SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
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[ ] TRANSITION REPORT PURSUANT 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.
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Exact name of small business issuer as specified in its charter
Nevada 88-0320364
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(State or other jurisdiction of I.R.S. Employer Identification No.
incorporation)
5310 NW 33rd Drive, Suite 212, Ft. Lauderdale, FL
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33309 (Address of principal executive offices and Zip code)
(954) 739-7005
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(Issuer's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
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. [x ] Yes [ ]
No
APPLICABLE ONLY TO 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 ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: July 31, 1998: 13,935,240
shares of common stock
Transitional Small Business Disclosure Format (check one): Yes___ No x
<PAGE>
INDEX
Page
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Part I
Condensed Balance Sheets 3
Statement of Operations 4
Statement of Cash Flows 5
Management's Discussion and Analysis or Plan of Operations 6
Part II
Item 1. Legal Proceedings 7
Item 2. Changes in Securities 7
Item 3. Defaults Upon Senior Securities 7
Item 4. Submission of Matters to a Vote of Security Holders 7
Item 5. Other Information 7
Item 6. Exhibits and Reports on Form 8-K 7
Signatures 9
2
<PAGE>
QuikBIZ Internet Group, Inc.
Condensed Balance Sheets
<TABLE>
<CAPTION>
Current Year Prior Yr
June 30,1998 Dec. 31, 1997
Current Assets
<S> <C> <C>
Cash 52,467 40,498
A/R 204,178 92,018
Other Receivables 151,167 151,167
Total Current Assets 407,812 283,683
Fixed Assets
Net Property & Equipment 14,291 12,291
Copyright 32,236 32,236
Accum Amort (6,447) (6,447)
Total Fixed Assets 40,080 38,080
Other Assets
Org Cost 62,811 52,668
Accum Amort (31,602) (31,602)
Security 5,761 5,761
Goodwill 218,326 218,326
Franchise Rights 225,000 225,000
Other Investments 21,595 21,595
Total Other Assets 501,891 491,748
Total Assets 949,783 813,511
Liabilities
A/P 309,949 246,074
Notes Payable 225,000 225,000
Accrued Expenses 32,699 34,261
Notes Payable 50,000
Notes Payable-off 12,143
Line Credit 99,713 95,082
Total Liabilities 729,504 600,417
Shareholders' Equity
Preferred Stock 17,248 17,248
Common Stock 21,533 21,533
Additional Paid In Capital 1,703,660 1,706,549
Retained Earnings (1,522,162) (1,532,236)
Total Equity 220,279 213,094
Total Liabilities & Equity 949,783 813,511
</TABLE>
3
See Accountants Compilation Report
<PAGE>
<TABLE>
<CAPTION>
QuikBIZ Internet Group, Inc.
Statement of Operations
3 Months Ended 6 Months Ended
30-Jun 30-Jun
(Unaudited) (Unaudited)
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C>
Revenues 560,028 - 840,724 -
CofGS 392,573 - 569,191 -
Gross Profit 167,455 - 271,533 -
Operating Expenses
General & Administrative 166,201 28,449 257,761 56,952
Interest 2,417 - 3,698 -
Total Operating Expenses 168,618 28,449 261,459 56,952
Net Profit/(Loss) (1,163) (28,449) 10,074 (56,952)
</TABLE>
4
See Accountants' Compilation Report
<PAGE>
QuikBIZ Internet Group, Inc.
Statement of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
30-Jun 30-Jun
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash Flows From Operations (1,163) (28,449) 10,074 (56,952)
(Increase)Decrease in Accounts Receivable (71,018) - (112,160) -
(Increase)Decrease inOther Assets (10,143) - (10,143) -
Increase(Decrease)in Accounts Payable 55,622 - 44,385 -
Increase(Decrease) in Accrued Liab. (1,562) - (1,562) -
Total Adjustments (27,101) - (79,480) -
Cash Flows From Investing Activities:
Purchase of Property and Equipment (2,365) - (2,000) -
Increase(Decrease) Other Liabilities 12,143 - 12,143 -
Net Cash Provided By Investing Activties 9,778 - 10,143 -
Cash Flows From Financing Activities:
Receipt of Proceeds from Stock Sales 7,000 46,500 16,600 46,500
Net Borrowing on Line of Credit 63,503 - 54,632
Net Cash Provided by Financing Activities 70,503 46,500 71,232 46,500
Net Increase(Decrease) in Cash 52,017 18,051 11,969 (10,452)
Cash at Beginning 450 3,576 40,498 32,079
Cash at the End 52,467 21,627 52,467 21,627
</TABLE>
5
See Accountants' Compilation Report
<PAGE>
Item 2. Management Discussion and Analysis or Plan of Operations
Results of Operations
During the three month and six month period ended June 30, 1998 the Company had
revenues of $560,028 and $840,724 respectively as against no revenues during the
three month and six month period ended June 30, 1997. The Company's gross profit
was 28.9% and 32.3% of revenue for the three and six month periods ended June
30, 1998. This was due to the operations of the Company's subsidiary, ADS
Advertising Corp. ("The Smith Agency"), which was acquired in November 1997.
During the three month and six month period ended June 30, 1998 the Company had
general and administrative expenses of $166,201 and $250,761 respectively as
against $28,449 and $58,952 during the three month and six month period ended
June 30, 1997. This was predominately due to the operations of The Smith Agency.
That as a result the Company had a net loss of $1,163 for the three month period
ended June 30, and a net profit of $10, 074 for the six month period ended June
30, 1998, as against a loss of $28,449 and a loss of $56, 952 respectively for
the three month and six month period ended June 30, 1997.
Liquidity and Capital Resources
The Company had cash on hand of $52,467 and accounts receivable, attributable to
The Smith Agency, of $204,178 at the end of the six month period ended June 30,
1998 an increase of $112,160 or 122%, $71,018 or 77% of such increase occurred
during the three month period ended June 30, 1998. The Company at the end of the
six month period ended June 30, 1998 had accounts payable of $309,949 an
increase of $55,522 during the six month period and notes payable of $12,143 for
expenses paid by the officers of the Company's subsidiary Capital Network of
America, Corp. for the subsidiary.
The Company believes that it will be able to meet its obligations through the
cash flow of its subsidiaries including QuikLab Multimedia Centers which it
acquired in July 1998. In the event it cannot meet its through this avenue it
will seek to raise capital, though there is no assurance that the Company will
be successful in obtaining capital. In regard to the Company's subsidiaries, it
is expected that The Smith Agency will be able to meet its obligations from its
revenue; and that the officers of Capital Network of America Corp., pursuant to
agreement, will provide for the expenses of that subsidiary for the first year
or until it has sufficient revenue. It is anticipated, though there is no
assurance, that the recent acquisition of QuikLab Multimedia Centers in July
1998 will further enhance the Company's sales and profitability for the second
half of 1998. The Company will continue to seek out additional opportunities
through acquisitions and mergers.
<PAGE>
6
<PAGE>
Part II
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
(c) 1. The Registrant sold the following non-registered shares of its
common stock in a private placement pursuant to Rule 506 of Regulation D and
Sec. 4(2) of the Securities Act of 1933, as amended (the "Act") at a price of
$.10 per share:
April 3, 1998 - 20,000 shares, $2,000.00;
2. June 1, 1998, 100,000 shares of common stock for $5,000.00 ($.05 per
share) pursuant to Sec. 4(2) of the Act.
3. In April 1998 the Registrant issued a total of 1,525,000 shares of
its common stock pursuant to 4(2) of the Act in accordance with employment
agreements of its subsidiary Capital Network of America, Corp.
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
On May 20, 1998, the change of name of the Registrant to QuikBIZ
Internet Group, Inc., was approved by consent of a majority of the shareholders
entitled to vote thereon.
Item 5. Other Information
None
Item 6. 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 20, 1997.
Exhibit 2.3 - Acquisition Agreement between the Registrant and
QuikLab Multimedia Centers, Inc., dated June 25, 1998, incorporated by reference
to the Registrant's 8-K dated July 23, 1998.
7
<PAGE>
Exhibit 3.1 - Registrant's Articles of Incorporation as
amended, incorporated by reference to the Registrant's 10-QSB for the period
ended March 31, 1998 and 10-KSB for the period ended December 31, 1997.
Exhibit 3.2 - Registrant's Bylaws, incorporated by reference
to the Registrant's 10-QSB 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 Registrants'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 Registrants'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 Registrants's 10-QSB for the period ended March 31, 1998.
Exhibit 10.5 - Amended employment agreement between Capital
Network of America, Corp. and Kirk J. Girrbach, dated July 6, 1998.
Exhibit 10.6 - Addendum to Employment Contract for Kirk J.
Girrbach, Douglas A. Stepelton and Anthony J. Ard dated July 7, 1998.
B. During the period ended June 30, 1998, the Registrant filed the
following 8Ks:
8K dated June 11, 1998: reporting the change in independent accountants
by the resignation of M.A. Cabrera & Co. PA.
8K dated June 24, 1998, reporting the change of independent accountants
by the retaining of Want & Ender CPA.
8
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
QUIKBIZ INTERNET GROUP, INC.
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Registrant
Date: August 13, 1998 /s/DAVID BAWARSKY
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DAVID BARWARSKY, CEO
Date: August 13, 1998 /s/KIRK J. GIRRBACH
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KIRK J. GIRRBACH, Treasurer
9
EXHIBIT 10.5
EMPLOYMENT CONTRACT FOR KIRK J. GIRRBACH
----------------------------------------
THIS AGREEMENT is made July 6, 1998, at the City of Fort Lauderdale, County of
Broward, State of Florida, between CAPITAL NETWORK OF AMERICA, CORP., a Nevada
Corporation, and wholly-owned subsidiary of QuikBIZ Internet Group, Inc., public
Nevada Corporation, hereinafter "employer", and KIRK J. GIRRBACH, hereinafter
"employee":
Employer is engaged in the financial advisory services industry and maintains a
business in the City of Fort Lauderdale, County of Broward, State of Florida;
Employee is willing to be employed by employer, and employer is willing to
employ employee, on the terms, covenants, and conditions set forth in this
agreement;
WHEREAS it is the intent of employer to obtain an employee with integrity and
requisite qualifications to act in an executive management function with the
company, and it is the intent of employee to fulfill the intent of employer and
be compensated for such employment;
THEREFORE, in consideration of the mutual covenants and promises of the parties,
employer and employee covenant and agree as follows:
SECTION ONE: Employer does hire and employ employee as Chairman, President and
CEO of its entire company, and employee does accept and agree to such hiring and
employment. In consideration of the invaluable and sustaining contributions
during the inception, research and development of the company, Kirk J. Girrbach,
will, in perpetuity, possess the title of co-founder of the employer-company and
its subsequent holdings. This title is not related to continued employment or
any amount of stock holdings retained. Subject to the supervision and pursuant
to the orders, advice, and directions of employer, employee shall direct all
phases of said company, subject only to the final direction of employer, and
shall perform such other duties as are customarily performed by one holding such
position in other similar businesses or enterprises as that engaged in by
employer, and shall also additionally render such other and unrelated services
and duties as may be assigned to employee from time to time by employer.
SECTION TWO: Employee agrees to perform, at all times faithfully, industriously,
and to the best of his ability, experience, and talent, all of the duties that
may be required of and from him pursuant to the express and implicit terms of
this agreement, to the reasonable satisfaction of employer. Such duties shall be
rendered at employer's Fort Lauderdale place of business and at such other place
or places as employer shall in good faith require or as the interest, needs,
business, and opportunities of employer shall require or make advisable.
SECTION THREE: The term of this agreement shall be for a period of five (5)
years, commencing April 13, 1998, and terminating April 12, 2003, subject,
however, to prior termination as provided below. Should employer cancel this
employment contract, employee shall receive a lump sum liquidated amount of TWO
MILLION ($2,000,000) DOLLARS as severance pay from employer.
SECTION FOUR: When the Employer obtains revenue, employer shall pay employee and
employee agrees to accept from employer, for employee's services under this
agreement, compensation at the gross rate of ONE HUNDRED THOUSAND ($100,000)
DOLLARS per year for serving as Chairman, President and CEO. Said compensation
shall be paid on a weekly basis and shall be increased 10% per year effective
the first day of January, 1999, during the term of this contract. It is
expressly understood that employee's compensation under this agreement may be
supplemented by additional stock option plans from employer. In addition,
employer agrees to establish an expense account from which it will reimburse
employee for any and all necessary, customary, and usual expenses incurred by
him on behalf of the employer pursuant to employer's directions. Upon execution
of this
1
<PAGE>
agreement, employee shall also be issued FIVE HUNDRED TWENTY FIVE THOUSAND
(525,000) SHARES OF RESTRICTED COMMON STOCK OF QuikBIZ Internet Group, Inc., a
public Nevada Corporation, solely as a "signing incentive" for execution of this
agreement. Further, when employer has signed its third (3rd) contract with a
client, employee shall be issued an additional THREE HUNDRED THOUSAND (525,000)
SHARES OF RESTRICTED COMMON STOCK OF QuikBIZ Internet Group, Inc., a public
Nevada Corporation and TWO HUNDRED THOUSAND (200,000) SHARES OF COMMON STOCK OF
QuikBIZ Internet Group, Inc., a public Nevada Corporation, issued pursuant to an
S-8 Registration Statement.
SECTION FIVE: The expenses of the employer shall be equally borne by Douglas A.
Stepelton, Kirk J. Girrbach, and Anthony J. Ard, until such time as revenue is
produced by the employer to pay for same, not to exceed one (1) year. It is
understood and agreed that the following the ability of employer to cover
company expenses as well as salary payments to Douglas A. Stepelton, Kirk J.
Girrbach and Anthony J. Ard in accordance with respective employment agreements
with employer, net revenue of employer shall be distributed as follows:
one-third (1/3) toward any accrued salary of Douglas A. Stepelton, Kirk J.
Girrbach, and Anthony J. Ard; one-third (1/3) toward any accrued expenses of
employer payable to Douglas A. Stepelton, Kirk J. Girrbach and Anthony J. Ard;
and one- third (1/3) toward profits of the employer company.
SECTION SIX: Employer shall provide family health insurance as well as dental
insurance to employee with no contribution required from employee.
SECTION SEVEN: Employer shall provide a company vehicle (1997 Volvo), or the
financial equivalent at employee's option, to employee and provide all
maintenance, insurance, repair and fuel to said vehicle.
SECTION EIGHT: Employer shall provide three (3) weeks annual paid vacation and
one (1) weeks annual paid sick leave to employee. In addition to vacation and
sick days, the employee shall have the following designated holidays: New Year's
Day, Birthday of Martin Luther King, Jr.,Lincoln's Birthday, Washington's
Birthday, Good Friday, Memorial Day, July 4th, Labor Day and the following
Friday, and Christmas Day (Note: Should any of the above dates fall on Saturday
or Sunday, the following Monday shall be deemed as a holiday).
SECTION NINE: Employer shall compensate employee as a "Performance Incentive
Bonus" as follows: Sliding Scale as follows:
Based upon Net Profit.
From 0 to $149,000 3.33%
From $150,000 to $299,000 5.00%
From $300,000 and over 6.66%
To be paid at the end of the fiscal year (1998).
For a period of 2 years to be reviewed at the end of term, but will not be less
than what was received in years one (1) and two (2).
Kirk J. Girrbach has choice of cash, common stock or any combination of the two.
SECTION TEN: Notwithstanding anything in this agreement to the contrary,
employer has the option to terminate this agreement in the event that during its
term employee shall become permanently disabled as the term permanently disabled
is defined below. Such option shall be exercised by employer giving notice to
employee by registered mail. The giving of such notice this agreement and the
term of this agreement come to an end on the last day of the month in which the
notice is mailed, with the same force and effect as is that day were originally
set forth as the termination date. For the purposes of the agreement, employee
shall be deemed to have become permanently disabled if, during any year of the
term of this agreement, because of ill health, physical or mental disability, or
for other causes beyond his control, he shall have been continuously unable or
unwilling or have filed to perform his duties under this contract for thirty
(30) consecutive days, or if, during any ear of the term of this agreement, he
shall have been unable or unwilling or have failed to perform his duties for a
total period of sixty (60) days, either consecutive or not. For the purpose of
this agreement, the term "any year of the term of this
2
<PAGE>
agreement" is defined to mean any period of twelve (12) calendar months
commencing on the first day of May and terminating on the last day of April of
the following year during the term of this agreement.
SECTION ELEVEN: Employee shall devote his time, attention, knowledge, and skill
to the business and interest of employer, and employer shall be entitled to all
of the benefits, emoluments, profits, or other issues arising from or incident
to any and all work, services, and advice of employee, and employee expressly
agrees that during the term of this agreement he will not be interested,
directly or indirectly, in any form, fashion, or manner, as partner, officer,
director, stockholder, advisor, employee, or in any other form or capacity, in
any other business similar to employer's business or any allied trade; provided
however, that nothing shall be deemed to prevent or limit the right of employee
to invest any of his funds in the capital stock or other securities of any
corporation whose stock or securities are publicly owned or are regularly traded
on any public exchange, nor shall anything be deemed to prevent employee from
investing or limit employee's right to invest his funds in real estate. Employer
expressly acknowledges that employee is a practicing attorney, and that employee
will be acting as such exclusive of his duties hereunder.
SECTION TWELVE: Employee further specifically agrees that he will not at any
time, in any manner, either directly or indirectly, communicate to any person,
form, or corporation any information of any kind concerning any matters
affecting or relating to the business of employer, including, without limiting
the generality of the foregoing, the names of any of its customers, the prices
it obtains or has obtained or at which its sells or has sold its products, or
any other information of, about, or concerning the business of employer, its
manner of operation, its plans, processes, or other date of any kind, nature, or
description without regard to whether any or all of the foregoing matters would
be deemed confidential, material, or important, the parties stipulating that as
between them, the matters are important, material and confidential and gravely
affect the effective and successful conduct of the business of the employer, and
its good-will, and that any breach of the terms of this paragraph is a material
breach of this agreement.
SECTION THIRTEEN: Anything contained in this agreement to the contrary
notwithstanding, it is understood and agreed that employee shall not have the
right to make any contract or commitments for or on behalf of employer without
the written consent of employer.
SECTION FOURTEEN: It is expressly understood that this agreement is between the
employee and Capital Network of America, Corp., a Nevada corporation. There is
no privity or liability of QuikBIZ Internet Group, Inc.. a public Nevada
corporation, under the terms of this agreement, with the sole exception of
honoring the issuance of restricted stock in accordance with this agreement.
SECTION FIFTEEN: The parties to this agreement shall hold harmless any Director,
officer, employee or agent of Algorhythm Technologies Corp. a public Nevada
corporation, for any and all liability whatsoever, who undertakes any action
pursuant to this agreement.
SECTION SIXTEEN: This written agreement contains the sole and entire agreement
between the parties and shall supersede any and all other agreements between the
parties. The parties acknowledge and agree that neither of them has made any
representation with respect to the subject matter of this agreement or any
representations inducing its execution and delivery except such representations
as are specifically set forth in this writing and the parties acknowledge that
they have had the opportunity to have legal counsel of their choice review this
agreement prior to entering into the same.
SECTION SEVENTEEN: It is agreed that no waiver or modification of this agreement
or of any covenant, condition, or limitation contained in it shall be valid
unless it is in writing and duly executed by the party to be charged with it,
and that no evidence of any waive or modification shall be offered or received
in evidence in any proceeding, arbitration, or litigation between the parties
arising out of or affecting this agreement, or the rights or obligations of any
party under it, unless such waiver or modification is in writing, duly executed
as above. The
3
<PAGE>
parties agree that the provisions of this paragraph may not be waived except by
a duly executed writing.
SECTION EIGHTEEN: The parties agree that it is their intention and covenant that
this agreement and performance under it and all suits relating to it be
construed in accordance with and under and pursuant to the laws of the State of
Florida, with venue in Broward County.
SECTION NINETEEN: This agreement shall be binding on and inure to the benefit of
the respective parties and their executors, administrators, heirs, personal
representatives, successors and assigns.
SECTION TWENTY: Severability. Should any portion of this agreement be found to
be unenforceable at law or in equity, the remaining provisions of this agreement
are to remain in full force and effect.
NOTICE REQUIREMENTS SENT TO: Kirk J. Kirrbach, 6550 N. Federal Highway, Suite
250, Fort Lauderdale, FL 33308.
EMPLOYER: EMPLOYEE:
CAPITAL NETWORK OF AMERICA, KIRK J. KIRRBACH
A Nevada Corporation
BY:/s/Douglas A. Stepelton /s/ Kirk J. Kirrbach
------------------------------------------- ----------------------
Douglas A. Stepelton Vice President, Kirk J. Kirrbach
and Director
WITNESSES:
/s/David Bawarsky /s/Andrew D. Smith
- ---------------------------------------------- ----------------------
David Bawarsky Andrew D. Smith
4
EXHIBIT 10.6
ADDENDUM TO EMPLOYMENT AGREEMENT FOR KIRK J. GIRRBACH,
DOUGLAS A. STEPELTON AND ANTHONY J. ARD
THIS ADDENDUM is made July 7, 1998, at the City of Fort Lauderdale,
County of Broward, State of Florida, between CAPITAL NETWORK OF AMERICA, CORP.,
a Nevada Corporation, and wholly owned subsidiary of QuikBIZ Internet Group,
Inc., a public Nevada Corporation, hereinafter "Employer", and KIRK J. GIRRBACH,
DOUGLAS A. STEPELTON, and ANTHONY J. ARD hereinafter collectively "Employee".
Employer and Employee agree to amend the employment agreement with Kirk J.
Girrbach dated 04/13/98 as amended 07/06/98, DOUGLAS A. STEPELTON dated
04/13/98, and ANTHONY J. ARD dated 04/13/98 as follows:
SECTION FOUR: The gross annual salary compensation of ONE HUNDRED THOUSAND
($100,000) DOLLARS per year for serving as officer and director, with an
increase of 10% per year effective the first day of January, 1999, during the
term of this contract for employee shall not accrue.
SECTION FIVE: The expenses of the employer shall be equally borne by Douglas A.
Stepelton, Kirk J. Girrbach, and Anthony J. Ard, until such time as revenue is
produces by the employer to pay for same, not to exceed one (1) year. It is
understood and agreed that following the ability of employer to cover company
expenses as well as salary payments to Douglas A. Stepelton, Kirk J. Girrbach
and Anthony J. Ard in accordance with respective employment agreements with
employer, net revenue of employer shall be distributed as follows: one- third
(1/3) toward any salary of Douglas A. Stepelton, Kirk J. Girrbach, and Anthony
J. Ard; one-third (1/3) toward any accrued expenses of employer payable to
Douglas A. Stepelton, Kirk J. Girrbach, and Anthony J. Ard; and one-third (1/3)
toward profits of the employer company.
EMPLOYER: EMPLOYEE:
CAPITAL NETWORK OF AMERICA, KIRK J. GIRRBACH
A Nevada Corporation DOUGLAS A. STEPELTON
ANTHONY J. ARD
BY:/s/Douglas A. Stepelton /s/ Kirk J. Girrbach
------------------------------------ ------------------------
Douglas A. Stepelton, Vice President Kirk J. Girrbach
and Director
/s/ Douglas A. Stepelton
------------------------
Douglas A. Stepelton
/s/ Anthony J. Ard
------------------------
Anthony J. Ard
WITNESS:
/s/ David Bawarsky /s/ Andrew D. Smith
- --------------------------------------- ------------------------
David Bawarsky Andrew D. Smith
