As Filed with the Securities and Exchange Commission on March 15, 2000
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT
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INFINITE NETWORKS CORPORATION
(FKA HARRISON DIGICOM, INC.)
NEVADA 4813 88-0361201
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification Number)
401 HARITON COURT
NORFOLK, VIRGINIA 23505
(757) 440-0511 (PHONE)
(Address and telephone number of principal executive offices)
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401 HARITON COURT
NORFOLK, VIRGINIA 23505
(757) 440-0511 (PHONE)
(757)440-0566 (FAX)
(Address of principal place of business or intended principal place of
business)
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RITE, INC.
1905 SOUTH EASTERN AVENUE
LAS VEGAS, NEVADA 89104
(702)641-7557
(Name, address and telephone number of agents for service)
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COPIES TO:
KENNETH G. EADE
Attorney at Law
827 State Street, Suite 26
Santa Barbara, CA 9310
(805)560-9828 (PHONE)
(805) 560-3608 (FAX)
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after the effective date of this registration statement.
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If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
---------------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------------------
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------------------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH DOLLAR PROPOSED PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES AMOUNT TO MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION FEE
TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE
<F1>
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Common Stock, $.001 par value.... $10,000,000 $ 10.00 $ 10,000,000 $ 2,640
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Representative's Warrant......... $ 0 $ 0.00 $ 0 $ 0
Totals........................... $10,000,000 ----------------- $ 10,000,000 $ 2,640
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<FN>
<F1> Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under
the Securities Act. Any difference between the dollar amount of the securities sold may be carried forward on a
future registration statement pursuant to Rule 429 under the Securities Act.
</FN>
Infinite Networks Corporation amends this registration statement on this date
or dates as may be necessary to delay its effective date until Infinite files a
further amendment which specifically states that this registration statement
becomes effective in accordance with Section 8(a) of the Securities Act, or
until this registration statement becomes effective on the date as the SEC,
acting pursuant to Section 8(a), may determine.
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DATED March 15, 2000
INFORMATION CONTAINED IN THIS OFFERING IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SEC. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO PURCHASE BE ACCEPTED
PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
WILL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH THE OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY STATE.
<U>ITEM 2.</U> <U>PROSPECTUS</U>
INFINITE NETWORKS CORPORATION
1,000,000 SHARES OF COMMON STOCK
A minimum of 100,000 up to a maximum of 1,000,000 shares of common stock are
being sold by Infinite Networks Corporation, formerly known as Harrison
Digicom, Inc. The common stock currently is quoted on the National Quotation
Bureau, "pink sheets", under the symbol "INCZ" and previously quoted on the
Bulletin Board under the symbol "HARR". Infinite will not obtain approval to be
quoted on the NASD OTC Bulletin Board until it becomes a reporting company.
There can be no assurance that Infinite's common stock will be quoted on the
Bulletin Board. As of February 25, 2000, the closing price of the common stock
was $.850 per share.
--------------------------------------
THE COMMON STOCK OFFERED IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK AND
SUBSTANTIAL DILUTION. SEE "RISK FACTORS" AND "DILUTION".
--------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO
PUBLIC COMMISSIONS<F1> INFINITE<F2>
Per Share............ $ 10 $ 0 $ 10
Total (Minimum)...... $ 1,000,000 $ 0 $ 1,000,000
Total (Maximum)...... $10,000,000 $ 0 $10,000,000
<FN>
<F1> This offering is self-underwritten so Infinite is not obligated to pay
commissions or fees on the sale of any of these shares.
<F2>These proceeds are before offering expenses estimated at approximately
$200,000. There can be no assurance that the maximum number of shares offered
will be sold.
</FN>
March 15,2000
INDEX TO PART I PROSPECTUS
ITEM 3 SUMMARY INFORMATION 2
ITEM 4 USE OF PROCEEDS 5
ITEM 5 DETERMINATION OF OFFERING PRICE 6
ITEM 6 DILUTION 6
ITEM 8 PLAN OF DISTRIBUTION 7
ITEM 9 LEGAL PROCEEDINGS 7
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS 7
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 8
ITEM 12 DESCRIPTION OF SECURITIES 9
ITEM 13 INTEREST OF NAMED EXPERTS 10
ITEM 15 ORGANIZATION WITHIN LAST 5 YEARS 10
ITEM 16 DESCRIPTION OF BUSINESS 11
ITEM 17 MANAGEMENT'S DISCUSSION AND ANALYSIS 20
ANALYSIS OF FINANCIAL CONDITION 22
ITEM 18 DESCRIPTION OF PROPERTY 26
ITEM 19 CERTAIN RELATIONSHIPS & RELATED TRANSACTIONS 26
ITEM 20 MARKET FOR COMMON EQUITY & RELATED STOCKHOLDER MATTERS 28
ITEM 21 EXECUTIVE COMPENSATION 29
ITEM 22 FINANCIAL STATEMENTS 31
1
-------------------------
AVAILABLE INFORMATION
Upon the effective date of this registration statement, Infinite will be
subject to the informational requirements of the Exchange Act, and will file
reports and other information with the SEC. Reports, proxy statements and
other information filed by Infinite can be inspected and copied at the
principal office of the SEC, Public Reference Room, 450 Fifth Street NW,
Washington, D.C. 20549. Copies can be obtained from the SEC at prescribed rates
by writing to the SEC at 450 Fifth Street NW, Washington, D.C. 20549. The SEC
maintains a web site, www.sec.gov, that contains reports, proxy and information
statements and other information. Upon acceptance of this filing, Infinite
will file to be listed on the bulletin board.
Infinite has filed with the SEC a registration statement under the Securities
Act, with respect to sales of the shares of common stock offered. This
prospectus omits certain information contained in the registration statement.
Agreements or other documents referenced to in this offering are not complete.
The reader should review the complete exhibits, included in the registration
statement, to clearly understand any referenced statements.
<U>ITEM 3.</U> <U>SUMMARY INFORMATION</U>
INFORMATION INCLUDED IN THIS SUMMARY AND THE RISK FACTORS ARE DISCUSSED IN MORE
DETAIL IN THE FINANCIAL STATEMENTS AND OTHER SECTIONS THROUGHOUT THE
REGISTRATION STATEMENT.
ALL SHARE, PER SHARE AND FINANCIAL INFORMATION INCLUDED IN THIS REGISTRATION
STATEMENT GIVES EFFECT TO THE JUNE 1999 FOUR-TO-ONE REVERSE STOCK SPLIT.
Infinite is engaged in the communications industry. Infinite will design full
service communications solutions for its customers using the latest
technologies available, including communications systems, long distance
telephone services, wireless communications, and data delivery and retrieval
systems. Infinite also currently owns nine television films that have been
converted to DVD. Infinite plans to market these films and to expand its film
library.
2
RISK FACTORS
PROSPECTIVE INVESTORS IN THE SHARES OFFERED SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS, IN ADDITION TO THE OTHER INFORMATION APPEARING IN THIS
PROSPECTUS.
WE HAVE A LIMITED OPERATING HISTORY, A HISTORY OF LOSSES, AND SIGNIFICANT
ACCUMULATED WORKING CAPITAL DEFICITS.
Infinite is a development stage company which has a limited operating history.
Infinite's future must be considered in light of the risks, expenses, delays
and difficulties frequently encountered in establishing a new business in an
emerging and evolving industry characterized by intense competition. Since
inception, Infinite has incurred significant losses. No assurance can be given
that Infinite will be successful.
WE FACE INTENSE COMPETITION BECAUSE WE ARE SMALLER THAN OUR COMPETITORS.
The Internet industry is intensely competitive, rapidly evolving and subject to
constant technological change. As the industry has grown, many of these
products and services are marketed by well-established companies with
reputations for success in the development and sale of products and services.
These companies have significantly greater financial, marketing, and
distribution resources than Infinite. These resources allow larger companies to
implement extensive advertising and promotional campaigns in response to
specific marketing efforts by competitors to enter into new markets or
introduce new products and services.
Established competitors may be able to provide more attractive incentive
packages to customers than those offered by Infinite. In addition, competitors
with greater resources than Infinite may be better situated to negotiate
favorable contracts with customers and vendors. Competitors, like AT&T, MCI
and Sprint, have the financial resources to withstand substantial price
competition. There can be no assurance that Infinite will be able to compete
successfully in these markets.
WE WILL DEPEND ON SERVICE AND PRODUCT PROVIDERS WHICH CAN CAUSE SERVICE
INTERRUPTIONS WHICH WE CANNOT CONTROL.
Infinite will be dependent on a limited number of service providers. Failure
to obtain continuing access to these services at competitive rates would have a
material adverse effect on Infinite long term operations. Additionally, any
increase in prices charged by Infinite's service providers could materially
adversely affect Infinite's operating margins. It is not unusual to experience
equipment failures and service interruptions in new emerging markets.
Equipment failures and service interruptions resulting in material delays could
adversely affect customer confidence, as well as Infinite's business operations
and reputation.
WE WILL DEPEND ON A SMALL GROUP OF CUSTOMERS IN EACH INDUSTRY WE SERVICE.
Due to Infinite's emphasis on providing Internet systems solutions to specific
industries such as medical, Infinite anticipates being substantially dependent
on a relatively small number of future customers during the development stages.
The loss of any of which could have a material adverse effect on Infinite in
that industry.
WE ARE ENTERING A NEW INDUSTRY AND UNCERTAIN OF MARKET ACCEPTANCE.
The Internet industry is an emerging market characterized by an increasing and
substantial number of new competitors that have introduced or are developing an
array of new products and services, including interactive, and are enhanced
value-added services. Each of these new companies are seeking a competitive
position for their products and services. As is typical in an emerging
industry, market acceptance of newly introduced products and services is
uncertain.
3
THE COMMUNICATIONS TECHNOLOGY INDUSTRY IS CHANGING RAPIDLY.
The communications industry is characterized by frequent and rapid changes in
technology and evolving industry standards, which often result in product
obsolescence or short product life cycles. These new communications
technologies, and existing technologies, may reduce demand for our services.
WE ARE UNCERTAIN AS TO WHETHER WE CAN OBTAIN THE NECESSARY LICENSES AND
REGULATORY APPROVALS FOR OUR BUSINESS.
There can be no assurance that Infinite will be able to obtain required
licenses from the FCC or state regulatory authorities. New statutes and
regulations with more stringent requirements could require Infinite to alter
methods of operation, at costs which could be substantial, or otherwise limit
the types of services offered by Infinite.
Many states regulate telecommunications companies by requiring them to apply
for state certification. While Infinite will exercise its best efforts to
apply for and obtain any state required licensing, there can be no assurance
that state regulators will grant Infinite all required authorizations.
WE HAVE LIMITED CAPITAL AND REQUIRE ADDITIONAL FINANCING.
Infinite anticipates that the net proceeds of this offering will satisfy its
operating cash requirements for at least 12 months after this offering is
consummated. However, no assurance can be given that Infinite will not require
additional financing sooner than currently anticipated. In order to continue
with its planned operations, Infinite Networks Corporation is dependent upon
additional equity financing. There can be no assurance that additional equity
financing can be obtained.
OUR SHARE PRICE WILL FLUCTUATE CONSIDERABLY.
The trading price of the securities could be subject to wide fluctuations in
response to quarter-to-quarter variations in operating results, announcements,
and other events or factors. In addition, the stock market has, from time to
time, experienced extreme price and volume fluctuations which have particularly
affected the market price for many companies and which often have been
unrelated to the operating performance of these companies. These broad market
fluctuations may adversely affect the market price of our securities.
OUR STOCK IS TRADED ON THE PINK SHEETS. WE MAY REGAIN OUR TRADING PRIVILEGES
ON THE BULLETIN BOARD.
Infinite's common stock is now quoted on the pink sheets. It cannot again be
quoted on the bulletin board unless it complies with new financial reporting
requirements. There can be no assurance that the NASD will again decide to
quote Infinite's securities. Until then, Infinite's stock will continue to be
quoted on the pink sheets. As a result, an investor may find it more difficult
to purchase, sell or obtain accurate price quotes of Infinite's securities.
OUR COMMON STOCK IS SUBJECT TO THE PENNY STOCK RULES.
Infinite's stock currently trades at less than $5 a share. The SEC has adopted
a set of rules that regulate broker-dealer securities with a price of less than
$5. The penny stock rules require a broker-dealer to deliver to the customer a
standardized risk disclosure document prepared by the SEC that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer must also provide the customer with other
information. The penny stock rules require that prior to a transaction, in a
penny stock, the broker-dealer must determine in writing that the penny stock
is a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may reduce the
level of trading activity in the secondary market for a stock that becomes
subject to the penny stock rules. If Infinite's common stock continues to
trade less than $5.00 a share, investors may find it more difficult to sell
their common stock.
4
MANAGEMENT HAS VERY BROAD DISCRETION IN USE OF THESE FUNDS.
The majority of the estimated net proceeds of the offering have been allocated
to working capital and general corporate purposes. Accordingly, Infinite's
management will have broad discretion to the use of these proceeds. A portion
of the proceeds allocated to working capital may be used by Infinite to pay
salaries, including salaries of its executive officers, and for acquisitions.
Although Infinite currently has no agreement, arrangement or understanding with
respect to any acquisition, if an acquisition opportunity is identified by
Infinite, the Board of Directors may have the ability to approve the
acquisition without seeking stockholder approval.
RELATED PARTY TRANSACTIONS HAVE BEEN COMPLETED WITH POSSIBLE CONFLICTS OF
INTEREST.
Infinite has engaged in transactions with our officers, directors and principal
shareholders, and is a party to consulting agreements with two of its principal
shareholders which continue after the consummation of this offering. The terms
of these transactions were determined without arms length negotiations and
could create, or appear to create, potential conflicts of interest which may
not necessarily be resolved in Infinite's favor. See "Item 19. Transactions
with Related Parties."
WE ARE DEPENDENT ON A FEW KEY PERSONNEL.
The success of Infinite is largely dependent on the personal efforts of John W.
Bush, Chief Executive Officer and Denton Guthrie, Chief Financial Officer.
Infinite has entered into employment agreements with Messrs. Bush and Guthrie.
The loss of the services of either Mr. Bush or Mr. Guthrie could have a
material adverse effect on Infinite's business.
THIS OFFERING IS PRICED SUBSTANTIALLY HIGHER THAN THE CURRENT MARKET PRICE.
The public offering price is substantially higher than the net tangible book
value per share of the current outstanding common stock. Investors purchasing
shares of common stock in the offering will experience immediate dilution in
net tangible book value, assuming a $10.00 per share offering price. See
"Dilution".
FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements based on current
expectations that involve risks and uncertainties. Forward financial
statements are typically phrased using words like "will", "may", "expect",
"believe", "anticipated", "intend", "should", "continue", "estimated", and
similar expressions or variations. Infinite's actual results could differ
materially from those anticipated in these forward-looking statements as the
result of many factors, including risk factors. Additional risks and
uncertainties not presently known to Infinite or that Infinite currently deems
immaterial may also impair our business financial condition or operating
results. The trading price of Infinite's common stock could decline and shares
held may lose part or all of the investment. The cautionary statements made in
this prospectus should be read as being applicable to all forward-looking
statements wherever they appear in this prospectus.
<U>ITEM 4.</U> <U>USE OF PROCEEDS</U>
Proceeds to Infinite from the sale of the shares of common stock offered are
estimated to be approximately $800,000 to $9,800,000, after deducting offering
expenses. Infinite intends to use approximately $200,000 to $3,000,000 of
these proceeds to expand sales and marketing activities aimed at both domestic
and international customers and to market an integrated wireless solution to
the medical industry. The remaining proceeds, of approximately $600,000 to
$6,800,000, will be used for working capital and general corporate purposes
which include acquisitions.
5
The use of the net proceeds of the offering above represents Infinite's best
estimates based upon its current plans and certain assumptions regarding
industry and general economic conditions and Infinite's future revenues and
expenditures.
Proceeds not immediately required for the purposes described above will be
invested temporarily, pending their application as described above, in
short-term United States government securities, short-term bank certificates of
deposit, money market funds or other investment grade, short-term,
interest-bearing instruments.
Infinite anticipates that the proceeds of this offering, with minimum shares
sold will satisfy its anticipated cash requirements until the end of the year.
This is based on currently proposed plans and assumptions relating to our
operations, including the costs associated with our growth strategy; however,
there can be no assurance that this will be the case. Infinite's actual cash
requirements may vary materially from those now planned and will depend upon
numerous factors, including the general market acceptance of Infinite's new and
existing products and services, the growth of Infinite's distribution channels,
technological advances and activities of competitors.
<U>ITEM 5.</U> <U>DETERMINATION OF OFFERING PRICE</U>
Infinite's Board of Directors arbitrarily decided upon the $10.00 price per
share for the common stock being registered. Their decision bears no
relationship to assets, book value, earnings or other criteria of value.
<U>ITEM 6.</U> <U>DILUTION</U>
As of December 31, 1999, Infinite's net tangible book value was ($643,757), or
($0.021) per share of common stock using the number of outstanding shares as of
February 25, 2000, which totaled 30,919,868 shares. Net tangible book value is
the aggregate amount of Infinite's tangible assets less its total liabilities.
Net tangible book value per share represents Infinite's total tangible assets
less its total liabilities, divided by the number of shares of common stock
outstanding just prior to this offering. After giving effect to the sale of
the minimum amount of 100,000 shares at the offering price of $10.00 per share
of common stock, application of the estimated net sale proceeds, after
deducting offering expenses, Infinite's net tangible book value as of the
closing of this offering would increase from ($0.021) to $0.005, if the minimum
amount of shares were sold, and to $0.286, if the maximum 1,000,000 shares were
sold in this offering. This represents an immediate increase in the net
tangible book value of $.307 per share to current shareholders, and immediate
dilution of ($9.714) per share to new investors or (97.14%), as illustrated in
the following table:
Based on 30,919,868 shares and Assets to stockholders of ($643,757)
Public offering price per
share of common stock $10.00 Minimum<F1> Maximum<F2>
Net tangible book value per share before offering..... $ (0.021) $ (0.021)
Increase per share attributable to new investors.... $ <F3>0.026 $ <F4>0.307
Net tangible book value per share after offering.... $ 0.005 $ 0.286
Dilution per share to new investors................. $ (9.995) $ (9.714)
Percentage dilution................................. | (99.95%) | (97.14%)
<FN>
<F1> 31,019,868 shares if minimum offered is sold.
<F2> 31,919,868 shares if maximum amount offered is sold.
<F3> $800,000/30,969,868 shares
<F4> $9,800,000/31,919,868 shares
</FN>
6
<U>ITEM 8.</U> <U>PLAN OF DISTRIBUTION</U>
The shares will be offered on a best effort basis. The offering of the shares
will be for 120 days unless extended for no more than an additional sixty days
at the discretion of Infinite. Infinite reserves the right to accept or reject
any subscription in whole or in part, or to allot to any prospective investor
less than the number of shares subscribed by investors.
<U>ITEM 9.</U> <U>LEGAL PROCEEDINGS</U>
On January 15, 1999, Atlantik International Holdings, Limited sued Infinite in
the United States District Court for the District of Nevada, Case No.
CV-8-99-00055-PMP, alleging that on or about December 16, 1998, 343,000
shares of Infinite's common stock were issued to Seven Oaks Holdings, Limited,
who in turn transferred the shares to Atlantik, and that Infinite allegedly
wrongfully placed a stop transfer order on the shares. Both parties agreed
to settle; Atlantik paid Infinite $123,750 and Infinite lifted the stop
transfer order. The case was effectively settled February 11, 1999, and
both parties released each other from any and all liability.
<U>ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS</U>
The current executive officers, key employees and directors of Infinite are as
follows:
NAME AGE BOARD POSITION EXECUTIVE POSITION
---------------------------------------------------- --- -------------- ------------------
John W. Bush....................................<F1> 49 Director CEO, Pres.
Donald L. Miller................................<F2> 63 Chairman ---
Denton Guthrie..................................<F3> 52 Director/Sec. CFO
Rafael Rojas....................................<F4> 53 Vice Chairman ---
Kynaston Perreria...............................<F5> 50 --- Executive VP
John C. Alkire..................................<F6> 55 --- VP
Howard Frantom (resigned 2/18/00)................... 66 --- Executive VP
<FN>
STATEMENT OF QUALIFICATIONS
<F1>
JOHN W. BUSH: Mr. Bush is the President, CEO and Director of Infinite. He has acted in that capacity since October
1998. John W. Bush has more than 25 years of management experience, and has been part of the telecommunications
industry since pre-deregulation. He was co-founder of Schnieder Communications, Inc. where he was responsible for
overall marketing and sales during the critical start-up years. As a executive, he gained experience in company
acquisitions, mergers and purchasing of communications equipment. During the early years of deregulation, Mr. Bush
was involved in lobbying the legislative body to ensure industry survivability. Mr. Bush has served as a Director
of Strategic Accounts for MCI and has held various executive positions with annual revenue responsibilities
exceeding $400,000,000. Mr. Bush served as Vice President of WinStar Communications during its start-up period in
developing the 38 GHZ marketplace. His varied experience in the development stage of communications companies and
his senior management experience with companies such as MCI, qualifies him to lead Infinite through its critical
growth years. Mr. Bush holds a MS in Business Administration from Cardinal Stritch College and a BS in Business
Administration from the University of Wisconsin. Mr. Bush also served ten years in the United States Marine Corps
and fourteen years in the United States Army Reserve, and is currently a retired Major.
<F2>
DONALD L. MILLER: Mr. Miller is the Chairman of Infinite and has served in that capacity since October 1998.
During his 37 years in the international arena, Mr. Miller has developed relationships at the highest levels in many
countries and corporations worldwide. He has been asked by many nations and corporations to assist with economic
development, coordination of technologies and other market opportunities through barter of services, raw goods and
other natural commodities in the world market. Mr. Miller has worked directly with the United Nations and in the
past year has been offered ambassadorships from three nations. Mr. Miller received the prestigious Yellow Scarf
Award from the Chinese Government in recognition of his accomplishments. Mr. Miller is a graduate of George
Washington University with a BS in Science and Marketing.
7
<F3>
DENTON GUTHRIE: Mr. Guthrie is the CFO of Infinite and has acted in that capacity since October 1998, and as a
director and secretary since July 1999. Mr. Guthrie has over 29 years of experience in business administration,
accounting, investing, management advisory services and taxation, both domestically and internationally. His
experiences include positions as Co-Founder and CFO, President, Chairman of the Board, and Director of various
corporations and joint ventures. Mr. Guthrie served as Executive Vice President, CFO and Director of American
Ventures International, HGK Ltd. He gained more than six years of experience in the Southeast Asia marketplace with
special focus in Vietnam in medical and educational humanitarian projects. He served as President of Spectrum Glass
& Ceramics, Inc. for more than 10 years. Mr. Guthrie has operated as the owner of a CPA firm for more than 17
years. Mr. Guthrie holds a BS degree from California State University at Los Angeles in Business Administration and
Accounting. He is a CPA certified through the California State Board of Accountancy.
<F4>
RAFAEL ROJAS: Mr. Rojas is the Vice Chairman of Infinite and has served in that capacity since February 1999.
Rafael Rojas is the founder of Venro Petroleum Corporation and Venro Energy Corporation, and has served as Chairman
and CEO since its organization in January 1992. Mr. Rojas has more than 30 years of experience in the international
energy sector. He has completed numerous energy and communications related transactions throughout the world,
initially with Exxon, and subsequently as a marketer for the Venezuelan oil industry.
<F5>
KYNASTON G. PERREIRA, SR.: Mr. Perreira is the Executive Vice President of International Affairs, and joined
Infinite in February 1999. Mr. Perreira has over twenty years of international experience. Mr. Perreira is the
founder of Kynaston & Associates, Ltd., an international consulting firm specializing in equity funding,
international finance, project management, financial analysis, feasibility studies, and products market coordination
including clear identification of competitive suppliers. Mr. Perreira has advised many international firms and
governments. Mr. Perreira serves as the Director of Guyana Affairs for the International Immigrants Foundation,
International Cultures Mission, United Nations N.G.O. economic and social council and the Caribbean Panamanian
Americans for Social, economic and Cultural Development. Mr. Perreira is endorsed by the Secretary of the State of
Puerto Rico to promote and participate in the 936 Fund program (CBI) and the Caribbean Development Program. Mr.
Perreira majored in Business Administration at Queens College in New York.
<F6>
JOHN C. ALKIRE: Mr. Alkire is the Vice President of Engineering, since January 1999. John C. Alkire has an
extensive background in the management of engineers and scientists as well as manufacturing and production
facilities. His background spans both the telecommunications and computer industries. He served as Vice President
of Caltronix Computer Systems, Vice President/General Manager of PBX Systems, Inc., Director of Engineering of Earth
Computer Technology, Vice President/General Manager of California Computer Systems, Inc., President of Nexus Inc.,
President of Megalithic, Inc., Manager of Engineering of Anaconda/Ericsson. Mr. Alkire holds a Master of Science in
Electrical Engineering; thesis title: Group Communications in Distributed Computing.
</FN>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table presents certain information regarding beneficial ownership
of Infinite's common stock as of February 25, 2000, by each person known by
Infinite to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each director of Infinite, each named Executive Officer and
all directors and executive officers as a group. Unless otherwise indicated,
each person in the table has sole voting and investment power as to the shares
controlled.
8
SHARES PERCENT PERCENT
BENEFICIALLY BEFORE AFTER
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED<F1> OFFERING OFFERING
---------------------------------- ------------ ---------- ---------
Donald Miller..................... | 283,968 | .92% | .89%
235 Charity Court
Naples, FL 34112-5012
John W. Bush...................... |10,011,782 | 32.38% | 31.37%
401 Hariton Court,
Norfolk, VA 23505
Denton Guthrie.................... | 1,243,709 | 4.02% | 3.90%
2757 W. Whittier
Montebello, CA 90640
Howard Frantom <F2>............... | 250,000 | .81% | .78%
P.O. Box 2273, 3112 Allview
Running Spring, CA 92382
William Windsor <F3>.............. | 7,157,536 | 23.15% | 22.42%
2650 Alice Blvd
Kissimee, Fl 34746
Rafael Rojas...................... | 333,968 | 1.08% | 1.05%
45 Rockefeller Plaza
New York, NY 10111
All executive officers and
directors as a group (4 persons).. |11,873,427 | 38.40% | 37.21%
Major shareholders not holding
an office or board seat........... | 7,157,536 | 23.15% | 22.42%
------------------------
<FN>
NOTES TO TABLE
<F1> A person is deemed to be the beneficial owner of voting securities that
can be acquired within 60 days from the date of this prospectus upon the
exercise of options, warrants or convertible securities. Each beneficial
owner's percentage ownership is determined by assuming that convertible
securities, options or warrants that are held, but not those held by any other
person, and which are exercisable within 60 days of the date of this prospectus
have been exercised. Unless otherwise noted, Infinite believes that all
persons named in the table have sole voting and investment power with respect
to all shares of common stock beneficially owned by them.
<F2> Mr. Frantom resigned his position with Infinite, effective February 18, 2000.
<F3> Mr. Windsor resigned his position with Infinite, effective December 29, 1999.
</FN>
<U>ITEM 12.</U> <U>DESCRIPTION OF SECURITIES</U>
The authorized capital stock of Infinite consists of 500,000,000 shares of
common stock, $.001 par value per share. Upon consummation of this offering,
there will be 31,019,868 outstanding shares of common stock if the minimum
amount is sold. At the conclusion of this offering, there will be 31,919,868
shares of common stock if the maximum amount is sold.
COMMON STOCK
Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders, including the election of
directors.
Holders of common stock do not have subscription, redemption or conversion
rights, nor do they have any preemptive rights.
9
Holders of common stock do not have cumulative voting rights, which means that
the holders of more than half of all voting rights with respect to common stock
can elect all of Infinite's directors. The Board of Directors may fill any
vacancies on the Board of Directors created by resignations, subject to quorum
requirements.
Holders of common stock are entitled to receive dividends, as may be declared
from time to time by the Board out of funds legally available, and will be
entitled to receive, pro rata, all assets of Infinite available for
distribution to common stock holders upon liquidation.
<U>ITEM 13.</U> <U>INTEREST OF NAMED EXPERTS AND COUNSEL</U>
Up to 200,000 shares of common stock will be issued to Kenneth G. Eade,
Infinite's security counsel, in payment for legal fees and expenses.
<U>ITEM 15.</U> <U>ORGANIZATION WITHIN LAST FIVE YEARS</U>
Infinite was organized on March 27, 1996, as T2 Logic Corporation, a
development stage corporation, which changed its name to Harrison Digicom, Inc.
on March 26, 1998, and focused on providing communications services to third
world countries such as Vietnam, through its former subsidiaries, Harrison
Industries, Inc. and Air Tel. In February 2000, the company completed a name
change to Infinite Networks Corporation.
On January 26, 1999, Infinite discontinued its former operations in Vietnam to
reduce any potential liabilities or cost to Infinite and its shareholders.
Saigon ETMC, a joint venture agreement in the Socialist Republic of Vietnam,
was 70% owned by Harrison Industries, Inc., a wholly owned subsidiary of
Infinite, decided to discontinue operation in Vietnam. On July 30, 1999, at
the annual shareholders meeting, the shareholders agreed to transfer AirTel, a
Wyoming Company, and Harrison Industries, Inc., a Wyoming Company, to one of
the original shareholders of those companies in exchange for 1,400,000 post
split shares received by that stockholder, all of which except 150,000 shares
have been returned to Infinite. An administrative hold has been placed on the
outstanding shares. This action was a final step to remove any potential risk
to Infinite and its shareholders relating to the Vietnam operations.
On February 2, 1999, Infinite received a letter of intent to purchase the
secure communications equipment from the Democratic Republic of the Congo. The
Congo has agreed to purchase the equipment under a capital lease agreement for
$20,025,000 with a 30% down payment and monthly payment of $445,650 per month
for thirty-six months. Payment and delivery have not yet commenced, and there
can be no assurances the Congo will perform. On February 18, 1999, Infinite
entered into a BCA with Venro Petroleum Corporation. This allows both parties
to assist in each other in finding business opportunities. Venro Petroleum
Corporation is responsible for the purchase agreement of the telecommunications
equipment with the Congo.
On February 26, 1999, Infinite signed a contract with Engineers Professional
Systems Incorporated as a subcontractor to three United States Government
contracts. These contracts authorize Infinite as an approved government
subcontractor to bid on projects. These awarded contracts are valued in excess
of two billion dollars. These contracts allow Infinite to sell products and
services directly to government installations. There can be no assurance that
Infinite will be successful in selling products and services under these
contract.
On May 11, 1999, Infinite signed a contract to acquire RCCommunications, Inc.,
in a direct stock exchange of 2,000,000 of Infinite's 144 restricted shares for
100% of all outstanding shares of RCCommunications, Inc. No stock was
transferred pursuant to the agreement. After due diligence, both parties
signed a mutual release not to complete the transaction on October 15, 1999.
10
On July 27, 1999, Infinite signed an agreement with Olympic Capital, LLC, to
develop a wireless environment for health professionals and practitioners.
Under the terms of the agreement, Infinite will be paid 0.5% of the edited face
value of the Medical Accounts Receivable purchased or financed. Infinite also
signed an agreement with GCR/Highland, LLC, as the consultant to this agreement
and would be paid 10% of the fee paid by Olympic paid to Infinite. Olympic has
made a verbal offer to buy out Infinite's position in the contract, but no
written offer has been received and the status of these contracts is uncertain
at this time.
On July 30, 1999, Infinite, at the annual shareholders meeting, increased the
authorized shares of common stock from 25,000,000 to 500,000,000 with a par
value of $.001, increased the number of Directors from five to seven, selected
Strabala and Ramirez as CPA audit firm, and authorized 4,500,000 shares of
preferred stock with no voting rights until converted and a conversion ratio of
1:100 to common stock.
<U>ITEM 16.</U> <U>DESCRIPTION OF BUSINESS</U>
Infinite is a development stage company, organized under the laws of the state
of Nevada, formerly known as Harrison Digicom, Inc. and originally known as T2
Logic, Inc. Infinite is engaged in the communications industry. Infinite's
primary business focus is providing a variety of communications, wireless
communications, and information management solutions for customers. We intend
to accomplish this by providing our customers with the equipment, hardware and
software they need to improve their operations. Infinite also plans to
develop an high capacity Internet communications network.
Infinite intends to market a full line of information services, tailored to
specific customers. We will research specific markets and define new
information services for potential customers, using the latest technology
available. We have identified the medical and transportation industries as two
of our first target markets.
Infinite has developed an integrated wireless solution for the medical industry
called "HOME", the Hospital Operating Management E-Solution. This system
supports the gathering of data and the management of accounts receivable,
insurance pre approval and filing of insurance claims.
Infinite has identified the small fleet and owner-operator segment of the
transportation market as a unique opportunity to provide complete mobile
computing and wireless communications solutions.
We also have nine television films which have been converted to DVD digital
format. We plan to increase our digital media and information content
libraries, market the films we have in our library as full films and segments,
and establish digital storage capabilities and products for the media on-demand
market.
STRATEGY
Infinite's ultimate strategy is to provide its customers with fully integrated
mobile communications solutions. As a integrated solutions provider, Infinite
plans to coordinate total solutions on behalf of customers. Infinite will
research targeted industries that have the potential to gain in operational
efficiencies by the use of new technology. Once a basic solution is designed,
Infinite will market the solution worldwide by industry.
Electronic solutions can typically be expanded into sub-markets for added
enhanced value of the primary focus market. The medical industry includes the
pharmaceutical and financial markets. Infinite plans to expand each product
line into the secondary markets that it can identify from the primary market.
11
Infinite plans to use new technology in coordination with emerging
communications systems to improve overall productivity. Infinite will target
industries where the introduction of real time information at the point of use
can make a competitive or operational difference. Infinite believes this will
also make a competitive or material change in that industry.
Infinite plans to deploy a active sales force equipped to handle technology
sales in delivering complete solutions to our customers and reselling related
products and services.
Infinite plans to work with companies such as IBM, HP, Dell, MCI, AT&T, Symbol,
3Com, Oracle, Ameranth and others in the design and implementation of unique
solutions for customers.
COMMUNICATIONS NETWORKS AND STRATEGIC ALLIANCES
Infinite's development of a communications networks will provide direct access
to a broad range of products and services for customers. Infinite's long-term
strategy is to lease high capacity communication networks for reselling
purposes and to support internal requirements.
GOVERNMENT MARKETS
Infinite has received a letter of intent from the Congo to implement a secure
government telephone system for $20,025,000. The Congo will finance the
project directly, thus reducing any liability for Infinite. Infinite currently
has this system in inventory and is waiting for funds to be released from the
Congo.
Infinite is a subcontractor to Engineering and Professional Services
Incorporated. Engineering and Professional Services has more than twenty years
of experience working with the U.S. Government, and has been awarded contracts
in the billions of dollars. Infinite has been named as a direct subcontractor
to these contracts and has access to market services to U.S. Government
agencies worldwide. Infinite intends to supply updated technology, related
solutions and equipment to various government entities.
THE MARKET
Infinite's marketing concepts cross all traditional boundaries and global
barriers. Infinite plans to use the Internet highways in conjunction with new
technologies in the mobile marketplace to design products and services for our
customers. The market has intense competition in the software, hardware and
access segments. Infinite believes the opportunities should be focused on
researching the best options available and designing a complete solution to a
customer's needs.
The electronic commerce is moving fast into the information revolution as the
use of new super highways, like the Internet, are being implemented worldwide.
These changes have and will continue to affect every segment of business and
everyday life. The net effect is the traditional market infrastructures will
be reshaped to meet these changes as new customers needs are developed.
Infinite's marketing model is based upon the understanding of the evolving
global market as a result of information and communication advances. The
approach to business has changed from providing historical information to real
time delivery of information at the point of sale or contact. Infinite will
sell this new approach to customers directly and through its subsidiaries and
affiliates.
Infinite will focus on providing a complete electronic solution, E-Solution,
for its customers. Infinite has reviewed the medical and transportation
industries. Both of these markets have huge opportunities for this type of
technology.
In the medical industry, Infinite has worked on the design of an integrated
wireless solution, Hospital Operating Management E-Solution, "HOME system", to
12
support the gathering of data and management of accounts receivable. The HOME
system is the coordination of the best in software, hardware to specific
address the medical facilities requirements in delivering and tracking the
complete life cycle of their patients at point of contact. The net result will
deliver an electronic profile of each patient and their medical records. The
efficiencies of the system will increase cash flow, patient quality of care and
decrease operating expenses. The system will give the various healthcare
professionals who must perform the various treatment elements for the care of
the patient vital information, such as insurance coverage and preapproval
requirements based on the physician's treatment plan. The system will also
assist in the creating and filing of insurance claims and follow up on
treatment providers to insure that their services are preauthorized, tracked
and paid.
In the transportation industry, Infinite has worked on designing a wireless
communication and data system which provides a transportation company with
accurate real time data, which allows it to make more accurate dispatching
decisions, reduces driver waiting time, enhances routing decisions, reduces
clerical work for dispatchers, and provides for accurate time keeping and
silent alarm" on stolen vehicle recovery.
"The Internet and demand for data transmission are transforming the
telecommunications industry, and providing tremendous benefits to citizens
around the world. I believe that all countries can benefit from the growth of
the Internet, and that greater participation in the information society." An
Address by William E. Kennard Chairman U. S. Federal Communications Commission
to the Conference on "Internet & Telecommunications: The Stakes" Paris, France
January 28, 2000.
He further quotes, "It has been our experience in the United States that the
fastest way to expand access to the Internet is to create the conditions for a
robust, competitive telecommunications market. We all agree that competition
is the best way to do this. Competition brings consumers the benefits of
choice and innovation at more affordable prices, and is the best way to ensure
rapid deployment of the telecommunications infrastructure... Recognizing... the
globalization of the Internet and e-commerce, I believe it is essential that we
work together to find the best way to advance our goals...
There is a fever in the air, a speculation about possibilities, even an
expectation as almost every arena of human thinking and ingenuity joins the
Internet. We file our taxes over the Internet. We apply for jobs over the
Internet. We check the cinema times, and reserve seats on airplanes over the
Internet. We even fall in love over the Internet, although we do not yet know
whether the Internet divorce rate will be higher or lower than is normal. There
are 43 million web sites on the Internet, and few major retail businesses in
America today operate without a web site. Those businesses work directly with
their customers, eliminating costly layers of brokers, wholesalers and other
middlemen...
Since 1994, subscribership for wireless phones has more than tripled in the
U.S. Real prices have dropped by 40 percent, and most of our major cities have
at least five mobile phone providers, with some having as many as seven. Long
gone are the days when a mobile phone was viewed as a status symbol or
something only available to the wealthy...
With Third Generation technology on the horizon, wireless is poised to capture
a larger segment of the telecom market." An Address by William E. Kennard
Chairman U. S. Federal Communications Commission to the Conference on "Internet
& Telecommunications: The Stakes" Paris, France January 28, 2000.
13
TARGET MARKET SEGMENTS
Infinite has identified the following target market segments for its mobile
computing and communications products and services:
MEDICAL INDUSTRY
Infinite has identified that the medical receivable market now exceeds 1.7
trillion dollars annually. Infinite plans to target this fragmented industry by
bringing a complete electronic solution to market. The medical industry is
competitive in software, hardware, specialized accounting packages to handle
the complex billing issues. The accounting and billing system are competing
directly with the purchase of equipment and technology for patient care. This
places the administration in a position to choose between patient care or
accounting systems. Infinite's market solution removes these choices and
delivers new systems with no up front cost.
U.S. CORPORATE MARKET/ GOVERNMENT
Infinite has identified U.S. businesses with annual sales in excess of $100
million as its primary target market segment for mobile computing and
communications solutions. These companies generally utilize diverse
technologies and systems that require sophisticated integration solutions.
These companies also generally have the resources and budgets necessary to
afford sophisticated solutions. Infinite plans to focus on Government sales by
utilizing the EPS contract.
PROFESSIONAL TRUCK FLEETS
Infinite has identified the small fleet and owner-operator segment of the
transportation market as a unique opportunity to deliver mobile computing and
communications solutions. The mobile services, pick-up, delivery, less than
truckload (LTL) and long haul segments represent approximately 42% of fleet
vehicles in operation and account for approximately 8 million vehicles.
Currently this market segment is not widely served with wireless data
information systems. However, market consolidations, growth and the benefits
of wireless data communications are likely to result in the growth of new
users. Improved operating efficiencies in this heavily regulated industry
often result in dramatic bottom line results. A mobile computing and
communications solution that makes a 10% - 20% increase in efficiency can make
a functionally bankrupt fleet operator profitable or can make a profitable
operation more competitive.
MARKETING
Infinite plans to develop a commission compensated sales force comprised of
direct and independent contractor salesmen with support from Infinite Networks
Corporation's management. Infinite may market its solutions in industry trade
shows, direct mail and telemarketing, and an aggressive online marketing
campaign.
ONLINE MARKETING CAMPAIGN
To help achieve its sales goals, Infinite plans to implement an aggressive
online marketing campaign combined with continual back-end monitoring and
optimization. The objective will be to build brand awareness for Infinite in
the online community and to continually acquire new customers. One of the
best ways to attract this target audience is to achieve high visibility in the
places where prospective customers are likely to be browsing. Infinite's
online campaign will target sites that generate high traffic from Internet
users who fit Infinite's customer profile. In order to create this market
presence and increase customer awareness, Infinite intends to promote its Web
site on the most effective search engines, directories and promotional sites
the Internet offers.
COMPETITION
"Hot Links To An Open Society" An Address by Chairman William E. Kennard
Federal Communications Commission to the National Press Club Washington, D.C.
February 8, 2000, As Prepared for Delivery, "Four years ago today, President
Clinton stood in the Library of Congress, and with the stroke of a digital pen
14
signed into law the Telecommunications Act of 1996. On that day, he said that
the new law would "enable the age of possibility in America to expand to
include more Americans." He called the new law "revolutionary" and said that it
would "bring the future to our doorstep."
Today, on the fourth anniversary of the Telecommunications Act, I am pleased to
report that the Act is working. The American telecommunications consumer today
has more choices of providers and services, at faster speeds and at lower
prices, than ever before. This is truly the beginning of a new era in which
high-speed, broadband access will be as ubiquitous as the dial tone is today.
And the 1996 Act has had a direct hand in bringing about this new age. Because
of the Act, Americans are using telecommunications services in their daily
lives now more than ever. And most important, the Act is helping to transport
our economy into the digital Information Age.
Today I want to review our progress. I want to outline how the Act is working,
and how it will bring even more exciting benefits to the American public in the
future.
I also want to talk about some of the benefits of the Act that you do not hear
enough about: how the Act is working to bring technology to our schools and
libraries; how it is ensuring that people with disabilities are full
participants in the digital economy; and how it is working to connect the
poorest, most remote regions of our country.
Last week I was in Europe for a round of meetings with my counterparts in
government. Meeting with my foreign colleagues is always an interesting
experience for me. There is often an interpreter at these meetings, and at the
start of the meeting the interpreter will say, "His excellency, the minister,
is pleased to meet you. He is honored that the esteemed Chairman of the Federal
Communications Commission has sent his youngest son to meet us." They think I'm
a kid. But seriously, what I find most interesting about these meetings is how
my perspective changes when I see America through the eyes of others. A year
ago, when I visited Europe, I set out to explain how the Telecommunications Act
of 1996 was creating the conditions for competition in our telecommunications
sector. Last year, they listened politely. This year, they took notes. The
difference is that this year countries around the world have awakened to the
miracle of the American model for unleashing competition in telecommunications.
The networks we have created in this country are the envy of the world. And the
whole world is watching. In fact, in one meeting, one of the French ministers
preempted me. Even before I could outline the core of my agenda for 2000 - -
what I call the ABCs: Access, Broadband and Competition - - - he leaned toward
me, as if we were about to share a state secret, and said: "I would like to
hear more about your A-B-C's." I thought he was reading my mind. It turned
out he was just reading my speeches . . . on the Internet. That experience
told me that all of us are truly living in a global chat room.
And the fundamentals of creating consumer benefits through competition,
embodied in the 1996 Act, are being replicated around the world. Why? Because
competition in the United States is delivering more telecommunications services
at lower prices and creating unprecedented investment and job growth in every
sector of the communications industry: in wireless, wireline, local and
long distance, video and, of course, the Internet."
IMPLEMENTATION
These results are due to the wisdom of the Act, as passed, and also due to the
implementation of the Act by the FCC. The core features of the Act are that it
ended the monopoly franchise of the traditional local telephone companies, and
it gave the FCC the power to break open these local markets to competition.
The Commission has gone to great efforts to implement the Act in a manner that
is balanced and fair, while it is also aggressively pro-competitive. The local
telephone monopoly is 100 years old in this country, and it is a $100 billion
market today. It takes enormous effort to inject competition into it.
Moreover, it takes a strong, independent agency that is technology neutral and
15
that can stay focused while a constant hurricane of special interests swirls
around it. Senator Hollings likened our effort to trying to take a drink out
of a fire hose. Over the last four years, the Commission has been prudent in
its restraint as well as in its actions. The Commission wisely withheld
regulation of most advanced services, while making sure that certain features,
such as the ability of one company to deliver broadband to the home over the
same line that another company is using to provide basic telephone service, are
available to all competitors and incumbents alike. Similarly, we refused to
apply legacy-style regulations to the new service of cable access to the
Internet, relying instead on market incentives to keep multiple paths open to
the Internet. At the same time, we have employed the Act to aggressively open
up the local telephone service market to competition. And the results are
impressive. I am releasing a report today, entitled "Telecommunications @ the
Millennium: The Telecom Act Turns Four," that summarizes this phenomenon. Here
are the results.
WIRELESS COMPETITION
Wireless competition has exploded across the country. Wireless technology will
carry more than ten percent of all U.S. voice traffic this year, as cell phones
migrate from the executive suite to the home and the shopping mall and the
teenager's pocket.In 1993, there were 15 million wireless phones in America.
Today, there are 80 million. Since 1994, the average wireless bill has dropped
40 percent, and subscribership has increased four-fold. Seventy-five percent of
Americans have a choice of five or more wireless carriers. What does this
mean? It means that millions of Americans are safer on our highways. It means
that millions of American parents sleep easier because their kids can call them
from anywhere, at anytime.
LONG DISTANCE COMPETITION
In the long distance market, competition has been growing steadily since
divestiture of AT&T in 1984. Domestic long-distance rates dropped nearly 56
percent in real terms since 1984, saving consumers about $200 billion. Some
companies are offering services for as low as five-cents-a-minute. What does
this mean for consumers? It means that long distance service is no longer a
high-priced, carefully rationed service in most American households. Like it
was when I was a kid and we were only able to call my grandmother long distance
once a week on Sunday for 15 minutes. It means that today in America, parents
can afford to give their kids in college personal 800 numbers. It means that
millions of American businesses pay less for long distance than ever before.
And FCC policies have driven down the cost of international calling rates as
well, by 27% from 1996 to 1999. In 1997, an AT&T call to Japan cost 47-cents-a-
minute. Today it costs 16 cents. This means that millions of Americans who
call friends and relatives abroad can stay in touch at a fraction of the cost.
LOCAL TELEPHONE COMPETITION
Competition in the local phone market is growing. Our biggest challenge in the
coming months is to accelerate competition in this sector. Too many Americans
still have only one choice in local residential phone service. But the data
show encouraging trends. Already about 130,000 cable customers get telephone
service from their cable company. Some predict that by 2005, nearly 50 percent
of all American households will have this option, a direct benefit of the 1996
Act. The Telecom Act has created a whole new industry - companies created to
compete against your traditional local phone company. It is an alphabet soup of
new carriers, called CAPs and CLECs and DLECs. In the past year, the number of
new competitive local phone companies operating their own networks doubled from
about 150 to over 300. These companies are adding about a million lines a
quarter. Local competition is where long distance competition was 20 years
ago, but the local market will reach the same competitive level as today's long
distance market much more quickly.
VIDEO COMPETITION
In video competition, cable rates are still too high, and we need more
competition, but there are encouraging signs. Late last year Congress passed an
important law to allow satellite carriers to carry local programming, making
16
satellite delivery more competitive with cable. Here again, the trend is
encouraging. Our report documents that two out of every three new video
subscribers now get their video from non-cable sources, such as satellite.
THE INTERNET
By creating the conditions for new investment in our networks, the 1996 Act
accelerated the growth of the Internet. In 1992, there were fewer than five
million on-line users in the United States. In 1996 there were 27 million.
Today, there are 80 million. No communications technology has grown faster in
the history of the world. That growth would not have been possible without the
pro-competitive environment created by the 1996 Act. Internet traffic is
doubling every 100 days. Over 40 percent of American households have Internet
access. In 1998, the U.S. Internet economy was a $633 billion market,
accounting for nearly 8% of the nation's economy and 4.8 million jobs. And
electronic commerce, which will be 90 percent business-to-business, is
projected to be a trillion-dollar activity in the next three to five years.
Already, directly or indirectly, through our information and telecommunications
sectors, the Internet is linked to one-third of our nation's economic growth,
decreasing costs, and contributing to the lowest level of inflation in many
years. But these figures do not, of course, adequately express what it is like
to live in America at the dawn of the Internet. We file our taxes over the
Internet. We apply for jobs over the Internet. We check the movie times and
reserve seats of airplanes over the Internet. We even fall in love and get
married over the Internet. (Although no one has determined what the divorce
rate is.) And the Internet as we know it is only about six years old. The 1996
Act helped to make the Internet as we know it possible, and the Internet is all
about new possibilities. As we build on the success of the 1996 Act, I want to
talk about some of the possibilities.
THE BROADBAND INTERNET AGE
Our challenge now is to build on the success of the 1996 Act in a way that
keeps the engine of competition and innovation humming, and that allows markets
to transition to the next stage. That next stage is about investment in the
infrastructure that will make the Internet go faster, and that will usher in
the Broadband Internet Age. Americans are excited about the Internet, but they
are ready for it to speed up. The average Internet user spends 25 hours a year
waiting for websites to download. Most Americans access the Internet through
one device: the desktop PC. That will change with the Broadband Internet Age.
The Internet will migrate out of the PC, and be integrated into many more
aspects of our daily lives: into handheld devices like Palm Pilots, into our
cars, and even into our appliances.One big challenge for the FCC is to make the
airwaves available for this transition to take place. And that is why
theCommission is pumping more spectrum into the market to make possible more
wireless devices to access the Internet: wireless laptop computers; wireless
Palm Pilots; and more wireless phones. An upcoming Commission auction this
spring will make spectrum available for new wireless services by
transitioninganalog broadcasting spectrum to digital technology. I envision a
network of networks, with multiple broadband platforms, giving American homes
the option of many digital services, including cable, DSL, wireless, satellite,
and broadcast. Already broadband technology is spreading. Today 1.7 million
customers connect to the Internet at speeds at least 25 times faster than the
standard modem. But this is just the beginning.
IPTV
The Broadband Internet is changing our favorite mass medium - television. No
longer will television be a passive, one-way medium, although there will still
be times when we want to sit and be entertained. Rather, today's analog
television is evolving into an interactive medium that has the digital agility
of a computer, but the display quality of a movie theater. And, it will be able
to be summoned on demand. This combination television and computer will be a
multimedia source of news, information and entertainment, and will offer
viewers program choices and control that would have been unthinkable only a few
years ago. The power of this new technology is that it creates your own
personal television. I call it IPTV, for "Interactive Personal TV." It is
17
going to change the economic models for the broadcasting and cable television
industries. They are becoming Internet companies, as well as digital video
providers. But right now you cannot buy an IPTV at Circuit City that will work
with your cable TV system. The equipment manufacturers and the cable industry
are at a standards impasse. If they do not resolve their differences on their
own, the Commission will. Consumers cannot wait much longer.
THE UNAPPRECIATED STORY
You know, it is a very exciting time for consumers today. Everyday, the
newspapers report about how technology is changing our economy and our lives.
The headlines are filled with news about IPOs and Dot.Com companies and instant
fortunes being made in the new digital economy. This whole new economy, in
fact, is being defined principally by its power to unlock the potential of
markets, to transform retailing, to make businesses more profitable and to
create unimaginable wealth for a privileged few in our society. But I believe
that this new economy means much, much more. This new economy should be
defined, first and foremost, by its power to unlock the potential of all of our
people -- by its power to educate our poorest children, to empower people with
disabilities, to uplift rural and inner city communities and to repair and
revitalize the fabric of our communities. Only then will America realize the
true power of this new economy.
As the numbers in our report demonstrate, the Telecommunications Act has turned
in a truly amazing economic performance. But the significance of the 1996 Act
is much more profound than facts and figures. It is a family, held together
because both parents have productive jobs in the new information economy. It
is a child at a terminal at an Indian reservation school, a hundred miles from
anywhere, getting that first glimpse of a world at her fingertips. Because of
the vision of Vice President Al Gore, and the persistence of lawmakers like
Senators Jay Rockefeller and Olympia Snowe and Bob Kerrey, and Congressman Ed
Markey, we have the e-rate program, which has connected almost one million
public school classrooms to the Internet and seventy percent of the schools
under the Bureau of Indian Affairs. The 1996 Act also is keeping communities
intact because it allows small, store-front businesses to access global
markets. By the power of telecommunications, these businesses can now reach out
across continents and oceans and capture customers a dozen time zones away.
The Act also is the deaf person who is able to enjoy television because of
closed captioning. The 1996 Act requires that, over the next decade, TV
stations make their programs accessible through captioning. Before I close, I
would like to introduce two individuals who are examples of the success of the
1996 Act. Pat Wallace is with the State of Maryland's Sailor Project, a
program to bring the Internet to the state's libraries. She has been so
successful in using E-rate funding to expand the libraries' bandwidth links to
the Internet that use of the library web sites will double this year. I also
would like to introduce Teresa Hopkins, a Navajo tribe member who has worked
extremely hard to increase telecommunications services to the Navajo
reservations. The 1996 Act is about opening up, not just markets for
consumers, but also opportunities for health, education and making a living for
all Americans. Pat and Teresa are the real foot soldiers who are making the
new digital economy work for all Americans.
CLOSING
What will communications leaders say from this podium a hundred years from now?
They will say that at the end of the twentieth century, a corner had been
turned. ...that the dream of a network of competing networks became a reality.
...that high-speed connections to every American home were on the advance.
...and that the web of networks became a support system that lifted the
American people to new levels of opportunity and openness. They also will say
that late in the 20th century a sleepy, backwater agency called the Federal
Communications Commission, described by some as a New Deal dinosaur from the
1930's, came to life, reinvented itself, engaged the future and helped to
launch our nation into the "Broadband Internet Age".
18
REGULATION
The overall direction of since 1960's, is unregulated. "For many decades in the
United States, the monopoly telephone network retained exclusive rights to
provide services and equipment. Beginning in the late 1960's, however, our
courts and our Commission determined that, as long as equipment connected to
the public telephone network did not harm the network, it ought to be
unregulated. This decision affected all kinds of equipment, such as telephones
and answering machines, and eventually computers and even fire alarms. As a
result, the market for terminal equipment flourished. As an unintended
by-product, the decision placed into the hands of Americans flexible,
inexpensive equipment, such as modems, that they eventually would use to reach
the Internet. Even today, the entry price for connecting to the Internet may
be dropping from a thousand-dollar computer to a hundred-dollar palm pilot.
Also in the 1970's, as computers and communications were coalescing, the
Commission made an effort to distinguish between the data processing of basic
telephone service and the data processing of other, or enhanced, information
services provided by commercial computers. Basic telephone service remained
uncompetitive, so the Commission continued to regulate it, but the Commission
decided that enhanced services were highly competitive, and should be left
unregulated. This decision, of course, contributed to the explosion of
computer services in the 1980's, and, ultimately, to the Internet. In the
1980's, our courts decreed that long distance service (essentially the services
that crosses state borders) be made competitive, in place of the AT&T monopoly
that had provided the service up until that time. As a result, today we have
600 long-distance companies, and rates have dropped 56 percent in real terms
since 1984. But the unintended consequence for the Internet was that these
competitive carriers laid the solid, backbone fiber-optic infrastructure upon
which our Internet rests today. Two acts of Congress, a 1993 act giving the FCC
authority to auction spectrum, and an extensive 1996 act to break down
barriers to competition, made competition the cornerstone of our
telecommunications policy.
The 1993 Act gave the Commission the authority to auction spectrum for the
provision of telecom services. The Commission used this authority in 1994 to
introduce additional wireless competitors to the cellular duopoly. Before
auctions, the Commission used comparative hearings and lotteries to award
spectrum licenses. Comparative hearings took too long, delaying service to the
public. Lotteries often resulted in spectrum being assigned to people who were
merely speculators, and who had no intention of developing the full use of the
licenses. Auctions decreased by four times the amount of time it took to
assign licenses, and ensured that the spectrum went to those who were most
eager to use it to serve the public. Beginning in 1995, we used spectrum
auctions to introduce competition to the cellular incumbents. The result has
been lower prices and more choice for U.S. consumers. The Telecommunications
Act of 1996 introduced local competition by giving the FCC the tools to break
open the incumbent's control over the local loop. The Act did this by requiring
the unbundling of the incumbent's network elements, cost-based interconnection;
and co-location. Implementing these requirements has not been easy. Thankfully,
however, I have been given the tools to do the job. Regulators like me need
decision-making authority. We also need enforcement authority. In the past, we
have not always been as aggressive in enforcement. However, we have learned
that all the rules on the books will not bring competition if the rules are not
honored. It is critical for the regulator to have enforcement authority to step
in, if necessary, to stop the inevitable attempts by the incumbent to slow down
the pace of competition. The local exchanges in the U.S. have been monopolies
for 100 years, but now, because of unbundling, co-location, and cost-based
interconnection, new competitors are beginning to offer local services. As they
do, we are unleashing the incumbent providers to compete freely with the new
providers, and the telecommunications network is flourishing. The same dynamic
can occur here in France as you introduce competition. I do not want to mislead
you into believing that we at the FCC have never made any mistakes. To the
contrary, we have made many mistakes. If I had to sum it up, I would say that
the vast majority of the mistakes occurred because we allowed incumbents to
convince us to not open markets, or to slow down the introduction of
19
competition from new entrants. Along the way, for example, we made a mistake in
the wireless market when we decided to only allow two licensees to provide
cellular services in each market. This was a huge mistake since it created a
legally sanctioned duopoly. As a result, consumers paid too much for cellular
calls, and the licensees had no incentive to innovate their services. Luckily,
in the 1990's, with our PCS auctions, we changed this policy and allowed many
new entrants into the cellular market. As a result, in the last five years,
real wireless prices have plummeted 40 percent, and competition has thrived. In
many markets, we have five competitors, and in the larger markets we have up to
seven cellular providers."
An Address by William E. Kennard Chairman U. S. Federal Communications
Commission to the Conference on "Internet & Telecommunications: The Stakes"
Paris, France January 28, 2000.
EMPLOYEES
As of February 25, 2000, Infinite had six full time employees. Except for the
one full time secretarial employee, all of the other employees are management
and have written employment contracts. None of Infinite's employees are
covered by a collective bargaining agreement. Infinite has never experienced
an employment related work stoppage and considers its employee relations to be
satisfactory.
<U>ITEM 17.</U> <U>MANAGEMENT'S DISCUSSION AND ANALYSIS</U>
OVERVIEW
Infinite Networks Corporation, formerly known as Harrison Digicom, Inc. and
originally known as T2 Logic, Inc., was organized under the laws of the State
of Nevada.
Infinite will utilize the emerging opportunities provided by the Internet
industry and emerging new technologies. Infinite's primary business focus is
providing to customers with the tools to improve their operations. We intend
to accomplish this by showing them how to use the emerging technologies by
providing solution design and implementation.
Infinite had minimum activity since the inception of the Company in March 1996,
except for a reorganization plan of March 1998. We started actively trading on
May 21, 1998, listing with the bulletin board. Infinite originally invested in
Vietnam with the intent of building and operating a computer manufacturing
plant and obtaining a cellular marketing license.
In October 1998, Infinite decided to acquire new assets and reorganize the
company by bringing in new management to assist in raising funds. New
management reviewed the business plans and decided to discontinue operations
Vietnam in early 1999. Since that time, management has continued to seek
additional funding and to develop a new business plan to focus in the new
emerging Internet marketplace.
In 1998 Infinite stock traded on the bulletin board with 1,120,200 shares
traded with a annualized average price of $1.82 per share. In 1999 volume rose
by 710% to 7,960,500 shares trading and a decrease in average share price of
76% or $0.44 per share. In 1999 nineteen market makers took a position in the
stock, as compared to six in 1998.
During the last year, Infinite has researched market opportunities in Cambodia,
Estonia, Honduras, Liberia, Democratic Republic of The Congo and several
countries in South America. Infinite has also focused on the new emerging
wireless market known as "pervasive computing".
After the last 18 months of reorganizing the company, completing four years of
financial audits and developing a new plan of operations, Infinite is ready to
move forward.
20
Infinite executive offices are located at 401 Hariton Court, Norfolk, 23505
and its telephone number is (757)440-0511 Facsimile (757)-440-0566 Web Site:
infinitenetworksinc.com. Our trading symbol is INCZ.
PLAN OF OPERATION
FORWARD LOOKING STATEMENTS
The following is a summary of the plan of operation for the next twelve months.
To the extent that such plans contain statements which are not historical in
nature, such statements are forward-looking statements which involve risks and
uncertainties. Forward-looking statements typically phrased using words such as
"will," "may," "expect," " believe," "anticipated," "intend," "could,"
"continue," and "estimated", and similar expressions or variations. Certain
important factors may affect our actual plan and could cause those plans to
differ from any forward looking statement contained in this prospectus, or that
are otherwise made on our behalf.
These factors include, but not limited to: our ability to raise additional
capital to support the company's business plan; and, our ability to establish
and sustain long term relationships to support the plan of operations in the
delivery of products and services; and, our ability to raise additional capital
for plan acquisitions to support the plan of operations; and, our dependence
upon a small number of key executive officers with the experience and vision to
support our long term goals (Loss of these services could have a material
adverse effect on Infinite and the business).
Infinite's ability to develop depends on its ability to attract and retain
highly qualified technical personnel. Competition for personnel in the new
emerging market is intense. If Infinite is unable to attract and retain
qualified personnel, it could have a material adverse effect on Infinite's
ability to properly execute the plan of operations and sustain the business
long term.
MISSION STATEMENT
Infinite plans to be a global full service Internet systems integrator
providing electronic solutions to its customers to improve their operations and
develop a direct customer service and sales force to deliver products and
services worldwide.
RESEARCH & DEVELOPMENT
During the fiscal years ended December 31, 1998 and 1999, Infinite has been
actively seeking new opportunities in the technology industry. Infinite has
had no revenues in 1998 and sustained an operating loss of $898,491. In 1999
management decided to discontinue the original investments in Vietnam and took
a loss from discontinued operations of $3,198,569 for a total loss of
$4,775,363 from operations.
During the last year, Infinite has researched market opportunities in Cambodia,
Estonia, Honduras, Liberia, Democratic Republic of The Congo and South America.
Infinite has also focused on the new emerging wireless market known as
"pervasive computing" with a specific focus on the medical and transportation
industry.
Since October 1998 the new management has attempted to move Infinite into a
full reporting status. Infinite has recently completed an financial audit from
inception as of March 1996 through December 31, 1999. A new business plan for
Infinite is being developed to capture these new opportunities emerging in the
Internet and technology marketplace. Infinite has signed key strategic
agreements that will allow new business to be generated once properly funded.
PLANNED PURCHASE AND SALE OF SIGNIFICANT EQUIPMENT
In October 1998, Infinite acquired 251 crates of communications equipment that
was previously built for the United States Government to be deployed in Saudi
21
Arabia during the gulf war. Infinite has received a letter of intent from the
Congo to purchase this equipment for $20,025,000. Management believes this
transaction is questionable since no funds have been received and has taken
final actions to resolve this transaction.
Infinite has also acquired nine television films and during the last year and
converted them into digital format to complete a pending transaction with a
major television production company. Management will continue to develop other
distribution channels and seek additional information content as long term
assets.
Infinite signed an agreement with a medical receivable company in 1999 and
worked on developing the HOME system, "Hospital Operating Management
E-solution". The HOME system is designed to be an integrated wireless solution
to support the gathering of data and management of accounts receivable.
ANTICIPATED CHANGES EMPLOYEES AND SUBCONTRACTORS
Infinite plans to hire a senior staff soon as possible and further develop the
organization to support the new business plan. Infinite will hire Vice
Presidents in sales, marketing, information management, accounting and
investment relations during the second and third quarter of 2000 as funds
become available. Infinite will also use subcontractors to handle specific
short term tasks.
Infinite signed a subcontractor agreement with EPS during 1999 that allows
Infinite to be part of three United States Government contracts with a total
allocation of more than two billion dollars.
Infinite signed an affiliation agreement with Northstar Enterprises, Ltd to
work jointly in development of acquiring, management, distribution, production
and development of video libraries in digital format for further sale through
broadcast, cable, satellite, home video, institutional video, DVD, CDROM and
Internet worldwide.
Infinite through its wholly owned subsidiary, International Television Film
Productions, Inc. has contracts with UFO Central and VisionQuest for
distribution of its nine films.
Management believes with proper funding, it can execute contracts during the
next twelve months to generate a revenue stream from products and services.
INVESTIGATED MERGERS AND ACQUISITIONS
Infinite anticipates the acquisition of technology companies that have a long
term fit in the operational plan. Infinite also plans to seek non technology
companies that may fit as a potential long term products or services provider
to customers.
<U>ITEM 17.</U> <U>ANALYSIS OF FINANCIAL CONDITION</U>
FISCAL YEAR ENDING DECEMBER 31, 1998
We suffered significant losses on inherited investments for operations in
Vietnam, which have since been discontinued. A total of $3,198,569 in losses
incurred in 1998 were carried into fiscal year 1999 as discontinued operations.
Infinite had 31,072,300 shares outstanding at the end of 1998. If these losses
were booked in the year the losses were incurred, the net tangible book value
would be estimated at($0.73)per weighted number of common outstanding shares as
compared to($0.16)shown in the audited financial statements.
The stock prices ranged from a high closing bid of $4.19 in on May 21, 1998 to
a low of $0.53 on December 24, 1998 a 790% decrease in price per share. The
stock had very low average volumes of 9,730 per day and was and is currently
subject to any price fluctuation in the market.
22
Infinite had no revenues in 1998 with total expenses of $901,990. If this
expense is added to the loss from discontinued operations incurred in 1998 the
expense would total $4,097,060 or the ($0.73) per weighted share outstanding.
FISCAL YEAR ENDING DECEMBER 31, 1999
The new management of Infinite attempted to reduce any additional losses early
in 1999 by discontinuing the operations in Vietnam. This accomplished three
significant items for Infinite: the reduction in monthly recurring cost and
future liabilities; the ability to write down these cost as discontinued
operations; and the refocusing of limited resources towards finding new more
stable opportunities. Management continued to take actions to reduce any
additional liabilities from these operations by returning two subsidiaries,
Harrison Industries and AirTel, to the original shareholder in exchange for
stock.
Management reviewed a series of new opportunities during 1999 and decided to
focus on the fastest growing market in history, the Internet. Infinite
completed a 504 exempt offering during 1999 and raised close to $1,000,000 of
operating capital. Total expenses in 1999 exceeded funds available and left
Infinite with outstanding liabilities of ($643,657). Most of these expenses
were accrued salaries of officers of Infinite during 1999.
Infinite completed the purchase of two assets during 1999. The communications
equipment was acquired at the cost of 13,820,985 shares of restricted stock and
the film library in exchange for 1,231,250 shares of restricted stock. These
assets are currently booked at basis cost to Infinite or .001 per share. This
only accounts for $78,106 in assets on the balance sheet. Management believes
that both of these assets are grossly under stated as to the long term value
expected from these assets.
Management also spent time and financial resources in late 1998 and 1999 to
educate the financial community and gain market support. In October 1998
Infinite had six market makers and by the end of 1999 nineteen were listed.
This increased our volume from the daily average of 9,730 shares to 38,205
shares, a 390% increase.
In June 1999 Infinite completed a 1:4 reverse stock split. This moved the stock
from $0.28 per share on June 16, 1999 to $1.25 on June 17, 1999 after the
split. This action reduced the outstanding shares down to under 1,000,000 of
free trading stock.
With the loss removed from discontinued operations booked in 1999 the net loss
per weighted shares is ($0.10)as compared to ($0.73) adjusted net loss in 1998,
a decrease of 86% in net loss per share.
These actions allowed Infinite to complete the audit and be ready to raise
additional capital to support the new business plan.
TRENDS AND EVENTS IN THE MARKET
Infinite perceives a huge market opportunity in the emerging Internet
marketplace. This market is noted as the fastest growing market in history.
During the last few years, the industry has grown by nearly 200 percent. Just
as voice and data has merged during the last ten years, the wire and wireless
industry will soon be seamless to the everyday user.
The Internet traffic doubles every 100 days, 40% of America now have access to
the Internet, the Internet economy is expect to be at a trillion dollars in
three to five years and the Internet currently has over 80 million users as
compare to only 5 million in 1992. These are a few of the reasons why it is
considered the fastest growing industry in history. Wireless has grown from 15
million users in 1993 and 80 million today. Long distance rates dropped 56%
since 1984. Over 130,000 customers now get their telephone services from the
cable company. This clearly displays the technology trends in the United
States.
23
In 1998, the U.S. Internet economy generated an estimated $300 billion in
revenues, and accounted for 1.2 million jobs. Electronic commerce (commonly
coined as e-commerce), which is projected to be 90 percent business-to-
business transactions, is projected to be a trillion-dollar activity in the
next three to five years. The Internet is already linked to one-third of our
nation's real economic growth, whether directly or indirectly. Costs are
decreasing in our information and telecommunications sectors and the Internet
is believed to have helped reduce the rate of inflation by one-third. The
communications and information sectors, coupled with the Internet, now account
for about 15 percent of our nation's gross domestic product. These numbers do
not adequately express what it is like to be alive in America in the age of the
Internet.
Infinite believes this information revolution will continue to change
traditional ways of operating businesses worldwide. Infinite will position
itself as a customer advocate, assisting them in researching opportunities in
their specific marketplace. Infinite has the experience and the vision to
assist customers in leveraging new emerging technologies that could make the
difference in their survival in the new world marketplace.
SIGNIFICANT ELEMENTS OF INCOME
Infinite plans to derive its revenue through three key segments, information
content, sales of fully integrated systems and resell of products and services
from our strategic alliances.
Infinite management believes the resell of information content and delivery
systems will give long term monthly revenue streams.
Infinite will also sell fully integrated systems and position itself as the
system operator in the medical and transportation industry.
The third area of revenue will be the development of a global network of sales
and service personnel delivering a full array of products and services to their
local marketplace.
MAJOR PRODUCTS, PRODUCT GROUPS AND SERVICE LINES
Infinite currently offers design and development of fully integrated systems,
for to support of these new technologies. Infinite believes it has the ability
to coordinate the design and implementation of telecommunications networks for
governments and businesses worldwide.
Infinite researched the Medical Industry and designed the HOME system, Hospital
Operating Management E-Solution. The HOME design is an integrated wireless
solution to support the gathering of data and management of accounts
receivable.
In the transportation industry, Infinite has designed a wireless communication
and data system which provides the transportation company with accurate real
time data, which allows it to make more accurate dispatching decisions, reduces
driver waiting time, enhances routing decisions, reduces clerical work for
dispatchers, provides for accurate time keeping and has a "silent alarm" for
stolen vehicle recovery.
Infinite also owns nine films that have been converted into Digital format.
These films are sold directly through normal distribution channels. One of
Infinite's distributors has also completed a contract to use segments of these
films in a new series being products by major television company.
Management believes that every business industry has a specific set of new
requirements in this new global marketplace. Infinite will continue to focus
itself as a one stop shop systems integrator to support our customers in this
new emerging global market.
24
STRATEGY
Infinite's strategy is to develop and leverage fully integrated systems to
build a portfolio of customers that requires advanced applications and products
to compete in this emerging global market. Infinite will build the systems to
operate in this global market and house the data required by the market segment
Infinite supports. Infinite believes there are five key components to the
overall strategy for long term survivability in this global market.
Expanded Intellectual Property Portfolio. Infinite intends to continue
developing its intellectual property portfolio. Infinite has signed an
affiliation agreement with another entity that will support these plans to
build a full DVD production center with data storage capabilities. Infinite is
also working with other entities to develop DVD an animation technology for the
educational and entertainment industry. Infinite believes the ability to house
and deliver data worldwide is a key component to the long term value and future
revenue streams of the company.
Establish Network Alliances. Infinite will seek to form alliances with major
companies to provide wholesale network bulk services for resale. Infinite
believes in having solid affiliations with an array of services providers that
will ensure competitive prices in the new global market. Infinite's management
believes that these alliances will bring additional expertise and specialized
equipment and resources to support the business requirement of our customers
and the internal requirements of Infinite. Infinite's management believes this
industry will continue to see intense competition and that it would not be in
the best interest of our shareholders spend billions of dollars to develop our
own global capacity.
Establish Strategic Alliances. Infinite will seek to build strategic alliances
with companies that can support the overall business requirements of our
customers. These alliances include networks services, systems engineering,
government contractors, software developing companies, financial institutions
to support our customers, hardware companies and transportation delivery
systems. Infinite believe the new global market customers will require a single
E-Solution that to the customer will be seamless, but will require the
coordination of many companies working in unison to support the delivery of a
single product or service.
Establish Market Support Alliances. Infinite will develop an in-house
marketing group and build strategic alliances to support the overall needs of
our customers in sales and service. Management believes the traditional
marketing concepts of the past will require companies to adapt to the new
global market. Infinite will build in-house and through these strategic
alliances and complete product and services groups to support the global needs
of our customer base.
Establish Business Incubator Alliances. As Infinite establishes relationships
with new developing companies, the opportunity to develop and an incubator
business support group will be another segment to the business plan.
Management believes there is an opportunity to assist business in an
affiliation and other type of arrangement that will allows them to leverage
Infinite's resources in the global market and public sector.
COMPETITION
The Internet services industry generally, and the wireless systems industry
specifically, is intensely competitive, rapidly evolving and subject to
constant technological change. As the industry has grown, many of these
products and services are marketed by well-established companies with
reputations for success in the development and sale of products and services
and which possess significantly greater financial, marketing, distribution,
personnel and other resources than Infinite. These resources allow such
companies to implement extensive advertising and promotional campaigns, both
generally and in response to specific marketing efforts by competitors, to
rapidly enter into new markets and to introduce new products and services.
25
Infinite believes that its products and services will offer unique fully
integrated E-solutions that will give Infinite a competitive advantage.
Infinite's ability to coordinate across non traditional business concepts will
be a key advantage. Infinite will develop and coordinate E-solutions that give
our customers new technology, which may be funded through alternative
resources. We believe that developing technology on our clients' behalf and
acting as the systems operator in a long term relationship to support their
business needs will give them and Infinite a competitive advantage.
<U>ITEM 18.</U> <U>DESCRIPTION OF PROPERTY</U>
PROPERTIES
Infinite is the owner of its web site, (http://www.) infinitenetworksinc.com or
incz.net, harrisondigicom.com, incz.org, harrisonindustries.com, airtelusa.com,
diginetservices.com, and martincom.com.
Infinite owns a complete Novacom 834 Secure Telecommunications System, which it
has agreed to sell to the Democratic Republic of the Congo for $20,025,000.
Infinite rents offices on a month to month basis for nominal rent from an
unrelated party in an arms length transaction. Infinite believes that its
facilities are adequate for its present purposes. Infinite believes that as it
grows, it will require additional facilities, and that such facilities will be
readily available.
PATENTS
Infinite owns no patents for its solution services and owns no registered
trademarks. We are the owners of the Internet domain names listed at the start
of this section.
INTELLECTUAL PROPERTIES
Infinite will seek to acquire and develop intellectual properties. Technology
in the form of software products and services geared toward entertainment and
education are part of Infinite's long-term business plan. We are the owners of
the Internet domain names listed at the start of this section.
FILM LIBRARY
Infinite has acquired a film library of nine films dealing with the paranormal.
These films have recently been fully digitized into DVD format. These films are
copyrighted. The names of the nine films are: World of the Unknown, Aliens from
Spaceship Earth, World Beyond Death, Man of Miracles, Underground Doctors,
Unknown Powers, The Unknown Force and Age of the Psychics.
REAL ESTATE
We own no real estate. We lease the following properties:
1000 South Coast Drive, Suite M204 5836 South Pecos Rd.
Costa Mesa, CA 92626 Las Vegas, NV 89120
<U>ITEM 19.</U> <U>CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS</U>
RELATED PARTY TRANSACTIONS; POSSIBLE CONFLICTS OF INTEREST
Infinite has engaged in transactions with certain of its officers, directors
and principal stockholders, and is a party to consulting agreements with two
of its principal stockholders which will continue after the consummation of
this Offering. The terms of such transactions were determined without arms
length negotiations and could create, or appear to create, potential conflicts
of interest which may not necessarily be resolved in the Company's favor. See
"Certain Transactions".
26
On October 16, 1998, pursuant to an agreement between Infinite and Infinite
Network, Inc., a Florida corporation, Infinite acquired a specialized
communications equipment inventory for restricted stock.
On December 15, 1998, Infinite and National Sales Corp. entered into a joint
venture agreement which if completed will result in the issuance of 220,000
shares of preferred stock by Infinite to National Sales Corp. in exchange for a
$200,000,000 guarantee. The preferred stock will be convertible to common
stock at the rate of one share of preferred to 1,000 converted shares of common
stock. It is the intent of the parties to consummate this agreement and the
start date has been extended. No stock has been transferred.
On January 22, 1999, Infinite signed a contract to acquire 50% of Claudia
Security Systems, an Estonia Corporation, pending completion of due diligence.
Infinite decided not to close the transaction, and withdrew from the contract
in accordance with its terms. Stock was issued, pursuant to an exemption from
registration contained in Regulation S. Infinite issued a letter of
cancellation after completing the due diligence as per the guidelines of the
agreement. Claudia Security Systems subsequently filed for bankruptcy in
Estonia. Infinite placed an administrative hold on the issued shares, pending
further cancellation proceedings.
Infinite agreed to issue 13,820,985 common shares of stock on May 27, 1999, as
per the agreement signed October 16, 1998 to purchase communications equipment.
The equipment is booked at the par value of stock issued. The economic effect
will be seen later if and when revenue is received from the sale of the
equipment. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4(2) of the
Securities Act. The beneficial owners of this equipment, William Windsor and
John Bush, had no position or interest in Infinite prior to the effective date
and time of the agreement. Since that time both parties became involved as
directors and officers, and now would be considered as related parties to this
contract.
On July 29, 1999, Infinite signed a release agreement with Sierra Nevada
Advisors, Inc. et al that released Infinite against any claims which Sierra may
have had growing out of any transaction or relationship between the parties in
exchange for 4,000,000 shares of common stock under Rule 144.
Effective August 12, 1999, Infinite finalized a mutual release and agreement
for exchange of 1,400,000 shares of Infinite stock held by that stockholder in
exchange for Infinite's rights in AirTel USA, a Wyoming company, and Harrison
Industries, Inc., a Wyoming company.
On December 29, 1999, Infinite entered into and completed an Agreement and Plan
of Reorganization effective December 29, 1999 with International Television
Film Productions which was a tax free reorganization. Pursuant to a previous
Agreement, entered into on December 10, 1999, the issuance of 1,231,250 shares
of restricted common stock was completed in exchange for 100% of the
International Television Film stock. This gave Infinite a digital film library
of nine films dealing with the paranormal and contracts with key companies
including a major television and film network. These films are considered to
have an indefinite life and should produce a long term revenue stream for
Infinite. The stock was issued pursuant to the exemption for private placement
of stock contained within Section 4(2) of the Securities Act.
On February 10, 2000, Premium Management Services issued an irrevocable letter
of intent to purchase 1,000,000 shares at $10.00 per share of free trading
stock, subject to certain conditions.
On February 15, 2000, Infinite entered into an agreement and plan of
reorganization to acquire 100% of the shares of Infinite Networks Corporation,
a Florida corporation, in exchange for 2,727,272 shares of Infinite. The stock
was issued pursuant to the exemption for private placement of stock contained
within Section 4(2) of the Securities Act.
27
<U>ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</U>
TRANSFER AGENT, WARRANT AGENT AND REGISTRAR
The transfer agent, warrant agent and registrar for the common stock and
preferred stock is Pacific Stock Transfer Company, Las Vegas, Nevada.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering if the minimum number of subscriptions are
sold, Infinite will have 31,019,868 shares of Common Stock outstanding. If the
maximum number of subscriptions are sold, Infinite will have 31,919,868 shares
of common stock outstanding. All shares sold in this offering will be freely
transferable without restriction or further registration under the Securities
Act. However, any share purchased by an affiliate (in general, a person who is
in a control relationship with Infinite), will be subject to the limitations of
Rule 144 promulgated under the Securities Act.
Under Rule 144 as currently in effect, a person, or persons whose shares are
aggregated with those of others, whose restricted shares have been fully paid
for and meet the rule's one year holding provisions, including persons who may
be deemed affiliates of Infinite, may sell restricted securities in broker
transactions or directly to market makers, provided the number of shares sold
in any three-month period is not more than the greater of 1% of the total
shares of common stock then outstanding or the average weekly trading volume
for the four calendar week period immediately prior to each such sale. After
restricted securities have been fully paid for and held for two years,
restricted securities may be sold by persons who are not affiliates of Infinite
without regard to volume limitations. Restricted securities held by affiliates
must continue, even after the two-year holding period, to be sold in brokers'
transactions or directly to market makers subject to the limitations described
above.
Prior to this offering, a public market has existed for the common shares on
the NASD OTC Bulletin Board and now through the National Quotation Bureau
"pink sheets". No predictions can be made as to the effect, of having its
quotation dropped by the Bulletin Board, if any, that market shares or the
availability of shares for sale will have on the market price prevailing from
time to time. The sale, or availability for sale, of substantial amounts of
common stock in the public market could adversely affect prevailing market
prices. The continued dropping of the NASD of quoting Infinite's securities on
the OTC Bulletin Board could adversely affect prevailing market prices.
UNDERWRITING
This offering is self underwritten by Infinite through its officers and
directors on a best efforts basis. Therefore, there is no underwriter or
broker compensation involved, and Infinite is acting as its own underwriter.
DIVIDEND POLICY
Infinite has never declared or paid cash dividends on its capital stock.
Infinite currently intends to retain earnings, if any, to finance the growth
and development of its business and does not anticipate paying any cash
dividends in the foreseeable future.
PRICE RANGE OF SECURITIES
Infinite's Common Stock is quoted on National Quotation Bureau "pink sheets".
The shares will not be quoted on the NASD OTC Bulletin Board unless it has
complied with new NASD rules which require Infinite to register its securities
with the SEC under the Exchange Act. Infinite intends to file a form
concurrent with or subsequent to this filing which will bring it into
compliance with the new NASD rules, but the NASD could decide not to quote
Infinite's securities, which will then still be quoted on the National
Quotation Bureau's "pinksheets". The following table sets forth the ranges of
high and low sale prices for the Common Stock for the periods indicated, as
reported by NASDAQ, which is the principal trading market for Infinite's
securities. The quotes represent inter-dealer prices without adjustment
markups, markdowns, or commissions and may not necessarily represent actual
transactions.
For the 12 months ending December 31, 1999, annual trading volume of common
stock was approximately 6,453,545 or 26,890 shares daily, based on 240 business
days. If normalized after the reverse stock split, the volume was 8,578,058
or 35,741 shares daily. This low trading volume may have had a significant
effect on the market price of the Common Stock. Accordingly, historic prices
may not necessarily be indicative of market prices in a more liquid market. See
"Risk Factors--Limited Trading Market and Possible Volatility of Common Stock
Prices".
COMMON STOCK HIGH LOW
------------------ ------- -------
1998
Third Quarter..... $3.00 $1.00
Fourth Quarter.... 2.00 0.40
1999
First Quarter..... $1.50 $0.15
Second Quarter.... 1.69 0.18
Third Quarter..... 0.81 0.20
Fourth Quarter..... 0.31 0.13
The last sale price of the Common Stock of Infinite was $.850 as of February
25, 2000, on the pink sheets.
As of February 25, 2000, there were 30,919,868 shares of Common Stock
outstanding, held of record by 324 shareholders. Infinite believes that there
are in excess of 900 beneficial holders of each of its publicly-traded
securities.
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of
Harrison Digicom as of December 31, 1999 now known as Infinite. The pro forma
capitalization of Infinite as of May 31, 2000, giving effect to; (1) the sale
of the minimum of 100,000 shares at the price of $10.00 share (2) the sale of
the maximum of 1,000,000 shares at $10.00 per share, after deducting estimated
offering expenses.
12/31/99 Minimum Maximum
Capitalization of shareholders equity 182,336 982,336 9,982,336
ITEM 21. EXECUTIVE COMPENSATION
The following table sets forth information concerning compensation of the
Company's Chief Executive Officer and the three other most highly compensated
executive officers (collectively, the "Named Executive Officers") for 1999:
29
SUMMARY COMPENSATION TABLE
NAME AND PRINCIPAL ---- FISCAL ANNUAL LONG TERM
-------POSITION DURING PERIOD YEAR COMPENSATION COMPENSATION
SALARY (OPTIONS)
------------------------------------ ------- ----------- ---------
Donald L. Miller<F1><F2>............ | 1999 $ 150,000 $ 125,000
Chairman/Director
John W. Bush <F1><F3>............... | 1999 $ 150,000 $ 125,000
Chief Executive Officer/Director
Denton Guthrie <F1><F4>............. | 1999 $ 150,000 $ 125,000
Chief Financial Officer/Director
Howard Frantom<F1><F4><F7>.......... | 1999 $ 150,000 $ 125,000
Chief Operations Officer (former)
Kynaston Perriera <F1><F5>.......... | 1999 $ 120,000 $ 37,500
S.V.P International Affairs
John Alkire <F1><F6>................ | 1999 $ 96,000 $ 12,500
Vice President Engineering
---------------------------------
<FN>
Notes to Table
<F1> Payment of compensation has been deferred until such time as Infinite Networks Corporation generates
sufficient revenue or raises sufficient capital to pay salaries.
<F2> Purchase price of option shall be the maximum discount permitted per SEC requirements as of October 16, 1998.
One fifth of the awards awarded on the commencement date of each anniversary of the employment contract. An annual
bonus of 85% of base salary is payable as additional compensation, based on performance of Company before taxes and
extraordinary items, as directed by the Board of Directors.
<F3> Purchase price of option will be the maximum discount permitted per SEC requirements as of October 16, 1998.
One fifth of the awards will be awarded on the commencement date of each anniversary of the employment contract. An
annual bonus of 80% of base salary is payable as additional compensation, based on performance of Company before
taxes and extraordinary items, as directed by the Board of Directors.
<F4> Purchase price of option will be $.001 per share as awarded by the Board of Directors. One fifth of the awards
will be awarded on the commencement date of each anniversary of the employment contract. An annual bonus of 75% of
base salary is payable as additional compensation, based on performance of Company before taxes and extraordinary
items, as directed by the Board of Directors.
<F5> Purchase price of option will be $1.00 per share as awarded by the Board of Directors. One fifth of the awards
will be awarded on the commencement date of each anniversary of the employment contract. An annual bonus of 70% of
base salary is payable as additional compensation, based on performance of Company before taxes and extraordinary
items, as directed by the Board of Directors.
<F6> Purchase price of option will be $1.00 per share as awarded by the Board of Directors. One fifth of the awards
will be awarded on the commencement date of each anniversary of the employment contract. An annual bonus of 55% of
base salary is payable as additional compensation, based on performance of Company before taxes and extraordinary
items, as directed by the Board of Directors.
<F7> Infinite Networks has recently accepted Mr. Frantom resignation. No options have been awarded to executive
officers in fiscal year 1998 or 1999 to date.
</FN>
EMPLOYMENT AGREEMENTS
Infinite has entered into employment agreements with each of John W. Bush, its
Chief Executive Officer and Director, Donald Miller, its Chairman of the
Board, Denton Guthrie, its Chief Financial Officer, and Howard Frantom, its
former Chief Operations Officer. All officer's employment agreements provide
for an initial term of five years from October/November, 1998. Messrs. Bush,
Perriera, and Alkire's agreements require them to devote full time to the
management and operations of Infinite, and Messrs. Guthrie and Miller's
agreements require them to devote their part time efforts to the management and
operations of Infinite. Salaries are summarized in the above table. All of
these officers also may be granted annual bonuses at the discretion of the
Board of Directors. Each of the agreements contains a provision prohibiting the
employee from disclosing trade secrets and confidential information, for a
period during the employment and for a period of two years thereafter, and from
competing with Infinite during the term of employment.
30
<U>ITEM 22.</U> <U>FINANCIAL STATEMENTS</U>
SUMMARY
CONSOLIDATED FINANCIAL DATA
The following summary of consolidated financial data should be read in
conjunction with management's discussion and analysis of financial condition
included in Item 17 on pages 22 - 24 of this prospectus, and operations and the
"Financial Statements", including the "Notes" thereto, included on pages F-6 to
F-10. The consolidated "Statement of Operations" data for the years ended
December 31, 1998, 1999 and the inception date of Mach 27, 1996 through
December 31, 1999 and the consolidated balance sheet data at December 31, 1998,
1999 are derived from Infinite's audited Consolidated Financial Statements
included on pages F-2 to F-5 of this Prospectus, and include all adjustments
that Infinite considers necessary for a fair presentation of the financial
position and results of operations at that date and for such periods.
The Financial Reports are titled "Harrison Digicom, Inc." as the name change to
Infinite Networks Corporation did not occur until after the closing date of the
field work.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent Auditors' Report F-1
Balance Sheets F-2
Statement of Operations F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
Notes to Financial Statements F-6 to 10
31
STRABALA, RAMIREZ, & ASSOCIATES
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
INDEPENDENT AUDITORS' REPORT
To: the Board of Directors
Harrison Digicom, Inc.
Norfolk, VA
We have audited the consolidated balance sheets of Harrison Digicom, Inc. (a
Nevada corporation) and subsidiaries as of December 31, 1999, and 1998, and
related consolidated statements of operations, shareholder's equity and cash
flows for the years then ended and for the period from inception March 27, 1996
through December 31, 1999. These financial statements are the responsibility
of Harrison Digiom, Inc.'s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Harrison Digicom, Inc. as of
December 31, 1999 and 1998, and the results of its operations and cash flows
for the period indicated, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that Harrison
Digicom, Inc. will continue as a going concern. As shown in the financial
statements, Harrison Digicom, Inc. incurred a net loss of $4,775,363 for 1999
and incurred losses since inception. As of December 31, 1999, total
liabilities exceeded assets by $643,657. These factors and the others
discussed in Note 9, raise substantial doubt about Harrison Digicom, Inc's
ability to continue as a going concern. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities that might be
necessary in the event Harrison Digicom, Inc. cannot continue in existence.
STRABALA RAMIREZ, & ASSOCIATES, INC.,
<U>STRABALA RAMIREZ, & ASSOCIATES, INC.</U>
STRABALA RAMIREZ, & ASSOCIATES, INC.
February 3, 2000
Irvive, California
ORANGE COUNTY CORPORATE OFFICE
19762 MacArthur Blvd. Suite 100, Irvine, CA 92612 (949) 852-1606
FAX (949) 934-2935
F-1
HARRISON DIGICOM, INC.
(FORMERLY T2 LOGIC CORPORATION)
(A Development Stage Company)
BALANCE SHEET
12/31/98 12/31/99
Assets
Cash and cash equivalents $ 15,543 $ 14,355
Notes and advances receivable 0 64,800
Property, plant and equipment, net 36,737 25,075
Telecommunication equipment held for sale 55,284 55,284
Film library 0 22,822
Pre-paids and other 149,021 0
Organization costs, net 3,714,565 0
Total Assets $3,971,150 $ 182,336
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable and accrued expenses $ 149,455 171,449
Related party loans and advances 889,123 654,644
Total liabilities 1,038,578 826,093
Commitments and contingencies 0 0
Minority interests (4,683) 0
Shareholders' equity:
Common Stock 31,073 24,681
($0.001 par value; 500,000,000 shares authorized.)
Additional paid-in capital 3,879,114 5,219,857
Subscription receivable 0 (140,000)
Deficit accumulated during development (972,932) (5,748,295)
Total shareholders' equity 2,937,255 (643,757)
Total Liabilities and
Shareholders' Equity $3,971,150 $182,336
The accompanying notes are an integral part of these statements.
F-2
HARRISON DIGICOM, INC.
(FORMERLY T2 LOGIC CORPORATION)
(A Development Stage Company)
STATEMENT OF OPERATIONS
Inception
(3/27/96)
through
12/31/98 12/31/99 12/31/99
Revenues, net of cost of goods sold
of $21,841 in 1999 $ 0 $ 9,961 $ 10,019
Expenses
Salaries and consulting fees 132,946 898,053 1,031,000
Research and development in emerging markets 495,759 67,557 563,316
General administrative 240,125 585,306 895,726
Rent 21,453 29,120 50,573
Depreciation and amortization 11,707 7,011 24,105
Total expenses 901,990 1,587,047 2,564,720
Minority interests losses 3,499 292 4,975
Loss from continuing operations (898,491) (1,576,794) (2,549,726)
Loss from discontinued operations 0 (3,198,569) (3,198,569)
Net loss $ (898,491) $(4,775,363) $(5,748,295)
Net loss per share available to
common shareholders $ (0.16) $ (0.32) $ (0.70)
Weighted average number of common
shares outstanding 5,549,175 14,733,489 8,193,943
The accompanying notes are an integral part of these statements.
F-3
HARRISON DIGICOM, INC.
(FORMERLY T2 LOGIC CORPORATION)
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY
Common Stock Deficit
Additional Accumulated
Paid-In During
Shares Amount Capital Development Total
BALANCE,
DECEMBER 31, 1997 3,293,650 3,294 68,928 (74,441) (2,219)
Shares issued for cash,
net of offering costs 1,046,650 1,046 715,103 716,149
Shares issued as a deposit
for film library 2,462,500 2,463 2,463
Shares issued for services 24,269,500 24,270 3,095,083 3,119,353
Net Loss (898,491) (898,491)
BALANCE,
DECEMBER 31, 1998 31,072,300 31,073 3,879,114 (972,932) 2,937,255
Shares issued for cash,
net of offering cost 3,080,760 3,081 325,844 328,925
Shares issued for
services 1,880,000 1,880 1,789,385 1,791,265
Shares returned and
canceled (10,000,000) (10,000) (4,301,331) (4,311,331)
May 27, 1999 - 1:4
reverse stock split (19,524,795) 0
Shares issued for cash,
net of offering costs 2,523,306 10,093 709,509 719,602
Shares issued for
equipment acquisition 9,674,689 38,699 38,699
Shares issued for
services 4,154,431 16,618 2,659,443 2,676,061
Par value changed
from $.004 to $.001 (68,583) 68,583 0
Shares issued for cash,
net of offering costs 10,000 10 1,990 2,000
Shares issued for services,
including directors' fees 1,809,984 1,810 87,320 89,130
Subscription receivable,
December 31, 1999 (466,667) (467) (139,533) (140,000)
Net Loss (4,775,363) (4,775,363)
BALANCE,
DECEMBER 31, 1999 24,214,008 24,214 5,080,324 (5,748,295) (643,757)
The accompanying notes are an integral part of these statements.
F-4
HARRISON DIGICOM, INC.
(FORMERLY T2 LOGIC CORPORATION)
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Inception
(3/27/96)
through
12/31/98 12/31/99 (12/31/99)
Cash flows from operating activities
Net loss $ (898,491) $ (4,775,363) $ (5,748,295)
Adjustments to reconcile net loss to
cash from operating activities:
Depreciation and amortization 11,707 7,011 24,105
Gain on the sale of computers (5,528) (5,528)
Shares issued for services 3,119,353 245,125 3,386,700
Loss from discontinued operations 3,198,569 3,198,569
Minority interests losses (3,499) (292) (4,975)
Changes in assets and liabilities:
Pre-paids and other (140,836) (149,021)
Notes and advances receivable (4,800) (4,800)
Accounts payable and accrued expenses 136,516 59,356 208,811
Related party loans and advances 212,094 471,281 1,319,824
Cash provided by (used in) operating activities 2,436,844 (804,641) 2,225,390
Cash flows from investing activities
Proceeds from sales of property, plant and equipment 21,840 21,840
Organization costs (3,099,139) (3,728,289)
Acquisition of property, plant and equipment (38,951) (47,324) (99,671)
Costs to digitize film library (21,591) (21,591)
Cash used in investing activities (3,099,139) (47,075) (3,827,711)
Cash flows from financing activities
Proceeds from sale of common stock 716,149 850,527 1,616,676
Net increase (decrease) in cash and cash equivalents $ 14,909 $ (1,189) $ 14,355
Cash and cash equivalents, beginning of period 634 15,543
Cash and cash equivalents end of period $ 15,543 $ 14,355 $ 14,355
(0) (0) (0)
SUPPLEMENTAL DISCLOSURES:
Cash paid for interests $2,758 $6,268 $9,026
Cash paid for income taxes 0 0 0
Common stock was issued for services, telecommunication equipment held for sale and film library (See Notes).
The accompanying notes are an integral part of these statements.
F-5
HARRISON DIGICOM, INC.
(FORMERLY T2 LOGIC CORPORATION)
(A Development Stage Company)
Notes to the December 31, 1998 and December 31, 1999 Financial Statements
1. HISTORY AND CURRENT OPERATIONS
HISTORY. Harrison Digicom, Inc. (the Harrison Digicom or Company), formerly
T-2 Logic Corporation, organized on March 27, 1996 in Nevada. The Company
remained dormant until March 1998, when it entered into a share exchange
agreement with the owners of Harrison Industries, obtaining both voting and
management control. The transaction was treated as a reorganization and
re-capitalization, as required by the Securities Exchange Commission. In
conjunction with the reorganization, the Company changed its name to Harrison
Digicom. During 1998, Harrison Digicom focused its efforts developing
opportunities in the telecommunications industry in Vietnam, through their
wholly-owned subsidiary AirTel USA and their 70% ownership interest in the
joint venture Saigon ETMC.
Pre-operating activities slowed considerably during the second quarter of 1998
due to lack of capitalization. In October 1998, new management was brought in
to assist in restructuring the Company and to secure capitalization. On
January 26, 1999, Harrison Digicom discontinued all pre-operating activities of
both subsidiaries, ending all operations in Vietnam (see Note 2).
In December 1999, the Company entered into a share exchange agreement with the
owners of International Television Film Productions, Inc. (ITFP), a Nevada
corporation, obtaining both voting and management control. The transaction was
treated as a reorganization and re-capitalization, as required by the
Securities Exchange Commission. In conjunction with the transaction, the
Company acquired a film library of nine television films.
CURRENT OPERATIONS. Harrison Digicom, still in the development stage, continues
to explore opportunities in the communications arena. Management is currently
targeting the global marketplace as proliferation of the Internet is continuing
to develop. Management has reviewed this pervasive computer market and will
focus on real-time information delivery in the medical and transportation
industries. Growth plans are to acquire high technology companies that add
synergy to the Harrison Digicom long-term goals.
2. DISCONTINUED OPERATIONS
On January 26, 1999, the Board of Directors adopted a plan to discontinue all
operations of their two subsidiaries, Airtel USA and Saigon ETMC. All shares
provided to the major owners of Harrison Industries in conjunction with the
March 1998, (discussed in Note 1) transaction were returned or canceled in
exchange for both of the original subsidiaries.
3. ACCOUNTING POLICIES
BASIS OF CONSOLIDATION. The accompanying consolidated financial statements
include the accounts of the Company and its wholly-owned and majority-owned
subsidiaries. Inter-company transactions and balances have been eliminated in
consolidation.
CASH AND CASH EQUIVALENTS. The Company includes cash and short term deposits
with maturities less than ninety days as cash and cash equivalents in the
accompanying financial statements.
F-6
3. ACCOUNTING POLICIES (continued)
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment are stated at
cost. Additions, renovations, and improvements are capitalized. Maintenance
and repairs, which do not extend asset lives, are expensed as incurred.
Depreciation is provided on a straight-line basis over the estimated useful
lives (5 to 7 years).
ORGANIZATION COSTS. The Company continues to seek opportunities in emerging
markets; costs incurred to establish operations in various locations are
capitalized. Once operations begin, the applicable organization costs are
amortized over 5 years. If operations are terminated, the related organization
costs are charged to expense.
INCOME TAXES. The Company has made no provision for income taxes because of
financial statements and income tax losses since inception. A valuation
allowance has been used to offset the recognition of any deferred tax assets
due to the uncertainty of future realization. The use of any tax loss
carryforward benefits may also be limited.
ROYALTY INCOME. The Company licenses rights to use its film library. Revenues
are recognized in the period earned. Non-cancellable advances and guarantees
are recognized over the license period.
SHARES ISSUED FOR SERVICES. The fair value of common stock issued for services
rendered is determined by the Company's officers and directors.
NET LOSS PER COMMON SHARE. Basic earnings/losses per common share (Basic EPS)
excludes dilution and is computed by dividing net loss available to common
shareholders (the numerator) by the weighted average number of common shares
outstanding (the denominator) during the period. Diluted earnings/losses per
common share (Diluted EPS) is similar to the computation of Basic EPS except
that the denominator is increased to include potential common shares (for
example, stock options), demonstrating the decrease in earnings per share had
potential common shares been issued. Diluted EPS excludes any potential common
share that is anti-dilutive; that is, Diluted EPS excludes potential common
shares that increase earnings per share. In 1999 and 1998, all potential
common shares are anti-dilutive; therefore, Basic EPS equals Diluted EPS.
Net loss available to common shareholders
---------------------------------------------------- = Basic and Diluted EPS
Weighted average number of common shares outstanding
USE OF ESTIMATES. The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to make
estimates. Those estimates affect the reported amounts of assets and
liabilities and disclosures 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 may differ from those estimates.
4. TELECOMMUNICATION EQUIPMENT HELD FOR SALE
In 1998, the Company acquired telecommunication equipment by issuing 13,820,985
shares of common stock. (See Note 7 for discussion about the effective change
in ownership of the Company with the issuance of stock in conjunction with this
transaction.) The equipment was originally manufactured by a third party under
a government contract to provide secure telecommunication equipment and lines
to the Armed Forces in overseas operations. Prior to delivering the equipment,
the government canceled the order. Harrison Digicom holds the equipment for
resale; they are actively marketing the equipment in Africa.
F-7
5. FILM LIBRARY
In 1999, the Company acquired a film library through a share exchange agreement
with ITFP, the majority of which was owned by an officer, director and
controlling shareholder (see Note 7). The Company agreed to issue 1,321,250
shares of common stock in conjunction with the acquisition (see Note 9). The
Company incurred additional costs to digitize the films; those costs have been
added to the basis.
The film content centers on supernatural or unexplained phenomenon. The
Company licenses rights to release the films at the box office, to broadcast
clips of the films or the films in their entirety and to reproduce the films on
video and DVD. Royalty rates range from 20% to 50% depending on format, venue,
length, etc.
6. PROPERTY, PLANT AND EQUIPMENT
The following is a summary of property, plant and equipment and the related
accumulated depreciation:
12/31/1998 12/31/1999
Office equipment, cost $ 52,347 $ 31,012
Less: Accumulated depreciation (15,610) (5,937)
$ 36,737 $ 25,075
The Company added approximately $47,000 of office equipment in 1999. However,
in connection with discontinued operations in Vietnam, noted in Note 2, the
Company disposed of all office equipment owned prior to 1999; the write-off is
included in "loss on discontinued operations" in the accompanying financial
statements.
7. RELATED PARTY TRANSACTIONS
RELATED PARTY LOANS AND ADVANCES. From time to time, the Company advances or
borrows monies to and/or from officers and directors of the Company. These
advances or borrowings are non-interest bearing and short-term. As of December
31, 1998 and 1999, borrowings totaled $889,123 and $654,644, including the
deferred payment of all officers' salaries.
TELECOMMUNICATION EQUIPMENT HELD FOR SALE. As discussed more fully in Note 4,
the Company acquired telecommunications equipment during 1998 in exchange for
common stock. After the stock issuance, the two sellers owned over 50% of the
outstanding stock in the Company; they were named as officers and directors,
effectively taking over management of the Company. As a result, the Company
recorded the equipment at approximately the same basis as it was carried on the
sellers' books.
FILM LIBRARY. As discussed more fully in Note 5, the Company acquired a film
library in 1999 for common stock. An officer, director and controlling
shareholder owned 50% of the seller. As a result, the Company recorded the
film library at approximately the same basis as it was carried on the seller's
books. Additionally, the Company pays consulting fees of $2,000 month to the
other prior owner for continuing efforts to manage and market the library.
F-8
8. SHAREHOLDERS' EQUITY
DEVELOPMENT STAGE COMPANY. Generally accepted accounting principles require
disclosing stock issued since inception for development stage companies. The
following chart summarizes shares issued from inception (March 27, 1996)
through December 31, 1999.
Shares Par Value Paid-in Capital
BALANCE, INCEPTION (MARCH 27, 1996) 0 0 0
Shares issued for cash, net of offering costs 250,000 250 9,750
Shares issued for services 201,320 202 21,637
December 4, 1996 5:1 stock split 1,805,280 1,805 (1,805)
Shares issued for cash, net of offering costs 1,000,000 1,000 39,000
Shares issued for services 37,050 37 346
BALANCE, DECEMBER 31, 1996 3,293,650 3,294 68,928
BALANCE, DECEMBER 31, 1997 3,293,650 3,294 68,928
Shares issued for cash, net of offering costs 1,046,650 1,046 715,103
Shares issued as a deposit for film library 2,462,500 2,463 0
Shares issued for services 24,269,500 24,270 3,095,083
BALANCE, DECEMBER 31, 1998 31,072,300 31,073 3,879,114
Shares issued for cash, net of offering costs 3,080,760 3,081 325,844
Shares issued for services 1,880,000 1,880 1,789,385
Shares returned and canceled (10,000,000) (10,000) (4,301,331)
May 27, 1999 1:4 reverse stock split (19,524,795) 0 0
Shares issued for cash, net offering costs 2,523,306 10,093 709,509
Shares issued for equipment acquisition 9,674,689 38,699 0
Shares issued for services 4,154,431 16,618 2,659,443
Change in par value ($0.004 to 0.001) 0 (68,583) 0
Shares issued for cash, net of offering costs 10,000 10 1,990
Shares issued for services, including directors' fees 1,809,984 1,810 87,320
Subscription receivable, December 31, 1999 (466,667) (467) (139,533)
BALANCE DECEMBER 31, 1999 24,214,008 $ 24,214 $ 5,080,324
STOCK BASED COMPENSATION. The Company issued 1,419,840 shares of stock to its
directors as compensation for services provided during 1999. In accordance
with APB 25, Accounting for Stock Issued to Employees, $88,740 in compensation
was recognized based on the estimated market value of restricted stock on the
date of grant, December 29, 1999.
Stock options: See Note 9.
9. COMMITMENTS AND CONTINGENCIES
GOING CONCERN. The Company has minimal capital resources presently available to
meet obligations that normally can be expected to be incurred by similar
companies, and with which to carry out its planned activities. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. Management is seeking additional equity financing to fund planned
operations. However, there is no assurance that the Company will be able to
obtain such financing. The accompanying financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
COMMON STOCK. The Company acquired telecommunications equipment for stock in
1998; as of December 31, 1999, approximately 4.1 million shares of common stock
remained un-issued (see Note 10). Additionally, the Company acquired a film
library for stock in 1999; as of December 31, 1999, approximately 615 thousand
shares of common stock remain un-issued. The Board intends to issue the shares
in 2000. Lastly, during 1999, the Company received a $470,000 commitment from
an investor; as of December 31, 1999, approximately $200,000 remained
outstanding (see Note 10).
TELECOMMUNICATION EQUIPMENT HELD FOR SALE. The Company received a letter of
intent from the Democratic Republic of the Congo to acquire all of the
telecommunications equipment held for sale. Management believes the sale will
be completed in 2000.
F-9
9. COMMITMENTS AND CONTINGENCIES (continued)
FILM LIBRARY. The Company licensed film rights during 1999. The licensee
projected Harrison Digicom's royalty income for 2000 at approximately $150,000.
EMPLOYMENT CONTRACTS AND STOCK OPTIONS. The Company entered into employment
contracts with the officers of the Company. Each contract covers a five year
period. Base pay is stipulated and ranges between $96,000 and $150,000.
Bonuses are permitted based on performance of the Company and the executive,
ranging between 55% and 85% of the executive's base pay. The contracts each
grant options every year. After adjustment for the 4:1 reverse stock split in
May 1999, stock options to be granted total 600,000, one fifth of which is due
each contract year. The price per option ranges from $0.001 to $1.00. None of
the options have been granted; however, it is the Board's intention to do so.
LEASE COMMITMENT. The Company leases office space in California and Nevada and
storage space in Oregon, on a month to month basis. Monthly rent payments
total approximately $3,500.
MERGERS AND ACQUISITIONS. From time to time, the Company enters into merger
and acquisition opportunities. As of December 31, 1999, the Company had no
such commitments. However, The Company continues researching and developing
opportunities to merge with or acquire operating Companies in order to maximize
shareholder value.
PUBLIC RELATIONS. The Company entered into a contract with a public relations
firm to provide services valued at approximately $54,000, from November 1999
through November 2000 for $270,000 shares of unrestricted common stock.
10. SUBSEQUENT EVENTS
SUBSCRIPTIONS RECEIVABLE. The Company collected $60,000 of subscriptions
receivable after December 31, 1999; these receivables are reflected in assets
in the accompanying financial statements.
TELECOMMUNICATIONS EQUIPMENT HELD FOR SALE. On January 6, 2000, the Company
issued 4,146,296 shares of common stock, representing all un-issued shares, as
required by the acquisition agreement.
UNAUDITED AMENDMENT OF ARTICLES OF INCORPORATION. On February 8, 2000, the
Company filed a Certificate of Amendment of Articles of Incorporation with the
State of Nevada for a name change from Harrison Digicom, Inc. to Infinite
Networks Corporation.
UNAUDITED PROPOSED MERGER/ACQUISITION ACTIVITY. On February 8, 2000, the
Company entered into negotiations to acquire all of the outstanding common
stock of Infinite Networks Corporation ("INC Florida"), a Florida corporation,
in exchange for 2,727,272 shares of Harrison Digicom common stock. INC Florida
incorporated in 1998 and to date has had minimal activities, other than a
$600,000 prepayment of loan fees to secure a $10,000,000 loan commitment. INC
Florida is significantly owned by a previous director of Harrison Digicom who
resigned his position with the Company in contemplation of this proposed
transaction.
The acquisition was completed February 15, 2000; as a result, historical
financial information presented in future reports will be restated to include
INC Florida. As required by the Securities Exchange Commission, the
transaction will be accounted for as a reorganization and recapitalization.
UNAUDITED CONTINGENT STOCK PURCHASE COMMITMENT. A former director of Harrison
Digicom is a significant shareholder of Premium Management Services, Ltd.
(PMS), a Bermuda corporation. PMS has committed to purchasing 1,000,000 shares
of the company's common stock for $10,000,000 upon completion of the successful
filing with the Securities Exchange Commission.
F-10
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY INFINITE NETWORKS CORPORATION OR BY THE UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED BY THIS PROSPECTUS, OR AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES BY ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IS
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SHALL NOT, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
------------------------
INFINITE NETWORKS
CORPORATION
1,000,000 SHARES OF COMMON STOCK
------------------------
PROSPECTUS PART II - ADDITIONAL INFORMATION NOT REQUIRED
------------------------
March 15 ,2000
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
INDEX TO PROSPECTUS PART II
ITEM 24 INDEMNIFICATION OF DIRECTORS AND OFFICERS 32
ITEM 25 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION 32
ITEM 26 RECENT SALES OF UNREGISTERED SECURITIES 33
ITEM 27 EXHIBITS 36
ITEM 28 UNDERTAKINGS 36
- ------------------------------------------------------------------------------
<U>ITEM 24.</U> <U>INDEMNIFICATION OF DIRECTORS AND OFFICERS</U>
NRS 78.751 provides that Infinite may provide in its articles of incorporation,
by laws or by agreement, to indemnify Infinite's officers and directors and
affects their liability in that capacity, for any and all costs incurred in
defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the
action, suit or proceeding, upon receipt of an undertaking by or on behalf of
the director or officer to repay the amount if it is ultimately determined by a
court of competent jurisdiction that he is not entitled to be indemnified by
the corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
Infinite's By-Laws and Articles of Incorporation, as amended, substantively
provide that Infinite indemnify its officers, directors, employees and agents
to the fullest extent permitted by NRS 78.751.
<U>ITEM 25.</U> <U>OTHER EXPENSES OF ISSUANCES AND DISTRIBUTION</U>
The Registrant estimates that expenses payable by it in connection with the
Offering described in this Registration Statement (other than the underwriting
discount and commissions and reasonable expense allowance) will be as follows:
SEC registration fee........................................... $ 2,640
Printing and engraving expenses................................ $ 0
Accounting fees and expenses................................... $150,000
Legal fees and expenses (other than Blue Sky).................. $ 20,000
Blue sky fees and expenses (including legal and filing fees)... $ 8,000
Miscellaneous.................................................. $ 19,360
Total...................................................... $200,000
----------
32
<U>ITEM 26.</U> <U>RECENT SALES OF UNREGISTERED SECURITIES</U>
The following securities were issued by Infinite within the past three years
and were not registered under the Securities Act. The shares issued in the
below transactions are reported directly from Infinite's stock transaction
report. These numbers have been adjusted to account for the reverse stock split
of June 1999. Actual shares issued could vary due to archive accounts which
are not adjusted for the reverse stock split.
On April 21, 1998, Infinite issued 22,375,000 pre-split shares to 23 entities
and individuals as part of the reorganization plan of March 20, 1998. The
stock was not registered, and part was transferred in pursuant to the exemption
for private placement of stock contained within Section 4 (2) of the Securities
Act. The remaining stock was transferred pursuant to the exemption for private
placement of stock contained within Section 4 (2) of the Securities Act,
Regulation D, Rule 504. No underwriter was used in the transaction.
In June 12, 1998, Infinite issued 125,000 shares to 1 individual as payment for
services within the contractual agreement properly executed by the company.
The stock was not registered, and was transferred in pursuant to the exemption
for private placement of stock contained within Section 4 (2) of the Securities
Act. No underwriter was used in the transaction.
In June 23, 1998, Infinite issued 94,959 shares to 94 individuals as payment
for services rendered. The stock was not registered, and was transferred
pursuant to the exemption for private placement of stock contained within
Section 4 (2) of the Securities Act. No underwriter was used in the
transaction.
In June 30, 1998, Infinite issued 763 shares to 1 individual for services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act. No underwriter was used in the transaction.
In July 6, 1998, Infinite issued 2,812,500 shares to 1 individual and 1 entity
to raise funds for the company. 2,500,000 shares were subsequently canceled
when funding did not go through. The stock was not registered, and was
transferred pursuant to the exemption for private placement of stock contained
within Section 4 (2) of the Securities Act. No underwriter was used in the
transaction.
In July 20, 1998, Infinite issued 879,875 shares to 81 individual as for
services rendered. The stock was not registered, and was transferred pursuant
to the exemption for private placement of stock contained within Section 4 (2)
of the Securities Act. No underwriter was used in the transaction.
In July 20, 1998, Infinite issued 4,688 shares to 1 individual for money. The
stock was not registered, and was transferred pursuant to the exemption for
private placement of stock contained within Section 4 (2) of the Securities
Act. No underwriter was used in the transaction.
In August 8, 1998, Infinite issued 50,000 shares to 1 individual as services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act. No underwriter was used in the transaction.
In October 23, 1998, Infinite issued 20,313 shares to 1 individual to adjust
for the fall in stock price. The stock was not registered, and was transferred
pursuant to the exemption for private placement of stock contained within
Section 4 (2) of the Securities Act. No underwriter was used in the
transaction.
33
In December 9, 1998, Infinite issued 115,625 shares to 1 individual as the
deposit for film library. The stock was not registered, and was transferred
pursuant to the exemption for private placement of stock contained within
Section 4 (2) of the Securities Act. No underwriter was used in the
transaction.
In December 18, 1998, Infinite issued 500,000 shares to 1 individual and 1
entity as the remaining deposit for film library. The stock was not
registered, and was transferred pursuant to the exemption for private placement
of stock contained within Section 4 (2) of the Securities Act. No underwriter
was used in the transaction.
In December 18, 1998, Infinite issued 343,000 shares to 1 entity for cash. The
stock was not registered, and was transferred pursuant to the exemption for
private placement of stock contained within Section 4 (2) of the Securities
Act. No underwriter was used in the transaction.
In January 15, 1999, Infinite issued 500,000 shares to 1 entity for cash. The
stock was not registered, and was transferred pursuant to the exemption for
private placement of stock contained within Section 4 (2) of the Securities
Act, Regulation D, Rule 504. No underwriter was used in the transaction.
In February 2, 1999, Infinite issued 1,200,000 shares to 1 entity as part of
the purchase agreement. The stock was not registered, and was transferred
pursuant to the exemption for private placement of stock contained within
Section 4 (2) of the Securities Act, Regulation S. No underwriter was used in
the transaction.
In March 3, 1999, Infinite issued 60,000 shares to 1 entity for services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act, Regulation D, Rule 504. No underwriter was used in the
transaction.
In March 3, 1999, Infinite issued 400,000 shares to 1 entity for services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act, Regulation S. No underwriter was used in the transaction.
In March 14, 1999, Infinite issued 116,369 shares to 1 entity for cash. The
stock was not registered, and was transferred pursuant to the exemption for
private placement of stock contained within Section 4 (2) of the Securities
Act, Regulation D, Rule 504. No underwriter was used in the transaction.
In March 14, 1999, Infinite issued 5,000 shares to 1 entity for services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act, Regulation D, Rule 504. No underwriter was used in the
transaction.
In March 14, 1999, Infinite issued 50,000 shares to 1 entity for services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act, Regulation D, Rule 504. No underwriter was used in the
transaction.
In March 19, 1999, Infinite issued 528,821 shares to 1 entity for cash. The
stock was not registered, and was transferred pursuant to the exemption for
private placement of stock contained within Section 4 (2) of the Securities
Act, Regulation D, Rule 504. No underwriter was used in the transaction.
In June 10, 1999, Infinite issued 88,968 shares to 1 entity for services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act. No underwriter was used in the transaction.
34
In June 28, 1999, Infinite issued 4,571 shares to 2 entities for services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act. No underwriter was used in the transaction.
In June 28, 1999, Infinite issued 9,674,689 shares to 2 entities in exchange
for communications equipment. The stock was not registered, and was transferred
pursuant to the exemption for private placement of stock contained within
Section 4 (2) of the Securities Act. No underwriter was used in the
transaction.
In July 6, 1999, Infinite issued 500,000 shares to 1 entity for a settlement.
The stock was not registered, and was transferred pursuant to the exemption for
private placement of stock contained within Section 4 (2) of the Securities
Act. No underwriter was used in the transaction.
In August 3, 1999, Infinite issued 103,305 shares to 1 entity for cash. The
stock was not registered, and was transferred pursuant to the exemption for
private placement of stock contained within Section 4 (2) of the Securities
Act. No underwriter was used in the transaction.
In August 4, 1999, Infinite issued 4,000,000 shares to 1 entity for settlement.
The stock was not registered, and was transferred pursuant to the exemption for
private placement of stock contained within Section 4 (2) of the Securities
Act. No underwriter was used in the transaction.
In August 5, 1999, Infinite issued 88,968 shares to 1 entity for services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act. No underwriter was used in the transaction.
In August 11, 1999, Infinite issued 786,667 shares to 11 entities for services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act. No underwriter was used in the transaction.
In August 23, 1999, Infinite issued 58,000 shares to 1 entity for services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act. No underwriter was used in the transaction.
In August 23, 1999, Infinite issued 88,968 shares to 1 entity for services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act. No underwriter was used in the transaction.
In September 23, 1999, Infinite issued 66,667 shares to 1 entity for services
rendered. The stock was not registered, and was transferred pursuant to the
exemption for private placement of stock contained within Section 4 (2) of the
Securities Act. No underwriter was used in the transaction.
In September 23, 1999, Infinite issued 1,566,667 shares to 1 entity for cash.
The stock was not registered, and was transferred pursuant to the exemption for
private placement of stock contained within Section 4 (2) of the Securities
Act. No underwriter was used in the transaction.
In October 5, 1999, Infinite issued 160,000 shares to 1 entity for services
rendered and cash. The stock was not registered, and was transferred pursuant
to the exemption for private placement of stock contained within Section 4 (2)
of the Securities Act. No underwriter was used in the transaction.
In December 30, 1999, Infinite issued 1,168,936 shares to 7 entities for
services rendered. The stock was not registered, and was transferred pursuant
to the exemption for private placement of stock contained within Section 4 (2)
of the Securities Act. No underwriter was used in the transaction.
35
In December 30, 1999, Infinite issued 384,144 shares to 54 entities for
services rendered. The stock was not registered, and was transferred pursuant
to the exemption for private placement of stock contained within Section 4 (2)
of the Securities Act. No underwriter was used in the transaction.
<U>ITEM 27.</U> <U>EXHIBITS</U>
(a) The following exhibits are filed as part of this Registration
Statement:
EXHIBIT
NUMBER DESCRIPTION
- -------- -------------------------------------------------------------
3.1 Articles of Incorporation dated 3-22-96
3.2 Amendment to Articles of Incorporation dated 3-20-98
3.3 Amendment to Articles of Incorporation dated 3-20-98
3.4 Amendment to Articles of Incorporation dated 6-11-99
3.5 Amendment to Articles of Incorporation dated 12-16-99
3.6 Amendment to Articles of Incorporation dated 2-11-00
3.7 By-Laws
4.1 Form of Common Stock Certificate
5.1 Opinion of Kenneth G. Eade, Attorney at Law
8.1 Opinion Regarding Tax Matters(included in Exhibit 99.1)
10.1 Employment Agreement between Harrison Digicom and John W. Bush
10.2 Employment Agreement between Harrison Digicom and Donald Miller
10.3 Employment Agreement between Harrison Digicom and Denton Guthrie
10.4 Employment Agreement between Harrison Digicom and Howard Frantom
10.5 Employment Agreement between Harrison Digicom and Kynaston Perriera
10.6 Employment Agreement between Harrison Digicom and John Alkire
10.7 Reorganization Agreement between Harrison Industries and T2 Logic 3-20-98
10.8 Agreement between Harrison Digicom and Infinite Networks Corporation 10-16-98
10.9 Agreement between Harrison Digicom and Martin Communications, Inc. 11-19-98
10.10 Agreement between Harrison Digicom and National Sales Corp. 12-15-98
10.11 Business Cooperation Agreement between Company and Claudia Sec. Sys. 12-15-98
10.12 Agreement between Harrison Digicom & American Cambodian Telecom Ltd. 1-7-99
10.13 Agreement between Martin Communications, Inc. and Claudia Sec. Sys. 1-22-99
10.14 Business Cooperation Agreement between Company and Venro Pet.Corp. 2-18-99
10.15 Release Agreement between Harrison Digicom and Transpac 6-21-99
10.16 Engagement & Consulting Agreement between Harrison Digicom & GCR/Highland LLC 7-9-99
10.17 Agreement between Harrison Digicom and Olympic Capital, LLC 7-27-99
10.18 Release Agreement between Harrison Digicom and Sierra Nevada Advisors, Inc. 7-29-99
10.19 Release Agreement between Harrison Digicom and RCCommunications 10-15-99
10.20 Agreement between Harrison Digicom & International Television Film Production 12-10-99
10.21 Agreement and Plan of Reorganization between Harrison Digicom & International Television Film Production 12-29-99
10.22 Contingent Stock Purchase Commitment of Premium Management Services, Ltd. 2-10-00
10.23 Agreement between Harrison now Infinite (Nevada) & Infinite (Florida) 2-15-00
17.1 Letter Regarding Resignation of Directors 12-29-99
22.1 Board Resolution: Reorganization of T2 Logic 3-20-98
23.1 Consent Strabala, Ramirez & Associates
23.2 Consent of Kenneth G. Eade
------------------------
<U>ITEM 28.</U> <U>UNDERTAKINGS</U>
The undersigned Company hereby undertakes to:
(a)(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
36
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the SEC pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than a 20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement;
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of Infinite Networks pursuant to the provisions referred to under Item
24 of this Registration Statement, or otherwise, Infinite Networks has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Infinite Networks Corporation of expenses incurred
or paid by a director, officer or a controlling person of Harrison Digicom in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of competent
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c)(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by Harrison Digicom under Rule 424(b)(1), or (4), or 497(h)
under the Securities Act as part of this Registration Statement as of the time
the SEC declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial bona
fide offering of those securities.
ADDITIONAL INFORMATION
Infinite Networks Corporation has filed with the SEC a registration statement
on Form SB-2 under Securities Act, with respect to the securities. This
prospectus, which forms a part of the registration statements, does not contain
all of the information set forth in the registration statement as permitted by
applicable SEC rules and regulations. Statements in this prospectus about any
contract, agreement or other document are not necessarily complete. With
respect to each such contract, agreement, or document filed as an exhibit to
the registration statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement is
qualified in its entirety by this reference.
The registration statement may be inspected without charge and copies may be
obtained at prescribed rates at the SEC's public reference facilities at
Judiciary Plaza, 450 Fifth Street NW, Room 1024, Washington, DC 20549, or on
the Internet at http://www.sec.gov.
37
Infinite Networks Corporation will furnish to its shareholders annual reports
containing audited financial statements reported on by independent public
accountants for each fiscal year and make available quarterly reports
containing reviewed financial information for the first three quarters of each
fiscal year.
SIGNATURES
In accordance with the requirements of the Securities Act, the
registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of Costa
Mesa, State of California, on March 15, 2000.
INFINITE NETWORKS CORPORATION
BY:
<U>JOHN W. BUSH</U>
JOHN W. Bush
Chief Executive Officer/Director
In accordance with the requirements of the Securities Act, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<U>JOHN W. BUSH</U>
JOHN W. BUSH
Chief Executive Officer/Director
March 15, 2000
<U>DONALD L. MILLER</U>
DONALD L. MILLER
Chairman, Board of Directors
March 15, 2000
<U>RAFAEL ROJAS</U>
RAFAEL ROJAS
Director
March 15, 2000
<U>DENTON GUTHRIE</U>
DENTON GUTHRIE
Chief Financial Officer/Director
March 15, 2000
38