UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
March 13, 2000
Date of Report (Date of earliest reported event)
AmeriNet Group.com, Inc.
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(Exact name of registrant as specified in its chapter)
Delaware
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(State or other jurisdiction of incorporation
000-03718
(Commission File Number)
11-2050317
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(IRS Employer Identification No.)
Crystal Corporate Center; 2500 North Military Trail, Suite 225-C;
Boca Raton, Florida 33431
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(Address of principal executive offices) (Zip Code)
(561) 998-3435
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Registrant's telephone number, including area code
(Not Applicable)
(Former name or former address, if changed since last report)
INFORMATION INCLUDED IN THE REPORT
Item 1. Acquisition or Disposition of Assets.
On March 13, 2000, the Registrant completed the acquisition of all of
the capital stock (being 1,265 shares of common stock, without par value) of
Vista Vacations International, Inc., a Florida corporation engaged in the travel
industry ("Vista," see Item 5 for a more complete description of Vista
business). Vista was acquired by the Registrant in a reorganization designed to
comply with Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended (the "Code"), in exchange for:
* 220,000 shares of the Registrant's common stock, $0.01 par value per
share (the "AmeriNet Stock"), issued in reliance on the exemption from
registration under the Securities Act of 1933, as amended (the
"Securities Act") provided by Section 4(6) thereof; and
* Up to 219,999 additional shares of AmeriNet Stock to be issued to the
former stockholders of Vista during the period ending on June 30, 2003,
based on the following performance thresholds:
(1) If Vista earns net, pre tax profits, determined in accordance
with generally accepted accounting principles, consistently
applied ("GAAP"), of at least $400,000 during the period
starting on July 1, 2000 and ending on June 30, 2001, then
Vista's former stockholders will be issued an aggregate of
36,667 additional shares of AmeriNet Stock;
(2) If Vista earns net, pre tax profits, determined in accordance
with GAAP, of at least $1,200,000 during the period starting
on July 1, 2001 and ending on June 30, 2002, then Vista's
former stockholders will be issued an aggregate 102,666
additional shares of AmeriNet Stock (including the 36,667 that
either were or could have been earned as of June 30, 2001);
(3) If Vista earns net, pre tax profits, determined in accordance
with GAAP, of at least $2,800,000 during the period starting
on July 1, 2000 and ending on June 30, 2003, then Vista's
former stockholders will be issued all 219,999 of the
additional shares of AmeriNet Stock (including the 102,666
that either were or could have been earned as of June 30,
2002); however, all rights to any of the AmeriNet Stock not
earned as of such date will thereupon expire.
(4) The additional shares of AmeriNet Stock will be allocated
among the former Vista stockholder's, pro rata, based on their
ownership of Vista's common stock immediately preceding the
closing on March 13, 2000, were reserved for future issuance
immediately following the closing and will be issued within 30
days after AmeriNet's audit for the subject fiscal year
confirming the calculations called for.
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In addition to consideration provided to the former Vista stockholders
for their Vista capital stock, the Registrant also agreed to:
* Invest up to $650,000 in Vista within 300 days after completion of the
reorganization and the filing of required reports with the United
States Securities and Exchange Commission (the "Commission"), and,
* To reserve an additional 931,000 shares of AmeriNet Stock for future
issuance through incentive stock options (as defined in Section 422 of
the Code) to be granted to Vista employees, provided, however, that
rights to such shares will vest on an annual basis, subject to
attainment of the following net, pre-tax profit projections determined
in accordance with GAAP:
(1) If Vista earns net, pre tax profits, determined in accordance
with GAAP, of at least $400,000 during the period starting on
July 1, 2000 and ending on June 30, 2001, then the first
163,333 shares of AmeriNet Stock reserved for issuance in the
event of exercise of the subject incentive stock options will
vest;
(2) If Vista earns net, pre tax profits, determined in accordance
with GAAP, of at least $1,200,000 during the period starting
on July 1, 2000 and ending on June 30, 2002, then all rights
to 457,333 (including the 163,333 shares vested, if any, on
June 30, 2001) of the shares of AmeriNet Stock reserved for
issuance in the event of exercise of the subject incentive
stock options will vest; and
(3) If Vista earns net, pre tax profits, determined in accordance
with GAAP, of at least $2,800,000 during the period starting
on July 1, 2000 and ending on June 30, 2003, then all rights
to all of the shares (including the shares vested, if any, on
June 30, 2001 and June 30, 2002) of AmeriNet Stock reserved
for issuance in the event of exercise of the subject incentive
stock options will vest.
(4) All rights to the incentive stock options in the subject
employment agreements that have not vested as of July 1, 2003
will expire on such date, and no further rights of any kind
thereto or to the underlying shares of AmeriNet Stock reserved
for such purpose will exist thereafter, the reservation
therefor terminating on such date.
Concurrently with the closing on the acquisition of Vista, the
Registrant and Ms. Nellie Tippery, a creditor of Vista, entered into an
agreement pursuant to which all obligations of Vista, including loans in the
aggregate amount of $180,000, were extinguished in consideration for 66,667
shares of AmeriNet Stock.
The exchange ratio for Vista's capital stock was determined by arms
length negotiation by the parties based on the approximate market price of the
Registrant's common stock during the period preceding March 13, 2000, the value
that Vista's management felt was reflective of its operating performance since
its inception, and the anticipated future value of Vista. The use of contingent
consideration seeks to make the component of the valuation based on future
performance more objectively ascertainable.
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The names of the former Vista stockholders are Teri E. Nadler, Scott B.
Ugell, Jean Hickman, Alicia Torrealba, Jean Hickman, Ken Nelson and Carol
Nelson, his spouse, and, Ms. Karyn McKnight. To the best of the Registrant's
knowledge, no material relationship existed between any such person and the
Registrant or any of its affiliates, any director or officer of the Registrant,
or any associate of any such director or officer.
No funds were used directly to acquire Vista, however, the Registrant
obtains the funds it uses to capitalize its acquisitions through private
placements to a group of accredited investors who already held shares of its
common stock. Such persons include the Yankee Companies, Inc., Xcel Associates,
Inc., Ms. Debra Elenson, Mr. Scott Heicken, Mr. Jonathan Eichner, Mr. Joseph D.
Radcliffe, K. Walker, Ltd. ( a corporation associated with Edward
Granville-Smith, Jr., the Registrant's former president) and Bolina Trading
Corp., S.A. (a corporation associated with Mr. Jerry C. Spellman, an associate
of Mr. Granville-Smith).
Vista assets include leased facilities and equipment and other physical
property currently used in conjunction with its travel business. Such use will
be continued and Vista will continue to be operated by its current management,
unless it fails to meet at least 65% of its operating projections.
Copies of the reorganization agreement, the agreement with Ms. Tippery, the
employment agreements with Vista employees and in one case, with a third party
consultant, and the related schedules and exhibits are filed as exhibits to this
current report (see "Item 7(c), exhibit Index"). See Item 5 for a more complete
description of Vista business
Item 5. Other Events.
Material Information Concerning Vista
Business
General
Vista Vacations International, Inc., a Florida corporation was organized in
November of 1998 by Ms. Teri E. Nadler, its current president, and a group of
her former co-workers, who in the aggregate, have more than one hundred years of
professional travel experience. Vista's management developed its strategic plan
based on the following observations:
* Decreasing airline commissions were causing traditional brick and
mortar travel agents to reevaluate their competitive prospects and to
seek ways to stay in business while reducing or eliminating traditional
overhead;
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* Increasingly available communications technology and the evolution of
the Internet were making home based businesses increasingly competitive
with traditional office based enterprises;
* The incidental benefits of the travel industry (e.g., the opportunity
to travel and lodge at interesting locations at discount prices) made
it attractive to people who valued quality of life as well as economic
opportunities;
* Travel companies had developed specializing in making travel industry
benefits available to large groups of independent contractors ("host
companies" and "member-agents," respectively), but without the training
and support to make their business operations economically viable or of
real service to the consuming public.
* There was a substantial niche for a host company that would provide
independent contractors with travel industry benefits and with the
educational and travel package support necessary to make them
competitive with traditional travel agencies.
Based on such observations, Ms. Nadler and her associates organized
Vista as an education oriented travel industry host company with a wide variety
of quality travel options including cruise vacations, vacation packages, auto
rentals, hotels and incentive travel programs from multiple travel providers at
competitive prices., providing its independent contractor member-agents with the
option of working from home without compromising on the quality of their product
inventory, services or training. However, it also intends to expand through
acquisition of existing travel agencies and travel service companies giving it
multiple travel service and travel product delivery outlets.
Vista agents are required to participate in Vista's ongoing training
programs and to attain proficiency in all phases of the travel industry. Vista's
exclusive Seminar at Sea program provides member-agents with professional travel
training classes, including travel industry product knowledge, winning sales
techniques and the industry's most respected educational tool, the Cruise Line
International Association ["CLIA"] accreditation masters program (which provides
specialized expertise in the cruise segment of the travel industry). Upon
completion, member-agents earn accreditation that grants them the opportunity of
sailing on most cruise lines for only $35.00 dollars a day. More importantly,
they acquire in-depth knowledge about alternative products from multiple travel
providers permitting them to compete successfully with traditional brick and
mortar travel agencies that have neither the staff nor financial resources to
maintain internal sales departments trained to work with specific travel
providers. Because its highly trained member-agents become more effective
consumer service providers, leading cruise lines, tour operators, hotels and
auto rentals grant Vista preferred pricing and inventory options.
As a result of its association with the Registrant, Vista expects to
negotiate with the Registrant's other subsidiaries for development of technology
applications to facilitate and enhance the selling process for Vista's's home
based independent sales agents. Vista has already entered into an agreement with
Wriwebs.com, Inc. ("WRI") to update Vista's website with cutting edge,
interactive technologies that will provide Vista member-agents, with the ability
to search and purchase over $40 million of secured travel inventory, including
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discounted cruises, tours and packages, hotels, and car rentals, on a 24 hours a
day, 7 days a week basis. The application, expected to be designated as "The
Cruise Navigation System" is scheduled for introduction by April 30, 2000. The
website will also provide sight training tutorials for Vista agents,
concentrating on travel product knowledge, sales techniques, world wide
geography and proprietary operations. Each of the applications developed by WRI
for Vista will use web-based technologies that restrict access to Vista approved
member-agents and their clients. Vista is also exploring licensing access to
portions of its website and other Vista related opportunities to third parties.
Vista currently has approximately 400 independent home-based agents
located nationwide who serve as its principal marketing source. The
member-agents not only service their local markets but are encouraged to recruit
other member-agents and are compensated for doing so. Vista is currently engaged
in a national marketing campaign designed to increase public awareness of its
services, through newspapers, magazines, radio and infomercials. Vista intends
to follow up the national marketing campaign with a similar one on an
international basis. Vista will also market its services over the Internet using
the website being developed by WRI, which:
* Can be accessed from replicated websites of its independent home based
member-agents; and
* Directs visitors to Vista's website to member-agents within their zip code.
Currently, Vista does not have any material portion of its assets,
operations or customers located outside of the United States. Substantially all
of Vista's revenues are from customers based within the United States, where all
of Vista's services are provided.
Industry Overview
Domestic travel and tourism spending by United States travelers was an
estimated $408 billion in 1997 and is forecasted to increase at a compound
annual growth rate of 6.7% through the year 2000. The market for specialized
distributors of leisure travel services is highly fragmented. Many of these
specialized distributors are small and generally have made little investment in
technology to improve their selling effectiveness, efficiencies and access to
information. Furthermore, most of these companies lack the volume and financial
security necessary to obtain preferential pricing and inventory from travel
providers or to create effective national marketing campaigns. For Vista's
purposes, the travel and tourism industry is divided into the following
segments:
Cruise Industry: The number of North American cruise passengers is expected
to increase from 5.1 million in 1997 to 7.0 million by the
year 2000, an 11.5% compound annual growth rate. In
addition, industry analysts forecast a 10.3% compound annual
growth rate in capacity over the same period, with a total
of 40 new vessels, contracted or planned, adding a net
supply of approximately 40,000 berths. The character of a
cruise varies significantly among the different cruise lines
and cruise ships. In addition, a cruise vacation, which
consists of lodging, entertainment, dining and travel,
typically represents a large portion of a traveler's
vacation budget. As a result, cruise sales require
significant marketing time and effort in comparison with
sales of other travel products. Cruise lines traditionally
have relied primarily on third party distributors to sell
virtually all of their berth capacity. It is estimated that
only 6% of cruise vacations are sold directly by the
internal sales departments of the cruise lines. While travel
agents remain an important channel of distribution for
cruise lines, specialized cruise vacation distributors (like
Vista) have become an increasingly significant source of
capacity utilization and, accordingly, are given
preferential pricing, cooperative advertising dollars and
access to preferred berth inventory and locations.
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Lodging Industry: Average daily room rates in the United States lodging
industry increased 6.2% to $75.16 in 1997 from $70.81 in
1996. Average daily room nights sold increased 2.3% to 2.3
million in 1997 from 2.2 million in 1996. Average daily
rates and average daily rooms sold are expected to increase
5.3% and 2.2%, respectively, in 1998.
Vacation and Tour
Packages Industry: Sales of vacation and tour packages was estimated to be a
$20 billion market in 1997. In 1997, 104.2 million United
States adults traveled with other family members, an
increase of 11% over the prior year. The market is expected
to grow at 6% a year for the next several years. Vacation
packages include a combination of two or more travel
services (e.g., hotel accommodations, ground transportation,
air transportation, cruises) that are offered at a package
price. Many vacation packages offer a choice of components
and options, thereby enabling the customer to customize the
package.
Incentive Travel
Programs Industry: The travel incentive industry is estimated to be a $6
billion market. Travel promotion agencies range from
sophisticated companies offering a broad range of service to
boutique shops, specializing in one or few specific types of
promotions. The industry is fragmented, with over 1000
travel promotion companies; however less than 100 companies
are believed to have sales in excess of $1 million.
Strategic Plans
Operating Strategy
Vista seeks to provide comprehensive, quality leisure travel products
and services, while improving efficiencies in its operations. Vista is a
specialist in several leisure travel products and services. By leveraging this
specialized knowledge, Vista provides a higher level of expertise and
information for a broader array of travel products and services than may be
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available through traditional distribution channels. Vista continues to make
significant investments in development of technology that will improve and
enhance the ability of its independent home-base travel agents to convert travel
inquiries into sales and make the selling and service processes more efficient.
WRI's technology applications which are being developed for Vista are Internet
web-based. The specifications for Vista's technology applications are designed
by subject matter experts who are best able to identify the necessary tools.
Vista's management believes that:
* Its strategic relationships with travel providers are integral to its
success. Vista has negotiated with many travel providers for pricing
that is often lower than published fares and for preferred access to
capacity. Vista has also initiated discussions with cruise industry
travel providers regarding access to direct electronic interfaces to
the cruise lines reservation systems. These strategic relationships
enable Vista to access multiple providers within each travel segment
and to offer value and service that is generally better than would be
available to travelers through travel agents.
* Utilizing multiple distribution channels provides it with additional
sales opportunities, decreases its reliance on any one channel and
differentiates it from competitors who offer their products through a
single channel.
* Maintaining high levels of customer service is essential to its
ability to generate significant repeat business. In addition to
Vista's competitive prices, customer service is an important
differentiating factor for leisure travelers who are making a
significant investment in a vacation; for travel agents who seek to
make reliable, quality travel arrangements quickly, efficiently and
without complicated processes; for independent hotels seeking to
market their products efficiently through global distribution systems;
and, for corporations that require innovative, turn-key travel
products, either for use by their personnel or as marketing
incentives.
Comprehensive Brand Strategy
During 1998 Vista's management reviewed various strategies in
connection with brand recognition and marketing of its services. In the first
half of 1998, Vista began implementation of a comprehensive brand and marketing
plan that called for development of a new, identifiable national brand name to
be used initially in marketing cruises to consumers, while continuing to use
existing product provider brands with strong identity and loyal customer
following in other segments. Vista is currently revisiting its brand strategy at
the Registrant's request and is considering revising its name to develop a
closer identification with the Registrant. As currently contemplated, such
strategy would involve continued use of the "Vista Vacations" name concurrently
with a new "AmeriNet" oriented name, and, based on market response, phasing one
out over a period of time. Vista seeks to develop a nationally recognized and
respected consumer brand, initially in the cruise segment and to aggressively
market its brands, through traditional marketing and sales initiatives, as well
as through opportunities that may arise in other business of Vista, such as
collateral materials that may also be utilized to promote Vista's other brands.
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Growth Strategy
Vista has a multi pronged approach to expansion of its operations:
growth through expansion of its network of independent member-agents by
providing them with economic incentives to recruit new member-agents; growth
through acquisition of existing travel agencies (which can either convert to
home based operations or remain as office based facilities); and, through
recruitment of personnel from existing travel agencies who are dissatisfied with
their existing arrangements, either because of an absence of training,
inadequate products or support, or, a desire to work at home. To date, Vista has
concentrated on the first element of its growth strategy but expects significant
growth from the other two elements within the next two fiscal years.
Investment in Technology
Vista plans to capitalize on the Internet as a major distribution
channel for its products and services. According to Forrester Research, the
on-line travel market is the second largest by dollar volume and the fastest
growing area of Internet commerce. The Internet represents a substantial
opportunity as a very important distribution channel for leisure travel in the
future. Vista promotes itself and the vista-vacation.com website through
advertising and promotional alliances on the Internet. Many of Vista's
independent home based travel agents will be operating their own replica sights
of Vista through our specialized website program. Vista has assigned personnel
also operating from their homes to handle its Internet sales leads and
inquiries, supervised by office based management personnel with significant
experience in e-commerce and Internet marketing. Vista, with the assistance of
other AmeriNet subsidiaries, is developing state-of-the-art information and
on-line reservations e-commerce website technology for use by Vista's
independent home based member-agents and their clients. In addition, Vista may
in the future consider pursuing licensing or other opportunities with respect to
the use of its technology by third parties. Vista has contracted with WRI, a
subsidiary of AmeriNet, to expend at least $360,000 on development and operation
of a cutting edge on-line reservations system over the next three years. Vista's
"Cruise Navigator" and online reservation systems are expected to permit Vista
to increase its productivity and net revenue per transaction by: (i) allowing
Vista agents to process reservations on-line in a more efficient fashion than
the current manually-intensive processes employed; (ii) enabling Vista agents to
offer their customers more comprehensive product information and automated
access to special pricing and inventory opportunities; (iii) providing Vista
agents additional up-selling (upgrading) capabilities; (iv) allowing Vista
agents real time access to customer information; (v) capitalizing on revenue
management opportunities; (vi) using the Internet to provide information and
book reservations; (vii) enabling consolidation of cruise back-office functions,
including reconciliation, accounting, documents management and financial
reporting; and (viii) new agent enrollment.
Economies of Scale and Best Practices
Vista's management believes that it can achieve significant economies
of scale and that its sales volumes and relationships with travel providers will
enable it to obtain preferential pricing and preferred access to travel provider
inventories. Vista's management believes that its member-agents and consumers
will benefit from Vista's increasing purchasing power in important expense
areas, and from the reduction in total operating expenses anticipated as it
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implements improved technology consolidating duplicative back-office and
administrative functions. Beginning in the second quarter of 2000, Vista expects
to realize these economies by selecting best practices, including marketing
techniques, revenue management processes, operations and call center management
strategies and cost efficiencies, that can be implemented to generate
incremental revenue and enhance profitability. The implementation of Vista's
information technologies is expected to further enhance Vista's performance by
allowing the most qualified sales agents to handle each customer lead and to
reduce the amount of time required to train new sales agents and process and
close sales transactions.
Expansion Through Acquisitions
In the second half of 2000, Vista will seek to acquire operating travel
companies in order to gain market share, add new areas of expertise, access new
geographic markets and enter complementary business lines. In the future, Vista
expects to focus on acquisitions that are larger in size or offer significant
strategic opportunities. Vista seeks acquisition candidates that have
long-standing reputations and demonstrated growth and profitability. As of the
date of this Report Vista is not a party to a binding agreement regarding any
acquisition.
Products and Services
Vista currently provides its products and services throughout the
United States through use of toll-free telephone numbers, home-based
member-agents, and the Internet. Product information and customer communication
capacity via email is provided through Vista's website, www.vista-
vacations.com. Typically, potential independent member-agents and customers call
Vista, often in response to a referral or in response to information seen on the
Internet. Vista's sales personnel assist potential independent member-agents or
consumers who wish to be independent member-agents in understanding the mission
and goals of Vista. Once enrolled, in-house reservations specialist assist
member-agents in selecting appropriate travel arrangements for themselves and
their clients and in making the required reservations. All reservations are made
by in-house reservations specialists as Vista member-agents are asked not to
call vendors directly in order to preserve quality control.
Cruises
Vista seeks to become one of the largest distributors of cruises in the
world, selling cruises on all major cruise lines. Typically, berths are booked
on behalf of customers at specified discounts from the published cruise line
prices. In addition, Vista is permitted to reserve more desirable berths on a
number of cruises, which gives Vista an "exclusive" right to sell these berths
for a period of time. If Vista does not sell these reserved berths, they are
returned to the cruise lines at a specified time, generally 90 to 150 days prior
to sailing, at no cost to Vista. Vista also advises large groups, such as
affinity groups, corporate groups and business seminars, in selecting
appropriate cruises and sells Alaskan land tour packages directly to travelers
and to travel agents.
Vista assists its independent home based member-agents in selecting
cruises that best fit their clients' particular needs and desires. This requires
Vista's sales personnel to have extensive knowledge about the various cruise
lines and the differences in their ships and the cruises offered. Vista's sales
personnel undergo extensive in-house training and participate in frequent
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seminars conducted by cruise lines. Sales personnel endeavor to develop
relationships with the independent home-based member-agents and their customers
in order to encourage repeat and referral business. In addition to reserving
berths on cruises, reservation agents can provide member-agents' customers with
information about the activities, shopping, sightseeing and restaurants
available at the various ports at which cruises stop and can make reservations
(where available) for such activities. Vista also provides its independent
member-agents with travel industry as well as inter and intra company
information on its website, with periodic mailings of information, weekly
blast-faxes disclosing cruise line and industry specials, reviews of various
cruises and ships, advice regarding planning for specific cruises and assistance
in preparing necessary travel documents. Through Vista's new cruise reservation
technology, detailed information about ships, itineraries, destinations and
other data will be available to sales personnel at their desktops.
Lodging, Vacations And Tour Packages
Vista is developing a program that will provide electronic reservation
services to over 2,500 independent and chain hotels located in 59 countries
worldwide. Vista's lodging service revenues are generally commission based and,
therefore, largely depend on the volume of reservations processed on behalf of
its hotel customers. Vista also plans to publish a hotel directory featuring
over 5,000 participating hotels worldwide which Vista's independent
member-agents can use as a guide to obtain special rates, access to block spaces
and other benefits. Vista sells vacation packages and all-inclusive vacations
world wide.. Vista is in the process of completing exclusive agreements with
chosen tour operators that will allow them to become exclusive Vista travel
partners. Vista is also in the process of creating an incentive travel
department that will provide incentive travel promotion services primarily to
corporations.
Technology
Information Technology
Vista has adopted an information technology strategy focused on
delivering value to Vista's independent home-based sales agents and travel
providers, while enabling efficient and effective back office processes and
providing necessary management information. The core of Vista's evolving
information technology strategy is the Cruise Navigator system, Vista's on-line
cruise reservation system being developed with the assistance of WRI. The series
of applications that comprise the system and their supporting infrastructure are
expected to include: (i) web-based applications that take advantage of
client/server processing structures; (ii) a multi-tier architecture for easy
changes, enhancements and maximum reuse potential; (iii) Microsoft standard
development tools, including XML-based message exchange architectures; (iv) the
Microsoft Windows NT operating system for the applications environment; and (v)
an SQL server relational database management system operating in the Windows NT
environment.
The Cruise Navigator technology is expected to increase productivity
and net revenue per transaction by: (i) allowing Vista's independent
member-agents to process reservations on-line in a fashion more efficient than
the current manually-intensive processes; (ii) enabling Vista independent
member-agents to offer customers more comprehensive product information and
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automated access to special pricing and inventory opportunities; (iii) providing
Vista agents additional up-selling capabilities; (iv) allowing Vista agents real
time access to customer information via an on-line database facility; (v)
capitalizing on revenue management opportunities; (vi) using the Internet to
provide information and book reservations; and (vii) enabling consolidation of
cruise back office functions, including reconciliation, accounting, documents
management and financial reporting.
Among Vista's technological goals is development of the most
comprehensive collection of customer information in the leisure travel industry.
Access to such information would enable Vista to develop a more accurate
customer relationship model, permitting it to refine its direct mail,
advertising and other marketing activities. Consequently, Vista's technology
will include a comprehensive customer information database comprised of
extensive customer data such as profiles, preferences, travel history,
memberships, passport information, and future travel desires. The customer
information database is expected to be a common repository, shared across all
Vista's applications permitting Vista personnel to become instantly familiar
with customers' buying patterns across travel segments.
Internet Distribution Channel
Vista plans to capitalize on the Internet as a major distribution
channel for its products and services. On-line travel accounted for
approximately one percent of the $101 billion in travel products sold by travel
agents and specialized distributors in 1997, with 84% of on-line travel
transactions being airline tickets. With over 43 million United States
households owning a personal computer and with over 22 million households
on-line in 1998, the new digital economy is growing at double the rate of the
overall economy. According to Forrester Research, the on-line travel market is
the second largest by dollar volume and the fastest growing area of Internet
commerce. Vista's management believes that while the Internet will never surpass
knowledgeable travel specialists as the primary mode of selling travel products,
the Internet represents a very important distribution channel for leisure travel
in the future.
Vista currently markets on the Internet in several ways. The website,
www.vista- vacation.com was launched in 2000 and provides information on
vacation products, and particularly in-depth information on cruises, offered by
Vista. For example, the cruise section of the site includes pages on hot deals,
cruise quotes, ships, cruise lines and cruise reviews. There is also a feature
to request cruise information and quotes on-line. The air section features an
airfare request capability. The toll free phone numbers for Vista's products are
promoted on each page. In addition, Vista promotes itself and the
www.vista-vacation.com website through advertising and promotional alliances on
the Internet and promotes its website in its other advertising media. Vista has
dedicated in-house agents to handle Internet sales leads and inquiries, as well
as management personnel who have significant experience in the areas of
e-commerce and Internet marketing.
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Sales and Marketing
Vista utilizes a multi-faceted marketing and sales approach depending on
the particular travel products and services being promoted and depending on the
type of customer being targeted. An essential element of Vista's marketing
strategy is developing a nationally recognized consumer brand, initially for
cruises. In addition, Vista intends to develop other national brands to
consumers, travel agents and independent hotels, respectively.
Vista markets cruises to consumers through its independent member-agents
who engage in marketing programs based on their own unique talents and marketing
theories. Vista is currently implementing an aggressive marketing campaign that
will include newspapers, radio, direct mail television commercials and
infomercials each of which contain extensive product offerings and special
travel offers. The marketing program highlights the advantage of becoming an
independent member-agents with access to Vista's toll-free numbers and website
as instruments for closing travel sale transactions. Vista is also in the
process of finalizing its "Adventure Club", a new division of Vista designed to
appeal to multi-level marketing companies seeking to increase benefit programs
to their distributors.
Vista operates in-house reservation centers to respond to calls generated
by its marketing programs. Vista also has a network of over 400 home-based
independent contractor member-agents who actively market and sell cruises in
their local areas. Direct mail campaigns include brochure and vacation directory
mailings to existing and new customers. Point of purchase sales promotions are
being developed, including tie-ins with other retailers such as fast food chains
and supermarkets.
Travel Provider Relationships
Because of Vista's reputation, historical relationships, expertise, and
substantial volume of business conducted with the travel providers, it receives
preferential pricing from certain travel providers, which frequently enables
Vista to offer prices lower than those generally available to travelers and
travel agents. Vista's agreements with travel providers are generally short-term
agreements cancelable on relatively short notice and, therefore, travel
providers can, and often do, modify the terms of contracts as industry
conditions change, including terms relating to commissions, access to inventory
and pricing. Such agreements generally permit Vista to sell the travel products
at either preferred prices or with preferred commission structures. However,
such contracts generally do not create commitments by the travel providers for
fixed capacity or inventory. Other distributors, including Vista's competitors,
may have similar arrangements with travel providers, some of which may provide
better availability or more competitive pricing than that offered by Vista.
Vista also works with a consortium, Vacation.com, that holds contracts and
overrides with specific vendors that Vista is not currently able to obtain on
its own. As its revenue grows with particular participants, Vista expects that
it will be able to obtain such benefits directly.
Competition
The travel service industry is extremely competitive and has traditionally
had low barriers to entry. Vista competes with other distributors of travel
services, travel providers, travel agents, tour operators, group travel
sponsors, Internet companies, and global distribution system providers, some of
which have greater experience, brand name recognition and/or financial resources
than Vista. Vista competes for customers based upon service, price, specialized
in-depth knowledge and, with respect to sales to travel agents, attractive
13
commission structures. Travel providers may decide to compete more directly with
Vista and restrict the availability and/or preferential pricing of their
capacity. In addition, other distributors may have relationships with certain
travel providers, providing better availability or more competitive pricing than
that offered by Vista. Furthermore, some travel agents and group travel sponsors
have a strong presence in their geographic area, which may make it difficult for
Vista to attract customers in those areas.
Employees
As of March 14, 2000, Vista had 6 full-time in-house employees and 417
independent member-agents nationwide. Vista's management believes that its
relations with its employees and independent member-agent contractors are good
but that it will have to continually expand its employee and independent
contractor base to meet the demands of its projected growth. Management believes
that required full and part time personnel can be recruited from within it group
of member agents and through its proposed acquisition strategy, on acceptable
terms.
No employees are represented by any labor unions but all of the
employees are parties to one year employment agreements, providing for automatic
renewals unless cancelled within a reasonable time prior to expiration of the
then current term.
Properties
Vista's principal place of business is located at 5653 Northwest 29th
Street; Margate, Florida 33063. This is in a office park type setting where the
other tenants are professional or traditional office based businesses. The space
occupied is approximately 1,150 square feet of office space. Vista has a two
year lease which began on January 1, 1999 and ends on December 31, 2000. There
are several short term options which allow it to extend the term of the lease.
Visa pays approximately $11.50 per square foot and pays a pro-rata share of real
estate taxes and maintenance costs. There are no present plans for any
renovation, improvement, or development of the property. The leased property is
in the opinion of Vista's management adequately covered by insurance.
Vista believes that its current premises will not be adequate for its
anticipated requirements and it is discussing consolidation of facilities with
other AmeriNet subsidiaries, either in a building that AmeriNet may seek to
purchase or through a lease for new premises providing adequate room for
expansion.
Legal Proceedings
Vista is not aware of any legal claims or actions arising in the
ordinary course of business. Therefore, Vista does not believe that there are
not any actions to be concerned about that would have a material adverse effect
on its business or financial condition and results of operations.
14
Risk Factors
Qualification of Forward-looking Statements
The statements contained in this Report that are not purely historical
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
including without limitation statements regarding Vista's expectations, beliefs,
intentions or strategies regarding the future. All forward-looking statements
included in this document are based on information available to Vista on the
date hereof, and Vista assumes no obligation to update any such forward-looking
statements. The forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause actual results, experience and
the performance or achievements of Vista to be materially different from those
anticipated, expressed or implied by the forward-looking statements. In
evaluating Vista's business, the following factors, in addition to the Risk
Factors set forth below and other information set forth herein, should be
carefully considered: successful deployment and integration of systems; factors
affecting internal growth and management of growth; Vista's ability to implement
its technology strategy; success of marketing, integration and operational
initiatives, including Internet marketing initiatives; dependence on technology;
labor and technology costs; cost and availability of advertising and promotional
efforts; success of the acquisition strategy and availability of acquisition
financing; success in entering new segments of the travel market and new
geographic areas; dependence on travel providers; risks associated with the
travel industry generally; seasonality and quarterly fluctuations; competition;
and general economic conditions. In addition, Vista's operating strategy and
growth strategy involve a number of risks and challenges, and there can be no
assurance that these risks and other factors will not have a material adverse
effect on Vista.
Limited Operating History; Risks of Integration.
Vista was founded in November of 1998 but conducted no operations and
generated no revenues prior until February of 1999. There can be no assurance
that Vista will be able to succeed on a profitable basis. Vista's executive
management team was assembled at its inception and there can be no assurance
that the management team will be able to effectively implement Vista's internal
growth strategy, operating strategy or technology strategy.. The financial
statements cover certain start up periods and therefore, may not be indicative
of Vista's future financial or operating results. The inability of Vista to
expand aggressively would have a material adverse effect on Vista's business,
financial condition, and results of operations.
While Vista's management believes that there are substantial
opportunities to cross-market and integrate all phases of the travel industry
through independent home-based independent agents, there can be no assurance
that Vista's goal of becoming a leading specialized distributor of leisure
travel services will be successful, or that Vista's independent member-agents
and their clients and or travel providers will accept Vista as a distributor of
a variety of specialized travel services.
15
Management of Growth; Factors Affecting Internal Growth.
Vista expects to grow internally, through increase in independent
home-based travel agents, multilevel distributors and acquisitions of existing
travel agencies that are looking for a responsible, reliable and profitable host
company to put their business through. Vista expects to spend significant time
and effort exploring this endeavor. There can be no assurance that Vista's
systems, procedures or controls will be adequate to support Vista's operations
as they expand. Any future growth also will impose significant added
responsibilities on members of senior management, including the need to
identify, recruit and integrate new senior level managers and executives. There
can be no assurance that such additional management will be identified or
retained by Vista. To the extent that Vista is unable to manage its growth
efficiently and effectively, or is unable to attract and retain qualified
management, Vista's business, financial condition and results of operations
could be materially adversely affected. While Vista has experienced revenue and
earnings growth over the past year, there can be no assurance that Vista will
continue to experience internal growth comparable to these levels, if at all.
Factors affecting the ability of Vista to continue to experience internal growth
include, but are not limited to, the ability to expand the travel services
offered, the continued relationships with certain travel providers and their
independent home-based travel agents, the public's acceptance of and response to
Vista's national brand names, the ability to recruit and retain qualified sales
personnel and continued access to capital.
Dependence on Travel Providers.
Vista is dependent upon travel providers for access to their capacity.
Vista receives from certain travel providers pricing and capacity that is
preferential to published fares which enables Vista to offer consistently
competitive products and services. Other distributors may have similar
arrangements with travel providers, some of which may provide better
availability or more competitive pricing than that offered by Vista. Vista
anticipates that a significant portion of Vista's revenues will continue to be
derived from the sale of capacity for relatively few travel providers.
Vista's agreements with its travel providers can generally be cancelled
or modified by the travel provider upon relatively short notice. The loss of a
contract, changes in Vista's pricing agreements, commission schedules, or
cooperative marketing arrangements or more restricted access to travel
providers' capacity could have a material adverse effect on Vista's business,
financial condition and results of operations. In addition, the lodging and
cruise industries have experienced a period of consolidation. Continued
consolidation could reduce Vista's ability to increase its secured inventory
which could, in turn, have a material adverse effect on Vista's financial
condition and results of operations.
Deployment of New Technology.
Vista is in the process of, and expects that it will continue over the
coming years, to replace many of its existing hardware and software systems
(e.g., its new "Cruise Navigator" architecture). There can be no assurance that
these new systems will be successfully completed, installed according to the
expected time frame or within the anticipated budget, implemented without any
disruption to Vista's business or result in the intended operational benefits
and cost efficiencies.
16
Risks Related to Vista's Acquisition Strategy.
Acquisitions involve a number of special risks, including possible
adverse effects on Vista's operating results, diversion of management's
attention, failure to retain key personnel, risks associated with unanticipated
events or liabilities and amortization of acquired intangible assets, some or
all of which could have a material adverse effect on Vista's business, financial
condition and results of operations. Customer dissatisfaction or performance
problems at a single acquired company could also have an adverse effect on the
reputation of Vista. Further, there can be no assurance that businesses acquired
will achieve anticipated revenues and earnings. In addition, to the extent that
Vista intends to increase its revenues, expand the markets it serves and
increase its service offerings through the acquisition of additional companies,
there can be no assurance that Vista will be able to identify, acquire or
profitably manage additional businesses or successfully integrate acquired
businesses into Vista without substantial costs, delays or other operational or
financial problems. Increased competition for acquisition candidates may also
develop, in which event there may be fewer acquisition opportunities available
to Vista, as well as higher acquisition prices. Vista may also seek
international acquisitions that may be subject to additional risks associated
with doing business in foreign countries. Vista continually reviews various
strategic acquisition opportunities and has held discussions with a limited
number of such acquisition candidates. As of the date of this Report, Vista is
not party to a binding agreement with respect to any acquisition.
Risks Related to Acquisition Financing and Possible Need for Additional
Capital.
Vista plans to finance future acquisitions by using shares of the
Registrant's common stock ("AmeriNet Stock") for all of the consideration to be
paid. In some cases, however, it is probable that Vista would be required to
make cash investments in the acquired businesses, as AmeriNet is making in
Vista. Vista would be charged against earnings for any AmeriNet Stock used to
effect acquisitions, consequently, it must take care to assure that the benefits
of the acquisitions exceed the cost of the AmeriNet Stock used as consideration
and the cash investment required, if any. In the event that the AmeriNet Stock
does not maintain a sufficient market value, or potential acquisition candidates
are otherwise unwilling to accept AmeriNet Stock as consideration for the sale
of their businesses, Vista may be required to utilize more of its cash
resources, if available, in order to maintain its acquisition program. If Vista
has insufficient cash resources, its growth could be limited unless it is able
to obtain additional capital through debt or equity financing. There can be no
assurance that AmeriNet will make required capital available or that other
financing will be available on terms Vista deems acceptable. If Vista is unable
to obtain financing sufficient for all of its desired acquisitions, it may be
unable to fully carry out its acquisition strategy. In addition, to maintain
historical levels of growth, Vista may need to seek additional funding. Adequate
funds for these purposes may not be available when needed or may not be
available on terms acceptable to Vista. If funding is insufficient, Vista may be
required to delay, reduce the scope of or eliminate some or all of its expansion
programs.
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Dependence Upon Technology.
Vista's business is currently dependent upon its website
www.vista-vaction.com and its on- line reservation system beginning with "Cruise
Navigator" to facilitate, access information and manage a high volume of secured
inventory.. Any failure of this technology would have a material adverse effect
on Vista's business, financial condition and results of operations. Because
technological change has been extremely dynamic, technological obsolescence has
become an increasingly important decision when making capital expenditures. No
assurances can be provided that the state of the arts systems being developed
for Vista will remain state of the art for a period sufficient to justify their
development.
Risks Associated with the Travel Industry; General Economic Conditions.
Vista's results of operations are dependent upon factors generally
affecting the travel industry. Vista's revenues and earnings are especially
sensitive to events that affect domestic and international air travel, cruise
travel, auto rentals and hotel room nights. A number of factors could result in
an overall decline in demand for travel, including political instability, armed
hostilities, international terrorism, extreme weather conditions, a rise in fuel
prices, a decline in the value of the United States dollar, labor disturbances,
excessive inflation, a general weakening in economic activity and reduced
employment in the United States These types of events could have a material
adverse effect on Vista's business, financial condition and results of
operations.
Seasonality and Quarterly Fluctuations.
The domestic and international leisure travel industry is seasonal.
Vista's results have been subject to quarterly fluctuations caused primarily by
the seasonal variations in the travel industry, especially the leisure travel
segment. Seasonality depends on the particular leisure travel product or service
sold. Vista expects seasonality to continue in the future. Vista's quarterly
results of operations may also be subject to fluctuations as a result of changes
in the mix of services offered by Vista as a result of acquisitions, internal
growth rates among various travel segments, fare wars by travel providers,
changes in relationships with certain travel providers, the timing of the
payment of overrides by travel providers, extreme weather conditions or other
factors affecting travel and the timing and cost of acquisitions. Unexpected
bankruptcy of tour operators or travel companies coupled with variations in
quarterly results could also adversely affect the price of the AmeriNet Stock,
which in turn could limit the ability of Vista to make acquisitions.
Substantial Amount of Goodwill.
Because the acquisition of Vista dis not qualify for pooling of
interest accounting treatment, it is expected to result in a substantial amount
of good will, which has to be written off against future income, making
operating results appear less positive (or more negative) than they actually
were, from a cash flow perspective. Such results and could have a material and
adverse impact upon the market price of the AmeriNet Stock.
18
Substantial Competition.
The travel service industry is extremely competitive and traditionally
has low barriers to entry. Vista competes with other distributors of travel
services, travel providers, travel agents, tour operators, Internet companies
and central reservation service providers, some of which have greater
experience, brand name recognition and/or financial resources than Vista. Travel
providers may decide to compete more directly with Vista and restrict the
availability and/or preferential pricing of their capacity. In addition, other
distributors may have relationships with certain travel providers providing
better availability or more competitive pricing than that offered by Vista.
Furthermore, some travel agents have a strong presence in their geographic area
which may make it difficult for Vista to attract customers or employees in those
areas.
Reliance on Key Personnel.
Vista's operations are dependent on the efforts and relationships of
Teri E. Nadler and Vista's other executive officers. Furthermore, Vista will
likely be dependent on the senior management of any businesses acquired in the
future. If any of these individuals become unable to continue in their role
Vista's business or prospects could be adversely affected. Although Vista has
entered into an employment agreement with each of Vista's executive officers,
there can be no assurance that such individuals will continue in their present
capacity for any particular period of time. Vista does not maintain key man life
insurance covering any of its executive officers or other members of senior
management.
Control of Existing Management.
Pursuant to the terms of the reorganization agreement between Vista
and the Registrant, Vista's current management will have the right to elect a
majority of the members of its board of directors for the foreseeable future,
unless Vista fails to attain at least 65% of its net, pre-tax profit
projections. Such requirement may prevent or delay AmeriNet from taking actions
to correct problems with Vista's management, and such inability may materially
impair Vista's operations.
Directors and Executive Officers of Registrant
Ms. Teri E. Nadler and Scott B. Ugell are expected to be elected as
members of the Registrant's board of directors at the annual meeting of
stockholders currently expected to be held during May of 2000. The following
table sets forth information concerning Vista's directors and executive
officers.
Name Age Position
Teri E. Nadler 48 President & chief executive officer
Scott B. Ugell 40 General counsel
Jean Hickman 60 Treasurer and chief financial officer
Alicia Torrealba 38 Secretary
19
All officers and directors are parties to employment agreements on a
revolving one year basis, which call for them to be elected to their current
positions. In addition, pursuant to the terms of the reorganization agreement
between Vista and the Registrant, Vista's current management will have the right
to elect a majority of the members of its board of directors for the foreseeable
future, unless Vista fails to attain at least 65% of its net, pre-tax profit
projections
Biographies of Executive Officers and Directors
Scott B. Ugell: Scott B. Ugell, age 40, has since November 1998, served as a
member of Vista's Board of Directors, and also as its
general counsel. Mr. Ugell is a practicing attorney, a
member of the New York Bar, (since 1986) and a member of the
Bar for the United States District Courts for the Southern
and Eastern Districts of New York (since 1986). He is a
graduate of Syracuse University, Syracuse, New York (B.S.,
1982); and Hofstra University School of Law, (J.D., 1985).
From 1986 to 1988 he served as Deputy Town Attorney in the
town of Hempstead, New York. In 1989 he served as General
Counsel for Autospa Corporation, a publicly held trading
company, headquartered in Great Neck, New York. In 1990 he
was the Assistant General Counsel for Pyramid Companies
headquartered in Syracuse, New York. From 1989 to 1993 he
served as General Counsel for Wavecrest Management, Ltd.
headquartered in Whitestone, New York. From 1986 to the
present he is a practicing attorney in New City, New York
where he handles criminal law, real estate law, corporate
law, family law, bankruptcy law, commercial and civil
litigation. Since 1991 he has served as the Town Justice for
Town of Clarkstown, Rockland County, New York where he
handles various criminal, civil and commercial cases. At the
Registrant's next monthly board of directors meeting it is
anticipated that Mr. Ugell will be elected as a new member
of the board of directors.
Teri E. Nadler: Teri E. Nadler, age 48, has since November 1998, served as a
member of Vista's Board of Directors, and also as its
president and chief executive officer. She is a graduate of
Nassau Community College, Long Island, New York (Associates
Degree in Education, 1971); and attended Queens College,
Queens, New York. From 1981 to 1991 she owned and operated
Starship Travel, headquartered in East Setauket, New York.
Starship was an independent retail agency which started one
of the first "Cruise only" divisions within a full service
agency. Mrs. Nadler was a founding member of NACOA, National
Association of Cruise Only Agents and served as the vice
president from 1984 to 1990. She was one of the first women
to serve on the Cruise Lines Advisory Board and help create
today's cruise market. From 1991 to 1994 she served as
executive vice president of sales and marketing for South
Florida Cruises, headquartered in Ft. Lauderdale, Florida.
From 1994 to 1995 she served as executive vice president of
sales and operations for 1-800-TAKE OFF, headquartered in
Ft. Lauderdale, Florida. From 1995 to 1998 she served as
executive vice president cruise department for Inteletravel,
Inc., headquartered in Boca Raton and Ft. Lauderdale,
Florida where she created and developed the cruise
department. At the Registrant's next monthly board of
directors meeting it is anticipated that Mrs. Nadler will be
elected as a new member of the board of directors.
20
Jean Hickman: Jean Hickman, age 60, has since November 1998, served as
executive vice president of operations and finance and
Treasurer for the Registrant's subsidiary, Vista. From 1983
to 1985 she served as executive secretary and inside sales
support for British Caledonian Airways, headquartered in
Dallas, Texas. From 1985 to 1989 she served as assistant
manger and senior travel consultant for American Express
Travel headquartered in Plano, Texas. From 1989 to 1993 she
was the owner of All Around Travel, headquartered in Plano,
Texas. From 1993 to 1995 she served as floor manager for
1-800- TAKE OFF, headquartered in Ft. Lauderdale, Florida.
From 1995 to 1998 she served as Executive Director of
Operations for Inteletravel, Inc., headquartered in Boca
Raton and Ft. Lauderdale, Florida where she was in charge of
25 in-house full travel sales personnel and developed and
implemented all procedures and operations functions.
Alicia Torrealba: Alicia Torrealba, age 38, has since November 1998, served as
vice president of Vista's training program, and secretary
for the Registrant's subsidiary, Vista. From 1984 to 1992
she served as Group and Tour representative for American
Express Travel, headquartered in Caracas Venezuela. From
1993 to 1994 she served as travel agent for Travel
Impressions, Inc., headquartered in Farmingdale, New York.
From 1994to 1995 she served as cruise and travel agent for
1-800-TAKE OFF, headquartered in Ft. Lauderdale, Florida.
From 1995 to 1996 she served as tour director for Nice
Florida Tours, headquartered in Ft. Lauderdale, Florida.
Relationships Among Officers and Directors
Teri E. Nadler and Scott B. Ugell are brother and sister. No other
relationships are known to exist among Vista officers and directors, or between
any Vista officer or directors and any officers or directors of the Registrant.
Executive Compensation
The following table sets forth the aggregate compensation paid to
Vista's Chief Executive Officer and four of Vista's other most highly
compensated executive officers whose total annualized salary and bonus was
$100,000 or more (the Chief Executive Officer and such other executive officers
are sometimes referred to herein as the "Named Executive Officers") with respect
to the years ended December 31, 1997 and 1998:
21
Summary Compensation Table
The following compensation was received from Vista during calendar year
1999.
Annual Compensation Awards Payouts
Securities
Name and Other Restricted Underlying Long Term All
Principal Annual Stock Options & Stock Incentive Other
Position Year Salary Bonus Compensation Awards Appreciation RighPayouts Compensation
- -------- ---- ------ ----- ------------ ------ ------------------------ ------------
1. 1999 (1) (1) 765 shares * * * *
(2) 1999 * * 400 shares * * $8,000 (2)
(3) 1999 (3) * 180 shares * * * *
(4) 1999 (4) * 60 shares * * * *
- ------
(1) Teri E. Nadler, president and chief executive officer. Ms. Nadler was paid
$29,368.32 in salary during calendar year 1999, and also received
substantial loans which were paid back at closing on the reorganization
agreement with AmeriNet.
(2) Scott B. Ugell, general counsel. Mr. Ugell received an $8,000 fee in
conjunction with the organization of Vista.
(3) Jean Hickman, treasurer. Ms. Hickman was paid $21,201.66 in salary during
calendar year 1999, and also received substantial loans which were paid
back at closing on the reorganization agreement with AmeriNet.
(4) Alicia Torrealba, secretary. Ms. Torrealba was paid $10,917.26 in salary
during calendar year 1999, and also received substantial loans which were
paid back at closing on the reorganization agreement with AmeriNet.
* None.
Executive Compensation; Employment Agreements; Covenants-not-to-compete
All of Vista's officers have employment agreements with Vista. Each of
the agreements provides that the employee will not enter the employ of or serve
as a consultant to, or in any way perform any services with or without
compensation to, any other persons, business or organization without the prior
consent of the President of Vista. They also contain non competition, non-
circumvention and confidentiality covenants during the term of the agreement,
all renewals thereof and for a period of two years after its termination.
Teri E. Nadler: Ms. Nadler's employment agreement expires on June 30, 2001
but is automatically renewed unless specifically canceled by
Vista or Ms. Nadler. Ms. Nadler has an annual base salary of
$75,000, plus an annual bonus in a sum equal to 5% of
Vista's pre-tax, net profits. Ms. Nadler is entitled to an
aggregate of up to $12,000 per year in benefits comprised of
car allowance, health insurance and disability insurance.
Unless specifically otherwise authorized by Vista's board of
directors, on a case by case basis, devote all of her
business time exclusively to the affairs of Vista. Vista
will defend, indemnify and hold Ms. Nadler harmless from all
liabilities, suits, judgments, fines, penalties or
disabilities, including expenses associated directly,
therewith (e.g., legal fees, court costs, investigative
costs, witness fees, etc.) resulting from any reasonable
actions taken by Ms. Nadler in good faith on behalf of
Vista, its affiliates or for other persons or entities at
22
the request of the board of directors of Vista, to the
fullest extent legally permitted, and in conjunction
therewith, will assure that all required expenditures are
made in a manner making it unnecessary for Ms. Nadler to
incur any out of pocket expenses; provided, however, that
Ms. Nadler permits the majority stockholders of Vista to
select and supervise all personnel involved in such defense
and that Ms. Nadler waive any conflicts of interest that
such personnel may have as a result of also representing
Vista, its stockholders or other personnel and agrees to
hold them harmless from any matters involving such
representation, except such as involve fraud or bad faith.
Scott B. Ugell: Mr. Ugell's agreement is materially similar to Ms. Nadler's
except that he does not receive any benefits, is permitted
to engage in other business and professional activities
dedicating only such time as is reasonable required for
Vista's legal affairs and his compensation is the sum of
$1,200 per month.
Jean Hickman: Ms. Hickman's agreement is materially similar to Ms.
Nadler's except that she receives only $8,000 in benefits
per year comprised of car allowance and health insurance and
her compensation is the sum of $60,000 per year.
Alicia Torrealba: Ms. Hickman's agreement is materially similar to Ms.
Nadler's except that she receives only $8,000 in benefits
per year comprised of car allowance and health insurance and
her compensation is the sum of $40,000 per year.
In addition to the compensation described, each of the four officers is
entitled to incentive stock options, as described below.
Indemnification Agreements
Vista has entered into employment agreements with each of its executive
officers which contain indemnification provisions. The provisions require, among
other things, that Vista indemnify its directors and executive officers to the
fullest extent permitted by law, and advance to the directors and executive
officers all related expenses, subject to reimbursement if it is subsequently
determined that indemnification is not permitted. Although the indemnification
provisions offer substantially the same scope of coverage afforded by provisions
in Vista's charter and bylaws, it provides greater assurance to directors and
executive officers that indemnification will be available, because, as a
contract, it cannot be modified unilaterally in the future by the board of
directors or by AmeriNet as Vista's stockholder, to eliminate the rights it
provides.
23
Vista has authority under Section 607.0850 of the Florida Business
Corporation Act to indemnify its directors and officers to the extent provided
in such statute. In general, Florida law permits a Florida corporation to
indemnify its directors, officers, employees and agents, and persons serving at
the corporation's request in such capacities for another enterprise, against
liabilities arising from conduct that such persons reasonably believed to be in,
or not opposed to, the best interests of the corporation and, with respect to
any criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful.
The provisions of the Florida Business Corporation Act that authorize
indemnification do not eliminate the duty of care of a director, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Florida law. In addition,
each director will continue to be subject to liability for (a) violations of the
criminal law, unless the director had reasonable cause to believe his conduct
was lawful or had no reasonable cause to believe his conduct was unlawful; (b)
deriving an improper personal benefit from a transaction; (c) voting for or
assenting to an unlawful distribution; and (d) willful misconduct or a conscious
disregard for the best interests of Vista in a proceeding by or in the right of
Vista to procure a judgment in its favor or in a proceeding by or in the right
of a shareholder. The statute does not affect a director's responsibilities
under any other law, such as the federal securities laws or state or federal
environmental laws
Vista's articles of incorporation provide that it shall indemnify its
officers, directors, advisory directors and employees to the fullest extent
permitted by law.
Long-term Incentive Plan
Pursuant to the terms of the reorganization agreement, AmeriNet has
reserved 931,000 shares of AmeriNet Stock for future issuance through incentive
stock options (as defined in Section 422 of the Code) granted in the employment
agreements, provided, however, that rights to such shares will vest on an annual
basis, subject to attainment of the following net, pre-tax profit projections
determined in accordance with generally accepting accounting principles,
consistently applied ("GAAP"):
(1) If Vista earns net, pre tax profits, determined in accordance with
GAAP, of at least $400,000 during the period starting on July 1, 2000
and ending on June 30, 2001, then the first 163,333 shares of AmeriNet
Stock reserved for issuance in the event of exercise of the subject
incentive stock options will vest;
(2) If Vista earns net, pre tax profits, determined in accordance with
GAAP, of at least $1,200,000 during the period starting on July 1, 2000
and ending on June 30, 2002, then all rights to 457,333 (including the
163,333 shares vested, if any, on June 30, 2001) of the shares of
AmeriNet Stock reserved for issuance in the event of exercise of the
subject incentive stock options will vest; and
(3) If Vista earns net, pre tax profits, determined in accordance with
GAAP, of at least $2,800,000 during the period starting on July 1, 2000
and ending on June 30, 2003, then all
24
rights to all of the shares (including the shares vested, if any, on
June 30, 2001 and June 30, 2002) of AmeriNet Stock reserved for
issuance in the event of exercise of the subject incentive stock
options will vest.
(4) All rights to the incentive stock options in the subject employment
agreements that have not vested as of July 1, 2003 will expire on such
date, and no further rights of any kind thereto or to the underlying
shares of AmeriNet common stock reserved for such purpose will exist
thereafter, the reservation therefor terminating on such date.
The 931,000 shares of AmeriNet Stock have been allocated as follows:
Teri E. Nadler, 499,800 shares; Scott B. Ugell, 261,600 shares; Jean Hickman,
117,600 shares; Alicia Torrealba, 39,200 shares.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of the AmeriNet Stock received by the former Vista
stockholders, as of March 14. 2000, individually and as a group, as well as
shares issued to a former creditor of Vista in consideration for extinguishment
of all claims against Vista, including a $180,000 loan. All persons listed have
sole voting and investment power with respect to their shares, unless otherwise
indicated.
Name and Address (1)(2) Percentage
Of Beneficial Owner Shares Owned
- ------------------- ------ -----
Teri E. Nadler 112,200 1.05%
6645 NW 48th Manor;
Coral Springs, Florida 33062
Scott Ugell 58,674 0.55%
155 N. Main Street;
New City, New York 10956
Jean Hickman 26,400 0.24%
3780 SW 19th Street;
Fort Lauderdale, Florida 33312
Alicia Torrealba 8,800 0.08%
1985 South Ocean Drive, Apartment 11-A;
Hallendale, Florida 33309
Karyn McKnight 2,926 0.02%
10020A Main Street, Suite 177;
Bellevue, Washington 98004
Kenneth & Carol Nelson 11,000 0.10%
1625 3rd Street South;
Naples, Florida 33942
Nellie Tippery 66,667 0.62%
219 E. Wiser Lake Road;
Lyndon, Washington 98264
All former Vista stockholders and
creditors as a group 286,667 2.66%
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- ------
(1) In addition to the foregoing, the former Vista stockholders have the
contingent right to receive up to 219,999 shares of AmeriNet Stock,
subject to the following requirements:
(A) If Vista earns net, pre tax profits, determined in accordance
with GAAP, of at least $400,000 during the period starting on
July 1, 2000 and ending on June 30, 2001, then Vista's former
stockholders will be issued an aggregate of 36,667 of the
additional shares;
(B) If Vista earns net, pre tax profits, determined in accordance
with GAAP, of at least $1,200,000 during the period starting
on July 1, 2001 and ending on June 30, 2002, then Vista's
former stockholders will be issued an aggregate 102,666 of the
additional shares (including the 36,667 that either were or
could have been earned as of June 30, 2001);
(C) If Vista earns net, pre tax profits, determined in accordance
with GAAP, of at least $2,800,000 during the period starting
on July 1, 2000 and ending on June 30, 2003, then Vista's
former stockholders will be issued all of 219,999 of the
additional shares (including the 102,666 that either were or
could have been earned as of June 30, 2002); however, all
rights to any of the additional shares not earned as of such
date will thereupon expire.
(D) The additional shares will be allocated among the Vista's
Stockholder's, pro rata, based on their ownership of Vista's
common stock immediately preceding the closing on the
reorganization Agreement with AmeriNet.
(2) In addition to the foregoing, 931,000 shares of AmeriNet Stock have
been reserved for future issuance through incentive stock options (as
defined in Section 422 of the Code) granted in Vista's officers'
employment agreements, provided, however, that rights to such shares
will vest on an annual basis, subject to attainment of the following
net, pre-tax profit projections determined in accordance with GAAP:
(A) If Vista earns net, pre tax profits, determined in accordance
with GAAP, of at least $400,000 during the period starting on
July 1, 2000 and ending on June 30, 2001, then the first
163,333 shares of AmeriNet Stock reserved for issuance in the
event of exercise of the subject incentive stock options will
vest;
(B) If Vista earns net, pre tax profits, determined in accordance
with GAAP, of at least $1,200,000 during the period starting
on July 1, 2000 and ending on June 30, 2002, then all rights
to 457,333 (including the 163,333 shares vested, if any, on
June 30, 2001) of the shares of AmeriNet Stock reserved for
issuance in the event of exercise of the subject incentive
stock options will vest; and
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(C) If Vista earns net, pre tax profits, determined in accordance
with GAAP, of at least $2,800,000 during the period starting
on July 1, 2000 and ending on June 30, 2003, then all rights
to all of the shares (including the shares vested, if any, on
June 30, 2001 and June 30, 2002) of AmeriNet Stock reserved
for issuance in the event of exercise of the subject incentive
stock options will vest.
(D) All rights to the incentive stock options in the subject
employment agreements that have not vested as of July 1, 2003
will expire on such date, and no further rights of any kind
thereto or to the underlying shares of AmeriNet common stock
reserved for such purpose will exist thereafter, the
reservation therefor terminating on such date.
(E) The rights to the 931,000 shares of AmeriNet Stock have been
allocated among Vista's officers, as follows: Teri E. Nadler,
499,800 shares; Scott B. Ugell, 261,600 shares; Jean Hickman,
117,600 shares; Alicia Torrealba, 39,200 shares.
Certain Relationships and Related Transactions
Since Vista's inception, it was a party to the following transactions
in which:
* a director or executive officer of Vista,
* a nominee for election as a director,
* a beneficial owner of ten percent or more of Vista's common
stock, or
* any member of the immediate family of any of the foregoing;
had or will have a direct or indirect interest, and did not involve: rates or
charges determined by competitive bids; services at rates or charges fixed by
law or governmental authority; services as a bank depository of funds, transfer
agent, registrar, trustee under a trust indenture; or, similar services:
Relationship Nature of Interest Amount of
Name To Vista In the Transaction Such Interest
- ---- -------- ------------------ ------------
Scott A. Ugell Director Receipt of legal fees for $8,000
and general counsel organizational work
Resignation of Ms. Penny Adams Field as a Member of the Registrant's Board of
Directors
Ms. Penny Adams Field, a member of the Registrant's board of directors
and of its audit committee, submitted a letter of resignation dated March 1,
2000, which was addressed to Michael Harris Jordan, the Registrant's president.
The board of directors intends to accept such resignation at its next meeting.
Because it did not involve any disputes with the Registrant, Ms. Field's
resignation is not reported under Item 6. The following is the text of Ms.
Field's resignation letter:
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"Dear Michael:
As we discussed at the first of the year, I cannot continue to
participate on the board of Amerinet Group due to the extreme demands that
have been placed on me at Cigarette racing Team. I cannot predict when my
responsibilities or schedule will lighten and therefore have had to discontinue
all outside activity and devote myself to the corporate transition.
I wish you and all of the board at Amerinet the best and success in all
your endeavors."
Item 7. Financial Statements and Exhibits.
List below the financial statements, pro forma financial information
and exhibits, if any, filed as a part of this report.
(a) Financial statements of businesses acquired.
As permitted by subsection (a)(4) of this Item, the Registrant will
file the financial statements required by this item by amendment not later than
60 days after the date that this report on Form 8-K is being filed. The
Registrant is including a minimal unaudited balance sheet and operating
statement provided by Vista as an exhibit to the reorganization agreement as a
component of such agreement, filed as an exhibit to this current report.
(b) Pro forma financial information.
As permitted by subsection (a)(4) of this Item, the Registrant will
file the pro forma financial information required by this item by amendment not
later than 60 days after the date that this report on Form 8-K is being filed.
(c) Exhibits.
Designation Page
of Exhibit Number
as Set Forth or Source of
in Item 601 of Incorporation
Regulation S-B By Reference Description
(2) Plan of acquisition, reorganization,
arrangement, liquidation or
succession:
.17 32 Reorganization Agreement dated March 12,
2000 between the Registrant and Vista.
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(3) (i) Certificate or Articles of Incorporation:
.4.vv 139 Current articles of incorporation for
Vista, as amended to date.
(ii) Bylaws:
.5.vv 145 Current bylaws for Vista, as amended to
date.
(10) Material Contracts
* Material agreements to which Vista is a
party or by which its is bound:
.1.vv 172 Commercial Lease dated December 9, 1998
between John A. Roschman and Vista for
property located at 5653 NW 29th Street,
Margate: Two year term ending December 31,
2000.
.2.vv 182 BSFS Equipment Leasing of ICS phone system
.3.vv 183 Xerox Equipment Lease dated 3/16/99.
.4.vv 184 Xerox Equipment Lease dated 3/16/99
.5.vv 185 Xerox Equipment Lease dated 3/16/99
.6.vv 186 Shareholders Agreement and
Irrevocable Proxy for Vista, dated
November 13, 1998.
.7.vv 200 Amended Shareholders Agreement dated
September 28, 1999.
.8.vv 202 Letter agreement removing security
interest in Vista shares by Nellie
Tippery, dated January 20, 2000.
.9.vv 203 Security and Pledge Agreement dated
November 14, 1998.
.10.vv 207 Shareholders Agreement and
Irrevocable Proxy dated January 17, 2000.
.11.vv 218 Carnival Cruise Override Commission
Agreement dated March 18, 1999.
.12.vv 221 Letter, application and membership
agreement form with Vacation.com.
.13.vv 224 Agreement with Dale Everly Colson as
Public Relations Consultant .
.14.vv 225 Agreement for Professional Services
between Vista and Wriwebs.com, Inc.
.15.vv 229 Superseder & Conversion Agreement
with Nellie Tippery.
.16.vv 242 Promissory Note in favor of Nellie
Tippery
.16.vv 243 Cancellation of Promissory Note in
favor of Nellie Tippery
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Designation Page
of Exhibit Number
as Set Forth or Source of
in Item 601 of Incorporation
Regulation S-B By Reference Description
.17.vv 244 Premium Finance Agreement dated February
2, 2000.
.18.vv 248 Summary of the following insurance
policies:
Preferred National Insurance Company
dated February 3, 2000.
Group Health Insurance Policy with
United Wisconsin Life Insurance
Company dated June 1, 1999, through
June 1,2000.
Comp Options Workers Compensation
and Employers Liability Policy dated
December 12, 1999.
.19.vv 250 Scott Ugell's Malpractice Insurance and
Professional Liability Policy dated May
5, 1999 to May 1, 2000.
.20.vv 251 Affiliate Agreement with Teri E. Nadler
.21.vv 268 Affiliate Agreement with Alicia Torrealba
.22.vv 285 Affiliate Agreement with Scott B. Ugell
.23.vv 302 Affiliate Agreement with Ken Nelson &
Carol Nelson
.24.vv 319 Affiliate Agreement with Jean Hickman
.25.vv 336 Affiliate Agreement with Karyn McKnight
.26.vv 353 Affiliate Agreement with Nellie Tippery
.27.vv 370 Employment Agreement with Teri Nadler
.28.vv 381 Employment Agreement with Scott B. Ugell
.29.vv 392 Employment Agreement with Alicia Torrealba
.30.vv 403 Employment Agreement with Jean Hickman
.31.vv 414 Independent Contractor Agreement with
Karyn McKnight
.32.vv 426 Confidentiality Agreement with Jay Lovins
.33.vv 430 Confidentiality Agreement with Karyn
McKnight
.34.vv 434 Confidentiality Agreement with Trevor
Grafflin
(99) Additional Exhibits:
.50 438 Resignation letter from Penny Adams Field
- -------
* Included as exhibits to or in the schedules to the Reorganization
Agreement dated March 12, 2000 between the Registrant and Vista filed
herewith as exhibit 2.16.
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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 hereunto duly authorized.
Dated: March 28, 2000
AmeriNet Group.com, Inc
/s/ Michael Jordan
---------------------------------
Michael Jordan
President
31