SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the quarterly period ended June 30th, 2002
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act.
Commission file number: 0-09358
MULTINET INTERNATIONAL CORPORATION., INC.
(Exact name of small business issuer as specified in its charter)
Nevada 88-0441388
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
554 Greentree Cove, Suite 102, Collierville, TN 38017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (901)-854-3574
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 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
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the last practicable date: 23,201,001 as of August 16th, 2002.
ITEM 1. FINANCIAL STATEMENTS
MULTINET INTERNATIONAL CORPORATION, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 2002
(Unaudited)
ASSETS
Current assets
Interest receivable $ 2,218
Prepaid expense 2,827
-----------
Total current assets 5,045
Fixed assets, net 40,673
Note receivable 65,000
Deposit 1,435
-----------
Total assets $ 112,153
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable and accrued expenses $ 74,707
Due to stockholder 363,130
Stock payable-related party 535,950
Stocks payable 10,000
-----------
Total current liabilities 983,787
Total liabilities 983,787
Commitments and contingencies --
Stockholders' deficit
Common stock - $.001 par value, 50,000,000 shares
authorized, 21,201,000 shares issued and outstanding 21,201
Additional paid-in capital 1,127,455
Prepaid consulting services paid common stock and warrants (512,485)
Accumulated deficit (1,507,805)
-----------
Total stockholders' deficit (871,634)
-----------
Total liabilities and stockholders' deficit $ 112,153
===========
See Accompanying Notes to Financial Statements
MULTINET INTERNATIONAL CORPORATION, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
For the period For the period
from April 19, 2001 from April 19, 2001
For the three (Date of Inception For the six (Date of Inception)
months ended through months ended through
June 30, 2002 June 30, 2001 June 30, 2002 June 30, 2002
------------ ------------ ------------ ------------
Revenues
Interest income $ 798 $ -- $ 844 $ 2,218
------------ ------------ ------------ ------------
Total revenues 798 -- 844 2,218
General and administrative expenses
Consulting fees 337,487 115,000 704,975 1,155,980
Depreciation 2,516 -- 4,595 11,475
Other general and administrative expenses 43,703 97,868 100,312 342,568
------------ ------------ ------------ ------------
Total general and administrative expenses 383,706 212,868 809,882 1,510,023
------------ ------------ ------------ ------------
Loss before provision for income taxes (382,908) (212,868) (809,038) (1,507,805)
Income tax provisions -- -- -- --
------------ ------------ ------------ ------------
Net loss $ (382,908) $ (212,868) $ (809,038) $ (1,507,805)
============ ============ ============ ============
Basic and diluted loss per common share $ (0.02) $ (0.01) $ (0.04) $ (0.08)
============ ============ ============ ============
Basic and diluted weighted average
common shares outstanding 20,603,222 18,000,000 21,129,579 19,723,489
============ ============ ============ ============
See Accompanying Notes to Financial Statements
MULTINET INTERNATIONAL CORPORATION, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM APRIL 19, 2001
(DATE OF INCEPTION FOR SHOWINTEL NETWORKS, INC.)
THROUGH JUNE 30, 2002
Prepaid Consulting
Common stock Services Paid
------------------------- Additional with Common Total
Number Paid-in Stock and Accumulated Stockholders'
of Shares Amount capital Warrants Deficit Equity
----------- ----------- ----------- ----------- ----------- -----------
Balance, April 19, 2001 (Date of Inception
of Showintel Networks, Inc.) -- $ -- $ -- $ -- $ -- $ --
Common stock issued to the founder for
cash, $0.0165 per share 15,000,000 15,000 232,725 -- -- 247,725
Common stock issued to the founder for
services, $0.0165 per share 3,000,000 3,000 46,500 -- -- 49,500
Common stock issued for the acquisition
of Multinet International Corporation,
Inc., $0.001 per share 2,431,000 2,431 -- -- -- 2,431
Issuance of warrants for 1,000,000 shares
of common stock to a consultant with a
weighted average exercise price of $1.00 -- -- 350,000 (291,666) -- 58,334
Net loss -- -- -- -- (698,767) (698,767)
----------- ----------- ----------- ----------- ----------- -----------
Balance, December 31, 2001 20,431,000 20,431 629,225 (291,666) (698,767) (340,777)
Common stock issued for consulting
services, $0.65 per share 760,000 760 493,240 (370,500) -- 123,500
600,000 shares of common stock given to
various consultants by the President/
stockholder to satisfy consulting
agreements, valued at $0.65 per share,
in exchange for stock payable -- -- -- (535,950) -- (535,950)
Expensed portion of prepaid consulting
services -- -- -- 685,631 -- 685,631
Issuance of 10,000 shares of common stock
related to exercise of warrants at
$0.50 per share 10,000 10 4,990 -- -- 5,000
Net loss -- -- -- -- (809,038) (809,038)
----------- ----------- ----------- ----------- ----------- -----------
Balance, June 30, 2002 (Unaudited) 21,201,000 $ 21,201 $ 1,127,455 $ (512,485) $(1,507,805) $ (871,634)
=========== =========== =========== =========== =========== ===========
See Accompanying Notes to Financial Statements
MULTINET INTERNATIONAL CORPORATION, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the period from
For the six April 19, 2001 (Date
months ended of Inception) through
June 30, 2002 June 30, 2002
------------- -------------
Cash flows from operating activities:
Net loss $ (809,038) $(1,507,805)
Adjustments to reconcile net loss to
net cash used by operating activities:
Stock based compensation 809,131 919,396
Depreciation 4,595 11,475
Changes in operating assets and liabilities:
Increase in interest receivable (844) (2,218)
Increase in prepaid expenses -- (2,827)
Increase in deposit -- (1,435)
Increase in accounts payable and accrued expenses 39,219 74,707
Increase (decrease) in stocks payable to consultants (109,156) 10,000
----------- -----------
Net cash used by operating activities (66,093) (498,707)
Cash flows from investing activities:
Loan related to note receivable (25,000) (65,000)
Purchase of fixed assets (4,872) (52,148)
----------- -----------
Net cash used by investing activities (29,872) (117,148)
Cash flows from financing activities:
Advances from stockholder 90,965 363,130
Proceeds from issuance of common stock 5,000 252,725
----------- -----------
Net cash provided by financing activities 95,965 615,855
----------- -----------
Net change in cash -- --
Cash, beginning of period -- --
----------- -----------
Cash, end of period $ -- $ --
=========== ===========
Supplementary cash flow information:
Cash payments for interest $ -- $ --
=========== ===========
Non-cash financing activities:
Prepaid portion of consulting agreement related to issuance
of warrants to purchase 1,000,000 shares of common stock $ -- $ 350,000
=========== ===========
Prepaid portion of consulting agreement related to issuance
of 760,000 shares of common stock $ 494,000 $ 247,000
=========== ===========
Prepaid portion of consulting agreement related to 600,000
shares of common stock given by President/shareholder
to satisfy consulting agreement in exchange for stock
payable $ 535,950 $ 148,819
=========== ===========
See Accompanying Notes to Financial Statements
MULTINET INTERNATIONAL CORPORATION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
Securities and Exchange Commission requirements for interim financial
statements. Therefore, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. The financial statements should be read in conjunction with the
Forms 10-KSB and 10-KSB/A for the year ended December 31, 2001 of Multinet
International Corporation, Inc. (the "Company").
The results of operations for the interim periods shown in this report are not
necessarily indicative of results to be expected for the full year. In the
opinion of management, the information contained herein reflects all adjustments
necessary to make the results of operations for the interim periods a fair
statement of such operation. All such adjustments are of a normal recurring
nature.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
NOTE 2 - GOING CONCERN
The Company incurred a net loss of approximately $1,508,000 the period from
April 19, 2001 (Date of Inception for Showintel Networks, Inc.) through June 30,
2002. The Company's current liabilities exceed its current assets by
approximately $443,000 as of June 30, 2002. The Company's net cash used from
operating activities approximated $499,000 for the period from April 19, 2001
(Date of Inception for Showintel Networks, Inc.) through June 30, 2002. These
factors create an uncertainty about the Company's ability to continue as a going
concern. The Company's management plans to complete the development of the
infrastructure necessary to deliver the video-streaming technology in order to
fully commence its operations and therewith generate future revenues. The
Company will also seek additional sources of capital through the issuance of
debt and equity financing, but there can be no assurance that the Company will
be successful in accomplishing its objectives.
The ability of the Company to continue as a going concern is dependent on
additional sources of capital and the success of the Company's plan. The
financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
NOTE 3 - NOTE RECEIVABLE
On July 16, 2001, the Company entered into an agreement to loan a principal sum,
with a maximum of $500,000, to See/Saw Communications, Inc., in exchange for a
convertible promissory note, which is convertible to a 10-15% membership
interest in the entity. The President of See/Saw Communications, Inc. serves as
a Advisory Board Member for the Company, see Note 6. The percentage of
membership interest would be determined by the exercise date based upon the loan
amount outstanding, with conversion rights executed before February 22, 2003,
resulting up to a 10% interest and execution after the said date would result up
to a 15% interest. The note is due in yearly anniversary payments of interest at
8% per annum with the outstanding principal due on August 22, 2006. As of June
30, 2002, the Company had loaned $65,000 to this entity and recorded interest
receivable of $2,218.
MULTINET INTERNATIONAL CORPORATION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 4 - DUE TO STOCKHOLDER
Due to stockholder totaling $363,130 as of June 30, 2002 consisted of the
following:
Loans payable from the Company's President and majority
stockholder, unsecured, interest rate of 10%, and
accrued interest and principal due on July 1, 2002 $ 257,026
Accrued interest related to loans
payable from the Company's
President and majority stockholder 22,104
Accrued wages for the Company's
President and majority stockholder 84,000
---------
$ 363,130
=========
NOTE 5 - STOCKS PAYABLE
As of June 30, 2002, stock payable totaling $10,000 related to cash received on
a stock subscription for a total of 100,000 shares of the Company's common stock
at $0.10 per share.
NOTE 6 - RELATED PARTY TRANSACTIONS
On January 18, 2002, the Company entered into a management consulting agreement
with several officers of See/Saw Communications, Inc. The President of See/Saw
Communications, Inc. serves as a Advisory Board Member for the Company, see Note
3. The agreement provides for strategic planning and general business services
for a period of one year in consideration of 760,000 shares of the Company's
common stock, to include 330,000 shares to the President of See/Saw
Communications, Inc. The Company has valued this transaction at $494,000 or
$0.65 per share which will be expensed over a period one year. As of June 30,
2002, the Company issued 760,000 shares and recorded $247,000 as consulting
expenses and the remaining portion of $247,000 has been included as part of
prepaid consulting services totaling $512,485 as of June 30, 2002, and will be
expensed over the remaining life of the agreement.
During the six month period ended June 30, 2002, the Company's
President/stockholder had given 600,000 shares of the Company's common stock
owned by him to various consultants for payment on consulting agreements entered
into during 2001. The value of the shares at the consummation of these
agreements were $0.65 per share which the Company has recorded a stock
payable-related party totaling $535,950 for these shares to be issued in the
future to the Company's President/stockholder as replacement. The Company has
expensed $267,975 for the six month period ended June 30, 2002 and $119,156 for
the year ended December 31, 2001 for a total accumulated expense of $387,131 as
of June 30, 2002. The remaining portion totaling $148,819 has been included as
part of prepaid consulting services totaling $512,485 as of June 30, 2002, and
will be expensed over the remaining life of the agreement.
MULTINET INTERNATIONAL CORPORATION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 7 - CONSULTING SERVICES
In November 2001, the Company entered into a consulting agreement with a company
to provide corporate finance and advisory services for a period of twelve months
in consideration for warrants to purchase 1,000,000 shares of it's common stock
with an weighted average exercise price of $1.00. The Company has valued this
transaction at $350,000 under SFAS No. 123. The Company has recorded consulting
expenses for $175,000 for the six month period ended June 30, 2002 and $58,334
for the year ended December 31, 2001 for a cumulative total of $233,334 as of
June 30, 2002. The remaining amount of $116,666 in included as part prepaid
consulting services totaling $512,485 as of June 30, 2002, and will be expensed
over the remaining life of the agreement.
NOTE 8 - COMMON STOCK
During the six month period ended June 30, 2002, the Company issued 10,000
shares of its common stock related to the exercise of warrants at $0.50 per
share.
In May 2002, the Company mistakenly issued 300,000 shares of unrestricted common
stock to two individuals. Accordingly, these 300,000 shares are not included as
outstanding shares of common stock as of June 30, 2002. The Company has notified
the appropriate agencies of this transaction in an effort to obtain these shares
from these individuals. The Company believes it will obtain these shares,
however, if these shares are not returned then an expense will be recorded based
upon the fair value of such shares, $0.35 per share, at the date of issuance
totaling $105,000.
NOTE 9 - SUBSEQUENT EVENTS
In July 2002, the Company entered into a common stock purchase agreement with an
investor whereby the Company will sell an aggregate of 2,000,000 shares to the
investor at $0.10 per share for a total of $200,000. The Company received
$200,000 in July 2002, and subsequently issued 2,000,000 shares of common stock
in August 2002. Provisions of the agreement allows the investor to sell their
shares to the Company during the period and from time to time between April 3,
2003 and July 3, 2003 for a cash purchase price of $0.19 per share. Furthermore,
the agreement allows the Company to purchase these shares from the investor at
$0.20 per share during the period and from time to time between the date of the
agreement to April 3, 2003.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This report contains 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. Actual results and events could differ materially from those projected,
anticipated, or implicit, in the forward-looking statements as a result of the
risk factors set forth below and elsewhere in this report. With the exception of
historical matters, the matters discussed herein are forward looking statements
that involve risks and uncertainties. Forward looking statements include, but
are not limited to, the date of introduction or completion of our products,
projections concerning operations and available cash flow. Our actual results
could differ materially from the results discussed in such forward-looking
statements. The following discussion of our financial condition and results of
operations should be read in conjunction with our financial statements and the
related notes thereto appearing elsewhere herein.
THE COMPANY
Multinet International Corporation, Inc. was incorporated on May 17, 1996 in the
State of Nevada. On September 26, 2001, the Company consummated an agreement to
acquire all of the outstanding capital stock of Showintel Networks, Inc., a
Nevada Corporation, in exchange for 18,000,000 shares of Multinet's common stock
("Showintel Transaction"). Prior to the Showintel Transaction, Multinet was a
non-operating public company with no operations or assets; and 2,431,000 shares
of common stock issued and outstanding; and Showintel Networks, Inc. was a
privately held company with assets being used for the development of its
video-streaming technology.
Prior to the Showintel Transaction, the Company operated a convenience store
through Nikky D Corporation, a wholly owned subsidiary. In September 2001, the
Company divested itself of Nikky D. Corporation. The Company has accounted for
this divestiture as a spin-off in accordance with Accounting Principles Board
Statement No. 29. As a result of this divestiture, the Company became a
non-operational public company.
Showintel Networks, Inc. ("Showintel") increases consumption of entertainment by
creating a system that interacts with the "entertainment life-cycle." Combining
theater-based advertising, innovative loyalty programs, and video-on-demand
(VOD) access to pay-per-view (PPV) and subscription services, Showintel can
increase loyalty and revenue to a chain of theaters, increase purchases of
ancillary products (soundtracks, DVDs, videos, merchandise), and create a
pinpoint targeted direct marketing connection with entertainment consumers to
stimulate rentals and PPV. In addition, some of the infrastructure investment
can generate incremental revenue through strategic relationships with local ISP
and wireless network operators.
IN-THEATER ADVERTISING SYSTEM: Showintel is placing interactive displays in
theaters that will offer advertising and coming attractions that theater patron
can watch passively or interactively. We have an exclusive agreement with
See/Saw Communications, LLC. See/Saw was created in part by the principals of
Toolbox Productions, Inc., to sell the advertising space on our displays.
Toolbox is a full service company, uniquely qualified to sell, produce, write,
edit and mix audio/video promotional campaigns and sales presentations. Toolbox
was founded in 1995 as the exclusive on-air promotion facility for the United
Paramount Network (UPN). Clients include MGM, ABC, Sony, Paramount and Studios
USA.
LOYALTY PROGRAM: As a reward for interacting with the advertising displays,
theater patrons will be offered the opportunity to sign up for a loyalty program
that offers them discounts on future tickets as well as discounted or free
offers from sponsors of the loyalty program.
E-MAIL MARKETING: Once a part of the loyalty program, Showintel will collect
data on the movies seen. This will allow us to market merchandise directly
related to the films seen as well as creating offers for entertainment of a
similar genre.
VOD INFRASTRUCTURE: As entertainment properties continue along the entertainment
lifecycle, Showintel will offer PPV and subscription services to the residential
and hospitality markets.
INFORMATION: Once Showintel knows which films a theater patron has seen, we will
create online conversations with them designed to obtain feedback on the shows
they have seen. This will be valuable to film producers and advertisers. It will
give us an advantage in targeting future entertainment opportunities to the
consumer.
Currently the company has under contract with two theater chains and one single
operator representing a total of 45 sites under contract to install the
company's IN THEATER ADVERTISING SYSTEM. 11 sites have the systems installed.
The Memphis theater sites have high-speed (T-1) broadband lines installed and
ready for hookup to the equipment upon installation. The central VOD server has
been purchased and configured with custom designed media management software.
Site based servers have been purchased and awaiting installation at 16 prepared
sites. The company has interest from a number of media buyers to purchase the
available interactive advertisement space contingent upon the complete
installation of equipment at each theater site.
NO ASSURANCES THAT WE WILL BE ABLE TO ESTABLISH OUR SYSTEM
There are no assurances, however, that we will ever be successful in
establishing our System or penetrating our target markets. Due to the company's
low cash reserves, additional funds are required within the next few months to
complete the installation of equipment needs at the sites under contract and to
proceed with the company's business plan. The Company intends to raise these
funds through various financial arrangements including debt or equity. The
company has been informed that it will not be able to secure a line of credit
from any financial institution to supplement its cash flow needs until revenue
is generated from the established contracts. The company is negotiating with a
number of sources of funding to provide for equipment expense and operational
expenses. There is no assurance that such additional financing will be available
when required in order to proceed with the business plan. If the company is
unsuccessful in securing the additional capital investments needed to continue
operations within the time required, the company will not be in a position to
continue operations and the stockholders may lose their entire investment.
Showintel has had limited operations since its organization and is a "start-up"
or "development stage" company. We have no history of operations you can use to
evaluate our business experience.
EMPLOYEES
As of June 30th, 2002, the company has one employee, David V. Lott, President,
who has worked full-time since the company's founding. The company intends to
hire additional employees immediately upon securing the necessary operational
and equipment financing. The company currently retains two outside consultants
to assist with business development, financial development and business
strategy.
RESULTS OF OPERATIONS
REVENUES
Showintel Networks, Inc. has never generated revenues form operations. Showintel
Networks, Inc has been in the development stage since its inception in April,
2001 and has been in the process of building its infrastructure. Showintel had
expected funding for operations and capital expenditures at the time of the
acquisition, which failed to materialize. Showintel Networks, Inc. and the
Company are in continuing discussions to raise sufficient capital for company
operations.
The Company realized interest income in the amount of $798 for the three months
ending June 30th, 2002 from accrued interest on a note receivable.
EXPENSES
Total general and administrative expenses were $383,706 for the three months
ended June 30th, 2002 and $809,882 for the six months ended June 30th, 2002.
Most of the expenses were for consultant fees in the amount of $337,487 and
$704,975 respectively, which have been paid primarily by the issuance of common
restricted stock in the company. The company booked depreciation of $2,516 the
three months ended June 30th , and $4,595 for the six months ended June 30th,
2002, on existing equipment and furnishings. Other general and administrative
expenses were $43,703 for the three months ended June 30th, 2002 and $100,312
for the six months ended June 30th, 2002.
OPERATING LOSS
On a pre-tax basis, we had a loss of $382,908 for the three months ending June
30, 2002 and $809,038 for the 6 months ending June 30th, 2002 from continuing
operations. For the three months ending June 30, 2002, and the 6 months ending
June 30th, 2002, we had a loss per common share from continuing operations,
basic and diluted, of $.02 and $.04 per share, respectively.
B. LIQUIDITY AND CAPITAL RESOURCES
The Company's current assets exceed its current liabilities by a total of
$443,000 as of June 30th, 2002. As of June 30th, 2002, the Company had an
accumulated deficit of $1,507,795. This raises substantial doubt about the
Company's ability to continue as a going concern.
The Company has incurred substantial losses from continuing operations,
sustained substantial operating cash outflows, has a working capital deficit
and, as of the 3 months ending June 30th, 2002, has a capital deficiency.
Management believes that such losses and negative operating cash flows will
continue through the fiscal year 2002 and into the fiscal year 2003 unless
adequate capital funding is obtained. The above factors raise substantial doubt
about the Company's ability to continue as a going concern. The Company's
continued existence is dependent on its ability to obtain additional equity
and/or debt financing to fund its operations and ultimately to achieve
profitable operations. The Company is attempting to raise additional financing.
There is no assurance that the Company will obtain additional financing or
achieve profitable operations or cash flow.
Historically, the Company has sustained its operations primarily from the use of
our own management's personal financial resources. We are seeking sources of
financing, from several public or private equity or debt offerings. The current
state of sources of funding are as follows:
On April 1, 2002, Multinet received a signed term sheet from International Forex
Finance Group, LTD. representing a line of credit equal to 20% of the market
value of restricted 144A stock the company placed in escrow for collateral for
such an arrangement. 5 million restricted 144 shares and 25 million 144A shares,
previously issued, have been canceled due to an error in calculation of the
total authorized number of shares of the Company. The Company is currently in
the process of properly amending the Articles of Incorporation to increase the
total number of authorized shares. Though this transaction was never finalized,
the term sheet has been cancelled. The Company is still in negotiations with
International Forex and is pursuing a new agreement with the use of 5 million
shares of David Lott's own personal shares. Should an arrangement be reached,
Mr. Lott will donate the shares to the Corporation for this purpose. Mr. Lott is
to be issued new shares in the amount of 5 million shares upon the filing of
amended articles of incorporation to increase the number of authorized shares
available. However, there are no assurances that the transaction with IFF will
be completed.
While not created for fundraising, the Company has issued warrants for 1 million
shares of common stock to Erik Nelson of Coral Capital Partners for consulting
services. Mr. Nelson holds two classes of Warrants. Class A entitles Mr. Nelson
to exercise for 500,000 shares of Company stock at $.50 share. Class B entitles
Mr. Nelson to exercise for 500,000 shares of Company stock at $1.50 per shares.
Mr. Nelson has advised the Company that he intends to begin exercising his
Warrants upon completion of the registration of the Warrants. On May 7, 2002, a
Form S-8 registration statement was completed that registered the warrants to
Mr. Nelson as well as the 1 million shares of common stock for the warrants. Mr.
Nelson has exercised 10,000 shares to date at $.50 per share.
On July 1, 2002, the Company executed a term sheet with La Jolla Cove Investors
for the investment of $200,000. The transaction has been completed. Mr. David V.
Lott, President of the Company, offered 1.6 million of his stock as collateral
for the funding. La Jolla Cove was given 2 million shares of restricted stock at
$.10 per share. Mr. Lott has a call option to buy the stock back in one year at
$.20 per share. La Jolla has a put option to sell the stock back to Mr. Lott at
$.19 per share at the end of the year. The funding allowed the installation of
equipment in 16 theater sites. Currently the Company and La Jolla are in more
negotiations for further funding arrangements.
On May 8th, 2002, the Company executed a private placement of 100,000 restricted
shares at $.10 per share to an individual investor.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On May 8th, 2002, the Company entered into an agreement to issue 100,000
restricted shares at $.10 per share pursuant to pursuant to Section 4(2) of the
Securities Act of 1933. The proceeds are to be used to further installation of
our equipment. The funds have been received by the Company and the Company is in
the process of distributing those shares.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
N/A
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
N/A
ITEM 5. OTHER INFORMATION
We have been in negotiations with UniGuest of Tennessee (www.uniguest.com)
regarding the potential acquisition of UniGuest by a newly created subsidiary of
our Company. UniGuest is a sales integration organization that provides
technology services to the travel and hospitality industry. No final agreements
have been reached and there are no assurances that such an agreement will be
finalized.
During the registration of an S-8, filed on May 7th, 2002, a delay after the
execution of an original filing document to re-evaluate several consultant
agreements caused an inadvertent release of 300,000 shares of common stock from
the Company treasury bearing no legend. Upon learning of the release, the
Company and its counsel requested the stock be returned to the company. Two
individuals refused to return the stock. The Company notified the SEC and NASD.
Official letters stating that the stock was unregistered was sent to the
Depository Transfer Corporation, Cede and Co. and the brokerage houses. As of
this date the stock is still being held in the brokerage houses but are frozen
from any activity. NASD is working with the Company to have the stock returned.
On July 10th, 2002, Showintel Networks entered into a master license agreement
with Wehrenberg Theaters, St. Louis Missouri, for the installation of Plasma
Screens and/or Digital Display systems in 11 different theater locations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
(a) Exhibits
2.1 Acquisition Agreement between Multinet International Corp. and
Showintel, Inc. dated September 26, 2001. (Incorporated by
reference in Company's 8K/A filed on October 18th, 2001.
3.1 Articles of Incorporation of Multinet International Corporation,
Inc. (Incorporated by reference from Exhibit 3.1 of Form 8-K
filed October 27, 2000).
3.2 Bylaws of Multinet International Corporation, Inc. (Incorporated
by reference from Exhibit 3.2 of Form 8-K filed July 21, 2000).
3.3 Certificate of Incorporation of Nikky D. Corporation, a Delaware
corporation (Incorporated by reference from Exhibit 3.1 of Form
8-K filed April 6, 2001).
10.1 Nikky D. Management Agreement (Incorporated by reference from
Exhibit 27.1 of Form 8-K filed July 21, 2000).
10.2 Master License Agreement between Digital Theatre Resources Co.
and Showintell Networks, Inc. (July 1, 2001) (Incorporated by
reference in Company's Form 10KSB filed on April 18th, 2002)
10.3 Guaranty Agreement between See Saw Communications Inc., and
Showintell Networks, Inc. (Oct 16, 2001) (Incorporated by
reference in Company's Form 10KSB filed on April 18th, 2002)
21.1 Subsidiaries of Registrant. (Incorporated by reference in
Company's Form 10KSB filed on April 18th, 2002)
99.1 Certification of David V. Lott
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Multinet International Corp., Inc.
By /s/ David V. Lott
------------------------------------------
David V. Lott, Sole Officer and Director.
Date: August 19, 2002