
Boca Raton, FL 33433
Secretary, CEO, Director
Andrew D. Smith 2,506,000(2) 19.68%
20955 Vieto Terrace
Boca Raton, FL 33433
President, Director
Dr. Bohdan Moroz 297,143 2.37%
250 Compass Drive
Ft. Lauderdale, FL 33308
Director
Kirk J. Girrbach 713,293(3) 5.65%
6550 N. Federal Highway
Ft. Lauderdale, FL 33308
Treasurer, Director
Douglas A. Stepelton 698,783(4) 5.65%
6550 N. Federal Highway
Ft. Lauderdale, FL 33308
Officers and Directors 8,995,303(1)(2)(3)(4) 68.49%
As a group (4 persons)
</TABLE>
- --------------------------------------------------------------------------------
1. Includes 300,000 shares that Mr. Bawarsky has options to purchase.
2. Includes 200,000 shares that Mr. Smith has options to purchase.
3. Includes 100,00 shares that Mr. Girrbach has options to purchase.
4. Includes 100,000 shares that Mr. Stepelton has options to purchase.
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1997 the Company's subsidiary, Quiklab Multimedia Centers, Inc., a
Nevada corporation (QuikNV) entered into a merger agreement with Quiklab
Multimedia Centers, Inc., a Florida corporation (QuikFL). After the merger the
new company was to spun off to the shareholders of the Company. David Bawarsky,
a director of the Company, was the President and principal owner of QuiklabFL.
Also, Gene Farmer who was Executive Vice President and a director of the Company
was also a director of QuiklabFL. The merger was not consummated. In July 1997,
at a time when Mr. Bawarsky was the President, director and controlling
shareholder of the Company, the merger was terminated by the Company because
pursuant to the rules, regulations and/or guidelines of the SEC the principal
objective of the transaction could not be accomplished.
In May 1997 the Company was merged with Nitros Franchise Corporation, a company
of which David Bawarsky, who was a director of the Company, was President,
director and principal shareholder. As a result of the merger Mr. Bawarsky
received 2,400,889 shares of the Company's common stock.
In June 1997 the Company issued 144,077 shares and 144,076 shares to Kirk J.
Girrbach and Gene Farmer as consultants. Prior to the merger with Nitros
Franchise Corporation, Mr. Girrbach was the President, CEO and a director and
Gene Farmer was the executive Vice President and director of the Company. Mr.
Girrbach is currently the Treasurer and a director of the Company.
In July 1997 the Company acquired Algorhythm Technologies International Inc. for
1,000,000 shares of the Company's common stock. David Bawarsky, the Company's
CEO and director (he was President at the time) and Alan J. Kvares (who was a
director of the company at the time) were the controlling shareholders and
officers of Telephonetics International Inc.
In December 1996 and September 1997 the Company issued Kirk Girrbach 51,429 and
324,420 shares at a price of $.25 per share. The Company has not received the
consideration for the shares and Mr. Girrbach has agreed to return the shares to
the Company for cancellation. Mr. Girrbach was the President, CEO and a director
of the company until May 1997 and is currently the Treasurer and a director of
the Company.
In December 1996 and September 1997 the Company issued to Gene Farmer 34,285 and
194,535 shares at a price of $.25 per share. The Company has not received the
consideration for the shares and Mr. Farmer has agreed to return the shares to
the company for cancellation. Mr. Farmer was the Executive Vice President and a
director of the Company until May 1997.
<PAGE>
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
None
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
Information with respect to the Company's directors, and executive
officers as of June 30, 1998 is set forth below:
NAME AGE POSITION
- ---- --- --------
Andrew D. Smith 40 President, director
David Bawarsky 43 CEO, Secretary, director
Dr. Bohdan Moroz 60 Director
Kirk J. Girrbach 40 Treasurer, Director, President of subsidiary
Douglas A. Stepelton 53 Vice President, Treasurer, director of
subsidiary
Dr. Anthony J. Ard 44 Vice President, Secretary, director of
subsidiary
Andrew D. Smith has been President and a director of the Company since
November 1997. Mr. Smith is founder, in 1983, and President of the Company's
wholly owned subsidiary A.D.S. Advertising Corporation d/b/a The Smith Agency, a
fully integrated marketing and advertising company, concentrating primarily on
electronic advertising. The Company acquired The Smith Agency in November 1997.
In April 1998 Mr. Smith was appointed a director of the Company's wholly owned
subsidiary, Capital Network of America Corp.
David Bawarsky has been CEO since May 1997, Secretary since November
1997 and a director since March 1997 of the Company. Mr. Bawarsky was President
of the Company from May 1997 to November 1997. From July 1997 to March 1997 Mr.
Bawarsky was President and a director of Telephonetics International, Inc. a
Florida company engaged in the business of telephone advertising. Mr. Bawarsky
was a consultant to the Company from 1995 to May 1997. Since 1991 Mr. Bawarsky
has been the President and principal owner of Quicklab Multimedia Centers, Inc.,
a Florida company, which provides multimedia services and products. From 1991 to
1997 Mr. Bawarsky was Vice President of Videotape Supply Company, Inc., a
Florida company in the business of manufacturing video tapes. He was also an
independent video consultant from 1990 to 1997.
Dr. Bohdan Moroz has been a director of the Company since November
1997. Since 1982 he has been a licensed and practicing physiatrist at Holy Cross
Hospital in Ft. Lauderdale, FL. He is a member of the American Medical
Association, Canadian Royal College of Physical Medicine & Rehabilitation,
American Congress of Physical Medicine & Rehabilitation, and the Broward County
Medical Association.
Kirk J. Girrbach has been a director of the Company since April 1998.
Since April 1998 he has been the President, CEO and a director of the Company's
wholly owned subsidiary Capital Network of America Corp., a company providing
financial advisory services. Mr. Girrbach is a lawyer and since 1990 has
conducted a law practice in Ft. Lauderdale, FL., concentrating in the areas of
securities, construction law, contracts and real estate. From November 1991 to
May 1997 Mr. Girrbach was the President and a director of the Company. From
December 1985 to November 1994 he was a certified police officer/detective with
the Ft. Lauderdale Police Department and was a court certified expert in the
area of code enforcement. Mr. Girrbach is a member of the
<PAGE>
American Bar Association and the Association of Trial Lawyers of America.
Douglas A. Stepelton has been a Vice President, Treasurer and a
director of the Company's wholly owned subsidiary Capital Network of America
Corp., a company providing financial advisory services, since April 1998. From
November 1994 to May 1997 he was a director and the director of Marketing for
the Company. Mr. Stepelton was owner of Stepelton Financial Corporation, a
licensed mortgage company in Pompano Beach, FL from 1983 to 1994. He is also the
owner of Blue Ridge Glen Inc., a Christmas tree farm in Cashiers, NC. Mr.
Stepelton is a past president of the Mortgage Broker's Association of Broward
County, FL and of the Urban League of Broward County, FL.
Dr. Anthony J. Ard has been Vice President, Secretary and director of
the Company's wholly owned subsidiary Capital Network of America Corp., a
company providing financial advisory services, since April 1998. Dr. Ard is a
physician and since July 1986 has been employed as an Emergency Physician by
Broward General Medical Center (Florida), Level 2 Regional Trauma Center. Dr.
Ard is a Fellow of American College of Emergency Physicians.
Compliance with Section 16(a) of the Exchange Act:
David Bawarsky: 2 reports, 3 transactions;
Jason Sherman: 2 reports, 2 transactions;
Dr. Bohdan Moroz: 1 report, 1 transaction;
Telephonetics International Inc.: 2 reports; 3 transactions;
Alan Kvares: 1 report, 1 transaction;
Andrew Smith: 1 report, 7 transactions.
Item. 10. Executive Compensation.
The CEO of the Company did not receive any compensation in 1996 and
1997; and no executive officer received compensation in excess of $100,000.
The directors of the Company did not receive any compensation in 1997.
<PAGE>
Item. 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information as of May 29, 1998 of the Company's
Common Stock with respect to the shares owned by its officers, directors, both
individually and as a group, and by the record and/or beneficial owners of more
than 5% of the outstanding amount of such stock.
Name and Address Amount and nature of
of beneficial owner beneficial ownership Percentage of Class
- ------------------- -------------------- -------------------
David Bawarsky 5,478,867(1) 42.69%
6184 Vista Linda Lane
Boca Raton, FL 33433
Secretary, CEO, Director
Andrew D. Smith 2,506,000(2) 19.68%
20955 Vieto Terrace
Boca Raton, FL 33433
President, Director
Dr. Bohdan Moroz 297,143 2.37%
250 Compass Drive
Ft. Lauderdale. FL 33308
Director
Kirk J. Girrbach 713,293(3) 5.65%
6550 N. Federal Highway
Ft. Lauderdale, FL 33308
Treasurer, Director
Douglas A. Stepelton 698,783(4) 5.65%
6550 N. Federal Highway
Ft. Lauderdale, FL 33308
Officers and Directors 8,995,303(1)(2)(3)(4) 68.49%
as a group (4 persons)
- ------------------
1. Includes 300,000 shares that Mr. Bawarsky has options to purchase.
2. Includes 200,000 shares that Mr. Smith has options to purchase.
3. Includes 100,000 shares that Mr. Girrbach has options to purchase.
4. Includes 100,000 shares that Mr. Stepelton has options to purchase.
<PAGE>
12. Certain Relationships and Related Transactions.
In March 1997 the Company's subsidiary, Quiklab Multimedia Centers
Inc., a Nevada corporation (QuikNV) entered into a merger agreement with Quiklab
Multimedia Centers Inc., a Florida corporation (QuikFL). After the merger the
new company was to be spun off to the shareholders of the Company. David
Bawarsky, a director of the Company, was the President and principal owner of
QuiklabFL. Also, Gene Farmer who was Executive Vice President and a director of
the Company was also a director of QuiklabFL. The merger was not consummated. In
July 1998, at a time when Mr. Bawarsky was the President, director and
controlling shareholder of the Company, the merger was terminated by the Company
because pursuant to the rules, regulations and/or guidelines of the SEC the
principal objective of the transaction could not be accomplished.
In May 1997 the Company was merged with Nitros Franchise Corporation, a
company of which David Bawarsky, who was a director of the Company, was
President, director and principal shareholder. As a result of the merger Mr.
Bawarsky received 2,400,889 shares of the Company's common stock.
In June 1997 the Company issued 144,077 shares and 144,076 shares to
Kirk J. Girrbach and Gene Farmer as consultants. Prior to the merger with Nitros
Franchise Corporation, Mr. Girrbach was the President, CEO and a director and
Gene Farmer was the Excutive Vice President and director of the Company. Mr.
Girrbach is currently the Treasurer and a director of the Company.
In July 1997 the Company acquired Algorhythm Technologies Inc. from
Telephonetics International Inc. for 1,000,000 shares of the Company's common
stock. David Bawarsky, the Company's CEO and director (he was President at the
time) and Alan J. Kvares (who was a director of the Company at the time) were
the controlling shareholders and officers of Telephonetics International Inc.
In December 1996 and September 1997 the Company issued to Kirk Girrbach
51,429 and 324,420 shares at a price of $.25 per share. The Company has not
received the consideration for the shares and Mr. Girrbach has agreed to return
the shares to the Company for cancellation. Mr. Girrbach was the President, CEO
and a director of the Company until May 1997 and is currently the Treasurer and
a director of the Company.
In December 1996 and September 1997 the Company issued to Gene Farmer
34,285 and 194,535 shares at a price of $.25 per share. The Company has not
received the consideration for the shares and Mr. Farmer has agreed to return
the shares to the Company for cancellation. Mr. Farmer was the Executive Vice
President and a director of the Company until May 1997.
On October 30, 1997, effective upon the acquisition of A.D.S.
Advertising Corp. d/b/a The Smith Agency, by the Company, A.D.S. Advertising
Corp. entered into an employment agreement with its President Andrew D. Smith,
who became the Company's President and a director upon the acquisition becoming
effective. The employment agreement provides for a salary of $100,000, plus a
performance bonus and the use of a motor vehicle.
<PAGE>
13. Exhibits and Reports on Form 8-K
A. Exhibit 2.1 - Agreement and Plan of Meger Between DigiMedia
USA, Inc. and Nitros Franchise Corporation, dated May 14, 1997, incorporated by
reference to the Registrant's 10-QSB for the period ended June 30, 1997.
Exhibit 2.2 - Acquisition Agreement Between Algorhythm
Technologies Corporation and ADS Advertising Corporation, dated October 30,
1997, incorporated by reference to the Registrant's 10-QSB for the period ended
September 30, 1997.
Exhibit 3.1 - Registrant's Articles of Incorporation as
amended incorporated by reference to the Registrant's 10QSB for the period ended
March 31, 1998, except for the July 1998 amendment which is attached.
Exhibit 3.2 - Registrant's Bylaws, incorporated by reference
to the Registrant's 10QSB for the period ended March 31, 1998.
Exhibit 10.1 - Employment agreement between ADS Advertising
Corporation and Andrew Smith, dated October 30, 1997, incorporated by reference
to the Registrant's 10-QSB for the period ended September 30, 1997.
Exhibit 10.2 - Employment agreement between Capital Network of
America, Corp. and Kirk J. Girrbach, dated April 13, 1998, incorporated by
reference to the Registrant's 10-QSB for the period ended March 31, 1998.
Exhibit 10.3 - Employment agreement between Capital Network of
America, Corp. and Douglas A. Stepelton, dated April 13, 1998, incorporated by
reference to the Registrant's 10-QSB for the period ended March 31, 1998.
Exhibit 10.4 - Employment agreement between Capital Network of
America, Corp. and Anthony J. Ard, dated April 13, 1998, incorporated by
reference to the Registrant's 10-QSB for the period ended March 31, 1998 .
Exhibit 16 - Letter of Want & Ender, CPA PC, dated February 9,
1998, incorporated by reference to the Registrant's 8K/A-1 dated March 3, 1998.
Exhibit 16.1 - Letter of M.A. Cabrerra & Company P.A. dated
June 11, 1998, incorporated by reference to the Registrant's 8K dated June 11,
1998.
Exhibit 21 - Subsidiaries of the Registrant.
B. Reports on Form 8K.
During the last quarter of 1997 the Registrant did not file any reports
on Form 8K.
<PAGE>
SIGNATURES
In compliance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned duly
authorized.
QUIKBIZ INTERNET GROUP, INC.,
by:/s/ Andrew Smith, President
---------------------------
ANDREW SMITH, President
Dated: July 6, 1998
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.
/s/Andrew Smith Dated: July 6, 1998
- ----------------------------------------
Andrew Smith, President, director
/s/David Bawarsky Dated: July 6, 1998
- ----------------------------------------
David Bawarsky, CEO, Secretary, director
/s/Kirk J. Girrbach Dated: July 6, 1998
- ----------------------------------------
Kirk J. Girrbach, Treasurer, director
/s/ Bohdan Moroz Dated: July 6, 1998
- ----------------------------------------
Bohdan Moroz, director
FILED
in the Office of the
Secretary of State of the
STATE OF NEVADA
JUL 01 1998
ALGORHYTHM TECHNOLOGIES CORP.
-----------------------------
Name of Corporation
No. C 9260-94 We the undersigned Andrew D. Smith and David Bawarsky of
--------------- --------------
President Secretary
Algorhythm Technologies Corporation do hereby certify
- -----------------------------------
Name of Corporation
That the board of Directors of said corporation at a meeting duly
convened, held on the 20th day of May 1998, adopted a resolution to amend the
original articles as follows:
Article One is hereby amended to read as follows:
FIRST: The name of the corporation is:
-----
QuikBIZ Internet Group, Inc.
The number of shares of the corporation outstanding and entitled to
vote on an amendment to the Articles of Incorporation is 12,465,240 that the
said change(s) and amendment have been consented to and approved by a majority
vote of the stockholders holding a majority of each class stock outstanding and
entitled to vote thereon.
/s/Andrew Smith
--------------
President
/s/David Bawarsky
----------------
Secretary
State of Florida
:ss
County of Broward
On May 20, 1998, personally appeared before me, a Notary Public, Andrew
D. Smith, as President and David Bawarsky, as Secretary on behalf of Algorhythm
Technologies Corporation, a Nevada corporation, who acknowledged that they
executed the above instrument.
/s/Sonnie R. Jackson 5/27/98
---------------------------
Signature of Notary
Sonnie R. Jackson
My Commission# 00857134
Expires June 19, 2001
Board of Notary Public Underwriters
The following are the subsidiaries of the Company. All of the subsidiaries are
wholly owned by the Company.
1. A.D.S. Advertising Corportion d/b/a The Smith Agency, a Florida corporation.
2. Capital Network of America Corp., a Nevada corporation.
3. Nitros Franchise Corporation, a Florida corporation.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 40,498
<SECURITIES> 0
<RECEIVABLES> 92,018
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 283,683
<PP&E> 40,669
<DEPRECIATION> 2,589
<TOTAL-ASSETS> 813,511
<CURRENT-LIABILITIES> 246,074
<BONDS> 0
0
17,248
<COMMON> 21,533
<OTHER-SE> 174,313
<TOTAL-LIABILITY-AND-EQUITY> 813,511
<SALES> 140,355
<TOTAL-REVENUES> 140,355
<CGS> 126,703
<TOTAL-COSTS> 126,703
<OTHER-EXPENSES> 125,199
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,608
<INCOME-PRETAX> (113,155)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (113,155)
<EPS-PRIMARY> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
