UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-KSB
Annual Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the
fiscal year ended June 30, 2000
Commission file number 000-03718
AmeriNet Group.com, Inc.
(Name of small business issuer in its charter)
Delaware
(State of incorporation or organization)
11-2050317
(I.R.S. Employer Identification No.)
2500 North Military Trail, Suite 225-C; Boca Raton, Florida
-----------------------------------------------------------
(Address of principal executive offices)
33431
(Zip Code)
Issuer's telephone number: (561) 998-3435
Securities registered under
Section 12(b) of the Exchange Act:
Title of each class: None
Name of each exchange on which registered: None
----
Securities registered under
Section 12(g) of the Exchange Act:
Common Stock, $0.01 par value
(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that our company was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. [x] Yes [ ] No
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of our company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [_]
State issuer's revenues for its most recent fiscal year: $255,053. State
the aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days: $10,360,216; based on the final
transaction reported on the OTC Bulletin Board at the close of business on
September 20, 2000 ($1.06 per share), there being 9,773,789 shares of our
company's common stock on such date held by non- affiliates of our company
(persons holding less than 10% of our company's common stock who were not
officers or directors within the last 90 days).
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date. As of June 30, 2000, there
were 12,465,172 shares of our company's common stock outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [_] No [x]
AVAILABLE INFORMATION.
The public may read and copy any materials filed by AmeriNet Group.com,
Inc. (referred to throughout this Report as "our company") with the United
States Securities and Exchange Commission (the "Commission") at the Commission's
Public Reference Room at 450 Fifth Street, Northwest, Washington, D.C. 20549.
The public may obtain information on the operation of the Public Reference Room
by calling the Commission at 1-800-SEC-0330. The Commission maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding our company and other issuers that file reports
electronically with the Commission, at http://www.sec.gov. Our Company maintains
a website at http://www.amerinetgroup.com and our company's wholly owned
operating subsidiaries, Wriwebs.com, Inc., and AmeriNet Communications, Inc.
maintain their own web-sites at http://www.wriwebs.com, and
http://www.callthefirm.com, respectively.
CAVEAT PERTAINING TO FORWARD LOOKING STATEMENTS & CONTEXT
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain of the statements contained
herein, which are not historical facts, are forward-looking statements with
respect to events, the occurrence of which involve risks and uncertainties.
These forward-looking statements may be impacted, either positively or
negatively, by various factors. Information concerning potential factors that
could affect our company is detailed from time to time in our company's reports
filed with the Commission. This Report contains "forward looking statements"
relating to our company's current expectations and beliefs. These include
statements concerning operations, performance, financial condition, anticipated
acquisitions and anticipated growth. For this purpose, any statements contained
in this Report or the Form 10-KSB, Forms 10QSB, Forms 8-K, and the Information
Statement referred to herein that are not statements of historical fact are
forward-looking statements. Without limiting the generality of the foregoing,
words such as "may", "will", "would", "expect", "believe", "anticipate",
"intend", "could", "estimate", or "continue", or the negative or other variation
thereof or comparable terminology are intended to identify forward-looking
statements. These statements by their nature involve substantial risks and
uncertainties which are beyond our company's control. Should one or more of
these risks or uncertainties materialize or should our company's underlying
assumptions prove incorrect, actual outcomes and results could differ materially
from those indicated in the forward looking statements.
The information in this Report is qualified in its entirety by reference to
the entire Report; consequently, this Report must be read in its entirety.
Information may not be considered or quoted out of context or without
referencing other information contained in this Report necessary to make the
information considered, not misleading.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents previously filed by our company with
the Commission are incorporated by reference in this Report:
(1) Form 10-KSB for the year ended December 31, 1998, information from Item
12 (Part III) thereof incorporated into Item 3 hereof; information from
Item 11 (Part III) thereof incorporated into Item 3 hereof; information
from Item 8 (Part II) thereof incorporated into Item 8 hereof; exhibits
from Item 13(a) (Part III) thereof incorporated into Item 13(a) hereof;
(2) Form 10-KSB for the year ended June 30, 1999, information from Item 12
(Part III) thereof incorporated into Item 3 hereof; information from
Item 11 (Part III) thereof incorporated into Item 3 hereof; information
from Item 8 (Part II) thereof incorporated into Item 8 hereof; exhibits
from Item 13(a) (Part III) thereof incorporated into Item 13(a) hereof;
(3) Form 10-QSB filed for quarter ended September 30, 1999, information
from Item 5 (b)(Part II) thereof incorporated into Item 1 hereof;
information from Item 5 (c) (Part II) thereof incorporated into Item 1
hereof, exhibits from Item 6(a) thereof incorporated into Item 13(a)
hereof.
(4) Form 8-K filed on September 8, 1997, exhibits from Item 7(c) thereof
incorporated into Item 13(a) hereof.
(5) Form 8-K filed on March 5, 1999, and amended 8-K filed on April 2,
1999, exhibits from Item 7(c) thereof incorporated into Item 13(a)
hereof.
(6) Form 8-K filed on July 12, 1999, amended 8-K filed on August 18, 1999,
and amended 8-K filed on September 9, 1999, exhibits from Item 7(c)
thereof incorporated into Item 13(a) hereof.
(7) Form 8-K filed on August 24, 1999, and amended 8-K filed on September
9, 1999, exhibits from Item 7(c) thereof incorporated into Item 13(a)
hereof.
(8) Form 8-K filed on December 16, 1999, amended 8-K filed on February 8,
2000 and amended 8-K filed on March 8, 2000, exhibits from Item 7(c)
thereof incorporated into Item 13(a) hereof.
(9) Form 8-K filed on January 26, 2000, and amended 8-K filed on March 3,
2000, exhibits from Item 7(c) thereof incorporated into Item 13(a)
hereof.
(10) Form 8-K filed on March 29, 2000, exhibits from Item 7(c) thereof
incorporated into Item 13(a) hereof.
(11) Form 8-K filed on May 30, 2000, exhibits from Item 7(c) thereof
incorporated into Item 13(a) hereof.
(12) Form 8-K filed on June 15, 2000, exhibits from Item 7(c) thereof
incorporated into Item 13(a) hereof.
(13) Form 8-K filed on July 17, 2000, exhibits from Item 7(c) thereof
incorporated into Item 13(a) hereof.
(14) Form 8-K filed on August 15, 2000, exhibits from Item 7(c) thereof
incorporated into Item 13(a) hereof.
TABLE OF CONTENTS
Part Item Page
Number Number Number Caption
- ------ ------ ------ -------
I 1 __ Description of Business
2 __ Description of Property
3 __ Legal Proceedings
4 __ Submission of Matters to Security Holders
II 5 __ Market for Common Equity and Related Stock-
holder Matters
6 __ Management's Discussion and Analysis and Plan
of Operation
7 __ Financial Statements
8 __ Changes In and Disagreements With Accountants
on Accounting
and Financial Disclosure
III 9 __ Directors, Executive Officers, Promoters and
Control Persons
9 __ Compliance With Section 16(a) of the Exchange
Act
10 __ Executive Compensation
11 __ Security Ownership of Certain Beneficial
Owners and
Management
12 __ Certain Relationships and Related Transactions
13 __ Exhibits and Reports on Form 8-K
Signatures __
Additional Information __
Exhibits __
- ------
* This document incorporates into a single document the Exchange Act
requirements for an annual report and the Form 10-KSB.
PART I
ITEM 1: DESCRIPTION OF BUSINESS
THE HISTORY OF OUR COMPANY UNDER PRIOR MANAGEMENT
AmeriNet Group.com, Inc. (sometimes hereinafter referred to as "our
company") was incorporated in the State of Delaware on December 8, 1964, as
Infotec, Inc, and engaged in computer and communications related activities. It
discontinued its original operations in March of 1974 and until August of 1991,
its activities were limited to the collection of royalties from licensing of
patents and the disbursement of funds (derived from the receipt of royalties).
Those activities ended in August of 1991 when the patents expired. From August
of 1991 until March of 1995, its only activities involved administrative
functions (e.g., payment of taxes, updating of stockholder records and
maintenance of corporate existence).
In March of 1995, Messrs. George Wulfing and Solomon Manber, then our
company's sole officers and directors (Mr. Wulfing serving as President and Mr.
Manber as Secretary and Treasurer), entered into a series of agreements with Mr.
Edward Granville-Smith, Jr. ("Mr. Granville-Smith") pursuant to which our
company's board of directors elected Mr. Granville-Smith as a member and all
directors other than Mr. Granville-Smith resigned. Immediately thereafter, Mr.
Granville-Smith, as the sole director, elected himself president and chief
executive officer.
On May 18, 1995, the holders of 1,018,106 of the 2,000,000 shares of our
company's common stock then outstanding adopted a resolution by execution of a
written consent in lieu of stockholders meeting which authorized amendments to
its certificate of incorporation. The amendments:
* Changed our company's name to "Equity Growth Systems, inc. [sic]";
* Effected a one for ten reverse stock split as a result of which the
2,000,000 formerly issued shares of common stock , $0.001 par value,
were reduced to 200,000 shares of common stock, $0.01 par value (all of
which were outstanding);
* After the reverse split was completed, changed its authorized
capitalization from 200,000 shares of common stock, $0.01 par value, to
20,000,000 shares of common stock, $0.01 par value; and
* Authorized the issuance of 5,000,000 shares of preferred stock, the
attributes of which are to be determined by our company's board of
directors from time to time prior to issuance, in conformity with the
requirements of Section 151 of the Delaware General Corporation Law.
Following the effective date of the amendments to our company's certificate
of incorporation, Mr. Granville-Smith, as the sole stockholder, officer and
director of Milpitas Investors, Inc., a Delaware corporation ("Milpitas"),
caused Milpitas to assign interests to our company in:
* Four leases involving five separate leased parcels of real estate (one
lease covered two parcels);
* Four promissory notes secured by mortgages on real estate leased to
third parties, in each case subject to mortgages to third parties; and,
* Four demand notes with an aggregate original principal balance of
approximately $160,000.
In exchange for such assets, Milpitas was issued 1,616,000 shares of our
company's common stock, $0.01 par value. Milpitas thereafter distributed the
stock to the Granville-Smith Trust, which thereafter transferred it to K. Walker
International, Ltd., a Bahamian corporation (affiliated with Mr.
Granville-Smith) and to Bolina Trading Co., S.A., a Panamanian corporation
(affiliated with Jerry C. Spellman, a business associate of Mr. Granville-Smith
sometimes hereinafter referred to as "Mr. Spellman").
Our company acquired such assets with the intention of operating as a real
estate acquisition, development and operations company, using its securities to
acquire real estate, and then using traditional real estate financing techniques
(e.g., loans secured by mortgages) to develop and improve such properties. It
was intended that our company would concentrate on commercial property suitable
for long term rentals (such as strip malls, shopping centers and office
buildings) where the income stream from long term leases could also be used to
finance our company's growth. An essential prerequisite to our company's
proposed operations was the resumption of trading in our company's securities in
the over the counter market and on such stock exchanges as our company's
securities qualified for listing. Most of Mr. Granville-Smith's initial
activities involved preparation of materials required to attain such
qualifications, including updating of corporate records and reports to the
Commission required pursuant to the Exchange Act and negotiations with potential
investment bankers.
During October of 1998, Mr. Granville-Smith, then our company's sole
director and chief executive officer, determined that his personal health
problems impeded his ability to adequately accomplish our company's established
corporate goals. Because he was unable to recruit a qualified and experienced
real estate professional with suitable experience to assume leadership of our
company, Mr. Granville-Smith initiated negotiations with the Yankee Companies,
Inc., a Florida corporation ("Yankees") whose principals had independently
assisted him in other matters in the past, for the purpose of establishing an
ongoing relationship with our company pursuant to which Yankees would recruit
additional qualified officers and directors, provide emergency funding, and
develop a new strategic plan.
Based on Mr. Granville-Smith's oral assurances, Yankees recruited a number
of persons who became involved in our company's operations, and, on November 6,
1998, Mr. Granville-Smith, then our company's sole director, elected the
following persons to our company's board of directors: Charles J. Scimeca (who
already served as our company's secretary), Penny Adams Field, Anthony Q. Joffe
and G. Richard Chamberlin, Esquire (one of our company's former securities
attorneys).
On November 11, 1998, after learning that Mr. Granville-Smith, had become
medically incapacitated, Mr. Scimeca, at the suggestion of Mr. Chamberlin,
called a special meeting of the board of directors to replace Mr.
Granville-Smith as our company's president and chief executive officer. The
action was taken on an expedited basis to assure timely filing of our company's
report on Form 10-QSB for the quarter ended September 30, 1998 with the
Commission. At the meeting, Mr. Scimeca was elected acting president and Mr.
Chamberlin was elected acting secretary. In addition, our company's board of
directors voted to:
* Reorganize as a holding company;
* Ratify common stock subscription agreements entered into by Mr.
Granville-Smith on behalf of our company with Yankees, its stockholders
and other persons introduced by Yankees to whom Yankees assigned a
portion of its subscription rights in consideration for their agreement
to provide services to our company (e.g., our company's newly elected
officers and directors);
* Formalize the consulting agreement with Yankees; and
* Enter into a settlement agreement with Mr. Granville-Smith, terminating
his existing agreements with us.
On November 24, 1998, our company formally retained Yankees to help us
develop and implement a new strategic plan. Yankees initially suggested that our
company's activities be divided into three areas: real estate operations
segregated in a new subsidiary managed by Mr. Scimeca; consulting services
provided to third parties; and, the acquisition of operating companies involved
in Internet related businesses that could benefit from our company's public
trading status and the experience of our company's directors. Our company's
board of directors, however, determined that continuing our company's real
estate operations without Mr. Granville-Smith's assistance would be counter
productive and initiated negotiations with Mr. Granville-Smith for their
divestiture.
On March 22, 1999, Mr. Granville-Smith, on his behalf and on behalf of the
Granville-Smith Trust dated August 13, 1976; First Ken Co Properties, Inc., a
dissolved Delaware corporation; K. Walker International, Ltd., a Bahamian
corporation; Milpitas; the Milpitas Investors, Inc., Trust; and, Equity Growth
Systems, Inc., a dissolved Maryland corporation (not to be confused with our
company), agreed to rescind all prior agreements with our company. In addition,
Mr. Spellman, on his own behalf and on behalf of Bolina Trading Co., S.A., a
Panamanian corporation and the WEFT Trust signed and executed a general release
in our company's favor. As a result of this rescission, Messrs. Granville-Smith
and Spellman acquired all of our company's assets as of December 31, 1998, but
became responsible for all associated liabilities. Our company's real estate
operations were then terminated.
ACQUISITION S OF BUSINESSES NO LONGER CONTROLLED BY OUR COMPANY
American Internet
During the second quarter of 1999 Yankees introduced our company to Messrs.
J. Bruce Gleason ("Mr. Gleason") and Michael D. Umile ("Mr. Umile"), the sole
officers and directors of American Internet Technical Centers, Inc., a Nevada
corporation formerly known as Ascot Industries, Inc., ("Ascot"). Messrs Gleason
and Umile then held more than 90% of Ascot's stock. Ascot was a holding company
with one operating subsidiary, American Internet Technical Center, Inc., a
Florida corporation ("American Internet"). American Internet incorporated in
Florida on April 15, 1998, to provide Internet services.
American Internet was acquired by Ascot on April 26, 1999, in a
reorganization that provided the stockholders of American Internet (Messrs.
Gleason and Umile) with 90% of the outstanding stock of Ascot in exchange for
all of the stock of American Internet. During June of 1999, however, Messrs.
Gleason and Umile determined that Ascot was not a public company as had been
represented to them and agreed to exchange their common stock in Ascot and all
of their rights to common stock in American Internet for shares of our company's
common stock.
On June 25, 1999, our company executed a reorganization agreement with
Ascot, American Internet and American Internet's former stockholders, Messrs.
Gleason and Umile, who exchanged all of their common stock in Ascot for
2,232,756 shares of our company's common stock, with the right to increase the
2,232,756 shares to 6,732,756 shares if net, pre-tax profit projections over the
next five years were met. As a result, Ascot became a 90% owned subsidiary of
our company and American Internet became a second tier subsidiary of our
company. Subsequently, Ms. Lyn Poppiti and Mr. and Mrs. Theodore Gill, minority
stockholders of Ascot also elected to exchange their shares of Ascot common
stock for 3,980 shares of our company's common stock. Consequently, our company
issued a total of 2,236,736 shares of its common stock to former Ascot
stockholders. The transaction was structured to meet the tax free exchange
provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended, and for accounting purposes, was treated as a purchase. The securities
were issued in reliance on the exemptive provisions of Commission Rule 505 of
Regulation D, and comparable state laws. A copy of the Reorganization Agreement
was filed as an exhibit to a current report on Form 8-K filed with the
Commission on July 12, 1999, and is incorporated by reference as an exhibit to
this Report, as permitted by Commission Rule 12b-23 (see Part III, Item 13,
Exhibits and Reports on Form 8-K).
On July 9, 1999, at our company's request, the parties to the
reorganization agreement and the former management and controlling stockholders
of Ascot entered into an agreement rescinding Ascot's acquisition of American
Internet. As a result, control of Ascot was reacquired by its original
stockholders, its name was changed back to Ascot, Ascot was carved out of the
reorganization agreement and American Internet became our company's direct,
wholly owned subsidiary. As consideration for the rescission American Internet
paid slightly less than $3,000 in fees to Ascot's legal counsel. A copy of the
Rescission Agreement was filed as an exhibit to a current report on Form 8-K
filed with the Commission on July 12, 1999, and is incorporated by reference as
an exhibit to this Report, as permitted by Commission Rule 12b-23 (see Part III,
Item 13, Exhibits and Reports on Form 8-K).
American Internet was organized to operate as an Internet web design,
marketing and hosting business. After its first year of operations, virtually
all non-marketing functions were outsourced. American Internet focused on small
businesses and consumers who needed inexpensive, uncomplicated web-sites, which
could be upgraded. Its original market was concentrated in Florida; its goal,
however, was to operate nationally and then internationally. Substantial
information concerning American Internet was included in a current report on
Form 8-K which our company filed with the Commission on July 12, 1999, as
amended on August 18, 1999 and September 9, 1999.
During the initial calendar quarter for 1999, the contractor principally
responsible for providing design services to American Internet's clients
suffered medical problems which disrupted service and detrimentally impacted
client relations. Because information originally provided to our company
concerning American Internet was inaccurate and its revenues materially failed
to meet the projections provided by American Internet's management, Yankees,
acting on our company's behalf, negotiated a material change in the terms of the
acquisition. All rights to receive up to 4,500,000
shares of our company's common stock as performance based future compensation
were waived by American Internet's former stockholders, American Internet's
former principal stockholders resigned as officers and directors of American
Internet and 1,682,756 of the 2,236,736 shares of our company's common stock
issued in exchange for all of the American Internet capital stock was returned
to our company in exchange for $48,000 paid out over a six month period. As a
part of this transaction, Yankees also returned119,602 of the 150,000 shares of
our company's common stock that it received as compensation for the American
Internet acquisition in consideration for $4,800 paid over six months. A copy of
the Amended Reorganization Agreement was filed as an exhibit to a current report
on Form 8-K/A filed with the Commission on August 18, 1999, and is incorporated
by reference as an exhibit to this Report, as permitted by Commission Rule
12b-23 (see Part III, Item 13, Exhibits and Reports on Form 8-K).
Trilogy International, Inc.
Trilogy International, Inc. ("Trilogy") was incorporated in Florida on
August 3, 1998 but did not start operations until July of 1999. During that
eleven month period, Trilogy developed a business plan, built an infrastructure,
recruited, hired and trained a professional staff, designed and implemented its
e-commerce web-site and created the marketing materials necessary to launch its
business. Trilogy is a network marketing and e-commerce company which provides:
* Responsible pet nutrition and pet care products that help pets live the
healthiest, happiest and longest lives possible;
* Human nutritional supplements; and
* Environmentally safe consumer cleaning products.
However, almost all of Trilogy's current marketing activities are
directed towards its pet care products.
On December 1, 1999, our company acquired all of the outstanding common
stock of Trilogy in exchange for 1,817,273 shares of our company's common stock.
Under the terms of the acquisition, certain persons who previously held options
to purchase shares of Trilogy's common stock for $0.25 each, were granted the
right to purchase 1/3 the number of shares of our company's common stock, at
$0.75 each (a total of 338,940 shares of our company's common stock for which
our company would receive an aggregate of $254,205). Our company also agreed to
provide Trilogy with up to $900,000 in expansion and development capital prior
to June 1, 2000.
The Trilogy transaction was structured to meet the tax free exchange
provisions of Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as
amended. For accounting purposes, the acquisition was treated as a purchase and
the securities were issued in reliance on the exemptive provisions of Section
4(2) of the Securities Act, and comparable state laws. No former Trilogy
stockholders were granted the right to receive additional shares based on future
performance or to acquire additional shares of Trilogy's common stock in the
future. Substantial information concerning Trilogy was included in a current
report on Form 8-K which our company filed with the Commission on December 16,
1999, as amended on February 8, 2000.
The acquisition of Trilogy was based on financial projections which Trilogy
was never able to meet, expenses having been greater and income lower than
anticipated by Trilogy's management. As previously disclosed in our company's
reports to the Commission on Forms 10-QSB and 8-K:
* Trilogy never met the financial projections it provided to our company
and on which our company based its investment decision. Instead,
Trilogy's management almost immediately requested that our company
accelerate its funding of Trilogy in order to allow Trilogy to meet its
cash flow requirements, indicating that inability to obtain accelerated
funding would inhibit Trilogy's ability to operate its business. Our
company complied with such request starting prior to December 31, 1999
and, in addition to the initial $250,000 advanced at closing, advanced
Trilogy approximately $412,051 on an accelerated basis.
* Even after receipt of accelerated access to operating loans, Trilogy
failed to meet its revised projections and its management advised our
company that its original projections had proved incorrect as to the
amount of development capital that would be required until such time as
its operations turned profitable. However, Trilogy's President, Carol
Berardi, and its Chairman, Dennis Berardi, continued to believe that
Trilogy's
operations would prove financially successful over a relatively short
term if it had access to required capital and in order to obtain the
additional capital investment needed, offered to pledge their common
stock in our company (received in exchange for their stock in Old
Trilogy), as collateral for additional loans to Trilogy.
As a consequence of the foregoing, Yankees suspended the availability of
capital for use by Trilogy and recommended that our company dispose of Trilogy
on or before June 30, 2000 (our company's fiscal year end). Since such reports
to the Commission, our company has suspended direct funding of Trilogy.
Based on our company's refusal to continue to loan Trilogy operating
capital, Mr. and Mrs. Berardi initiated negotiations with Xcel Associates, Inc.
("Xcel"), previously a source of loans to our company and a large purchaser of
securities from our company's shareholders in privately negotiated transactions
[relying on Commission Rule 144(k)]. As a result of such negotiations, Xcel
provided Trilogy with interim loans and proposed to our company that it
surrender 80% of its capital stock in Trilogy to Mr. and Mrs. Berardi, Xcel,
George T. Jochum ("Mr. Jochum"), and Richard H. Tannenbaum, Esquire (serving as
attorney for all such persons), whereupon Xcel and Mr. Jochum would provide the
additional funding required by Trilogy. In order to induce our company to agree
to such proposal, Mr. and Mrs. Berardi offered to return the 1,051,726 shares of
our company's common stock issued to them in conjunction with the Trilogy
acquisition, provided that the other former Trilogy stockholders were permitted
to retain the remaining 766,547 shares issued to acquire Trilogy.
Our company's management was unsuccessful in negotiating a more favorable
transaction despite lengthy efforts to do so and, faced with the alternative of
losing the entire $672,051 loaned to Trilogy and all 1,817,273 shares issued to
acquire Trilogy, our company's board of directors agreed to the proposal,
effective as of June 30, 2000. Mr. Jochum's background as the former chairman of
the board of directors of Mid-Atlantic Medical, Inc., a New York Stock Exchange
listed company and his experience in turning around problem companies was a
material factor in our company's acceptance of the Trilogy disposition offer. A
copy of the Superseder & Settlement Agreement was filed as an exhibit to a
current report on Form 8-K filed with the Commission on July 17, 2000, and is
incorporated by reference as an exhibit to this Report, as permitted by
Commission Rule 12b-23 (see Part III, Item 13, Exhibits and Reports on Form
8-K).
Vista Vacations International, Inc.
Vista Vacations International, Inc., is a Florida corporation headquartered
in Margate, Florida ("Vista"). Vista is a cruise and leisure travel marketing,
training and reservations organization operating largely through home-based
professional sellers of vacation travel. Vista works closely with the industry's
largest cruise lines including Carnival Corp. (NYSE-CCL), Royal Carribean
International (NYSE - RCL), Norwegian Cruise Line (NYSE - NCL) and Princess
Cruises, a subsidiary of United Kingdom based P&O which trades on the London
Stock Exchange. Substantial information concerning Vista was included in a
current report on Form 8-K which our company filed with the Commission on March
29, 2000.
On March 13, 2000 our company completed the acquisition of Vista in
exchange for 220,000 unregistered shares of our company's common stock. The
transaction was structured to meet the tax free exchange provisions of Section
368(a)(1)(B) of the Internal Revenue Code (a stock for stock exchange), and for
accounting purposes, was treated as a purchase. The securities were issued in
reliance on the exemptive provisions of Section 4(6) of the Securities Act (an
offering solely to accredited investors, as that term is defined in Commission
Rule 501). A copy of the Vista Reorganization Agreement was filed as an exhibit
to a current report on Form 8-K filed with the Commission on March 29, 2000, and
is incorporated by reference as an exhibit to this Report, as permitted by
Commission Rule 12b-23 (see Part III, Item 13, Exhibits and Reports on Form
8-K).
Up to 219,999 additional shares of our company's common stock were reserved
for issuance to the former stockholders of Vista if it met the performance
criteria described below. In addition:
* Our company issued 66,667 shares of its common stock to a creditor of
Vista in exchange for cancellation of all indebtedness and other
liabilities (principally a $180,000 loan together with accrued
interest); and
* Our company reserved 931,000 shares of its common stock for potential
future issuance through incentive stock options (as defined in Section
422 of the Internal Revenue Code) exercisable at $1.50 per share, to be
granted to Vista employees if Vista attained the operating goals
established below.
The rights of Vista's former stockholders as to the reserved shares and the
rights to the incentive stock options would have fully vested only if Vista
earned net, pre-tax profits determined in accordance with GAAP (generally
accepted accounting principles, consistently applied) of at least $2,800,000
during the period starting on July 1, 2000 and ending on June 30, 2003.
In the event earnings were lower, some of the additional shares and
incentive stock options could have vest subject to meeting minimum annual goals.
All rights to additional stock and incentive stock options that had not vested
as of July 1, 2003 would have expired on such date, and no further rights of any
kind thereto would have existed thereafter.
On March 15, 2000, our company provided $125,000 to Vista in expansion
capital and expected to invest up to an additional $525,000 over the next 12
months with $125,000 of that amount expected to be funded prior to the end of
our company's current fiscal year ended June 30, 2000. However, immediately
following the acquisition, our company's chief financial officer and chief
operating officer found very material discrepancies between the financial
results represented by Vista's principals in the acquisition agreements and its
actual results, based on GAAP. Because Vista could not provide verifiably
accurate information in accordance with the requirements of the Securities Act
and the Exchange Act, our company exercised unilateral rescission rights
provided for by the acquisition agreement and, our company and the former Vista
stockholders and creditor entered into a superseder and rescission agreement
effective June 30, 2000, pursuant to which all securities were returned and our
company's $125,000 loan to Vista was converted into a 20% ownership interest in
Vista. A copy of the Rescission Agreement was filed as an exhibit to a current
report on Form 8-K filed with the Commission on August 15, 2000, and is
incorporated by reference as an exhibit to this Report, as permitted by
Commission Rule 12b-23 (see Part III, Item 13, Exhibits and Reports on Form
8-K).
OUR COMPANY'S BUSINESS
OVERVIEW
Our company is a holding company with two operating subsidiaries,
Wriwebs.com, Inc. ("WRI") and AmeriNet Communications, Inc. ("AmeriCom"). It
also holds minority interests (less than 20% ownership) in two operating Florida
corporations, Trilogy International, Inc. and Vista International, Inc. and
provides consulting services to other corporations.
As a holding company, our company endeavors to:
* Coordinate, supervise and advise its subsidiaries, raise capital for
them when necessary and fulfill related reporting obligations under the
Exchange Act by centralizing common functions at the holding company
level; and
* Evaluate promising businesses introduced to our company with a view
towards acquiring those our company finds compatible with its
objectives.
As a consultant our company provides services to third parties in exchange
for the issuance of shares of such third parties common stock directly to our
company's stockholders, subject to prior registration with the Commission.
However, as our company's subsidiaries take up more of our company's time, our
company is finding this role more difficult to pursue and may soon determine
that it is not worth our company's while. Our company currently has one active
consulting agreement, that being with FundsAmerica Finance Corporation, a
recently organized Florida retail mobile home re-finance company
("FundsAmerica"). Our company anticipates that the direct benefits of its
consulting activities will be minimal and that any real benefit would be derived
from the evolution of a consulting relationship into an acquisition or a
strategic alliance with a client that fit our company's strategic requirements.
OPERATING SUBSIDIARIES
Wriwebs.com, Inc.
Acquisition Related Information
Wriwebs.com, Inc., was incorporated in the State of Florida under the name
Web Results Institute, Inc. ("Old WRI"). On April 18, 1999, its name was changed
to Wriwebs.com, Inc. On November 12, 1999, Old WRI was merged into American
Internet and all of Old WRI's capital stock was converted into 531,000 shares of
our company's common stock. In addition, our company agreed to issue the former
Old WRI stockholders up to 150,000 additional shares of our company's common
stock based on the future performance of the combined companies (hereinafter
referred to as "WRI"), based on WRI's future performance. While Old WRI was
merged into American Internet, its officers and directors emerged in charge of
the combined companies.
During the eighteen months commencing on February 10, 2000 and ending at
the close of business on November 11, 2001, Michael A. Caputa, the president and
controlling stockholder of WRI immediately prior to the merger ("Mr. Caputa")
has an option to acquire a controlling block of WRI's common stock if:
* WRI has materially complied with its obligations to our company;
* WRI's former stockholders and their successors in interest return all
of the common stock received from our company in the WRI acquisition
and all other distributions of securities, cash or other assets or
rights received by them as a result of their status as our
stockholders, without any liens or encumbrances;
* WRI repays all funds advanced by our company to WRI, American Internet
and their affiliates or designees directly or indirectly, with
interest;
* WRI registers the WRI common stock that our company acquired (expected
to be between 20% and 30% of its total capital stock) with the
Commission and with state securities' regulatory authorities for
distribution to our company or our designees (e.g., our stockholders)
or such other uses as our board of directors deems appropriate (e.g.,
retain it as an investment or sell it to obtain working capital);
* WRI provides protection to the common stock that our company retains or
distributes to its designees, (e.g., its stockholders, etc.) from
dilution(a reduction in its percentage of outstanding WRI common stock)
for a period of two years; and.
* Our company is granted a right of first refusal to provide financing
to WRI for a period of two years.
The amount of WRI common stock which Mr. Caputa could acquire would be
based on when the option was exercised. If the option was exercised on or before
November 11, 2000, then WRI common stock equal to 80% of the total WRI common
stock that would then be outstanding would be held by Mr. Caputa and the balance
would be retained by our company. If the option was exercised on or after
November 12, 2000, then the portion of the outstanding WRI common stock that Mr.
Caputa would hold would be reduced to 70% and the balance would be retained by
our company. In the event that Mr. Caputa exercised his option, all rights to
additional shares of our common stock that former WRI stockholders had based on
the performance of WRI (as described above) would be forfeited. Because of such
right, until it expires or is waived, we cannot consolidate WRI's balance sheet
or the results of its operations with our financial statements but rather,
reflect 20% thereof.
The securities were issued in reliance on the exemption provisions of
Section 4(6) of the Securities Act based on representations by the parties
reflected in the agreement and plan of merger. The transaction was structured as
a "triangular merger" to meet the tax free exchange provisions of Section
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended, and for
accounting purposes, was treated as an investment.
Concurrently with the merger, our company provided $100,000 in expansion
capital to the merged entity and from the time of the closing through June 30,
2000, we have provided it with an additional $111,515. WRI used those funds to
retire debt, fund the increase in payroll resulting from the addition of
American Internet personnel and its own expansion and for marketing, advertising
and working capital. At the time of the merger, our company anticipated
providing the surviving entity with up to $300,000 in funding, in addition to
the $209,259 it had previously provided to American Internet, however, our
company has suspended funding to WRI due to its failure to meet projections and
the inadequacy of its financial reporting processes which required extensive
intervention by our company's chief financial officer.
Following WRI's acquisition, Yankees recommended that WRI shift the focus
of its web design and hosting services from the low-end consumer and small
business market to the more lucrative higher-end business market. The latter
market would permit WRI's staff to use their expertise and experience to develop
complex, interactive web designs that justify materially higher prices. The
management of WRI agreed with Yankees and has used a portion of the funds
provided by our company to develop and market increasingly sophisticated web
design products. However, WRI also maintains its presence in the lower cost
market. While we expected such shift in business emphasis to increase operating
costs and to reduce profits over the short term, we believed that the increased
potential earnings would quickly reverse such losses and result in materially
increased profits within the calendar year ending December 31, 2000.
Prior to June 30, 2000, our company's chief financial officer determined
that the information provided by WRI concerning its operations prior to its
acquisition was materially inaccurate and did not justify the projections on
which our company's investment decisions had been made. Our company's management
does not believe that the information was deliberately misleading but rather,
that the personnel responsible for its preparation did not understand generally
accepted accounting principles. However, as a result of such failure of WRI to
comply with its obligations under the acquisition agreements, our company has
suspended the availability of operating loans on which WRI relied to implement
its expansion plans.
Substantial information concerning WRI was included in a quarterly report
on Form 10-QSB which we filed with the Commission on November 19, 1999, an a
current report on Form 8-K filed with the Commission on January 26, 2000, as
amended on March 3, 2000. A copy of the WRI Plan of Merger Agreement was filed
as an exhibit to a quarterly report on Form 10-QSB filed with the Commission on
November 19,1999, and is incorporated by reference as an exhibit to this Report,
as permitted by Commission Rule 12b-23 (see Part III, Item 13, Exhibits and
Reports on Form 8-K).
Current Operations
Currently, WRI is an Internet presence provider located in Pompano Beach,
Florida offering residential and business users web-hosting and design services,
as well as a wide range of other e-commerce solutions including e-mail, personal
home pages, chat rooms and electronic commerce. WRI also offers ancillary
services including leased high- speed Internet access lines as a reseller of
long distance service; web-site development, maintenance and storage; and,
Internet advertising, promotion and consulting.
Internet web-hosting is a multi-media Internet service that permits clients
to maintain a continued presence on the Internet directly through high-speed
servers and a dedicated tier one connection. The hosting services available
through WRI includes virtual hosting and collocation. Virtual hosting allows a
client's web-site (which may be hosted on either a UNIX or NT server platform)
to be connected to the Internet through our company's subsidiaries' network
operations centers. Collocation permits a client's Internet content to be hosted
on a dedicated server located at our company's subsidiaries' network operations
centers, eliminating or substantially reducing the capital investments a client
is otherwise required to make and reducing certain of the client's security
concerns associated with connection of the client's private network(s) to a
web-server.
WRI provides web-hosting and Internet access services from initial simple
online brochures to complex interactive multi-media applications. Its secure
network operations center is located at 100 East Sample Road, Suite 210 Pompano
Beach, Florida with dedicated Dell, Compact and other dedicated servers,
multiple high-speed fiber optic connections to the Internet, and an
uninterruptible power supply and environmental controls, is monitored twenty
four hours a day to minimize service interruptions. WRI maintains high-bandwidth
paths to the Internet with dedicated T1 lines through Intermedia Communications.
WRI currently provides its customers with the following products either
individually or as part of a one-stop package custom designed for each client's
individual needs, including:
Programming and
Applications Development:
Customized application development including web-portals, total
e-commerce solutions, e-marketing packages, shopping carts, real-time
audio and video, custom online databases, virtually interactive
communications and purchasing systems. Content management Intranet and
extranet systems Web-site development and maintenance: Web-site
Hosting and Internet Access, shared hosting and co-location services,
Digital Subscriber Lines (DSL), Dedicated access (T-1 and T-3 service)
and Integrated Services Digital Network (ISDN).
WRI's existing services comprise three broad categories: web-site
development and maintenance, e-commerce and training. Web-site development
involves the design and development of a client's web-site production. Working
with clients and utilizing its own graphic designers and programmers, WRI
designs, creates and maintains multi-media, interactive web-sites for its
clients, using the latest applications and development tools, such as Cold
Fusion, HTML and FLASH. WRI has its own web enabled shopping cart that provides
its e-marketing clients with an affordable packaged cart they can lease to sell
their products on-line. WRI offers multi-tiered e-training services including:
(i) one-on-one Internet training for executives; (ii) group training for
non-computer professionals; and, (iii) on-site internships dedicated to the
professional training of students involved with Internet related studies,
providing WRI with a strong, financially sound work force.
WRI's customers are principally located in the Southeast United States
(although it has customers around the world). As of June 30, 2000, WRI had
approximately 500 web-site hosting customers, a decrease from approximately
4,500 that it had immediately following its acquisition. The reduction in
hosting customers is based in part on WRI's change in emphasis from low-end,
simple web-site projects to large scale, complex web-site projects for more
substantial clients but also reflects the increasingly competitive nature of the
web-hosting industry. Currently, non of WRI's web hosting clients involve
referrals from our company's AmeriCom subsidiary. The reason for the loss of
approximately 3,000 subscribers is disputed with American Internet's former
management placing the blame on WRI's current management and WRI's current
management claiming that the client base was not as represented by American
Internet.
None of WRI's clients account for more than 5% of its total business, nor
does WRI rely on any supplier for 5% or more of its required equipment or
supplies.
AmeriNet Communications, Inc.
Acquisition Related Information
On May 11, 2000, our company completed the acquisition of all of the
capital stock (being 111 shares of common stock, $0.01 par value) of Lorilei
Communications, Inc., a Florida corporation ("Lorilei"). It was acquired by our
company in a reorganization designed to comply with Section 4(2) of the
Securities Act, Section 517.061(11) of the Florida Securities and Investor
Protection Act and Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended (the "Code"). Lorilei's capital stock was acquired by our company in
exchange for 572,519 shares of our company's common stock, $0.01 par value per
share, issued in reliance on the exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act") provided by Section
4(2) thereof. Initially, our company agreed to issue up to 907,896 additional
shares of its common stock to former stockholders of Lorilei who were to remain
as its principal employees and executive officers based on Lorilei's performance
during the period ending on June 30, 2003, however, both such persons resigned
from Lorilei on August 1, 2000, making such thresholds inapplicable. On
September 12, 2000, in order to assure that our company's continuing investments
in Lorilei were not subjected to claims based on undisclosed liabilities and to
clarify unequivocally that the performance based shares and incentive stock
options originally allocated to Mr. and Mrs. Cunningham were no longer
applicable, our company organized a new Florida subsidiary, AmeriNet
Communications, Inc. ("AmeriCom"), and assigned it all of Lorilei's assets,
personnel and operations, including the fictitious names "The Firm Multimedia"
and "Ocala News Tonight." Record title to certain of the assets will remain in
Lorilei until required consents are obtained, however, such assets will be held
by Lorilei as trustee for AmeriCom. AmeriCom agreed, in consideration for the
assignment of Lorilei's assets, to make the mortgage, equipment lease and
financing payments disclosed in exhibits to the acquisition agreement as well as
to repay funds loaned to Lorilei by our company. AmeriCom intends to refinance
such liabilities at such time as its operating results, as reflected in its
financial statements, justify the required loans, on competitive terms, from one
or more financial institutions.
The names of the former Lorilei stockholders are Gerald R. Cunningham, who
served as Lorilei's president, chief executive officer, treasurer, chief
financial officer and a member of Lorilei's board of directors; and, Leigh A.
Cunningham, Mr. Cunningham's spouse, who served as Lorilei's vice president,
secretary and as the other member of Lorilei's board of directors. To the best
of our company's knowledge, no material relationship existed between any such
person and our company or any of its affiliates, any director or officer of our
company, or any associate of any such director or officer. No funds were used
directly to acquire Lorilei, however, our company obtained the funds it used to
provide Lorilei with the $100,000 in funding due at closing through a loan from
Yankees, its strategic consultant. Yankees loaned our company an additional
$72,000 which it loaned to Lorilei prior to the assignment of its assets and
operations to AmeriCom.. The obligation to repay the funds advanced by our
company to Lorilei were assumed by AmeriCom as part of the consideration for
Lorilei's assets and operations. Lorilei's assets included improved real estate
held in fee simple, television and video production equipment, computers and
other office equipment, leased facilities and equipment and other physical
property currently used in conjunction with its business. The assets are
currently encumbered by liens securing $349,651 in indebtedness.
The exchange ratio for Lorilei's capital stock was determined by arms
length negotiation between the parties based on the approximate market price of
our company's common stock during the period preceding May 11, 2000, the value
that Lorilei's management felt was reflective of its operating performance since
its inception, and the anticipated future value of Lorilei. Our company used a
formula of approximately eight times Lorilei's earnings during the year ended on
December 31, 1999, as the basis for its valuation. The use of contingent
consideration sought to make the component of the valuation based on future
performance more objectively ascertainable; however, as a result of the
resignation of Mr. and Mrs. Cunningham and the acquisition of all of Lorilei's
assets and operations by AmeriCom, such factor has become irrelevant.
Copies of the reorganization agreement, the employment agreements with
Lorilei employees and the related schedules and exhibits were filed as exhibits
to a current report on Form 8-K filed by our company with the Commission on May
30, 2000. A copy of the agreement between Lorilei and AmeriCom is filed as an
exhibit to this report (see Part III, Item 13(c), Exhibits Required by Item 601
of Regulation SB.")
Use of Proceeds Invested by Our Company
Our company provided Lorilei with $200,000 in funding since its
acquisition, which was expended as follows:
Date Expended Amount Percentage Description of Expenditure
- ------------- ------ ---------- --------------------------
May 15, 2000 $51,097.84 .2554 Vendors
$ 300.00 .0015 Advertising - The Firm
$ 7,815.08 .0390 Equipment
$10,364.24 .0518 Property Taxes
$ 4,860.56 .0243 Payroll Taxes May 05, 2000 Payroll
$ 980.00 .0049 AmSouth Line of Credit
$18,000.79 .0900 Payroll May 20, 2000
$ 1,581.51 .0079 Gerry Cunningham Expense Reimbursement
May 18, 2000
$ 5,000.00 .025 Vendors
June 23, 2000
$ 5,066.00 .0253 Vendor (WCTV 6)
July 03, 2000
$ 3,000.00 .015 Vendors
July 06, 2000
$ 7,043.54 .0352 Payroll Taxes, June 20, 2000
$ 6,991.62 .0350 Payroll Taxes, July 05, 2000
$ 4,500.00 .0225 Advertising - Ocala News Tonight
$ 2,888.01 .0144 Gerry Cunningham Expense Reimbursement
$ 2,576.83 .0129 Vendors
July 07, 2000
$ 667.76 .0033 Equipment
$ 2,332.24 .0117 Vendors
July 11, 2000
$ 325.64 .0016 Second Quarter2000 State Unemployment Taxes
$ 2,207.64 .0110 Health Insurance
$ 2,233.67 .0112 Vendors
$ 2,233.66 .0112 Towards July 20, 2000 Payroll
August 03, 2000
$10,000.00 .05 Vendors
August 04, 2000 $ 7,000.00 .035 Towards August 05, 2000 Payroll
August 09, 2000
$10,000.00 .05 Vendors
August 16 to
August 31, 2000 $10,000.00 .05 Towards August 20, 2000 Payroll
August 31, 2000 $20,934.00 .1047 Working Capital
- --------------- ------------ ----- ---------------
August 31, 2000 $200,000.00 100% Total
General Information
AmeriCom's principal offices are located at 7325 Southwest 32nd Street;
Ocala, Florida 34474; however, its mailing address is Post Office Box 770787;
Ocala, Florida 34477. Its main telephone number is (352) 861-1350 and its
general fax number is (352) 861-1339. AmeriCom's general e-mail address is
thefirm@callthefirm.com. Lorilei's operations were currently divided into two
divisions, each operating under a registered trade name, The Firm Multimedia, a
full-service advertising agency, and Ocala News Tonight, a nightly half-hour
newscast. Websites for AmeriCom's two divisions are located at
http://www.callthefirm.com (The Firm Multimedia) and
http://www.ocalanewstonight.com (Ocala News Tonight). However, AmeriCom has
suspended operations of the Ocala News Tonight division indefinitely and its
current operations are limited to The Firm Multimedia division.
Lorilei was organized in July of 1994 by Gerald R. Cunningham and Leigh A.
Cunningham, its former president and treasurer respectively, as the successor to
a Florida general partnership founded by them in 1993 doing business under the
fictitious name, "The Firm." Based on information provided by Mr. and Mrs.
Cunningham, Lorilei's gross sales in calendar year 1999 surpassed $1.5 million,
with billings of approximately $1.1 million and earnings before interest, taxes
depreciation and amortization (a concept referred to by the acronym "EBITDA") of
approximately $162,000. Mr. and Mrs. Cunningham projected that Lorilei would
experience substantial sales increases, with a June 30, 2001 fiscal year billing
target of $2.5 million and an EBITDA target of $500,000. Lorilei projects that
its billings will exceed $5 million with EBITDA of $1.5 million in the fiscal
year ending June 30, 2003. The current management of AmeriCom have advised our
company's management that they believe AmeriCom can attain such projections
despite the resignation of Mr. and Mrs. Cunningham.
The Firm Multimedia division is a national full service advertising agency.
Its services include consulting on marketing and advertising issues; graphic
layout, design, and printing; video and audio production; media planning and
placement; internet website design and promotion; interactive CD-rom design;
long and short-form direct response television production; long and short-form
direct response placement; and, placement of long-form television programming
under commercial leased access FCC rules.
Commercial leased access to cable systems is a segment of communications
law mandated by Congressional cable television deregulation. Commercial leased
access to cable systems affords programmers not affiliated with the cable
operator the opportunity to purchase minimum half-hour time increments in
substantially better time periods than offered through traditional commercial
venues at prices regulated by the FCC. Lorilei developed a proprietary database
of cable systems nationwide which AmeriCom intends to expand nationwide,
enabling it to offer commercial leased access to cable systems to direct
response television marketers and other programers.
Lorilei developed a prototype local advertiser supported evening news
program, Ocala News Tonight through commercial leased access to cable systems in
Marion County, Florida. It was produced by The Firm Multimedia, starting in
January of 2000 as a traditional news, weather and sports half-hour newscast for
geographic areas where traditional broadcast television media do not devote
airtime or personnel required to provide adequate coverage of market segments.
Ocala News Tonight filled local news niche left open by Orlando and Gainesville,
Florida broadcasters in Marion County, where the program was available to
approximately 73,000 otherwise under-serviced television households, providing
local information not available elsewhere. AmeriCom elected not to continue with
the program because its operating expenses did not justify the continuing
investment required to cover operating losses. However, AmeriCom believes that
the program provided sufficient information and experience to permit its
re-evaluation, either in Marion County or in another compatible geographic
region, at such time as advertising revenues and better technical production
capabilities become available.
AmeriCom's Business
The term "Multimedia" refers to a combination of text, data, sound,
graphics, photography, animation, motion pictures, computer software and
additional newly evolving elements and was selected by Lorilei because it
reflected the array of advertising and marketing services Lorilei provided,
including in-house production of video, audio, internet authoring, interactive
CD-Rom, graphics, and pre-press. AmeriCom believes that its principal current
target clientele is comprised of advertisers, including businesses, political
organizations, service organizations or issue advertisers that use direct
response and e-commerce sources of information distribution; however, it also
actively targets traditional "image" advertisers.
AmeriCom provides incremental advertising services to national, regional
and local advertisers and marketers. AmeriCom's management believes that
AmeriCom offers its clients competitive advantages in speed, quality and price
made possible by use of new, lower cost technology, to provide competitively
priced production services, in-house, unlike larger advertising agencies and
marketing companies which subcontract most of their production.
AmeriCom maintains websites under each of its trade names. The Firm
Multimedia website features video and audio clips illustrating its work as well
as examples of graphic design and links to authored websites. Lorilei's website
was a major source of client lead generation and AmeriCom's management believes
that it will continue to serve such function. Ocala News Tonight also had a
website used primarily as an interactive focal point for the viewing audience.
It included content updated on a daily basis with highlights from the newscast
as well as viewer opinion polls. Advertising was accepted but was not actively
solicited for the Ocala News Tonight website.
AmeriCom offers its general advertising services throughout the United
States. The Firm Multimedia division communicates with clients located outside
the Central Florida production area by telephone, fax, Internet, courier,
in-person sales calls and in some cases, non-local client visits to AmeriCom's
facilities. AmeriCom intends to materially
expand its physical geographic presence by adding additional sales offices in
Florida, regionally and nationally. Ocala News Tonight's clients were primarily
located in Marion County, Florida. As additional news markets are added the
clients for each news operation will also primarily be located in the community
of service.
E-Commerce
AmeriCom provides clients with a turn-key e-commerce approach by both
authoring websites and providing website owners with marketing and advertising
services designed to increase visits by potential customers. AmeriCom also
provides clients with consultative advice covering a wide range of issues
including domain names, domain registration, competitive content items (e.g.,
pricing, placement, inventory, target marketing, and demographic data),
qualitative factors and perceptual customer research.
AmeriCom uses state of the art software including "Flash" "Shockwave" and
Quicktime video to author rich content websites, including sites featuring video
and audio. Each website is custom-authored based on client specifications and
may include specialized applications, including database access. Lorilei
believed that rich content websites would become critical components in
commercial website development and AmeriCom's management agrees.
Lorilei did not host its clients Internet websites. AmeriCom intends to
gradually add hosting, portal and Internet access services, first through
arrangements with third parties and then through internal resources. However, in
the event that the president of our company's WRI subsidiary waives his existing
limited rights to acquire a controlling interest thereof, AmeriCom is expected
to use WRI's services for such purposes.
AmeriCom is active in the business to business (commonly referred to as
B2B) Internet website promotion and operation industry. It offers clients
comprehensive rather than piecemeal services through its centralized, in house
capacity to develop required strategies and materials and to articulate required
messages in multiple media. Most of its competitors address only portions of
client needs, outsourcing production related aspects or requiring clients to
make separate production arrangements. Because of AmeriCom's comprehensive
capabilities, its clients can either supplement or replace expensive,
economically inefficient in house, full service advertising departments
retaining the benefit of their centralized responsibility aspects. AmeriCom's
management believes that by relieving its clients of the need to coordinate
multiple, diffuse one dimensional outside sources, its clients enjoy most
benefits of in house resources without the related capital and personnel costs,
while avoiding the absence of coordination and responsibility that characterizes
outsourcing to multiple, independent vendors and specialized service providers.
Because of the price advantages inherent in business through cyberspace
(materially reduced facilities, personnel costs, utility and inventory costs),
traditional facility oriented businesses (now commonly referred to as brick and
mortar retailers) will be forced to seek non-traditional revenue streams in
order to maintain their existing clientele as well as to compete with new
business opportunities generated by e-retailers. Based on Lorilei's experience,
one of the best ways to establish a productive B2B presence is through
development of a versatile, user friendly, interactive e-commerce website
supported with DRTV resulting in telephone sales as well as sales through the
Internet website.
As use of the Internet industry matures, effective use of websites will
require increasingly sophisticated and reactive Internet strategies. Effective
Internet strategies require continuously updated and up to date information
concerning both industry specific data and Internet technology developments,
coupled with continuing analysis of feedback from employees, suppliers,
consumers, competitors and related professionals. Such intelligence gathering
and analysis is costly on an in house basis but can be very cost-effectively
obtained through combined use of internal personnel resources supplemented and
guided by firms such as The Firm Multimedia.
Local News Programming
Lorilei's experience in channel leasing and studio facilities, equipment
and technology (including desktop video and high quality prosumer cameras
available through The Firm Multimedia division) permitted it to experiment with
production of a prototype, nightly advertiser-supported news program dedicated
to a targeted geographic area, similar to the familiar news, weather and sports
format used by most local broadcast television stations, without a large capital
investment. The prototype program, Ocala News Tonight, was a network of four
cable systems produced six days per week and airing twice nightly, at 6:30 PM
and 10:30 PM to over 73,000 households in the Marion County, Florida area from
January of 1999, until suspended by AmeriCom during August of 2000.
The criteria that Lorilei expected to use to determine geographic viability
included market composition, market geography, market identity, presence of
local television news coverage, available advertising revenues (estimated as a
percentage of total retail sales), and cable television penetration. Lorilei
chose Marion County, Florida as the prototype for the concept because production
operations were already in place and the Marion County area met such guidelines
(i.e., it had a local identity apart from either Orlando or Gainesville,
sufficient retail sales to provide a local advertiser base, and adequate cable
television penetration). While the area is part of the Orlando television market
it receives very little local news coverage from the Orlando stations, and
minimal coverage from Gainesville stations located 35 miles away. Due to its
distance from Orlando and Gainesville, and with the Gainesville market's strong
identity with the University of Florida, it appeared unlikely that any
television station from either area would make a concerted effort to compete
with the program. Lorilei intended to expand the program to other geographic
areas, however, AmeriCom's management was not satisfied with its production
quality or the efforts made by Lorilei to develop its advertising base and
consequently suspended such broadcasts pending a re-evaluation of AmeriCom's
technical capacity to produce the quality of programming it wants to be
associated with from both a content and technical prospective, and the degree of
local advertising or other economic support that could be generated if adequate
efforts were used. Among options being considered are termination of the
concept, sale of the concept and related equipment or resumption of the project
as a quasi-independent venture under local management or as a program produced
by AmeriCom for the Ocala Star Banner, a local Ocala newspaper owned by the New
York Times.
Sales and Marketing
AmeriCom uses a mix of marketing tools, including an infomercial produced
to generate business to business leads, direct mail, telemarketing, trade and
business publication print, Internet advertising, trade show displays and
participation in competitive, award granting events. It has used a combination
of inside and outside sales representatives in the past for The Firm Multimedia
and intends to expand the use of inside sales representatives in two areas (1)
to support outside sales with appointment setting, and (2) to sell DRTV to dot
com and e-commerce companies and the DRTV trade. In the past, The Firm
Multimedia employed generalist-type sales professionals, expending considerable
time in training the person to represent AmeriCom's many services. Management
now feels that its sales require sales professionals proficient in four major
specialty areas: Print graphics, DRTV and Video, Internet and e-commerce, and
Agency services. Under its current marketing plan, AmeriCom will generate
specific leads in one of its specialty areas and, using a consultative selling
approach, will identify other specialty areas where it might be of service. It
will then allocate leads among its sales personnel based on their compatibility
with the potential client and its requirements at the appropriate time.
Management believes this approach will result in less training time and higher
sales revenues.
Facilities and Equipment
Management of AmeriCom believes that it has the largest and best equipped
television facilities in its operating area (which compare favorably with the
closest on air commercial television stations). It has already made the
transition to digital, non- linear video editing (versus the older tape-based
linear tape editing) and intends to invest in high definition video equipment as
distribution facilities and high definition television ("HDTV" sets-in-use
increase to a critical mass. Nonetheless, AmeriCom recognizes that in the field
of computer hardware, capital investments should be carefully made in order to
stay technologically competitive while not expending unreasonable sums to
modernize equipment based on fads or improvements that are themselves about to
be exceeded. AmeriCom's computer inventory includes both Microsoft Windows(R)
and Apple (R) equipment inter-networked to permit regular cross-connectivity and
extremely high resolution scanning and internal printing capabilities. Because
of the low cost, extremely competitive available printing resources, client
printing is outsourced based non best available prices at the time.
Principal Clients and Suppliers
No supplier accounts for 5% or more of goods or material used by AmeriCom
in its business, since it is fundamentally a service business. AmeriCom's
principal clients (those that accounted for more than 5% of its gross billings
or net profits) during the fiscal year ended June 30, 2000 and the percentage of
its gross billings which they accounted for are set forth in the following
table:
Percentage
Gross Net of Total
Name of Client Billing Income Income Description of Services Provided
- -------------- ------- ------ ------ --------------------------------
Southwest Georgia Consortium $309,600 $177,237 23% Television and radio media
campaign.
CareerTV.com $118,602 $35,580 9% Cable television media campaign.
Edward Waters College $88,000 $58,000 7% Marketing campaign including
infomercial, CD Rom, brochures and
promotional items.
15C2-11 PROJECT
Our company intends to develop an interactive Internet presence as a
depository of information concerning non- reporting public companies. The
project seeks to fill a need identified by the Commission and the NASD for
regularly updated information on non-reporting public companies accessible to
market makers in securities as well as to potential investors. The issue is a
topic under consideration for regulatory action.
Our company obtained rights to the following domain names from its
strategic consultant, Yankees: 15c2- 11.com, 15c2-11.net, 15c2-11.org and
15c2-11.cc. The names are derived from Rule 15c2-11 under the Exchange Act which
deals with the information that must be publicly available before brokerage
firms may participate in making markets for publicly traded securities and the
anticipated applications revolve around the concept of a publicly accessible
information depository system.
Our company's agreement with Yankees originally anticipated that it would
delegate the design, development and operation of the anticipated Internet site
or sites to WRI and would pay Yankees a 5% royalty, payment of which will be
deferred and accrued until our company can make the required payments from
consolidated profits. The term of the agreement is concurrent with Yankees'
consulting agreement and any renewals or extensions thereof, after which the
rights and all derivations therefrom would revert to Yankees. It is now more
probable that the 15c2-11 project will be undertaken by AmeriCom.
As currently contemplated, non-reporting public companies would be
permitted to list information statements meeting the requirements of Rule
15c2-11 for periods of three to six months, after which they would have to be
renewed with current information. The information would be protected from
modification by non-authorized persons, to the extent technologically feasible.
In addition, auditors, attorneys, transfer agents and other providers of
services to public companies would be permitted to direct advertisements to the
public companies listed. Brokerage firms and other providers of services to
investors would be permitted to direct advertisements to public visitors to the
sites. Our company anticipates that listing companies will be charged reasonable
fees designed to cover operating costs but that site visits will be free.
Advertisements are expected to be the principal source of potential profits.
Accuracy of the information on the site will be the responsibility of the
companies that list it; however, our company is contemplating the feasibility of
establishing a preliminary review process designed to promote the development of
qualitative standards geared to the requirements of Commission Regulation SB and
generally accepted accounting practices, other than audit requirements, as long
as such process does not subject our company to additional liability.
The sites will endeavor to meet standards imposed for registered
information depository systems by the Commission or the NASD; however, because
such standards have not been developed, no assurances can be provided that they
will be met, or that the Commission's current proposals dealing with registered
information depository systems will ever be adopted or implemented.
CONSULTING ACTIVITIES
Overview
In response to Yankees' suggestions, our company's board of directors
authorized our company's officers to negotiate consulting agreements with
private companies that desire to become public companies and that can benefit
from our company's experience in operating public companies. Our company helps
these companies recruit and supervise professionals such as attorneys, auditors,
investment bankers, transfer agents, officers and directors who have experience
operating public companies. It also shares our company's operating and
regulatory compliance policies with them and makes our company's personnel
available to them, on a reasonable, as required basis, to provide ongoing advice
dealing with issues faced by public companies.
Our company expects, in exchange for these services, that the consulting
client will register a percentage of its common stock for issuance directly to
our company's stockholders, as of an agreed upon date following the execution of
the consulting agreement. The amount of common stock involved will vary
depending upon the circumstances of each transaction. The issuance of shares to
our company's stockholders will be conditioned on prior registration with the
Commission and the failure to conclude such registration would void the
agreement.
Registration of shares directly to our company's stockholders is necessary
in order for our company to avoid inadvertently becoming an investment company
and provides a major benefit to clients in that they obtain a large, wide spread
base of stockholders, including all of our company's market makers. The major
benefit of the consulting services to our company is that it will be
continuously exposed to emerging companies, some of which should prove to be
attractive acquisition candidates or candidates for strategic operating
alliances (cooperative business activities not involving shares equity
ownership).
As of the date of this Report, our company has one active consulting
agreement and has an oral understanding as to a third agreement with one of our
company's directors. A number of other consulting agreements have been entered
into but have expired without any tangible benefits. Because it was very active
in acquisition activities during the past year, our company has not been able to
allocate as much time to its consulting activities as it anticipated and may be
forced to re-evaluate how much time it can dedicate to them in the future.
FundsAmerica Finance Corporation
Our company's first consulting agreement was signed on May 18, 1999, with
FundsAmerica Finance Corporation, a recently organized Florida corporation that
operates as a development stage retail finance company concentrating on
refinancing mobile homes ("FundsAmerica"). FundsAmerica believes that reporting
company status will facilitate its ability to package and resell loan
portfolios. Our company will not be involved in FundsAmerica's operations, will
provide only the described consulting services, and makes no predictions as to
the ultimate value of the securities to be distributed to its stockholders after
they are registered with the Commission.
Based on the terms of this consulting agreement our company's stockholders
of record as of June 17, 1999, will, after registration, receive 10% of
FundsAmerica outstanding common stock, which will be distributed on a pro rata
basis of approximately two shares of FundsAmerica common stock for every 25
shares of our company's common stock. A registration statement covering the
shares to be issued to our company's stockholders was filed by FundsAmerica with
the Commission on or about October 14, 1999. The registration process has still
not been completed. Our company and FundsAmerica have agreed that the reasonable
value of such common stock, in the aggregate, is the lesser of $50,000 or 10% of
stockholders' equity of FundsAmerica, determined in accordance with generally
accepted accounting principals, consistently applied ("GAAP"). No assurances,
however, can be provided that such valuation will actually be deemed appropriate
for auditing or tax purposes and a different valuation may be arrived at based
on the initial trading value of such securities or other factors not currently
apparent to management.
As of the date of this annual report, our company has not taken a position
regarding the tax consequences of the anticipated distribution of FundsAmerica
securities to our company's stockholders. It is possible that the value of the
FundsAmerica securities distributed to our company's stockholders will be deemed
income to our company and that the value of the distributed FundsAmerica stock
will be deemed to be dividends to our company's stockholders. If the
registration statement fails to become effective for any reason, the agreement
will be deemed void.
Sports Collectible Exchange, Inc.
Sports Collectible Exchange, Inc., a recently organized Florida corporation
("SCE") controlled by G. Richard Chamberlin, Esquire ("Mr. Chamberlin"),
formerly our company's general counsel and a current member of our company's
board of directors, has indicated a firm intention to proceed subject to
development of its web-site and valuation of its inventory. SCE maintains
temporary offices at 14950 Southeast United States Highway 441: Summerfield,
Florida 34491. Its telephone number is (352) 694-6714: its fax number is (352)
694-7153: and, its current e-mail address is grichardch@aol.com. SCE has been
organized to engage in a number of collectible areas including
an inventory of minor league collectibles that is expected to be appraised prior
to June 30, 2000, by either Gulf Coast Minors, of Sarasota, Florida, or Steve
Weitlauf, former owner of Bleacher Bums a baseball card shop, Belleview,
Florida. The appraisal will be based on both wholesale and probable retail
value. SCE's management has advised our company's management that it believes
that the wholesale appraisal will be in the range of $40,000 to $100,000, based
on it's experience with minor league baseball collectibles. SCE intends to
develop an Internet web-site to market minor league baseball collectibles,
including its current inventory, to operate such site with an initial emphasis
on minor league baseball collectibles in a manner similar to that currently used
to trade securities over the Internet, permitting transactions in its own
inventory, purchase of inventory from third parties and facilitation of
transactions between third parties for a small fee (expected to be a percentage
of the transaction). SCE also intends to develop a minor league collectibles
appraisal certification program and to establish a minor league hall of fame.
The agreement with SCE has been delayed because Mr. Chamberlin's obligations to
our company did not permitted him to complete the inventory of collectibles
required for the appraisal; however, During November of 1999, Mr. Chamberlin
requested that our company recruit a successor as general counsel as soon as
possible so that he could shift his business emphasis to SCE. Mr. Chamberlin was
replaced as general counsel on March 31, 2000 but remains available to provide
our company with legal assistance on a project by project basis. He also remains
as a member of our company's board of directors.
Other Consulting Activities
Our company is not currently pursuing any additional consulting related
activities.
EMPLOYEES
Our company's has no employees other than its executive officers. However,
it has access to Yankees clerical and administrative employees, which it pays
directly on an as used basis.
WRI
As of August 1, 2000, WRI had 10 full time employees and 2 part time
employees. Due to its economic under performance, WRI has had to discharge a
number of its employees and may have to further reduce its staff until operating
income improves. All employment is at will.
AmeriCom
As of August 1, 2000, Lorilei had 22 full time employees and 2 part-time
employees. AmeriCom requires that all full-time employees sign a non-competition
and confidentiality agreement as a condition of employment. No employee
contracts currently exist and all employment is at will. No employees are
currently represented by any labor unions. AmeriCom believes its relations with
employees to be good, however additional employees will need to be recruited to
meet its growth projections. Management believes that required personnel can be
recruited on acceptable terms from the large, technically and professional pool
in the Marion and Alachua county regions of Florida, at very favorable rates.
AmeriCom anticipates adding up to ten additional staff members within the next
fiscal year in sales, marketing and support functions.
COMPETITION
WRI
The web hosting and design industry is highly fragmented industry with
varied competition. WRI competes with web hosting, web design and web
programming firms. WRI competes for its customers based on price, customer
service , creativity and quality. WRI believes that it can increase its market
share by providing the highest possible customer service along with low cost web
design services for its customers. It can also provide more advanced services
for customers seeking cutting edge quality web design and programming.
AmeriCom
The advertising industry is highly fragmented with low entry barriers to
establishment of an advertising agency. Advertising production is also
competitive, however capital costs for equipment and facilities are a
significant barrier
to entry. AmeriCom competes with other advertising agencies, television and
radio stations, other direct response television companies, cable television
providers and television broadcasters. AmeriCom competes for customers based on
service, price, quality, specialized in-depth knowledge, and creativity. Most
DRTV competitors are located in Western states, making West coast-based business
a more difficult competitive challenge.
Many potential competitors have access to substantial capital, physical and
personnel resources and established reputations (e.g., national television
networks, cable companies, advertising agencies and public relations firms) with
which AmeriCom can compete only by providing innovative services at reduced
prices.
GOVERNMENTAL REGULATION
WRI
As a subsidiary of a fully reporting, publicly held company, WRI is subject
to applicable provisions of federal and state securities laws, especially with
reference to periodic reporting requirements and, the operations of WRI are
subject to regulation normally incident to business operations. WRI's management
knows of no other applicable government regulation.
AmeriCom
General
As a subsidiary of a fully reporting, publicly held company, AmeriCom is
subject to applicable provisions of federal and state securities laws,
especially with reference to periodic reporting requirements and, the operations
of AmeriCom are subject to regulation normally incident to business operations
(e.g., occupational safety and health acts, workmen's compensation statutes,
unemployment insurance legislation and income tax and social security related
regulations).
Because AmeriCom is subject to regulation in every state and country in
which it transacts business and because government regulation tends to be
extremely dynamic, AmeriCom will have to carefully monitor current and proposed
legislation in order to continuously comply therewith. There can be no assurance
that AmeriCom's operations will always be in compliance with applicable
governmental regulation and in the event that it fails to comply with applicable
regulatory requirements, its activities may be curtailed and it may be exposed
to fines and adverse publicity. In any such event, AmeriCom's business could be
detrimentally affected.
To the best of management's knowledge, AmeriCom will not be required to
directly incur material expenses in conjunction with federal, state or local
environmental regulations, however, like all other companies, there are many but
incalculable indirect expenses associated with compliance by other entities that
affect the prices paid by AmeriCom for goods and services.
Advertising
Based on First Amendment protections, most of AmeriCom's advertising
activities are not subject to pre- approval by government agencies; however, its
activities are subject to government imposed repercussions in the event that its
materials are materially inaccurate, libelous or violate government policies.
Such after the fact regulation is provided federally through the FCC, the
Federal Trade Commission (the "FTC"), the United States Department of Justice
and the Commission. Similar agencies regulate AmeriCom's activities on a state
level. In addition to governmental agencies, AmeriCom is a voluntary member of
numerous industry and trade associations on a national, state and local basis,
many of which have codes or standards of conduct to which members are expected
to adhere.
Cable
AmeriCom's success is dependent in part on the existence of federal
regulations which require cable operations to lease cable access at low rates
pursuant to FCC rules promulgated under the Cable Television Consumer Protection
Act of 1992 (the "1992 Cable Act"). The statutory framework for commercial
leased cable access was established by the Cable Communications Policy Act of
1984 (the "1984 Cable Act") and amended by the 1992 Cable Act. The 1984
Cable Act established leased access to unused channel capacity of cable systems
by parties unaffiliated with the cable operator that wanted to distribute video
programming free from editorial control by the cable operator. Channel set-aside
requirements were established in proportion to a system's total activated
channel capacity in order to assure that the widest possible diversity of
information sources were made available to the public by cable systems in a
manner consistent with the growth and development of cable systems. A cable
system operator was permitted to use any unused leased access channel capacity
for its own purposes until such time as a written agreement for a leased channel
use was obtained. Each system operator subject to such requirements was to
establish the "price, terms, and conditions of such use which were to be at
least sufficient to assure that such use would not adversely affect the
operation, financial condition, or market development of the cable system. The
only exception to the leased commercial access channel set-aside under the 1984
Cable Act was that up to 33% of a system's designated leased commercial access
channel capacity could be used for qualified minority or educational programming
from sources affiliated with the operator.
The 1992 Cable Act amendments broadened the statutory purpose to include
"the promotion of competition in the delivery of diverse sources of video
programming" and the FCC was provided with expanded authority: (1) to determine
the maximum reasonable rates that a cable operator could establish for leased
access use, including the rate charged for the billing of subscribers and for
the collection of revenue from subscribers by the cable operator for such use;
(2) to establish reasonable terms and conditions for leased access, including
those for billing and collection; and (3), to establish procedures for the
expedited resolution of leased access disputes. The legislative history of the
1992 amendments expressed concern that some cable operators may have established
unreasonable terms or may have had financial incentives to refuse to lease
channel capacity to potential leased access users based on anti-competitive
motives, especially if the operator had a financial interest in the programming
services it carried.
Any person aggrieved by the failure or the refusal of a cable operator to
make commercial channel capacity available or to charge rates as required by FCC
rules may file a petition for relief with the FCC within 60 days of the alleged
violation. In order to enforce its rights under the 1992 Act, Lorilei filed a
number of such petitions with varied results. In order to merit relief, the
petition must show by clear and convincing evidence that the operator violated
the leased access statutory or regulatory provisions or otherwise acted
unreasonably or in bad faith. Relief may be in the form of refunds, injunctive
relief or forfeitures. The FCC encourages parties to use alternative dispute
resolution procedures such as settlement negotiation, conciliation,
facilitation, mediation, fact finding, mini-trials and arbitration. The 1992
Cable Act provides for both judicial and FCC review of leased commercial access
disputes.
A change in the 1992 Cable Act or the regulations promulgated thereunder
could significantly impair AmeriCom's ability to successfully compete against
larger advertising companies.
Costs of Compliance
The costs of monitoring and complying with existing regulations is
expensive and time consuming. AmeriCom's management is required to expend
significant resources to obtain required regulatory clearance and the delays
incident thereto have and are expected to continue to deprive AmeriCom of
significant opportunities. However, because such regulations also apply to
AmeriCom's competitors, they merely tend to make all participants in the
industry less effective, rather than to affect AmeriCom's competitive business
posture. More importantly, however, FCC regulations are actually a benefit to
AmeriCom's operations since access requirements and pricing controls make
AmeriCom competitive with vastly larger organizations. The absence of such
regulations would have a materially adverse impact on AmeriCom's business.
ESTIMATE OF THE AMOUNT SPENT DURING EACH OF THE LAST TWO FISCAL YEARS ON
RESEARCH AND DEVELOPMENT ACTIVITIES, AND IF APPLICABLE THE EXTENT TO WHICH THE
COST OF SUCH ACTIVITIES ARE BORNE DIRECTLY BY CUSTOMERS
WRI
During the past year WRI expended approximately $4100 in research and
development activities. The expenses were passed along to the public indirectly
via WRI's pricing decisions. The bulk of the research and development activities
involve using students to research the Internet, e-commerce, hosting and various
other technical areas related to the Internet.
AmeriCom
During the last two years, Lorilei expended approximately $8,200 in
research and development activities. Such expenses were passed along to the
public indirectly in the form of components of Lorilei's pricing decisions. The
bulk of the research and development activities involved production of local
news programs and activities with the FCC designed to assure access to unused
cable system channel capacity.
ITEM 2: DESCRIPTION OF PROPERTY
Our company does not own any real property directly. Except for AmeriCom,
our company and its subsidiaries operate from leased facilities which they
believe are adequately insured by comprehensive general liability policies. Our
company does not, however, maintain business interruption coverage.
Our company: Our company's corporate offices are located at 2500
North Military Trail, Suite 225-C; Boca Raton, Florida 33431
and at 1941 Southeast 51st Terrace, Ocala, Florida 34471. The
offices in Boca Raton include access to office equipment and
are leased on a month to month basis from Carrington Capital
Corp., at $1,062.88 per month. The offices in Ocala are made
available by Yankees on a rent free basis and also include
access to office equipment.
WRI: WRI currently leases 3,000 square feet of office space at 100
East Sample Road, Suite Number 210; Pompano Beach, Florida
33064. The lease is for a term of three years staring on June
1, 2000, with a three year renewal option. The monthly rental
starts at $4,000 per month and increases by 5% each year.
AmeriCom:
- --------
Operations Facilities:
AmeriCom's principle place of business is located at 7325
Southwest 32nd Street, Ocala, Florida, 34474. This is an
industrial park type setting where the other businesses are
warehouse or light manufacturing businesses. The building is
approximately 5,000 square feet in total space, with 3,500
square feet devoted to office and production space and 1,500
square feet devoted to studio space. All space is
air-conditioned and heated. The property is encumbered by a
first mortgage in the original principal amount of $194,000
in favor of Small Business Loan Source. The loan bears
interest at the rate of 12.25% per annum and is payable over
a term of 25 years. The property is in the opinion of
AmeriCom's management adequately covered by insurance.
Management believes the current facility to be adequate for
anticipated growth through the 2003 fiscal year. Management
cannot, however, guarantee that the square footage will be
sufficient for all production operations. Additional
construction or additional leased space could be required,
either of which could result in additional unanticipated
expense.
Sales Offices:
AmeriCom leases field sales offices in Orlando, Florida, and
is considering opening satellite sales offices in the Tampa
Bay and Boca Raton, Florida areas within the year 2001.
Rental costs for such additional space is expected to be
minimized through use of "office suite" type space that can
be expanded if justified by sales volume. If sales volume
becomes substantial it could require considerably more
square footage in leased office space than has been
projected.
Foreign Locations:
AmeriCom does not have any material portion of its assets,
operations or customers located outside of the United
States. Substantially all of AmeriCom's revenues are from
customers within the United States, where all of AmeriCom's
services are provided.
ITEM 3: LEGAL PROCEEDINGS
HOLDING COMPANY LEVEL
Our company is not aware of any legal proceeding pending or threatened
against it or any of its subsidiaries that either alone or cumulatively with all
other pending or threatened proceedings, if any, would have a material impact on
our company's business or that of any of its subsidiaries. However, our
company's subsidiaries may become parties to litigation either as defendants,
plaintiffs or interested parties, in the ordinary course of business, from time
to time.
OPERATING SUBSIDIARIES
Lorilei
To the best of our company's knowledge, Lorilei is not a party to any
pending legal proceedings. However:
* Lorilei declined to pay $21,420 to Home and Garden Television ("HGTV")
pending confirmation of sums due based on Mr. and Mrs. Cunningham's
assertions that advertising time slots purchased were not provided.
Because of the departure of Mr. and Mrs. Cunningham, the viability of
their assertions cannot be verified and Lorilei has received demand
letters from HGTV's attorneys.
* On June 28, 2000, Sheryl Wolf, an employee of Lorilei resigned alleging
that she had not received compensation she had been promised by Mr. and
Mrs. Cunningham and Lorilei received correspondence from an attorney on
behalf of Ms. Wolf demanding payment, which was answered by attorneys
for Lorilei denying any liability. As a material subsequent event,
because of the departure of Mr. and Mrs. Cunningham, Ms. Wolf has
agreed to provide services to AmeriCom comparable to those she provided
to Lorilei, but under an independent contractor rather than employment
basis, consequently, AmeriCom's management believes that there is
little if any likelihood of litigation.
* Since their resignation from Lorilei, Mr. Cunningham retained an
attorney who demanded that Lorilei pay Mr. Cunningham two weeks'
salary which Mr. Cunningham claims was not paid. Lorilei responded
asserting that Mr. and Mrs. Cunningham breached both their employment
agreement and the acquisition agreement by resigning almost
immediately after closing on the acquisition of Lorilei and are not
entitled to anything. Rather, our company's current management
believes that it should pursue claims against Mr. and Mrs. Cunningham
as a result of their refusal to honor the terms of their employment
agreements which were an essential element of their obligations under
the acquisition agreement. Mr. and Mrs. Cunningham subsequently filed
for protection from creditors under Chapter 7 of the United States
Bankruptcy Code and our company plans to assert claims against them in
that forum.
Because of the resignation of Mr. and Mrs. Cunningham, their apparent move
to California and their decision to file for personal bankruptcy, our company's
management was concerned that Lorilei might have been subject to undisclosed
liabilities, although it has no tangible evidence to that effect and has been
assured to the contrary by Lorilei's vice president of finance, who now performs
such role for AmeriCom. In order to eliminate any danger that undisclosed
liabilities could detrimentally affect our company's investment in Lorilei, our
company terminated its operations and assigned all of its personnel, assets and
operations to AmeriCom, a new Florida subsidiary organized by our company for
such purpose. Record title to certain of the assets will remain in Lorilei until
required consents are obtained, however, such assets will be held by Lorilei as
trustee for AmeriCom. AmeriCom agreed, in consideration for the assignment of
Lorilei's assets, to make the mortgage, equipment lease and financing payments
disclosed in exhibits to the acquisition agreement as well as to repay funds
loaned to Lorilei by our company. AmeriCom intends to refinance such liabilities
at such time as its operating results, as reflected in its financial statements,
justify the required loans, on competitive terms, from one or more financial
institutions.
WRI
WRI's management has not advised our company of any pending or potential
litigation.
ITEM 4: SUBMISSION OF MATTERS TO SECURITY HOLDERS
The response to this item is incorporated by reference to the response to
Item 4 of our company's report on Form 10-KSB/A for the fiscal year ended June
30, 1999, as permitted by Commission Rule 12b-23.
PART II
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
Our company's common stock started trading in the over-the-counter market
in 1964, however, until November 18, 1998, there had been no established public
trading market for many years. Consequently, information regarding quotations of
bid and asked prices for the common stock was not available during 1996 or 1997.
Our company's common stock resumed trading in the over the counter market during
November of 1998 and bid, offer and transaction report prices are available
through the electronic bulletin board operated (but not a part of) the National
Association of Securities Dealers, Inc.'s, NASDAQ, Inc., subsidiary (the "OTC
Bulletin Board"). During 1998 and most of 1999, our company's common stock
traded under the symbol "ETSY"; however, after the acquisition of American
Internet during June of 1999, our company changed its name and its trading
symbol was changed to "ABUY." The following table indicates the average high and
low bid prices as quoted for our company's common stock at the end of each
calendar quarter since quotation was resumed. The following over-the-counter
quotations reflect inter-dealer prices, without retail mark-up, mark-down, or
commission, and may not necessarily represent actual transactions. The range of
the reported high and low bid quotations have been derived primarily from
information quoted on the OTC Bulletin Board.
Closing Closing Last Reported
Date Bid Price Offering Price Transaction Price
December 31, 1998 $0.625 $0.1875 $0.125 (December 1, 1998)
March 31, 1999 $0.25 $0.50 $0.25
June 30, 1999 $1.50 $1.50 $1.50
September 30, 1999 $1.50 $1.72 $1.50
December 28, 1999 $1.22 $1.31 $1.31
March 31, 2000 $1.875 $2.00 $2.00
June 30, 2000 $0.59 $0.78 $0.78
As of August 31, 2000, 17 NASD member firms were listed as market makers in
our company's common stock: [Knight Trimark, Inc.; Sharpe Capital, Inc.; Herzog,
Heine, GeDulo, Inc.; Hill, Thompson Magid & Co., Inc.; Equitrade Securities
Corp.; Wien, Inc.; J. Alexander Securities, Inc.; Olson Payne & Co.; North
American Institutional Brokers; Schwab Capital Markets, L.P.; Spenser Edwards,
Inc.; Paragon Capital Corp.; Weckstein & Co., Inc.; Program Trading Corp.; GVR
Company; Glenn Michael Financial, Inc.; and, Fleet Trading, a division of Fleet
Securities Incorporated
AMOUNT OF COMMON EQUITY SUBJECT TO OUTSTANDING OPTIONS OR WARRANTS TO PURCHASE,
OR SECURITIES CONVERTIBLE INTO, COMMON EQUITY OF OUR COMPANY
As of August 31, 2000, our company had 4,796,675 shares of its common stock
reserved for issuance in conjunction with current obligations to issue
additional shares and in the event that currently outstanding options and
warrants are exercised. The following table provides summary data concerning
such obligations. Notes to all of the tables in this section (MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS) follow the last table:
Number of Shares
of Common Stock
Designation or Holder Nature of the Security Exercise or Conversion Price Currently Reserved
- --------------------- ---------------------- ---------------------------- ------------------
Yankees Option (4) (4) 2,157,733 (4)
Stock Plan Options (5) 2,000,000
Michael Caputa (6) (6) 150,000
Former Trilogy
Stockholders Warrants & Options(7) $0.75 per share 338,942
Debra Elenson &
Jonathan Eichner Warrants(8) $0.75 per share 150,000
AMOUNT OF OUR COMPANY'S COMMON EQUITY THAT COULD BE SOLD PURSUANT TO RULE 144
UNDER THE SECURITIES ACT
As of August 31, 2000, 12,465,172 shares of our company's common stock were
outstanding, of which:
* 3,968,221 are recognized as free trading by our company;
* 8,161,013 have been issued since 1964 pursuant to exemptions
from registration and are thus restricted securities, some of
which are eligible for resale under Commission Rule 144 ("Rule
144").
Of the 8,161,013 shares that our company has instructed its transfer agent
to treat as restricted:
* 2,821,696 were issued prior to August 31, 1999, and
consequently, may currently be sold under Rule 144, subject to
Rule 144's volume limitations, notice, public information and
manner of sale conditions. The volume limitations restrict
quantities sold over 90 day periods to the greater of 1% of
the total outstanding common stock, or the average weekly
trading volume during the four week period preceding the sale;
* 749,696 were issued to persons that do not appear to be
affiliates of our company prior to August 31, 1998, and
consequently may be sold by holders that have not been
affiliates of our company for a period of at least 90 days,
under the more liberal provisions of Commission Rule 144(k)
("Rule 144[k]"), which dispense with the volume, public
information and manner of sale conditions.
In addition to the foregoing, during the twelve month period ending on June
30, 2000, an additional _,___,___@@ shares of our company's currently
outstanding common stock will become eligible for resale under the provisions of
Commission Rule 144, subject to the limitations on quantities sold over 90 day
periods, notice, public information; and, _,___,___@@ shares will become
eligible for resale under Commission Rule 144(k).
AMOUNT OF COMMON EQUITY THAT OUR COMPANY HAS AGREED TO REGISTER UNDER THE
SECURITIES ACT FOR SALE BY SECURITY HOLDERS
Except as disclosed below with reference to Yankees, as of August 31, 2000,
our company had not agreed to register any shares of its common stock. However,
our company has agreed to include approximately 617,000 currently outstanding
shares of its common stock in any registration statements it files with the
Commission for which they are eligible (commonly referred to as "piggy back
registration rights"). The exercise term for the Yankees' options expires 45
days following the effective date of their registration with the Commission.
Yankees has been granted demand registration rights with reference to its
options; however, Yankees has advised our company that its options need not be
included in any currently contemplated registration statements since Yankees
does not have any present intent to sell the underlying securities.
AMOUNT OF COMMON EQUITY THAT OUR COMPANY IS CONSIDERING PUBLICLY OFFERING OR
PRIVATELY PLACING DURING THE YEAR ENDING JUNE 30, 2001, OTHER THAN SHARES TO BE
ISSUED PURSUANT TO AN EMPLOYEE BENEFIT PLAN OR DIVIDEND REINVESTMENT PLAN), THE
OFFERING OF WHICH COULD HAVE A MATERIAL EFFECT ON THE MARKET PRICE OF OUR
COMPANY'S COMMON EQUITY.
Our company is currently contemplating the sale of up to $7,000,000 in
shares of its common stock in order to provide capital to its current
subsidiaries and to other companies that it may acquire in the future. Some of
those shares may be offered and subscribed for prior to September 30, 2000. Our
company currently anticipates that between $1,000,000 to $2,000,000 of the
$7,000,000 in shares of its common stock will be privately placed and that the
balance will be offered publicly. The offering price will be tied to the market
price at the time of offering except for small discounts if a rights offering to
existing stockholders is involved, somewhat larger discounts for shares
privately placed and material discounts if the shares are purchased by Yankees
in the event other potential subscribers are not available. Our company cannot,
however, currently provide any realistic estimates as to what such prices will
be since they will depend on market conditions, our company's success in making
profitable acquisitions that appeal to the investing public, and other factors
beyond our company's control.
HOLDERS OF OUR COMPANY'S COMMON STOCK
The number of record holders of our company's common stock, $0.01 par value
(its sole class of common equity) as of the close of business on August 31,
2000, was approximately 2,280. Approximately 73 holders are securities firms
holding customer securities in street name, approximately representing an
additional 1,500 beneficial stockholders. Consequently, our company estimates
that it currently has approximately 3,783 stockholders.
DIVIDENDS
Our company has not declared any dividends on our company's common stock
and do not expect to do so at any time in the foreseeable future. There are
currently no restrictions on our company's ability to declare dividends in the
future, other than restrictions applicable to all Delaware corporations
involving the source of funds for payment of dividends and their effects on our
company's solvency. In the future, our company may use loans from financial
institutions for acquisitions and development. If it does, it is likely that
such institutions would require restrictions on the payment of dividends based
on traditional financial ratios designed to predict our company's ability to
repay such loans. However, no specific predictions as to any such restrictions
can be made at this time.
Our company's consulting activities may result in the distribution of
shares of other issuer's common to our company's stockholders. To date, only one
issuer has agreed to do so and it is anticipated that approximately 500,000
shares of the common stock of Funds America Finance Corporation will be
distributed to the stockholders of our company, as reflected on its stock
transfer records as of June 17, 1999, subject to the condition precedent that
they first be registered under the Securities Act. A registration statement has
been filed and is pending resolution of Commission comments.
RECENT SALES OF UNREGISTERED SECURITIES
During the last three years, our company issued 8,631,524 shares of its
common stock, options or warrants to purchase 6,585,653 shares of its common
stock, of which 1,258,980 have either been exercised, expired or terminated and,
none of its Class A Preferred Stock. Details of such issuances are contained in
our company's report on Form 10-KSB for the year ended June 30, 1999 and in its
reports on Form 10-QSB for the calendar quarter ended September 30, 1999,
December 31, 1999 and March 31, 2000. As permitted by Commission Rule 12b-23,
such information is incorporated by reference herein. Since April 1, 2000, our
company has issued the securities listed in the following tables without
registration under the Securities Act in reliance on the exemptions from
registration requirements cited. Footnotes for all tables follow the last table.
Common Stock:
Amount of Total Terms of Registration
Securities Offering Conversion Exemption
Date Sold Subscriber Consideration or Exercise Relied on
- ---- ----- ---------- ------------- ----------- ---------
April 8 200,000 Palmair, Inc. $4,000(9) None (1)
May 11 377,099 Mr. & Mrs. Cunningham (10) (10) (1)
May 11 114,504 Yankees, as escrow agent (10) (10) (1)
May 11 80,916 Bruce Brashear, Esquire (10) (10) (1)
May 11 19,542 Yankees (10) (10) (1)
May 11 9,427 Michael D. Umile (10) (10) (1)
May 11 9,427 J. Bruce Gleason (10) (10) (1)
May 11 8,869 George Franjola (10) (10) (1)
May 11 4,987 K. Walker Ltd. (10) (10) (1)
May 11 5,000 Lawrence R. Van Etten (10) (10) (1)
May 16 200,000 K. Walker Ltd. $50,000 None (2)
May 16 16,667 K. Walker Ltd. $10,000.20 None (2)
May 31 200,000 Xcel Associates, Inc. (11) (11) (2)
June 5 56,000 Yankees $7,000 (3) (2)
June 5 50,000 George Franjola $12,500 None (2)
June 5 50,000 John Franjola $12,500 None (2)
June 5 28,000 Lawrence R. Van Etten $7,000 None (2)
June 5 28,000 Linda Van Etten $7,000 None (2)
June 30 700,000 Yankees (12) (12) (2)
June 30 50,000 Lawrence R. Van Etten (12) (12) (2)
June 30 9,000 George Franjola (12) (12) (2)
June 30 20,000 Coast to Coast Realty (12) (12) (2)
June 30 5,000 Vanessa H. Lindsey (12) (12) (2)
June 30 2,000 Nancy Molinari (12) (12) (2)
June 30 2,000 Sally Stoberg (12) (12) (2)
Convertible Securities
Options & Warrants:
Amount of Total Terms of Registration
Securities Offering Conversion Exemption
Date Sold Subscriber Consideration or Exercise Relied on
- ---- ----- ---------- ------------- ----------- ---------
1999:
August 19 100,000 Michael H. Jordan $69,000 $0.69 per share (2)
October 26 50,000 Saul B. Lipson $53,125 $1.0625 per share (2)
November 11 15,000 Vanessa H. Lindsey $19,200 $1.28 per share (2)
2000:
March 6` 100,000 Debra Elenson (8) $0.75 (2)
March 6 50,000 Jonathan Eichner (8) $0.75 (2)
March 8 (5) Stock Option Plan (5) (5) (2)
March 12 5,000 G. Richard Chamberlin (13) $1.50 (2)
May 22 100,000 Lawrence R. Van Etten $56,000 $0.56 (2)
May 22 50,000 Lawrence R. Van Etten $30,000 $0.60 (2)
May 26 50,000 David K. Cantley $28,125 $0.5625 (2)
Class A Preferred Stock:
Amount of Total Terms of Registration
Securities Offering Conversion Exemption
Date Sold Subscriber Consideration or Exercise Relied on
- ---- ----- ---------- ------------- ----------- ---------
2000:
None
Notes to All Tables
(1) Section 4(2) of the Securities Act. In each case, the subscriber was
required to represent that the shares were purchased for investment
purposes, the certificates were legended to prevent transfer except in
compliance with applicable laws and the transfer agent was instructed
not to permit transfers unless directed to do so by our company, after
approval by its legal counsel. In addition, each subscriber was
directed to review our company's filings with the Commission under the
Exchange Act and was provided with access to our company's officers,
directors, books and records, in order to obtain required information.
(2) Section 4(6) of the Securities Act. In each case, the subscriber was
required to represent that the shares were purchased for investment
purposes, the certificates were legended to prevent transfer except in
compliance with applicable laws and the transfer agent was instructed
not to permit transfers unless directed to do so by our company, after
approval by its legal counsel. Each subscriber was directed to review
our company's filings with the Commission under the Exchange Act and
was provided with access to our company's officers, directors, books
and records, in order to obtain required information; and, a Form D
reporting the transaction was filed with the Commission.
(3) No commissions or discounts were paid to anyone in conjunction with the
sale of the foregoing securities, except that Yankees exercised
preferential subscription rights granted by our company in Yankees'
consulting agreement or that it may be entitled to compensation based
on the terms of its consulting agreement with our company.
(4) Option to purchase 12.5% of our company's outstanding and reserved
capital stock (including all securities convertible into capital stock)
outstanding or reserved, measured immediately following exercise of the
option, in consideration for an aggregate of $90,000. The option was
originally granted during November of 1998 and covered 10% of our
company's outstanding or reserved common stock only, with the exercise
price being $60,000. It was granted as a portion of consideration
granted to Yankees under its consulting agreement with our company, in
exchange for Yankees agreement to forego hourly and document licensing
fees for a period of 365 days. During November of 1999, our company
requested that the consulting agreement be renegotiated to extend for
another year the waiver of Yankees' hourly and document licensing fees
and in conjunction with the resulting amendment, the current terms were
adopted. The amendment was disclosed in a report on Commission Form 8-K
filed by our company on December 16, 1999. The number of shares
issuable cannot be determined with certainty, The transaction and
option agreement are more fully described in our company's report on
Form 10-QSB for the quarter ended September 30, 1998, its Form 10-KSB
for the years ended December 31, 1998 and June 30, 1999, and the report
on Form 8-K filed on December 16, 1999. For purposes of these tables,
it has been assumed that the option will cover 2,500,000 shares since
only 20,000,000 shares of common stock are authorized; however, the
number may be different based on the actual number of outstanding and
reserved shares of capital stock.
(5) Non-qualified stock options and incentive stock options, the terms of
which, including price, will be determined prior to issuance. It is
anticipated that the exercise price will be 85% or greater of the last
transaction price reported on the OTC Bulletin Board or other
designated quotation medium on the date of grant. Our company's stock
plan was approved by our company's board of directors on August 5, 1999
and ratified by the holders of a majority of our company's outstanding
common stock by a written consent in lieu of special meeting on October
8, 1999. The stock plan was described in detail in Item 5 of our
company's report on Form 8-K filed with the Commission on September 9,
1999. On March 8, 2000 the plan was amended from 1,000,000 to 2,000,000
shares. At our company's annual meeting, stockholders will be asked to
ratify the plan and to adopt a similar plan for the fiscal year ending
on June 30, 2001.
(6) Option permitting him to acquire between 70% to 80% of WRI's common
stock (see "Item 1, Part 1, Description of Business- the Acquisition of
Wriwebs.com, Inc.").
(7) Represents the shares issuable to former Trilogy stockholders pursuant
to the terms of its ten year incentive stock options (90,667 shares)
issued to Trilogy employees and consultants and five year stock
purchase warrants issued to Trilogy investors (248,273 shares), which
were converted into the right to purchase shares of our company's
common stock on a three options or warrants for one share basis, at
$0.75 per share.
(8) Represents shares reserved for issuance upon exercise of common stock
purchase warrants granted to two stockholders who regularly
participated in private placements of our company's securities during
the current fiscal year. The warrants are exercisable at $0.75 per
share and were issued on March 6, 2000.
(9) On December 11, 1998, Mr. Scimeca received options to purchase 200,000
shares of our company's common stock, at an exercise price of $0.02
per share as his only compensation from our company for services in
all capacities. Mr. Scimeca transferred all of his rights to our
company's securities, including those reflected in this table, to
Palmair, Inc., a Bahamian corporation, with an address at 55 Frederick
Street, Box CB-13039; Nassau, Bahamas ("Palmair"). Chrisje
Gentis-VerMeulen, an individual with an address at Brouwrij 8;
Breukelen (UTR) 3621, The Netherlands ("Ms. Gentis-VerMeulen"), is
listed as the record stockholder and director of Palmair. The option
was exercised by Palmair, Inc. on April 8, 2000.
(10) Shares of common stock issued to Gerald A. and Leigh A. Cunningham,
former stockholders of Lorilei who were officers or directors thereof,
in exchange for their Lorilei shares and to Yankees and its designees
pursuant to the terms of its consulting agreement with our company in
consideration for its role in arranging the acquisition. A portion of
the shares are being held by Yankees as escrow agent (114,504 shares)
and by Bruce Brashear, Esquire as escrow agent (80,916 shares).
(11) On May, 31, 2000, our company enterd into a settlement agreement with
Xcel Associates, Inc. A copy of the Settlement Agreement was filed as
an exhibit to a current report on Form 8-K filed with the Commission
on June 15, 2000, and is incorporated by reference as an exhibit to
this Report, as permitted by Commission Rule 12b-23 (see Part III,
Item 13, Exhibits and Reports on Form 8-K).
(12) On June 30, 2000, our company converted $98,500 of Yankees debt to
equity. They instructed our company to issue a portion of the
shares to their affiliates.
(13) Represents an option to purchase 5,000 shares of our company's common
stock at $1.50 per share granted to G. Richard Chamberlin, Esquire,
then our company's general counsel, for legal services in conjunction
with the acquisition of Vista.
Preferred Stock:
Our company is authorized to issue 5,000,000 shares of preferred stock,
$0.01 par value, the attributes of which are to be determined by our company's
board of directors prior to issuance, on a case by case basis. Pursuant to the
provisions of Section 151(g) of the Delaware General Corporation Law, our board
of directors authorized the creation of a class of preferred stock designated
the Class A Preferred Stock with the following attributes:
Amount designated: 500,000 shares.
Dividends: The holders of shares of the Preferred Stock are entitled to
receive, out of the assets of our company legally available
therefore, and as and when declared by our company's board of
directors, dividends of every kind declared and paid to holders
of our company's common stock, at a rate per share twenty times
that paid per share of common stock. Each dividend will be paid
to the holders of record of shares of the Class A Preferred Stock
as they appear on the stock register of our company on the last
day of the month next preceding the payment date thereof.
Conversion: The holders of shares of the Class A Preferred Stock will have
the right, at their option, to convert all or any part of such
shares into shares of common stock of our company at any time on
and subject to the following terms and conditions:
The shares of Class A Preferred Stock are convertible at the
office of transfer agent for the Class A Preferred Stock (the
"Transfer Agent"), and at such other place or places, if any, as
our company's board of directors may designate, into fully paid
and non-assessable shares (calculated as to each conversion to
the nearest 1/100th of a share) of common stock.
The number of shares of common stock issuable upon conversion of
each share of the Class A Preferred Stock will be equal to the
greater of:
(1) Twenty shares of common stock (the "Set Conversion Rate");
or
(2) The number of shares of common stock obtained by dividing
the gross price at which the preferred shares were issued by
our company (the "Issuance Price") by 80% of the closing
price for our company's common stock, as reported on the
public stock market or securities exchange (in both cases,
registered as such by the Commission having the highest
average trading volume in our company's securities (for
purposes of illustration, the following, being acceptable:
The New York Stock Exchange, the NASDAQ Stock Market, the
American Stock Exchange, the OTC Bulletin Board operated by
the NASD, the Electronic Pink Sheets operated by the
National Daily Quotation System, Inc.), on the day the
notice of conversion provided to our company is executed and
dated by the holder with medallion signature guarantee (the
"Market Conversion Rate").
Adjustments: The Set Conversion Rate in effect at any time is subject to
adjustment designed to prevent dilution.
Liquidation Rights:
In the event of any liquidation or dissolution or winding up of
our company, voluntary or involuntary, the holders of the Class A
Preferred Stock are entitled to receive, subject to the rights of
any other class of stock which ranks senior to the Class A
Preferred Stock as to distribution of assets on liquidation, but
before any distribution is made on any class of stock ranking
junior to the Class A Preferred Stock as to the payment of
dividends or the distribution of assets (including, without
limitation, our company's common stock, a sum per share of Class
A Preferred Stock equal to the Issuance Price per share.
Voting Rights:
The Class A Preferred Stock will entitle its holders to twenty
votes for every share held on terms identical to those of holders
of twenty shares of common stock, or if there is more than one
class or series of common stock outstanding, equal to twenty
votes by those of shares of common stock having the greatest
voting rights per share.
A certificate of designation creating the Class A Preferred Stock was filed
with the State of Delaware on July 3, 2000. As of September 25, 2000, 49,393
shares of the Class A Preferred Stock have been issued, in each case relying on
the exemption from registration requirements imposed by the Securities Act
pursuant to Section 4(6) thereof. The foregoing summary information is qualified
in its entirety by reference to the certificate of designation, a copy of which
has been filed as an exhibit to this report, see Part III, Item 13(a), Exhibits
Called for by Item 601 of Regulation SB.
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
(To be supplied by management once the financial statements are completed.)
ITEM 7: FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
The auditor's report and our company's audited balance sheet for its years
ended June 30, 2000, June 30, 1999 and December 31, 1998 and the related
statements of operations, stockholder's equity, cash flows and notes to
financial statements for such years follow in sequentially numbered pages
numbered __ @@ through __. The page numbers for the financial statement
categories are as follows:
Page Numbers:
Item 2000 1999 1998
- ---- ---- ---- ----
Cover Page
Table of Contents
Report of Independent Accountants
Balance Sheet
Statements of Income and Accumulated Deficit
Statements of Shareholders' Deficit
Statement of Cash Flows
Notes to Financial Statements
FINANCIAL STATEMENTS
[to be supplied directly from auditors]
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
Except for a disagreement which has become moot with Bowman & Bowman, our
company's auditors for the year ended December 31, 1998, there have been no
disagreements with our company's auditors during the past two fiscal years in
any matters of accounting principles or practices, financial statement
disclosure , or auditing scope or procedures which, if not resolved to their
satisfaction would have caused them to make reference to the matter in their
report. Disclosure concerning the disagreement with Bowman & Bowman is
incorporated by reference to our company's report on Form 10-KSB/A for the
fiscal year ended June 30, 1999, as permitted by Commission Rule 12b-23.
PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
BOARD OF DIRECTORS
CORPORATE GOVERNANCE
In accordance with the Delaware General Corporation Law and our company's
certificate of incorporation and bylaws, our company's business, property and
affairs are managed under the direction of its board of directors. Although
directors are not involved in day-to-day operating details, they are kept
informed of our company's business through written and oral reports and
documents provided to them regularly, as well as by operating, financial and
other reports presented by the president and our company's other officers at
meetings of the board of directors and committees thereof.
The directors hold office until the next annual meeting of the stockholders
and until their successors have been duly elected or qualified. Committee
members serve at the pleasure of our company's board of directors. Our company's
board of directors sets corporate policies which are implemented by our
company's management and when applicable, the management of our company's
subsidiaries. In the event that our company's board of directors determines that
a member faces a conflict of interest, for any reason, it is expected that the
director will abstain from voting on the matter which raised the issue.
No member of our company's board of directors has resigned due to
disagreements.
Meetings of the Board of Directors
Our company's board of directors held 14 meetings during the period
commencing on July 1, 1999 and ending on June 30, 2000, principally by
teleconference. In addition our company's board of directors passed 17 series of
resolutions by unanimous written consent in lieu of meetings during such period.
Each of the incumbent directors attended at least 75% of the board of directors
and committee meetings to which the director was assigned, except for Ms. Field
who has resigned due to the time required for her other business commitments.
The incumbent directors in the aggregate attended 90% of their board of
directors and assigned committee meetings.
Committees of the Board of Directors.
The board of directors has established two standing committees, the audit
committee and the executive committee. Directors' committee memberships are
included in the table listing our company's executive officers and directors
beginning on page ___@@.
Our company's board of directors created an audit committee in November of
1998. The audit committee meets with management to consider the adequacy of our
company's internal controls and the objectivity of our company's financial
reporting, selects the nominees for independent auditors and coordinates the
flow of information between our company and its independent auditors in order to
assure timely compliance with reporting obligations. In addition, it must
participate with management in the preparation of the management discussion and
analysis materials filed in Commission reports, which it must approve along with
our company's financial statements prior to filing. In most cases to date, the
bulk of the audit committee's work has been performed by its chair. As of the
date of this Report, Mrs. Field, who served as Chair until November 4, 1999,
advised our company that three meetings of the audit committee had been
held since its creation in November of 1998 and Mr. Lipson, who succeeded Ms.
Field as Chair, has held 4 meetings since he assumed the role of Chair, although
he has also conducted detailed personal meetings with our company's auditors and
our company's chief financial officer to develop and implement proper
procedures.
The executive committee, as authorized by our company's Bylaws, exercises
all the authority of the board of directors between regular board of directors
meetings, except that it does not have the authority to: (i) approve or
recommend to stockholders actions or proposals required by the Delaware General
Corporation Law to be approved by stockholders; (ii) designate candidates for
the office of director for purposes of proxy solicitation or otherwise; (iii)
fill vacancies on the board of directors or any committee thereof; (iv) amend
our company's bylaws; (v) authorize or approve the re-acquisition of shares
unless pursuant to a general formula or method specified by the board of
directors; or (vi) authorize or approve the issuance or sale of, or any contract
to issue or sell, shares or designate the terms of a series of a class of
shares. The executive committee was formed as a result of the difficulty in
calling frequent board of directors meetings due to the conflicting schedules of
its members and the requirement for frequent board of directors' action in
conjunction with implementation of our company's strategic plan. The executive
committee may exercise the full power and authority of the board of directors to
the extent permitted by Delaware law. This committee generally meets monthly or
when action is necessary between scheduled board of directors meetings, a
limited time frame exists and a board of directors quorum is not readily
available. The committee was formed after June 30, 1999, and, since its
inception acted by unanimous written consent in lieu of meeting five times.
It is expected that membership on the board of directors will be set at ten
persons at the next annual meeting of stockholders. Yankees also recommended
that our company's board of directors form a regulatory affairs committee and
that suggestion is expected to be implemented by the board of directors elected
at the annual stockholders' meeting. The regulatory affairs committee will be
responsible for working with our company's general counsel, chief financial
officer and audit committee chair to develop and implement procedures designed
to avoid violations of law. Such procedures are expected to initially focus on
transactions in our company's unregistered securities and transactions by our
company's officers, directors and holders of 10% or more of any class of its
equity securities; compliance with restrictions on commercial use of facsimile
transmission and the Internet by our company's subsidiaries; and, compliance
with laws governing multi-level marketing. The regulatory affairs committee is
also expected to create a working group which, in addition to its members, will
include members of the boards of directors of our company's subsidiaries and
other personnel whose background and experience will help to attain the
committee's goals.
Our company anticipates that our company's board of directors elected at
the annual stockholders meeting will also form a derivative litigation
committee, as called for by our company's Certificate of Incorporation.
Our company does not currently have compensation or nominating committees,
such functions having been delegated to Yankees during Mr. Granville-Smith's
tenure as our company's sole director, although the board of directors retains
all authority in conjunction with decisions on such matters, Yankees' role being
solely advisory. In addition, pursuant to its consulting agreement with our
company, Yankees identifies potential acquisition candidates for our company and
conducts negotiations with them on our company's behalf, subject in each case to
specific ratification by the board of directors prior to entry into any
agreements. It is anticipated that Yankees will become materially less involved
in assisting our company as income from operations becomes available to pay for
full time corporate level personnel. As independent resources become available
and our company becomes less financially dependent on continuing investments by
Yankees, the board of directors will form its own compensation, nomination and
acquisition committees.
EXECUTIVE OFFICERS AND DIRECTORS
The following persons have served in the positions indicated on the table
below, since July 1, 1999:
Name Age Term Positions
Lawrence R. Van Etten 63 (12) President, chief operating officer, director and executive
committee member; director nominee.
Charles J. Scimeca 53 (1)(2) Acting president, chief executive officer, director.
Michael Jordan 46 (3)(12) President, director, executive committee member.
G. Richard Chamberlin 53 (1)(10) Acting secretary, general counsel, director, executive committee
member; director nominee.
Penny Adams Field 43 (1)(6) Director, audit committee chair.
Name Age Term Positions
Anthony Q. Joffe 57 (1)(6) Director, audit committee and executive committee member;
director nominee.
Mark Granville-Smith 42 (4) Director.
J. Bruce Gleason 56 (5) Director; director nominee.
Saul B. Lipson 51 (7)(6) Director, audit committee chair, executive committee member;
director nominee.
Edward C. Dmytryk 53 (7)(6) Director, audit committee member; director nominee.
Michael A. Caputa 29 (8) Director; director nominee.
Carol A. Berardi 45 (9) Director.
Dennis A. Berardi 54 (9) Director.
Vanessa H. Lindsey 29 (10) Director & secretary.; director nominee.
David K. Cantley 62 (11) Vice president, treasurer, chief financial officer, director; director
nominee.
- --------
(1) Elected on November 6, 1998, to serve, in the case of directors, until
the next annual meeting of our company's stockholders and until their
successors are elected and assume their office, unless their earlier
resignations are accepted by our company's board of directors: and, in
the case of officers, to serve at the pleasure of our company's board
of directors. Ms. Field resigned due to lack of available time on March
1, 2000.
(2) Mr. Scimeca resigned as our company's acting president and as a member
of our company's board of directors on August 5, 1999.
(3) Our company's board of directors elected Michael Jordan as its
president and as a member of its board of directors, effective as of
August 6, 1999. Mr. Jordan resigned as our company's president on May
22, 2000. Mr. Jordan's term as a member of our company's board of
directors will expire following the election and installation of his
successor (assuming Mr. Jordan is not re-elected) at the next annual
meeting of stockholders.
(4) In accordance with the terms of a settlement agreement between our
company and Edward Granville-Smith, Jr. (who served as our company's
principal officer and sole director from 1995 until November of 1998),
our company elected his son, Mark Granville-Smith as a member of our
company's board of directors, effective July 1, 1999. Details of the
settlement agreement were disclosed in our company's report on Form
10-KSB for the year ended December 31, 1998 and such agreement was
filed as an exhibit thereto. Mr. Mark Granville-Smith resigned as a
member of our company's board of directors of our company on September
17, 1999, for personal reasons. The resignation did not involve any
disagreements with our company and a copy of his resignation letter was
filed as an exhibit to our company's report on Form 10-KSB for the
fiscal year ended June 30, 1999.
(5) In conjunction with the acquisition of American Internet Technical
Center, Inc., a Florida corporation ("American Internet"), J. Bruce
Gleason, the president, founder and a member of the board of directors
of American Internet, was elected as a member of our company's board of
directors for a term commencing on July 1, 1999, and expiring on the
earlier of December 31, 1999, or the conclusion of the next annual
meeting of our company's stockholders, provided that his successor will
have been duly elected and assumed office.
(6) The audit committee has been comprised of Ms. Field, (who served as
chair from its creation until November 4, 1999 and as a member of the
committee until March 1, 2000), Mr. Joffe (who has served since its
creation), Mr. Lipson, who was elected as a member and as chair on
November 4, 1999 and Mr. Dmytryk (who was elected as a member on
November 4, 1999).
(7) Messrs. Lipson and Dmytryk were elected to the board of directors on
November 4, 1999 for a term expiring at our company's next annual
meeting of stockholders and will be nominated for re-election to our
company's board of directors at the next annual stockholders meeting.
(8) Mr. Caputa was elected on December 2, 1999, for a term expiring after
our company's next annual meeting of stockholders; however, he will be
nominated for election to our company's board of directors at the next
annual stockholders meeting.
(9) Mr. and Mrs. Berardi were elected on December 2, 1999, for a term
expiring after our company's next annual meeting of stockholders.
However, they resigned in conjunction with the change in Trilogy's
status (see "Part III, Item 12, Certain Relationships and Related
Transactions") on June 7, 2000.
(10) Mrs. Lindsey was elected as our company's secretary, replacing G.
Richard Chamberlin, Esquire, in that role, on November 11, 1999. She
serves at the pleasure of the board of directors but has agreed to
remain in that office until December 31, 2000. She was elected as a
member of our company's board of directors on April 6, 2000, replacing
Ms. Field. Mr. Chamberlin resigned as our company's general counsel on
March 31, 2000. Mr. Chamberlin and Ms. Lindsey will be nominated for
re-election to our company's board of directors at the next annual
stockholders meeting.
(11) On February 17, 2000, David K. Cantley was elected as our company's
vice president, treasurer and chief financial officer. He serves at the
pleasure of the board of directors in such roles. Effective July 1,
2000 Mr. Cantley was elected as a member of our company's board of
directors for a term expiring after its next annual meeting of
stockholders; however, he will be nominated for re-election to our
company's board of directors at the next annual stockholders meeting.
(12) Mr. Van Etten was elected as a member of our company's board of
directors on May 22, 2000 for a term expiring after its next annual
meeting of stockholders; however, he will be nominated for re-election
to our company's board of directors at the next annual stockholders
meeting. He was elected as our company's president and chief operating
officer on May 22, 2000 and serves in such offices at the pleasure of
the board of directors.
The following biographies disclose information concerning the business and
professional activities of the members of our company's board of directors,
executive officers and other persons deemed material employees.
Executive Officers and Directors:
Lawrence R. Van Etten
Mr. Van Etten, age 63,was elected as acting president and chief operating
officer and a member of our Company's board of directors on May 22, 2000. Mr.
Van Etten graduated from New York Military Academy, Cornwall On Hudson, New York
in 1954;attended Gettysburg College, Gettysburg, Pennsylvania from 1954 -1956
and Marist College, Poughkeepsie, New York from 1981-1982 . He was employed by
IBM from 1956, until 1987, where he held several senior management positions
including Corporate Control Operations Manager, Corporate Scheduling Manager and
Director of Logistics Special Processes. Since leaving IBM, Mr. Van Etten has
served as an executive with several companies in the United States and Canada
[Vice President - Remtec, Inc. Chambly, QC - Manufacturer of Refueling Vehicles
1987-1988; Vice President - The Enterprise Group - Clearwater Florida -
Development Of New Business Opportunities 1993-1994; Vice President -
International Digital Communications Systems, Inc. - Miami, FL -
Telecommunications Sales - 1996-1998; President Techtel Communications, Inc.,
Pompano Beach, FL- CLEC Service Provider 1998 - 1999 ] and owned and managed his
own consulting company [LVE & Associates - US & Canada - Several long term
contracts with Toyada Gosei, Best Glove Canada, Remtec, Inc. Prestige Auto &
Strategic health Development Corporation]. Much of his recent work experience
has dealt with business management systems, materials management, management
development, personal computer application software and the Internet. Since May
31, 2000, Mr. Van Etten has serves as a member of the board of directors of
Colmena Corp., a publicly held Delaware corporation.
David K. Cantley
David K. Cantley, age 62, was elected as our company's vice president,
treasurer and chief financial officer on February 17, 2000 and as a member of
its board of directors effective July 1, 2000. Mr. Cantley graduated from Yale
University in 1959. From 1959 through 1964, except for six months active duty
with the Pennsylvania National Guard, he worked in his family's structural steel
contracting business, Cantley & Co., Inc., Philadelphia, Pennsylvania. In 1965
he joined the Stouffer Corporation, headquartered in Cleveland, Ohio where he
held various management positions from 1965 through 1974. In 1974 he returned to
Philadelphia and rejoined the family business, Cantley & Co., Inc., where he
served as vice-president until 1978. From 1978 to 1981 Mr. Cantley was employed
as general manger of the Great Bay Resort & Country Club, Somers Point, New
Jersey. In 1981 he joined Bally's Park Place Casino, Atlantic City, New Jersey
where he was employed as dealer, floor man and pit boss until 1984. From 1984 to
1992 he served as vice- president of Hotel Properties, Inc., Somers Point, NJ, a
private company in the hospitality real estate development, construction and
management business. He served as president of Full House Resorts, Inc. (NASDAQ:
FHRI) from its inception in 1992 to 1995. From 1995 to 1999, Mr. Cantley was
associated with Nevada Gold & Casinos, Inc. (OTC Bulletin Board: UWIN) as
project director and financial advisor. He remains an advisory director of
Nevada Gold & Casinos. Mr. Cantley joined Trilogy International in July 1999 as
its chief financial officer.
Vanessa H. Lindsey
Vanessa H. Lindsey, age 29, was elected as our company's secretary on
November 11, 1999 and as a member of our company's board of directors on April
6, 2000. From 1993 to 1995 she was employed by Accell Plumbing Systems, Inc., an
Ohio corporation, as that company's office manager and bookkeeper. Since 1995
she has been employed by Diversified Corporate Consulting Group, L.L.C., a
Delaware limited liability company, engaged in providing diversified consulting
services and in filing EDGARized documents for clients with the Commission, as
that company's chief administrative officer. Since 1996 she has been employed by
the Southeast Companies, Inc., a Florida corporation, involved in the
entertainment industry, in business and political consulting and as a licensed
mortgage brokerage company, as its chief administrative officer and currently
serves as its vice president and secretary. She is also the secretary and chief
administrative officer for the Yankee Companies, Inc., which serves as our
company's strategic consultant, and, for Southern Capital Group, Inc, a Florida
retail finance corporation and licensed mortgage brokerage business. She
currently holds the position of secretary of The Marion County Libertarian Party
and was the Campaign Treasurer for the Cyndi Calvo for State Senate, District 8
Campaign. Since January of 1999, she has served as the secretary of Colmena
Corp., a publicly held Delaware corporation and was elected as a member of its
board of directors on January 3, 2000.
Michael Jordan
Michael Jordan, 46 years old, is a resident and native of Miami, Florida.
From 1972 until 1973 he attended the University of Miami where he studied
English literature. In 1979, Mr. Jordan obtained a Series 7 and a Series 63
license from the NASD and in 1982 he obtained a Series 24 license from the NASD
(general securities principal). In conjunction with his activities as an
individual licensed to engage in securities transactions by the NASD, he was
also licensed by the securities regulatory authorities of a number of states.
Since 1985, Mr. Jordan has been engaged in business as a private investor. In
1992, Mr. Jordan incorporated Securities Counseling and Management, Inc., a
private consulting firm headquartered in Miami, Florida, for which he serves as
president and sole director. In January of 1996, Mr. Jordan became secretary,
treasurer and a member of the board of directors of Zagreus, Inc., a publicly
held Delaware corporation then headquartered in Miami, Florida ("Zagreus").
Zagreus is an inactive public company in the process of reorganization. In 1998,
Mr. Jordan became an independent consultant for the Southeast Companies, inc., a
Florida corporation engaged in providing business and political consulting
services and consumer financial services as a licensed mortgage brokerage
company and during 1998, became president of a division thereof operating in
compliance with Florida fictitious name laws as Southeast Counseling &
Management. In 1999, Mr. Jordan became a registered principal (NASD Series 24
license) of Champion Capital Corporation, an NASD member firm located in
Orlando, Florida. On August 6, 1999, Mr. Jordan became a member of our company's
board of directors and was elected as our company's president.
G. Richard Chamberlin
G. Richard Chamberlin age 53, has since November 1998, served as a member
of our company's board of directors and served as our company's general counsel
until March 31, 2000. Until November 11, 1999, he also served as our company's
secretary. From 1973 to 1974 he served as Trust Officer with Central Bank &
Trust Company, Jonesboro, Georgia. Mr. Chamberlin is a practicing attorney and
is a member of the Georgia Bar, (since 1974), and the Florida Bar, (since 1990).
He is also a member of the Bars for the Federal District Court for the Northern
District of Georgia, (since 1974) and the Federal District Court for the
Northern District of Florida (since 1995), the Court of Appeals for the State of
Georgia, (since 1974) and the Supreme Court for the State of Georgia (since
1974). Mr. Chamberlin is also a member of the Bar for the Eleventh District
Court of Appeals, (since 1982). He is a graduate of Eastern Military Academy,
Huntington, New York (College Prep Diploma, 1964): The Citadel, The Military
College of South Carolina, (B.A., political science, 1968): and the University
of Georgia School of Law, (J.D., 1971). Mr. Chamberlin earned a Certificate from
the American Bankers Association, National Trust School, (1974). Mr. Chamberlin
is a two term former member of the Georgia House of Representatives,
(1979-1983). In the State House, Mr. Chamberlin served on the Following
committees: House Journal Committee, Natural Resources Committee, Special
Judiciary Committee and Labor Committee. He is a former member of the Counsel
for National Policy. He is the
founder of the Georgia Roundtable, Inc., and served as President from 1981 to
1986.: He is the founder of the Georgia Heritage Foundation, and served as
President from 1982 to 1986. He is the former Principal of Soul's Harbor
Christian Academy, Belleview, Florida, (1990-1992). Mr. Chamberlin served as
national music chairman for the Religious Roundtable, Inc., at the premier event
known as the 1992 National Affairs Briefing in Dallas, Texas wherein President
George Bush was the keynote speaker. Mr. Chamberlin has received Resolutions of
Commendation from the House of Representatives for the Commonwealth of Kentucky,
(1985) and from the House of representatives for the State of Georgia, (1982).
Mr. Chamberlin is former president and director for Atrieties Development
Company, Inc., a publicly held corporation involved in the real estate industry,
(1986 through 1987), and has held licenses as a real estate agent, (Georgia and
Florida). He presently serves as President of the Citadel Club of Central
Florida, Inc. Mr. Chamberlin also serves as President of Southern Capital Group,
Inc., a Florida corporation, ("SCG") with offices in Belleview and Ocala,
Florida. SCG was founded in 1999 to consolidate pre existing business lines in
the automotive and mortgage business. Mr. Chamberlin is also president and sole
director of and majority stockholder in Sports Collectible Exchange, Inc., a
Florida corporation, ("SCE"). SCE was founded in 1999 specializing in the sale
and distribution of minor league baseball collectibles. Mr. Chamberlin has
agreed to serve another term as a member of our company's board of directors, if
elected by the stockholders, but requested that our company replace him with a
general counsel who could dedicate more time to our company's affairs. Pursuant
to the terms of our company's consulting agreement with Yankees, our company is
permitted to share the use of Yankees' general counsel, subject to such
counsel's superior obligations to Yankees in the event of a conflict of
interests. Our company is also required to pay Yankees for the reasonable value
of the services provided by its general counsel but can make such payment in
shares of our company's restricted common stock. Yankees' current general
counsel is George Franjola, Esquire.
Anthony Q. Joffe
Anthony Q. Joffe, age 57, has served as a member of our company's board of
directors since November, 1998. He also serves on its audit and executive
committees. Mr. Joffe holds a degree in Aeronautical Engineering Management from
Boston University, Boston, Massachusetts. Subsequent to his graduation, Mr.
Joffe was employed as the Quality Control Manager for Cognitronics Corporation,
a computer manufacturer, where he was responsible for overseeing the United
States Air Force compliance testing program as well as normal day-to-day
management. In 1967, Mr. Joffe was employed by General Electric as a production
engineer in the insulating materials field. In 1970, Mr. Joffe was employed by
King's Electronics, a RF coaxial connector manufacturer, where he was
responsible for major accounts and guided the field sales force. In 1973, Mr.
Joffe was one of the founders and vice-president of J.S. Love Associates, Inc.,
a commodity brokerage house no longer in operation (then headquartered in New
York City). In 1976, Mr. Joffe formed and served as President and Chief
Operating Officer of London Futures, Ltd., a commodity broker with 275 employees
in nine offices. London Futures, Ltd. was closed in 1979 and Mr. Joffe moved to
Florida. From 1979 until 1986, Mr. Joffe was vice president of Gramco Holdings,
Inc. (and its predecessor companies), a firm which owned and operated a variety
of companies. These companies included five cemeteries and funeral homes in
Broward County, Florida, a 33 acre marina, a general contracting company, a boat
title insurance underwriting firm, three restaurants, a real estate brokerage
company, a mortgage brokerage company and a leasing company. His
responsibilities involved supervision of the day-to-day operations and new
business development. From 1986 to 1991, Mr. Joffe served as consultant and/or
principal to a variety of small businesses in the South Florida area. In 1989
Mr. Joffe became President of Windy City Capital Corp., a small publicly traded,
reported company that was originally formed as a "blind pool" for the express
purpose of finding an acquisition candidate. Eventually, a reverse merger was
consummated with a computer software company from Pennsylvania. Mr. Joffe then
took the position of President of Rare Earth Metals, Inc. (and its predecessor
companies), a small publicly traded company which has purchased Spinecare, Inc.,
a medical clinic in New York. Spinecare changed its name to Americare Health
Group and relocated its state domicile to Delaware. Since March of 1993, Mr.
Joffe has performed consulting services for First Commodities, Inc., an Atlanta
based commodities firm, and has been involved in fund raising for the Multiple
Sclerosis Foundation. He also assisted Digital Interactive Associates and IVDS
Partnership with financial affairs in conjunction with their successful bid to
the Federal Communications Commission for licenses in the cities of Atlanta,
Georgia, Minneapolis/St. Paul, Minnesota, and Kansas City, Missouri. Mr. Joffe
served as the interim president of Madison Sports & Entertainment Group, Inc., a
publicly held Utah corporation then headquartered in Fort Lauderdale, Florida,
from September 1, 1994, until February 16, 1996, at which time he became its
vice president and vice chairman, chief operating officer, treasurer and chief
financial officer until he resigned in 1996. Since 1996, he has founded a boat
financing company and joined NorthStar Capital ("NorthStar") as Managing
Director. NorthStar is an investment banking firm with offices in Stamford,
Connecticut and Boca Raton, Florida which specializes in assisting small to mid
size private and publicly traded companies with business and financial planning;
acquisition and divestiture: financial public relations and market position
advice: and, treasury services. In January 1999, Mr. Joffe was elected to serve
as a member of the board of directors of Colmena Corp, a publicly held Delaware
corporation, involved in the telecommunications industry. In March of 1999, Mr.
Joffe was elected as chairman of the board of directors and in May of 1999, he
was elected as the president of Colmena Corp.
J. Bruce Gleason
Mr. Gleason, age 56, was elected to our company's board of directors,
effective as of July 1, 1999, concurrently with the acquisition of American
Internet on June 25, 1999. He co-founded American Internet with Michael D. Umile
in 1998 and served on the board of directors of American Internet and as its
president, chief executive officer and chief financial officer until its merger
with WRI. He has a diverse business background with over 30 years experience in
sales, marketing and finance. In 1972 Mr. Gleason received a certified general
accounting designation from the Certified General Accountants Association
located in Ontario Canada. From 1972 until 1974 he was employed by Crawford,
Smith & Swallo, a public accounting firm located in Toronto, Canada. In 1973 he
founded Photo Shack, Inc., an Ontario corporation which owned and operated a
chain of seventy, 24 hour film processing kiosks in Canada which he sold in
1976. In 1982, he founded Gourmet Galley, Inc., and served as president of
frozen food distribution in Pompano Beach, Florida, until 1990, when he sold
Gourmet Galley, Inc. to a partner. In 1990, he co-founded Southern Telco, Inc.,
a telecommunications company headquartered in Lighthouse Point, Florida, in
which he served as president. Southern Telco, Inc., was sold to Public Teleco,
Inc. in 1993. From 1994 until 1996, he served as president of Showcase Group,
Inc., a construction company headquartered in Deerfield Beach, Florida which
built 27 town houses, after which he conveyed his interest to a third party in
1996. During 1996, he received a legal expense insurance license from the State
of Florida Department of Insurance and served as an independent associate for
Prepaid Legal Services, Inc. headquartered in Lighthouse Point, Florida, until
1998.
Saul B. Lipson
Mr. Lipson, age 51, serves as a member of our company's board of directors,
as chair of its audit committee and has been nominated for membership in the
next board of directors' regulatory affairs committee. Mr. Lipson is the founder
and President of The Lipson Professional Group, Inc., a Financial Consulting and
Accounting Firm. Mr. Lipson has expertise in the fields of Accounting and
Financial Consulting. He has represented hundreds of public and private
companies, as well as individuals. The depth of Mr. Lipson's expertise ranges
from basic accounting and taxes to SEC compliance consulting for over the
counter companies. Prior to establishing The Lipson Professional Group, Mr.
Lipson was involved in marketing and financial and management consulting for
various businesses such as Ross Todd Productions, a concert promoting firm in
Cincinnati, Ohio; Reimer & Associates, a management consulting firm in Fort
Lauderdale, Florida; and, World Wide Consultants, Inc., a multi-faceted business
with offices in the United States and Sweden. Mr. Lipson earned a bachelor of
professional arts degree at the Brooks Institute in Santa Barbara, California in
1971, after completing his undergraduate accounting requirements at Florida
Atlantic University in Boca Raton, Florida in 1985. Mr. Lipson earned his Master
of Accounting degree with honors from Nova Southeastern University in Davie,
Florida in 1988. Mr. Lipson is also enrolled as an agent to practice before the
United States Internal Revenue Service and has received a Certified Financial
Planner designation from the College for Financial Planning in Denver, Colorado.
Edward Carl Dmytryk
Mr. Dmytryk, age 53, serves as a member of our company's board of directors
and as a member of its audit committee. He graduated summa cum laude from the
Citadel, the Military College of South Carolina, in 1968 with a bachelor of
science degree. From 1968 until 1973, Mr. Dmytryk served in the United States
Air Force (including a tour in the Viet Nam conflict as a fighter pilot), where
he attained the rank of captain. From 1973 until 1975, he served as a sales
manager for Wulfsberg Electronics, Inc., a national avionics firm specializing
in airborne radio telephone systems and headquartered in Overland Park, Kansas.
From 1976 until 1981, he served as a regional sales manager for Polaroid
Corporation a multi faceted imaging company headquartered in Cambridge,
Massachusetts. From 1981 until 1985, he served as vice president of sales for
West Chemical, Inc., a company involved in the manufacture of animal health feed
additives, pharmaceutical products, iodophor concentrates and specialty
chemicals, headquartered in Princeton, New Jersey. From 1985 until 1986, he
served as vice president for sales and marketing at Animed, Inc., a veterinary
products manufacturing company specializing in sales to veterinarians,
headquartered in Roslyn, New York. From 1987 until 1988, he served as president
of Mac's Snacks, Inc., the world's largest processor of pork rinds,
headquartered in Grand Prairie, Texas. From 1988 until 1995, he served as the
chief operating officer for Bollinger Industries, Inc., a fitness products
manufacturer headquartered in Irvine, Texas. Since June of 1990, he has been the
owner and chief executive officer of Benchmark Industries, Inc., a metal
fabrications company headquartered in Fort Worth, Texas. Since September of
1999, he has also served as the acting president of GNR Health Systems, Inc., a
physical therapy products sales company headquartered in Ocala, Florida.
Michael A. Caputa
Mr. Caputa, age 29, was recently elected as a member of our company's board
of directors and serves as the president of our company's subsidiary, WRI. He
founded WRI in 1998 and was its principal stockholder prior to the merger with
American Internet. He continues to serve as a member of the merged companies'
board of directors and as its president and chief executive officer. From July
of 1996 until May of 1998, he served as director of sales for GCI Marketing,
Inc., a Florida corporation engaged in web design and hosting. Mr. Caputa
graduated from Florida Atlantic University in 1996 with a degree in psychology.
Former Officers and Directors
The following persons served as officers or directors during the fiscal
year ended June 30, 1999, but no longer serve in such capacities.
Charles J. Scimeca, Acting President & Director
Charles J. Scimeca, age 54, served as the acting president and as a member
of our company's board of directors from November 11, 1998 until August 6, 1999,
when he resigned from all positions with our company to pursue other interests.
Since 1982 he has been a licensed real estate broker. He is managing director of
Coast to Coast Realty Group, Inc., located in Sarasota, Florida. The company is
involved in residential and commercial real estate development as well as
general real estate brokerage and business acquisition. He has been involved in
real estate transactions totaling over one billion dollars, representing Fortune
500 clients, such as , Equitable Life Insurance Company, Walt Disney
Corporation, Paramount Studios and TRW Real Estate Group. From 1980 until 1982,
Mr. Scimeca was on sabbatical, exploring business opportunities in various
industries. From 1975 until 1980, Mr. Scimeca served as chief operating officer
for Andy Frain Maintenance & Security, Inc., headquartered in Chicago, Illinois.
His responsibilities included budgeting and implementing cleaning services for
high rise office, retail and industrial properties for such notable clients as
Standard Brands, JMB Realty, John Hancock Insurance Company and other Fortune
500 companies. From 1965 until 1975, Mr. Scimeca was the owner and manager of
the Mecca Restaurant, a full-service family owned multi-unit restaurant business
headquartered in Chicago, Illinois. He is a member of the Clearwater, Sarasota
and Manatee County Association of Realtors, the International Council of
Shopping Centers and other local, regional and national real estate and mortgage
related organizations. He holds a degree in Business Administration from Wright
College in Chicago, Illinois (1964). Mr. Scimeca has remained available to our
company on an informal basis to provide continuity of management and assist in
Mr. Jordan's transition and has continuously provided material assistance on an
uncompensated basis.
Edward Granville-Smith, Jr., Director
Edward Granville-Smith, Jr., age 66, served in the following capacities for
our company until November, 1998: president, chief executive officer and sole
director. From November, 1998, until March, 1999, he continued as a member of
our company's board of directors, although he informed our company's board of
directors through his son and attorney in fact, that he was unable to attend
board of directors meeting due to present impairment and disability. Mr.
Granville- Smith, Jr., was President of Equity Growth Systems, Inc., a Maryland
corporation (not to be confused with our company) specializing in structuring
and marketing mortgage backed securities as well as the acquisition of select
commercial real estate for its own account. From 1981 to the present, he has
been a real estate consultant and principal involved in various aspects of
commercial real estate financing and syndication, both internationally and
domestically. One primary accomplishment during this period was the successful
sale of the real estate assets of some twenty-nine limited partnerships to both
domestic and foreign investors. From 1972 through 1980, he was chairman of the
board of directors, chief executive officer and president of United Equity
Corporation, a corporation which was primarily involved in the structuring,
financing and marketing, through the syndication of various tax incentive
ventures with an aggregate valuation in excess of $100 million. From 1959
through 1972, Mr. Granville-Smith, Jr. built the Washington Insurance Agency,
Inc., and became the chairman of one of the top one percent of insurance
brokerage houses in the Washington area. Mr. Granville-Smith, attended Brown
University from September, 1951 through June, 1952 at which time he entered the
United States Marine Corps. Upon discharge from the Marine Corps in 1955, he
enrolled in the Georgetown University School of Foreign Service and graduated in
June of 1959 with a B.S.F.S. degree. Mr. Granville-Smith's professional
affiliations include CLU and CPCL.
Mark Granville-Smith, Director
Mark Granville-Smith, 42 years of age, was elected to our company's board
of director's effective July 1, 1999, to serve until the next annual meeting of
our company's stockholders or until December 31, 1999, whichever event occurs
first. Mr. Granville-Smith graduated from Georgetown University, Washington,
D.C. in 1980 with a bachelor of science degree in business administration. From
1976 until 1980 he was a commercial pilot for United Bounty Corporation of
Silver Spring, Maryland. In 1980, he went to work in the commercial real estate
syndication industry with his father Edward Granville-Smith, Jr., the recently
retired president, chairman and chief executive officer of our company. Mr. Mark
Granville-Smith served as the president of corporate general partners in a
number of privately placed real estate syndications during such period, as well
as of Milpitas, the corporate general partner of a public real estate limited
partnership capitalized with $6,000,000, and of a number of privately placed
real estate syndications. In 1986 he also became president of Gran-Mark
Properties, Inc., located in McLean, Virginia, the general partner of Gran-Mark
Income Properties Limited Partnership. In 1987 he left Milpitas and formed his
own real estate syndication company which sponsored private placement
syndications of commercial real estate for two years. Starting in 1989, Mr. Mark
Granville- Smith managed an international underwater diving expedition for
Maryland Marine Recovery Headquarters in Towson, Maryland, to salvage the cargo
of an 1850's sailing ship that sank in the Irish Sea. In 1991, he became
chairman of the board of directors and chief executive officer of Classic
Concept Builders, Inc. ("Classic"), a start-up residential new home construction
company. In 1998, he became involved with our company as a result of his
father's decline in health and during September of 1998, was appointed
attorney-in-fact for purposes of handling certain personal and business affairs
for his father (then our company's sole director and chief executive officer).
Since December of 1998, he has participated in our company's board of director's
meetings in a non-voting capacity. Mr. Mark Granville-Smith resigned as a member
of our company's board of directors on September 17, 1999, for personal reasons.
Penny Adams Field, Director, Audit Committee Chair and Audit Committee
Penny Adams Field, age 44, served as a member of our company's board of
directors from November of 1998 until March 1, 2000. Until November 4, 1999, she
also served as the chair of its audit committee. Mrs. Field is a principal and
co-founder of Executive Concepts, a management consulting and investment banking
advisory firm. Ms. Field has technical expertise in designing and implementing
financial management systems, acquisition and divestiture models, cash flow
management, information systems assessment and implementations, and operational
and cost system audits. Her background in strategic planning, performance
measurement, comprehensive business planning, and cost structure analysis add to
the breadth and depth of the Executive Concepts team skills. Ms. Field is an
experienced and accredited business valuation specialist and is a member of the
Institute of Business Appraisers. As a management consultant, Ms. Field has
consulted with firms such as Monsanto, Mallinckrodt, McDonnell-Douglas, MEMC
Electronic Materials Company, Maytag, Mark Andy, CyberTel, and numerous other
small firms in the healthcare, manufacturing, construction, and service
industries. Prior to founding Executive Concepts, Ms. Field was an administrator
for the John M. Olin School of Business at Washington University in St. Louis,
where she helped to establish the Executive Programs division. Her
responsibilities included program development in the Far East. Prior to her
administrative role she served as a full-time member of the accounting faculty
instructing in financial accounting and cost management for undergraduate and
graduate programs at the Olin School. Prior to graduate study at Washington
University, Ms. Field worked in healthcare administration and banking, including
positions at Children's Hospital National Medical Center in Washington, D.C. and
Harris Bank in Chicago. After earning a B.B.A. in Accounting and Finance, Ms.
Field earned her M.B.A. from the Olin School of Business at Washington
University in St. Louis. Ms. Field also posted several hours of Ph.D. level
course work in accounting and finance prior to making a full-time commitment to
consulting. Due to other business commitments, Mrs. Field was unable to dedicate
required time to our company's business and elected to resign.
Carol A. Berardi
Mrs. Berardi, age 45, served as a member of our company's board of
directors from December 2, 1999 until June 7, 2000 and currently serves as
president of Trilogy. In 1980, Ms. Berardi founded Wayne, New Jersey based
Jakits Personnel and in 1986 she acquired a Transworld Temporary Franchise, a
permanent placement and temporary help service firm, which she operated until
1990. In 1990, Mrs. Berardi joined Dennis Berardi, now her husband, to co-found
Uniquest, a network marketing company specialized in the sale of non-run
pantyhose, headquartered in Lakewood, New Jersey. In 1992, Mrs. Berardi was
retained as a consultant for Nashua, New Hampshire based Envion International
Inc., a start up company in the direct sales industry with a product line of
nutritional meal replacement bars. In 1993, upon completion of Mr. and Mrs.
Berardi's assignment as a consultant to Envion, they started their own Envion
distributorship. In May of 1998, Mr. and Mrs. Berardi founded Trilogy
International, Inc., a network marketing/e- commerce company specializing in the
sale of products to enhance the quality of life for people, the planet and pets.
Dennis A. Berardi
Dennis Berardi, age 54, served as a member of our company's board of
directors from December 2, 1999 until June 7, 2000 and currently serves as chief
executive officer of Trilogy. He began his career in the music industry as a
professional drummer. Mr. Berardi was drafted into the United States Army Band
in 1963 and was subsequently appointed to the Presidential Band in Washington,
D.C. In 1968, Mr. Berardi founded Town Music, a national chain of music stores
that he owned and operated. In 1976, he started Kramer Guitar, a major music
instrument company headquartered in Neptune, New Jersey. He sold Kramer Guitar
(now owned by Gibson Guitar), in 1989. In 1987, Mr. Berardi became involved in
the music promotion industry, brought the first Russian band, Gorky Park, to the
United States and obtained a major recording deal for the band with Polygram
Records. In the same year, Mr. Berardi founded Berardi-Thomas Management to help
oversee the careers of major recording artists. A year later, Mr. Berardi
organized the Moscow Peace Festival, which brought United States and Russian
rock and roll bands together for a concert at Moscow's Lenin Stadium. In 1990,
Mr. Berardi founded Uniquest, a networking marketing company based in New Jersey
that specialized in the sale of non-run pantyhose. In 1993, Mr. Berardi and his
wife, Carol Berardi, started a distributorship with Nashua, New Hampshire based
Envion International, a direct sales company with a focus on nutritional
products for humans. In May of 1998, Mr. and Mrs. Berardi founded Trilogy
International, Inc., a direct sales/e-commerce company specializing in the sale
of products to enhance the quality of life for people, the planet and pets.
Other Material Personnel
While not employees of our company or of any of its subsidiaries, Yankees
provides our company with access to the services of a number of its employees
and access to the services of other persons who are under independent contractor
arrangements with Yankees, pursuant to which they provide Yankees' clients with
assistance, as required. Among such persons are Leonard Miles Tucker, Yankees
president; William A. Calvo, III, Yankees vice president. In addition, Vanessa
H. Lindsey, our company's secretary and a member of our company's board of
directors serves as the secretary and chief administrative officer for Yankees
and G. Richard Chamberlin, Esquire, a member of our company's board of directors
and its former general counsel, also served as general counsel to Yankees and
was introduced to our company by Yankees; Executive Concepts, a business owned
and operated by Penny Adams Field and her husband was under an independent
contractor agreement with Yankees pursuant to which they provided Yankees'
clients with assistance, as required, and Mrs. Field, a former member of our
company's board of directors and the former Chair of its audit committee was
introduced to our company by Yankees; Securities Counseling & Management, Inc.,
a Florida corporation owned and operated by Michael Jordan, our company's former
president and a member of its board of directors is under an independent
contractor agreement with Yankees pursuant to which it provides Yankees' clients
with assistance, as required, and Mr. Jordan was introduced to our company by
Yankees.
ITEM 10: EXECUTIVE COMPENSATION
During the twenty-four month period commencing on July 1, 1998 and ending
on June 30, 2000, no executive officer received compensation from or on behalf
of our company during any twelve month period valued, in the aggregate, in
excess of $100,000, except possibly for Mr. Edward Granville-Smith, Jr., if the
book value of his settlement is considered compensation. During the 12 month
period ended June 30, 1999, three persons served as our company's executive
officers. Mr. Edward Granville-Smith, Jr. served in such position during the
period starting on July 1, 1998 until his replacement for health purposes on or
about November 11, 1998, Mr. Charles J. Scimeca served in such role during the
period starting on November 11, 1998 through June 30, 1999 and G. Richard
Chamberlin, Esquire, served in such position from on or about November 11, 1998
through June 30, 1999. During the 12 month period ended June 30, 2000, five
persons served as our company's executive officers, Mr. Scimeca served in such
role until his resignation on August 5, 1999, Mr. Chamberlin served in such role
until his resignation on March 31, 2000, Michael Jordan served in such role from
August 6, 1999 through May 22, 2000, Mr. Van Etten and Mrs. Lindsey currently
serve in the roles disclosed above.
During the 12 month period ended June 30, 1999, Mr. Granville-Smith
received 47,000 shares of our company's common stock and all of our company's
real estate operations in settlement of all potential claims that Mr. Granville-
Smith or his affiliates may have had against our company, including claims under
his employment agreement in effect since 1995. At the time of their
authorization for issuance by the board of directors (March 22, 1999), the
market value for such shares, based on the closing price reported on the OTC
Bulletin Board, was $0.25 per share (an aggregate of $11,750 for the 47,000
shares received). The book value of our company's assets conveyed to Mr.
Granville-Smith, as reported in our company's audited balance sheet for the year
ended December 31, 1998, was approximately $377,275. In addition to the
foregoing, during such period Mr. Granville-Smith received the sum of $5,000
from our company as repayment for unaccounted expenses that Mr. Granville-Smith
claimed to have made on behalf of our company, but could not document.
During the 12 month period ended June 30, 1999, Mr. Scimeca received
options to purchase 200,000 shares of our company's common stock, at an exercise
price of $0.02 per share as his only compensation from our company for services
in all capacities. At the time the options were authorized for issuance by the
board of directors (December 11, 1998), the market value for the shares of our
company's common stock, based on the closing price reported therefor on the OTC
Bulletin Board, was $0.06 per share.
During the 12 month period ended June 30, 1999, G. Richard Chamberlin,
Esquire, then our company's secretary and general counsel, was assigned the
right to purchase 125,000 shares of our company's common stock for an aggregate
of $2,500 by Yankees as compensation for his services as an officer and director
of our company. Mr. Chamberlin was subsequently issued an additional 50,000
shares of our company's common stock in consideration for services that may have
been contemplated when Yankees assigned the rights to the initial 125,000 shares
to Mr. Chamberlin. At the time Yankees relinquished its right to purchase such
common stock in favor of Mr. Chamberlin, no market for our company's common
stock existed and the stockholders equity per share of our company's common
stock, based on the latest available information at the time, was $0.0625 per
share. At the time Mr. Chamberlin was granted the additional 50,000 shares
(March 24, 1999), the market value for the shares of our company's common stock,
based on the closing price reported therefor on the OTC Bulletin Board, was
$0.25 per share.
During the 12 month period ended June 30, 2000, no officer of our company
or its subsidiaries received aggregate compensation from our company or on
behalf of our company from any other person, equal to $100,000 or more. However,
Mr. Jordan was granted options to purchase 100,000 shares of our company's
common stock, Mr. Van Etten was granted options to purchase 100,000 shares of
our company's common stock, Mr. Cantley was granted options to purchase 100,000
shares of our company's common stock and Mrs. Lindsey was granted options to
purchase 15,000 shares of our company's common stock (see "Summary Compensation
Table" below for detailed disclosure. Although not categorizable as
compensation:
* Messrs. J. Bruce Gleason and Michael D. Umile, then executive officers
of American Internet, each received 275,000 shares of our company's
common stock in exchange for all of their common stock in American
Internet. At the time Messrs. Gleason and Umile received such
securities (June 25, 1999), the market value for the shares of our
company's common stock, based on the closing price reported therefor on
the OTC Bulletin Board, was $0.875 per share.
* Mr. Michael A. Caputa, the chief executive officer of WRI, received
531,000 shares of our company's common stock in exchange for all of his
common stock in WRI which, at the time (November 11, 1999) had a market
value based on the closing price reported therefor on the OTC Bulletin
Board, of $1.28 per share.
* Mr. Dennis A. Berardi and Mrs. Carol A. Berardi, the executive officers
of Trilogy, they received 1,051,726 shares of our company's common
stock in exchange for all of their common stock in Trilogy. At the time
Mr. and Mrs. Berardi received such securities (December 2, 1999), the
market value for the shares of our company's common stock, based on the
closing price reported therefor on the OTC Bulletin Board, was $1.50
per share.
* Mr. Gerald Cunningham and Mrs. Leigh Cunningham, then the executive
officers of Lorilei, they received 377,099 shares of our company's
common stock in exchange for all of their common stock in Lorilei. At
the time Mr. and Mrs. Cunningham received such securities (May 11,
2000), the market value for the shares of our company's common stock,
based on the closing price reported therefor on the OTC Bulletin Board,
was $1.31 per share.
In addition, Mr. Caputa, Mr. and Mrs. Berardi and Mr. and Mrs. Cunningham
all received salaries and benefits during such period from the subsidiaries by
which they were employed, as described below (see "Employment Contracts and
Termination of Employment and Change in Control Arrangements").
SUMMARY COMPENSATION TABLE
Annual Compensation Awards Payouts
Securities
Underlying Long All
Name and Other Restricted Options & Term Other
Principal Annual Stock Stock Apprecia- Incentive Comp-
Position Year Salary Bonus Compensation Awards tion Rights Payouts ensation
- -------- ---- ------ ----- ------------ ------ ----------- ------- --------
(1) 1998 None None None None None None (1)
(1) 1999 None None None None None None (1)
(2) 1999 None None None None 200,000 Shares None None
(3) 1998 None None (3) 50,000 Shares None None None
(4) 1999 None None $ 45,000 (6) None None None (8)
(5) 1999 None None $ 54,000 (7) None None None (8)
- -------
(1) Edward Granville-Smith, Jr., served as our company's president and chief
executive officer during the period beginning on July 1, 1997 and ending on
November 11, 1998. See the disclosure concerning Mr. Granville- Smith's
compensation at "EXECUTIVE COMPENSATION" above.
(2) Charles J. Scimeca served as our company's president and chief executive
officer during the period beginning on November 11, 1998 and ending in
August of 1999. See the disclosure concerning Mr. Scimeca's compensation at
"EXECUTIVE COMPENSATION" above.
(3) G. Richard Chamberlin, Esquire, served as our company's secretary and
general counsel during the period beginning on November 11, 1998 and ending
on March 31, 2000. See the disclosure concerning Mr. Chamberlin's
compensation at "EXECUTIVE COMPENSATION" above.
(4) J. Bruce Gleason was the former president and chief executive officer of
American Internet. See the disclosure concerning Mr. Gleason's compensation
at "EXECUTIVE COMPENSATION" above.
(5) Michael D. Umile was the former vice president and chief operating officer
of American Internet. See the disclosure concerning Mr. Umile's
compensation at "EXECUTIVE COMPENSATION" above.
(6) Represents distributions of profits from American Internet received by Mr.
Gleason during the period starting on July 1, 1998 and ending on June 30,
1999. Until June 25, 1999, American Internet was subject to taxation under
Sub-Chapter S of the Internal Revenue Code of 1986, as amended.
(7) Represents distributions of profits from American Internet received by Mr.
Umile during the period starting on July 1, 1998 and ending on June 30,
1999. Until June 25, 1999, American Internet was subject to taxation under
Sub-Chapter S of the Internal Revenue Code of 1986, as amended.
(8) During the period starting on July 1, 1998 and ending on June 30, 1999,
Messrs. Gleason and Umile each received approximately $3,276 in benefits
from American Internet, involving insurance, health insurance and similar
perquisites.
OPTIONS AND STOCK APPRECIATION RIGHTS GRANTS TABLE
Quantity of Percentage of Total
Securities Options or Stock
Underlying Appreciation Exercise
Options & Stock Rights Granted or Base
Appreciation to Employees Price Per Expiration
Name Rights Granted In Fiscal Year Share Date
- ---- -------------- -------------- ----- ----
Edward Granville-Smith, Jr. None None Not Applicable Not Applicable
Charles J. Scimeca 200,000 shares 100% $0.02 December 31, 2000
AGGREGATED OPTION & STOCK APPRECIATION RIGHT EXERCISES AND FISCAL YEAR-END
OPTIONS & STOCK APPRECIATION RIGHTS VALUE TABLE
Number of
Securities
Underlying
Options & Value of
Stock Unexercised
Appreciation In-the-Money
Shares Rights at Options & Stock
Acquired Value Fiscal Appreciation Rights
Name On Exercise Realized Year End at Fiscal Year End
- ---- ----------- -------- -------- ------------------
Edward Granville-Smith, Jr. None None None None
Charles J. Scimeca None None * 200,000 Shares $298,000.00
- -------
* Mr. Scimeca transferred all of his rights to our company's securities,
including those reflected in this table, to Palmair, Inc., a Bahamian
corporation, with an address at 55 Frederick Street, Box CB-13039;
Nassau, Bahamas ("Palmair"). Chrisje Gentis-VerMeulen, an individual
with an address at Brouwrij 8; Breukelen (UTR) 3621, The Netherlands
("Ms. Gentis-VerMeulen"), is listed as the record stockholder and
director of Palmair.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS.
Employment Agreements During Fiscal Year Ended June 30, 1999
During the fiscal year that started on July 1, 1998 and ended on June 30,
1999, our company had no employment contracts, termination of employment or
change in control arrangements with any of its executive officers, except:
* Edward Granville-Smith, Jr.'s employment agreement, which was terminated
and settled by mutual agreement.
* Employment agreements between J. Bruce Gleason and Michael D. Umile and
American Internet inherited by our company in conjunction with the
acquisition but which were terminated and settled by mutual agreement.
Summaries of Current Employment Contracts:
Our company is currently a party to employment agreements with two current
executive officers, its president, Lawrence R. Van Etten, and its vice
president, treasurer and chief financial officer, David K. Cantley. The
following summary information is extracted from their agreements. A copy of the
Van Etten and Cantley employment agreements are filed as exhibits to this report
(see Part III, Item 13(c), Exhibits Required by Item 601 of Regulation SB.")
Mr. Van Etten:
Duties: Mr. Van Etten serves as our company's chief operating officer and is
responsible for supervision of all of our company's other officers;
for our company's compliance with all applicable laws, including
federal, state and local securities laws and tax laws; for supervision
of our company's subsidiaries; and, for performance of such other
duties as are assigned to him by our company's board of directors,
subject to compliance with all applicable laws and fiduciary
obligations.
Other Activities:
Mr. Van Etten must perform his employment duties in good faith and
must devote substantially all of his business time, energies and
abilities to the proper and efficient management and execution of such
duties.
Term: The Van Etten Agreement is for a term of one year, subject to
automatic annual renewal thereafter unless the Party deciding not to
renew provides the other with written notice of intention not to renew
prior to the 60th day before termination of the then effective term or
renewal thereof.
Compensation:
* An option to purchase up to 100,000 shares of our company's common
stock during the 36 month period commencing at the end of the 365th
day following commencement of the initial term of his employment
agreement, at $0.56 per share, provided
A. He remains in the employ of our company for a period of not less
than 365 consecutive days;
B. He has not been discharged by our company for cause;
C. He fully complies with the provisions of the employment agreement,
including, without limitation, the confidentiality and
non-competition sections thereof;
* In the event that Mr. Van Etten arranges or provides funding for our
company on terms more beneficial than those reflected in our company's
current principal financing agreements, copies of which are included
among our company's records available through the SEC's EDGAR web
site, Mr. Van Etten will be entitled, at his election, to either:
A. A fee equal to 5% of such savings, on a continuing basis; or
B. If equity funding is provided through Mr. Van Etten or any of his
affiliates, a discount of 5% from the bid price for the subject
equity securities if they are issuable as free trading
securities, or, a discount of 25% from the bid price for the
subject equity securities if they are issuable as restricted
securities (as the term restricted is used for purposes of SEC
Rule 144); and
C. If equity funding is arranged for our company by Mr. Van Etten
and our company is not obligated to pay any other source
compensation in conjunction therewith (other than the normal
commissions charged by broker dealers in securities in compliance
with the compensation guidelines of the NASD), Mr. Van Etten will
be entitled to a bonus in a sum equal to 5% of the net proceeds
of such funding.
* In the event that Mr. Van Etten generates business for our company,
then, on any sales resulting therefrom, Mr. Van Etten will be entitled
to a commission equal to 5% of the net income derived by our company
therefrom, on a continuing basis.
Mr. Cantley:
Duties: Mr. Cantley serves as our company's vice president, treasurer and
chief financial officer. As its only current vice president, he
assumes the duties of the president in the event of Mr. Van Etten's
unavailability. His most specific duties involve:
* Development and implementation of procedures to assure the timely
collection, preparation and filing of data in reports to the
Securities and Exchange Commission;
* Coordination of the internal accounting systems of our company's
subsidiaries;
* Interaction with our company's officers, directors, strategic
consultant, audit committee and independent auditors to assure the
establishment and maintenance of prudent financial and management
controls; and
* Evaluation of our company's subsidiaries' ongoing capital
requirements, monitoring of their operations and evaluation of their
progress in attaining goals established by our company's strategic
plan.
* Developing and implementing procedures for gathering, assembling and
interpreting all financial data pertaining to our company; preparation
of financial reports involving our company and its subsidiaries;
coordination of all financial information with our auditors and with
our board of directors; assisting our subsidiaries with preparation of
their projections and monitoring their financial progress;
investigating the financial condition of acquisition candidates and
making related recommendations; assisting our board of directors'
audit committee coordinating its activities with our auditors; keeping
our strategic consultant apprized of the economic status, prospects
and financial requirements of our company and its subsidiaries; and,
performing such other functions as may be delegated to him by our
board of directors.
Other Activities:
Mr. Cantley is required to devote his full business time to our
company's affairs and may not engage in other activities without the
prior consent of our board of directors (or of its executive committee
if the board of directors is not available).
Term: Mr. Cantley's employment is for a term ending on June 30, 2001, but
subject to automatic renewal on an annual basis thereafter unless the
party desiring not to renew provides the other with written notice of
intention not to renew with sixty days prior to the end of the term
then in effect. However, the board of directors may terminate the
agreement at any time, subject to Mr. Cantley's contractual remedies,
including rights to compensation.
Compensation:
Mr. Cantley is entitled to an annual salary of $80,000 and
* An option to purchase up to 50,000 shares of our company's common
stock during the 36 month period commencing at the end of the
365th day following commencement of the initial term of his
employment agreement, at $1.4325 per share, provided that:
A. He remains in the employ of our company for a period of not
less than 365 consecutive days;
B. He has not been discharged by our company for cause;
C. He fully complies with the provisions of the employment
agreement, including, without limitation, the
confidentiality and non-competition sections thereof;
* In the event that Mr. Cantley arranges or provides funding for
our company on terms more beneficial than those reflected in our
company's current principal financing agreements, copies of which
are included among our company's records available through the
SEC's EDGAR web site, Mr. Cantley will be entitled, at his
election, to either:
A. A fee equal to 5% of such savings, on a continuing basis; or
B. If equity funding is provided through Mr. Cantley or any of
his affiliates, a discount of 5% from the bid price for the
subject equity securities if they are issuable as free
trading securities, or, a discount of 25% from the bid price
for the subject equity securities if they are issuable as
restricted securities (as the term restricted is used for
purposes of SEC Rule 144); and
C. If equity funding is arranged for our company by Mr. Cantley
and our company is not obligated to pay any other source
compensation in conjunction therewith (other than the normal
commissions charged by broker dealers in securities in
compliance with the compensation guidelines of the NASD),
Mr. Cantley will be entitled to a bonus in a sum equal to 5%
of the net proceeds of such funding.
* In the event that Mr. Cantley generates business for our company,
then, on any sales resulting therefrom, Mr. Cantley will be
entitled to a commission equal to 5% of the net income derived by
our company therefrom, on a continuing basis.
On May 26, 2000 Yankees negotiated an agreement with Mr. Cantley
on our company's behalf, which was ratified on August 9, 2000 by
our company's board of directors, pursuant to which Mr. Cantley
was granted an option to purchase an additional 50,000 shares of
our company's common stock at $ 0.5625 per share, exercisable
during the period starting on February 17, 2001 and ending on
June 30, 2004.
Common Features:
Status: Messrs. Van Etten and Cantley serve as employees of our company
but have no authority to act as agents thereof or to bind our
company or its subsidiaries as principals or agents thereof
without the specific consent of our company's board of directors,
all such functions being reserved to the board of directors in
compliance with the requirements of our company's constituent
documents.
Limitations: Messrs. Van Etten and Cantley have each agreed that he will not:
* Release any financial or other material information or data
about our company without the prior written consent and
approval of our company's general counsel or conduct any
meetings with financial analysts without informing our
company's general counsel and board of directors in advance
of the proposed meeting and the format or agenda of such
meeting.
* Disclose to any third party any confidential non-public
information furnished by our company except on a need to
know basis, and in such case, subject to appropriate
assurances that such information will not be used, directly
or indirectly, in any manner that would violate state or
federal prohibitions on insider trading of our company's
securities.
* Take any action which would in any way adversely affect the
reputation, standing or prospects of our company or which
would cause our company to be in violation of applicable
laws.
In any circumstances where Messrs. Van Etten or Cantley are
describing the securities of our company to a third party,
they have agreed to disclose to such person any compensation
received from our company to the extent required under any
applicable laws, including, without limitation, Section
17(b) of the Securities Act of 1933, as amended.
Benefits: Messrs. Van Etten and Cantley are entitled to any benefits
generally made available to all other employees (rather than to a
specified employee or group of employees) of our company or its
subsidiaries.
Indemnification:
Our company has agreed to defend, indemnify and hold Messrs. Van
Etten and Cantley harmless from all liabilities, suits,
judgments, fines, penalties or disabilities, including expenses
associated directly, therewith (e.g. legal fees, court costs,
investigative costs, witness fees, etc.) resulting from any
reasonable actions taken by them in good faith on behalf of our
company, its affiliates or for other persons or entities at the
request of the board
of directors of our company, to the fullest extent legally
permitted, and in conjunction therewith, has agreed that it will
assure that all required expenditures are made in a manner making
it unnecessary for them to incur any out of pocket expenses;
provided, however, that Messrs. Van Etten and Cantley permit our
company to select and supervise all personnel involved in such
defense, that they waive any conflicts of interest that such
personnel may have as a result of also representing our company,
its stockholders or other personnel and that they agree to hold
them harmless from any matters involving such representation,
except such as involve fraud or bad faith.
Early termination:
Our company can terminate Messrs. Van Etten and Cantley's
employment agreements only, for cause (e.g., the inability
through sickness or other incapacity to discharge duties for 21
or more consecutive days or for a total of 45 or more days in a
period of twelve consecutive months; refusal to follow directions
of the board of directors; dishonesty; theft; or conviction of a
crime involving moral turpitude; material default in the
performance of obligations, services or duties required under the
employment agreement (other than for illness or incapacity) or
materially breach of any provision of the employment agreement,
which continues for 5 days after written notice, if it resulted
in material damage; discontinuance of business; and, death. In
the event of a dispute concerning termination due to breach or
default, compensation will be continued until resolution of such
dispute by a tribunal of competent jurisdiction, subject to
repayment upon final determination that such compensation was not
called for.
The employment agreements contains broad non-disparagement, confidentiality
and non-competition covenants (subject to judicial restructuring if found to be
legally unenforceable) which provide for both injunctive relief and liquidated
damages.
Compensation of Corporate Secretary
Our company has agreed to compensate Mrs. Lindsey for her services as
secretary until December 31, 2000, by granting her a non-qualified stock option
pursuant to our company's Stock Option Plan (described in our company's report
on Form 10-KSB for the fiscal year ended June 30, 1999) to purchase 15,000
shares of our company's common stock at a price of $1.28 per share (the closing
transaction price for our company's common stock on the date Mrs. Lindsey agreed
to serve in such capacity) exercisable during the period starting on January 1,
2001 and ending on December 31, 2002. Mrs. Lindsey will receive substantially
equivalent compensation for her services as a member of our company's board of
directors.
Compensation of Senior Subsidiary Officers
In addition to our company's agreements with its executive officers, WRI
has a materially similar agreement with Mr. Caputa) except for the compensation
provisions. Mr. Caputa is contractually entitled to an annual salary of $65,000
for his services as the president of WRI; however, due to its lack of cash flow,
Mr. Caputa has not been drawing his full salary.
Compensation of Directors
During the fiscal year that started on July 1, 1998 and ended on June 30,
1999, the members of our company's board of directors received the following
compensation:
* During November of 1998, Messrs. G. Richard Chamberlin and Anthony Q. Joffe
and Mrs. Penny Adams Field all received the rights to purchase 62,500
shares of our company's common stock at a price $0.02 per share, which they
immediately exercised. The right was originally granted by our company to
Yankees, but was used by Yankees to recruit Messrs. Chamberlin and Joffe
and Mrs. Field as members of our company's board of directors for the
period during which Yankees was not to receive hourly or licensing fees
under its consulting agreement with our company (i.e., until November 23,
1999). Mr. Chamberlin was allocated an additional 62,500 shares based on
his agreement to also serve as our company's secretary and general counsel
until November 23, 1999.
* During November of 1998, Mr. Charles J. Scimeca received an option to
purchase 200,000 shares of our company's common stock at an exercise price
of $0.02 per share, until December 31, 2000. Such option was granted,
without allocation, for his agreement to serve as our company's acting
president, and as a member of our company's board of directors, as well as
consideration for past services to our company during the tenure of Edward
Granville-Smith, Jr. as our company's sole director, president and chief
executive officer.
Neither J. Bruce Gleason nor Mark Granville-Smith received any compensation
for their services as directors of our company, rather, in each case, the
director obtained his membership pursuant to contractual arrangements that
obligated our company to elect them.
During the fiscal year that started on July 1, 1999 and ended on June 30,
2000, the members of our company's board of directors received the following
compensation:
Michael Jordan was elected as our company's president and as a member of
its board of directors, effective as of August 6, 1999. As compensation for all
of his roles with our company, Mr. Jordan was granted the compensation described
in the summary of his employment agreement (see "EXECUTIVE COMPENSATION").
Our company has agreed to compensate Mr. Lipson for his services as a
director and member of the audit and executive committees until December 31,
2000, by granting him a non-qualified stock option to purchase 50,000 shares of
our company's common stock at an exercise price of $1.0625 per share (the
closing transaction price for our company's common stock on the date Mr. Lipson
agreed to serve in such capacities). The option will be exercisable during the
period starting on January 1, 2001 and ending on December 31, 2002.
Based on a proposal by Yankees, subject to ratification by our company's
stockholders at the next annual meeting of stockholders, the board of directors
has passed a resolution providing that members of our company's board of
directors (except for Mr. Lipson who has a separate compensation agreement with
our company) who are not provided other compensation by our company's
subsidiaries, be compensated for their services during the period ending on
December 31, 2000, as follows:
* For basic service as a member of our company's board of directors, an
option to purchase 15,000 shares of our company's common stock during
the twelve month period commencing on January 1, 2001 and ending on
December 31, 2002, at an exercise price based on the last reported
transaction price for our company's common stock reported on the OTC
Bulletin Board on an appropriate measuring date, possibly the first
business day following the next annual meeting of our company's
stockholders. The options would vest as to 1,000 shares of the
underlying common stock per month.
* For service on the audit or executive committee, the option would be
increased by an additional 10,000 shares which would vest at the rate
of 800 shares per month; and
* For service as the chair of the audit or executive committee, the
option would be increased by an additional 5,000 shares which would
vest at the rate of 400 shares per month.
All of the foregoing options would require that the recipient comply on
a timely basis with all personal reporting obligations to the Commission
pertaining to his or her role with our company and that the recipient serve in
the designated position providing all of the services required thereby prudently
and in good faith until December 31, 2000 (unless such person was not elected to
such position by our company's stockholders despite a willingness and ability to
serve). In addition to the compensation described above, our company's directors
elected at the next annual meeting of stockholders will be entitled to the
following contingent compensation and right to indemnification:
(1) In the event that a member of our company's board of directors arranges
or provides funding for our company on terms more beneficial than those
reflected in our company's current principal financing agreements,
copies of which are included among our company's records available
through the SEC's EDGAR web site, the director will be entitled, at its
election, to either:
(1) A fee equal to 5% of such savings, on a continuing basis; or
(2) If equity funding is provided through the director or any
affiliates thereof, a discount of 5% from the bid price for the
subject equity securities, if they are issuable as free trading
securities, or, a discount of 25% from the bid price for the
subject equity securities, if they are issuable as restricted
securities (as the term restricted is used for purposes of SEC
Rule 144); and
(3) If equity funding is arranged for our company by the director and
our company is not obligated to pay any other source compensation
in conjunction therewith, other than the normal commissions
charged by broker dealers in securities in compliance with the
compensation guidelines of the NASD, the director will be
entitled to a bonus in a sum equal to 5% of the net proceeds of
such funding.
(4) In the event that the director generates business for our
company, then, on any sales resulting therefrom, the director
will be entitled to a commission equal to 5% of the net income
derived by our company therefrom, on a continuing basis.
Our company will defend, indemnify and hold the members of its board of
directors harmless from all liabilities, suits, judgments, fines, penalties or
disabilities, including expenses associated directly, therewith (e.g. legal
fees, court costs, investigative costs, witness fees, etc.) resulting from any
reasonable actions taken by him or her in good faith on behalf of our company,
its affiliates or for other persons or entities at the request of the board of
directors of our company, to the fullest extent legally permitted, and in
conjunction therewith, will assure that all required expenditures are made in a
manner making it unnecessary for the members of its board of directors to incur
any out of pocket expenses; provided, however, that director permits our company
to select and supervise all personnel involved in such defense and that director
waives any conflicts of interest that such personnel may have as a result of
also representing our company, its stockholders or other personnel and agrees to
hold them harmless from any matters involving such representation, except such
as involve fraud or bad faith.
At Yankees' recommendation, the board of directors has also resolved that
at such time as our company has, on a consolidated basis, earned a net, after
tax profit of at least $100,000 per quarter for four calendar quarters, our
company will:
* Obtain insurance to cover our company's indemnification obligations, if
available on terms deemed economically reasonable under the
circumstances, which do not materially, detrimentally affect our
company's liquidity at the time;
* Provide members of its board of directors who will not have overlapping
coverage with health and life insurance coverage, if available on terms
deemed economically reasonable under the circumstances, which do not
materially, detrimentally affect our company's liquidity at the time;
and
* Pay $500 per diem cash allowance for all meetings or functions attended
in person rather than by telephone or similar means at the request of
our company to all members of the board of directors who are not also
officers or employees of our company or its subsidiaries.
All of the foregoing are reflected in a form of "agreement to serve as a
corporate director" that each director nominee will have signed prior to the
next annual meeting of stockholders, except that the stock bonus provisions will
not apply to Messrs. Van Etten, Cantley and Caputa who have different
compensation arrangements with our company, or WRI and that a portion of the
non-stock option compensation was covered in Mr. Jordan's employment agreement.
Copies of the executed agreements will be filed as exhibits to our company's
quarterly report on Form 10-QSB or current report on Form 8-K first filed with
the Commission following the next annual meeting of stockholders.
REPORT OF RE-PRICING OF OPTIONS OR STOCK APPRECIATION RIGHTS
During the period commencing on July 1, 1998 and ending on the date of this
Report, our company has not adjusted or amended the exercise price of stock
options or stock appreciation rights previously awarded to any of the named
directors or executive officers, whether through amendment, cancellation or
replacement grants, or any other means, nor are any such adjustments or
amendments currently contemplated.
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Our company's only currently outstanding voting securities are 12,465,172
shares of common stock, $0.01 par value, held by approximately 2,280 registered
holders of record and approximately 1,500 additional holders whose securities
are registered in "street name" (e.g., held in the names of brokers or dealers
in securities or their designees, the Depository Trust Company, etc.). The
following tables disclose information concerning ownership of our company's
common stock by officers, directors and principal stockholders (holders of 5% or
more of our company's common stock). All footnotes follow the second table. Our
company's currently outstanding shares of common stock, for purposes of these
calculations, are calculated based on information available as of June 30, 2000,
and include both currently outstanding securities and securities which a named
person has a right to acquire within 60 days following the date of this Report.
Consequently, the number of shares deemed outstanding for purposes of Table A
will vary materially from those deemed outstanding for purposes of Table B.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of June 30, 2000, the following persons (including any "group") are,
based on information available to our company, beneficial owners of more than
five percent of our company's common stock (its only class of voting
securities). Of the number of shares shown in column 3, the associated footnotes
indicate the amount of shares with respect to which such persons have the right
to acquire beneficial ownership as specified in Commission Rule 13(d)(1), within
60 days following the date of this Report. For purposes of Table A, 14,622,905
shares of our company's common stock are assumed to be outstanding. Footnotes
follow Table B.
Table A; Principal Stockholders:
Amount
and Nature Percent
Title Of Beneficial of
Of Class(1) Name and Address of Beneficial Owner Ownership Class
- ----------- ------------------------------------ ---------- -----
Common The Yankee Companies, Inc. (4) 3,835,867 26%
2500 North Military Trail, Suite 225; Boca Raton, Florida 33431
Common The Tucker Family (5) 875,500 6%
2500 North Military Trail, Suite 225; Boca Raton, Florida 33431
Common Jerry C. Spellman (6) 809,190 5.5%
2510 Virginia Avenue, NW; Washington, D.C. 20037
Common Edward Granville-Smith, Jr. (7) 803,988 5.4%
3821-B Tamiami Trail, Suite 201; Port Charlotte, Florida, 33952
SECURITY OWNERSHIP OF MANAGEMENT
As of June 30, 2000, the following Table discloses our company's common
stock (the only outstanding voting class of equity securities for our company,
its parents or subsidiaries held by persons other than our company) other than
directors' qualifying shares, beneficially owned by all directors and nominees,
naming them each; each of the named executive officers as defined in Item 402(a)
of Commission Regulation S-B; and, all directors and executive officers of our
company as a group, without naming them. The table shows in column 3 the total
number of shares beneficially owned and in column 4 the percent owned. Of the
number of shares shown in column 2, the associated footnotes indicate the amount
of shares, if any, with respect to which such persons have the right to acquire
beneficial ownership as specified in Commission Rule 13(d)(1), within 60 days
following the date of this Report. For purposes of this Table, 12,565,172 shares
of our company's common stock are assumed to be outstanding, including shares
subject to options to acquire shares of our company's common stock exercisable
within the next 60 days. Footnotes for Table A and Table B follow this Table.
Table B; Security Ownership of Management:
Name and Address of Amount Nature of Percent
Beneficial Of Equity Beneficial of
Owner Owned (1) Ownership Class
- ----- -------- -------- -----
Charles J. Scimeca None (8) None 0.00%
320 Island Way, Number 210; Clearwater, Florida 33767
Michael Jordan 100,000 (9)(19) (2) 0.08%
21131 Northeast 24th Court; Miami, Florida 33180
G. Richard Chamberlin 145,000 (10)(19) (2) 0.1%
3660 Northeast 42nd Lane; Ocala, Florida 34479
Penny Adams Field 62,500 (11) (2) 0.04%
2424 Longboat Drive; Naples, Florida 34104
Anthony Q. Joffe 62,500 (12)(19) (2) 0.04%
101 Southeast 11th Avenue; Boca Raton, Florida 33486
Saul B. Lipson None (13) None 0.0%
1515 University Drive, Suite 222; Coral Springs, Florida 33071
Edward C. Dmytryk None (19) None 0.0%
707 Kyle Drive; Arlington, Texas 76011
Michael A. Caputa 500,380 (14) (2) 0.4%
7526 Silverwoods Court; Boca Raton, Florida 33433-3336
J. Bruce Gleason 172,702(15) (2) 0.1%
46 Havenwood Drive; Pompano Beach, Florida 33064
Mark Granville-Smith
10460 Dumfries Road, Suite 121; Manassas, Virginia 20110 20,000(16) (3) 0.01%
Vanessa Lindsey 13,500(17)(19) (3) 0.01%
1723 Northeast 36th Avenue, Number 5, Ocala, Florida 34470
David K. Cantley 86,667(18)(19) (2) 0.06%
4197 Southeast Bayview Street; Stuart Florida 34497
Lawrence R. Van Etten
1601 North 15th Terrace; Hollywood, Florida 33020 111,000(19) (2) 0.08%
All officers and directors as a group (25) 1,274,249 (2) 10%
Footnotes to Tables A and B.
(1) The only classes of our company's outstanding voting securities are
common stock and Class A Preferred Stock, however, no Class A Preferred
Stock was outstanding as of June 30, 2000.
(2) Record and beneficial ownership.
(3) Actual control and beneficial ownership.
(4) The Yankee Companies, Inc., a Florida corporation, is owned in equal
shares by members of the Calvo and Tucker families. Consequently, half
of its securities should be attributed beneficially to the Calvo
family and half to the Tucker family. See Notes (5) for additional
shares attributable to the Tucker and Calvo Families. The shares
listed include shares issuable on exercise of Yankees' warrant rights
under its consulting agreement with our company to purchase 12.5% of
our company's outstanding and reserved common stock but does not
include shares that Yankees may obtain in the future based on the
performance of our company's subsidiaries since they are not issuable
within the next 60 days. The Calvo Family is comprised of Cyndi N.
Calvo, William A. Calvo, III, her husband, and their three minor
children, William, Alexander and Edward and an additional 560,500
shares are held by the Calvo Family Spendthrift Trust, a Florida trust
created in February of 1986, for the benefit of the members of the
Calvo Family. Mr. and Mrs. Calvo serve as trustees. Mr. Calvo serves
as the vice president of Yankees and he and his family collectively
own 50% of its equity securities.
(5) The Tucker family is comprised of Michelle Tucker, her husband Leonard
Miles Tucker and Shayna and Montana, their minor daughters. Mrs.
Tucker holds 108,750 of the shares in trust for each of her minor
daughters and the balance of the shares are held by Blue Lake Capital
Corp., a Florida corporation owned by Mrs. Tucker. Mr. Tucker serves
as the president of Yankees and he or his family own 50% of its equity
securities, consequently, 50% of our company's securities held or
attributed to Yankees should be attributed to the Tucker family, see
note (4). Mr. Tucker also serves as president of Carrington Capital
Corp., a Florida corporation which holds 28,000 shares of our
company's common stock (included in the Tucker Family's shares
listed).
(6) Record ownership is held by Bolina Trading Co., S.A., a Panamanian
corporation, except with reference to 2,701 shares (2400 shares of
record held by Mr. Spellman personally and 301 shares held of record
by First Investment Planning Company). Mr. Spellman is the managing
director of Bolina Trading Co., S.A., and a frequent business partner
and advisor to Mr. Edward Granville-Smith, Jr.
(7) Record ownership is held by K. Walker International, Ltd., a Bahamian
corporation. Mr. Edward Granville- Smith, Jr., formerly served as our
company's director, president and chief executive officer.
(8) All such shares acquired by Charles J. Scimeca, who in the past has
served as our company's secretary and president, and, as a member of
its board of directors, transferred his shares and options to Palmair,
Inc. Palmair, Inc., is a Bahamian corporation, with an address at 55
Frederick Street, Box CB-13039; Nassau, Bahamas ("Palmair"). Chrisje
Gentis-VerMeulen, an individual with an address at Brouwrij 8;
Breukelen (UTR) 3621, The Netherlands ("Ms. Gentis-VerMeulen"), is
listed as the record stockholder and director of Palmair. The shares
listed include an option to purchase 200,000 shares of our company's
common stock at $0.02 per share until December 31, 2000.
(9) Mr. Jordan serves as a member of our company's board of directors and
served as our company's president until May 22, 2000. Mr. Jordan's
interest includes 100,000 shares of our company's common stock that
Mr. Jordan is entitled to purchase pursuant to the terms of his
employment agreement.
(10) Mr. Chamberlin serves as a member of our company's board of directors
and served as our company's general counsel until March 31, 2000. He
also served as our company's secretary until November 11, 1999. Mr.
Chamberlin received his right to purchase common stock in
consideration for agreeing to serve as our company's general counsel
and secretary and as a member of our company's board of directors
during the past year.
(11) Mr. Joffe serve as members of our company's board of directors and as
members of its audit committee. Mrs. Field formerly served as a member
of our company's board of directors and formerly served on its audit
committee, which she chaired until March of 2000. They received their
right to purchase shares of our company's common stock in
consideration for agreeing to serve as members of our company's board
of directors and the audit committee thereof during the past year.
(12) On November 4, 1999, Mr. Lipson was elected as a member of our
company's board of directors, as the chair of its audit committee, as
a member of its executive committee and has been recommended by
Yankees as a member of the regulatory affairs committee to be selected
by the board of directors elected at the next annual meeting of
stockholders. In consideration for his agreement to provide such
services until December 31, 2000, he has been granted an option to
acquire 50,000 shares of our company's common stock at an exercise
price of $1.0625 per share (the closing transaction price for our
company's common stock on the date Mr. Lipson agreed to serve in such
capacities), exercisable during the period starting on January 1, 2001
and ending on December 31, 2002.
(13) Mr. Caputa acquired his shares of our company's common stock as a
result of the merger of WRI into American Internet. The shares do not
include up to 150,000 shares which the former stockholders of WRI may
obtain over the three year period ending on June 30, 2002, based on
WRI's net pretax profits during such period because they will not be
obtained during the next 60 days. Mr. Caputa serves as a member of our
company's and WRI's boards of directors and as the president of WRI.
(14) Mr. Gleason serves as a member of our company's board of directors and
formerly served as the president of its American Internet subsidiary.
He obtained his shares in consideration for all of his capital stock
in American Internet.
(15) Mr. Mark Granville-Smith served as a member of our company's board of
directors from July 1, 1999 until September 17, 1999, when he resigned
for personal reasons. On March 26, 1999, our company issued 20,000
shares of its common stock to the Mark Granville-Smith Trust, in
consideration for undefined consulting and bookkeeping services for
the benefit of our company. The shares were issued at the direction of
Edward Granville-Smith, Jr., then our company's sole director and Mark
Granville-Smith's father.
(16) The foregoing does not include options to purchase 15,000 shares of
our company's common stock which she received as consideration for her
services as our company's corporate secretary. The options are
exercisable at a price of $1.28 per share from January 21, 2001 until
December 31, 2002.
(17) Shares issued to Mr. Cantley in exchange for his old Trilogy shares
pursuant to the terms of the Trilogy Acquisition. (see "Item 1, Part
1, Description of Business- Trilogy International, Inc").
(18) Shares issued to Mr. Van Etten from shares of our company's common
stock which is owned by Yankees
(19) The shares listed do not include shares of our company's common stock
to which such person may become entitled if the Directors'
Compensation Plan to be considered at our company's next annual
meeting of stockholders to which this Report relates is adopted.
Changes in Control
Please see "EXECUTIVE OFFICERS AND DIRECTORS - CURRENT MANAGEMENT" for a
discussion of how current management assumed control of our company starting in
November of 1998. As a result of the investments by Yankees and equity
compensation to which Yankees is entitled under its consulting agreement with
our company, our company's acquisitions during the past year, currently
contemplated acquisitions and investments by Xcel Associates, Inc., a New Jersey
corporation, our company's former principal stockholders (Mr. Granville-Smith
and his associate, Jerry C. Spellman) can no longer control decisions by our
company's stockholders, although they fully support our company's current
management. No current stockholder or group of related stockholders currently
has the ability to control the affairs of our company; however, stockholders
involved in management of our company or its subsidiaries, together with the
former stockholders of its subsidiaries, when coupled with our company's
strategic consultant and Messrs. Granville- Smith and Spellman, control more
than 50% of our company's common stock and have the ability to pass the matters
to be acted on at the annual stockholders meeting to which this Report pertains,
without the affirmative vote of any other stockholders.
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Family Relationships
There are no family relationships among the current officers and directors
of our company. However:
* Carol A. Berardi and Dennis A. Berardi, former members of our
company's board of directors, of Trilogy's board of directors and
Trilogy's principal executive officers husband and wife;
* Teri E. Nadler and Scott D. Ugell, Esquire, members of Vista's board
of directors and Vista's principal executive officers are brother and
sister; and
* Gerald R. Cunningham and Leigh A. Cunningham, former members of
Lorilei's board of directors and Lorilei's former principal executive
officers are husband and wife.
Materially Adverse Proceedings
Our company is not aware of any proceedings involving its executive
officers or directors adverse to our company's interests.
Involvement in Certain Legal Proceedings
Based on information provided to our company's legal counsel, during the
five year period ending on June 30, 2000, no current director, person nominated
to become a director, executive officer, promoter or control person of our
company has been a party to or the subject of:
* Any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
* Any conviction in a criminal proceeding or pending criminal proceeding
(excluding traffic violations and other minor offenses);
* Any order, judgment, or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting their involvement in
any type of business, securities or banking activities; or,
* Been found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or vacated.
Our Company's Parents
As defined in Rule 405 of Commission Regulation C, a "parent" of a
specified person is an affiliate controlling such person directly or indirectly
through one or more intermediaries. The same rule defines an affiliate as a
person that directly or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the person specified.
Based on such definitions, our company does not believe that it has any
"parents." However:
* Pursuant to its duties under its consulting Agreement with our company,
Yankees has recruited all of our company's current officers and directors
and has negotiated all of our company's companies completed and pending
acquisitions on our company's behalf. Yankees has confirmed to our
company's board of directors that Yankees does not exercise any control
over our company's officers or directors other than through persuasion when
its personnel advocate a course of action or recommend personnel or
potential acquisitions to our company's board of directors, and, through
Yankees willingness in the past to provide funds required by our company.
* The five persons currently holding the largest amount of our company's
outstanding common stock listed in order of quantity held, are: Yankees
(3,114,134 shares including all shares held by the Tucker Family and the
Calvo Family); Bolina Trading Co., S.A. (809,190 shares, including the
shares held by Jerry C. Spellman); K. Walker International, Ltd. (803,988
shares); Palmair, Inc. (565,200 shares); and, Michael A. Caputa (500,380
shares). Such persons are, for purposes of convenience in this discussion,
collectively referred to as the "Largest Stockholders' Group."
Our company has been informed that there are no direct or indirect
arrangements or understandings between the members of the Largest Stockholders'
Group to act in concert for purposes of controlling our company. Notwithstanding
such position, in the event that our company engaged on a course of action that
any of the foregoing stockholders found unacceptable, like any other
stockholders, it is likely that they would seek to protect their interests in
our company through available stockholder action, including derivative
litigation or stockholder resolutions, in which case it is probable that two or
more of the foregoing stockholders would act in concert for such purposes.
Certain Business Relationships
Except as specifically set forth below, during the last fiscal year none of
our company's directors or nominees for director:
(1) Is, or during the last fiscal year has been, an executive officer of,
or owns, or during the last fiscal year has owned, of record or
beneficially in excess of ten percent equity interest in, any business
or professional entity that has made during our company's last full
fiscal year, or proposes to make during our company's current fiscal
year, payments to our company or its subsidiaries for property or
services in excess of five percent of (i) our company's consolidated
gross revenues for its last full fiscal year, or (ii) the other
entity's consolidated gross revenues for its last full fiscal year;
(2) Is, or during the last fiscal year has been, an executive officer of,
or owns, or during the last fiscal year has owned, of record or
beneficially in excess of ten percent equity interest in, any business
or professional entity to which our company or its subsidiaries has
made during our company's last full fiscal year, or proposes to make
during our company's current fiscal year, payments for property or
services in excess of five percent of (i) our company's consolidated
gross revenues for its last full fiscal year, or (ii) the other
entity's consolidated gross revenues for its last full fiscal year;
(3) Is, or during the last fiscal year has been, an executive officer of,
or owns, or during the last fiscal year has owned, of record or
beneficially in excess of ten percent equity interest in, any business
or professional entity to which our company or its subsidiaries was
indebted at the end of our company's last full fiscal year in an
aggregate amount in excess of five percent of our company's total
consolidated assets at the end of such fiscal year;
(4) Is, or during the last fiscal year has been, a member of, or of counsel
to, a law firm that the issuer has retained during the last fiscal year
or proposes to retain during the current fiscal year, which has or is
expected to result in payment of fees exceeding five percent of the law
firm's gross revenues for that firm's last full fiscal year;
(5) Is, or during the last fiscal year has been, a partner or executive
officer of any investment banking firm that has performed services for
our company, other than as a participating underwriter in a syndicate,
during the last fiscal year or that our company proposes to have
perform services during the current year and the dollar amount of
compensation received by an investment banking firm exceeded or is
expected to exceed five percent of the investment banking firm's
consolidated gross revenues for that firm's last full fiscal year; or
(6) Is, or during the last fiscal year has been involved in any other
relationships that our company is aware of between the nominee or
director and our company that is or was substantially similar in nature
and scope to those relationships listed in paragraphs (1) through (5).
Nature of Amount
Relationship to Interest in the of Such
Name our Company Transaction Interest
G. Richard Chamberlin Director & executive Subscription for common stock. See
"EXECUTIVE COMPENSATION" for details.
Edward Granville-Smith, Jr. Director See "EXECUTIVE COMPENSATION" for details.
Our company's board of directors did not feel
that the transaction was fair to our company,
since Mr. Granville-Smith and Jerry C.
Spellman, an associate of Mr. Granville-Smith
refused to return any of the shares they had
received for originally transferring the real
estate operations to our company; however,
our company's board of directors determined
that under the circumstances the settlement
with Mr. Granville-Smith was in the best
interest of our company. In addition, as also
disclosed at "EXECUTIVE COMPENSATION,"
Mr. Granville-Smith received $5,000 from our
company as repayment for unaccounted
expenses that he claimed to have made on
behalf of our company but could not
document. Certain of those payments were a
condition to Mr. Granville-Smith's agreement
to enter into the settlement agreement with our
company.
Michael A. Caputa Director An Option permitting him to acquire between
70% to 80% of WRI's common stock (see "BACKGROUND-
THE ACQUISITION OF WRIWEBS.COM, INC.").
The foregoing table does not include disclosure of compensation received or
anticipated by directors or director nominees solely in conjunction with the
exchange of shares in companies acquired by our company for shares of our
company's companies common stock.
ITEM 13 EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-B
The exhibits listed below and designated as filed herewith (rather than
incorporated by reference) follow the signature page in sequential order.
DESIGNATION PAGE
OF EXHIBIT NUMBER
AS SET FORTH OR SOURCE OF
IN ITEM 601 OF INCORPORATION
REGULATION S-B BY REFERENCE DESCRIPTION
(1) * Underwriting Agreement
(2) Plan of acquisition, reorganization, arrangement,
liquidation or succession:
.5 (2)-1 General Release with Jerry C. Spellman
.7 (2)-2 Settlement agreement with Edward Granville-Smith
.11 (2)-3 Rescission agreement between Ascot and American
Internet, dated July 9, 1999
.12 (2)-4 Reorganization agreement dated June 25, 1999,
between our company and
American Internet Technical Centers, Inc.,
and exhibits.
.13 (2)-5 First amendment to reorganization agreement with
American Internet
.14 (2)-6 Second Amendment to American Internet
Reorganization Agreement.
.15 (2)-5 Plan and agreement of merger dated November 11, 1999
between American
Internet Technical Center, Inc. and Wriwebs.com,
Inc., and exhibits.
.16 (2)-6 Agreement and Plan of Merger dated December 2, 1999
between our company,
Trilogy and Trilogy Acquisition Corporation, and
exhibits.
.17 (2)-7 Reorganization Agreement dated March 12, 2000
between our company and Vacations, International,
Inc., and exhibits.
.18 (2)-8 Reorganization Agreement dated May 11, 2000
between our company and Lorilei
Communications, Inc., and exhibits.
(3) (i) Articles of incorporation:
.1 (3)-1 Our company's certificate of incorporation, as
of December 8, 1964
.2 (3)-2 Amendment to our company's certificate of
incorporation, dated July 5, 1995.
.3 (3)-3 Amendment to our company's certificate of
incorporation, dated July 7, 1999.
.9 ___ Certificate of Designation Preferences & Rights
of Class A Preferred Stock, dated
July 3, 2000.
(ii) Bylaws:
.2 (3)-4 Amended & Restated Bylaws as of December, 1998.
.3 (3)-5 Amended & Restated Bylaws as of December 1999.
(4) Instruments defining the rights of holders
including indentures:
.1 (4)-1 Form of class A, series A, subordinated
convertible debentures
.2 (4)-1 Form of subscription agreement to class A,
Series A, subordinated convertible
Debentures
.3 (4)-2 Letter agreement between our company and the
subscribers for class A, series A,
subordinated convertible debentures,
changing the subscription to a subscription
for common stock
.4 (4)-2 Xcel Warrant Agreement
.5 ___ Our company's Non-qualified and Stock Option
Incentive Plan for 2000.
(5) * Opinion re: legality
(8) * Opinion re: tax matters
(9) Voting trust agreement
.1 (9)-1 Lock-up and voting agreement
.2 (9)-2 First amendment to lock-up and voting
agreement
.3 (9)-3 Second Amendment to Lock-up and Voting
Agreement.
.4 (9)-4 Third Amendment to Lock-up and Voting
Agreement.
.5 (9)-5 Fourth Amendment to Lock Up and Voting
Agreement.
(10) Material Contracts [since June 30, 1998]
.22 (10)-4 Subscription agreements with new subscribers
and new officers and directors
.23 (10)-4 Consulting agreement with The Yankee
Companies, Inc.
.24 (10)-4 Recent Settlements and Releases with
creditors.
.26 (10)-4 Stock Purchase Option Agreement with Mr.
Scimeca.
.27 (10)-5 Calvo Settlement Agreement
.29 (10)-15 Engagement agreement for 1998 audit with
Bowman & Bowman, P.A., certified
public accountants.
.30 (10)-6 Calvo amended settlement agreement,
dated February 18, 1999.
.31 (10)-6 Consulting Agreement with Funds America
Finance Corporation, dated May 7, 1999.
.32 (10)-7 Our company's engagement agreement with
Daszkal, Bolton & Manela, P.A.,
certified public accountants, dated July 9,
1999.
.33 (10)-8 American Internet employment agreement
with J. Bruce Gleason.
.34 (10)-9 American Internet employment agreement
with Michael D. Umile.
.35 (10)-10 Our company's employment agreement with
Carmen Piccolo.
.36 (10)-11 Distributor agreement between American
Internet and Education to Go, dated
August 4, 1998.
.37 (10)-12 Michael Harris Jordan employment agreement
.38 (10)-13 Xcel and American Internet Promissory Note
.39 (10)-14 Loan Guarantee and Indemnification Agreement
between Xcel Associates, Inc.
and The Yankee Companies, Inc.
.40 (10)-16 First amendment to Yankees Consulting
Agreement, dated November 23, 1999.
.41 (10)-16 First Amendment to Yankee Warrant Agreement,
dated November 23, 1999.
.44 (10)17 Yankees Loan Agreement
.55 (10)-18 License Agreement with Yankees
.56 ___ Employment Agreement with Lawrence R. Van
Etten
.57 ___ Employment Agreement with David K. Cantley
.58 ___ Asset Purchase Agreement between Lorilei
Communications, inc, AmeriNet
Communications, Inc. and our company.
(11) (11) Statement re computation of per share earnings
(13) * Annual or quarterly reports, Form 10-QSB:
(15) * Letter on unaudited interim financial
information
(16) ** Letter on change in certifying accountant
(17) ** Letter on director resignation:
(18) ** Letter re change in accounting principals
(19) * Reports furnished to security holders
(20) ** Other documents or statements to security
holders or any document incorporated
by reference
(21) (21) Subsidiaries of our company
(22) ** Published report regarding matters submitted
to vote
(23) Consent of experts and counsel
.5 ___ Consent of Daszkal, Bolton & Manela, P.A.
Certified Public Accountants re audit
for year ending June 30, 2000
(23) * Statement re eligibility of trustee
(24) * Invitation for competitive bids
(25) ___ Financial data schedule
(99) Additional Exhibits
- -------
* Not applicable
** None
(2)-1 Incorporated by reference, as permitted by Commission Rule 12b-23,from
"Part III, Item 13(c), Exhibits," from the correspondingly numbered
exhibit filed with our company's report on Form 10- KSB for the year
ended December 31, 1998.
(2)-2 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Part III, Item 13(a), Exhibits," from exhibit 2.4 filed with our
company's report on Form 10-KSB for the year ended December 31,1998.
(2)-3 Incorporated by reference, as permitted by Commission Rule 12b-23,
from "Item 7(c), Exhibits," from exhibit 2.7 filed with our company's
report on Form 8-K filed with the Commission on July 12, 1999.
(2)-4 Incorporated by reference, as permitted by Commission Rule 12b-23,
from "Item 7(c), Exhibits," from exhibit 2.8 filed with our company's
report on Form 8-K filed with the Commission on July 12, 1999.
(2)-5 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from exhibit 10.40 filed with our company's
report on Form 8-K filed with the Commission on September 9, 1999.
(2)-6 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Part II, Item 6, Exhibits," from the correspondingly numbered exhibit
filed with the our company's report on Form 10- QSB for the quarter
ended September 30, 1998.
(2)-7 Incorporated by reference, as permitted by Commission Rule 12b-23,
from "Item 7(c), Exhibits," from exhibit 2.14 filed with our company's
report on Form 8-K filed with the Commission on December 16,
1999.
(2)-8 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from the correspondingly numbered exhibit filed
with the our company's report on Form 8-K filed with the Commission on
March 29, 2000.
(2)-9 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from the correspondingly numbered exhibit filed
with the our company's report on Form 8-K filed with the Commission on
May 30, 2000.
(3)-1 Incorporated by reference, as permitted by Commission Rule 12b-23,from
"Part III, Item 13(c), Exhibits," from the correspondingly numbered
exhibit filed with our company's report on Form 10- KSB for the year
ended December 31, 1991.
(3)-2 Incorporated by reference, as permitted by Commission Rule 12b-23,from
"Part III, Item 13(c), Exhibits," from the correspondingly numbered
exhibit filed with our company's report on Form 10- KSB for the year
ended December 31, 1999.
(3)-3 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from the correspondingly numbered exhibit filed
with the our company's report on Form 8-K filed with the Commission on
July 12, 1999.
(3)-4 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Part II, Item 6, Exhibits," from the correspondingly numbered exhibit
filed with the our company's report on Form 10- QSB for the quarter
ended September 30, 1998.
(3)-5 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from the correspondingly numbered exhibit filed
with the our company's report on Form 8-K filed with the Commission on
December 16, 1999.
(4)-1 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from exhibit 4.11 and 4.12 filed with our
company's report on Form 8-K filed with the Commission on July 12,
1999.
(4)-2 Incorporated by reference, as permitted by Commission Rule 12b-23,from
"Part III, Item 13(c), Exhibits," from the correspondingly numbered
exhibit filed with our company's report on Form 10- KSB for the year
ended December 31, 1999.
(9)-1 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from exhibit 10.33 filed with our company's
report on Form 8-K filed with the Commission on July 12,1999.
(9)-2 Incorporated by reference, as permitted by Commission Rule 12b-23,from
"Part III, Item 13(c), Exhibits," from the correspondingly numbered
exhibit filed with our company's report on Form 10- KSB for the year
ended December 31, 1999.
(9)-3 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 6, Exhibits," from the correspondingly numbered exhibit filed
with our company's report on Form 10-QSB for the period ended September
30, 1999, filed with the Commission on November 19, 1998.
(9)-4 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 6, Exhibits," from the correspondingly numbered exhibit filed
with our company's report on Form 10-QSB for the period ended September
30, 1999, filed with the Commission on November 19, 1998.
(9)-5 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 6, Exhibits," from the correspondingly numbered exhibit filed
with our company's report on Form 10-QSB for the period ended December
31, 1999, filed with the Commission on February 14, 2000.
(10)-1 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 13(c), Exhibits," from the correspondingly numbered exhibit filed
with our company's report on Form 10-KSB/A for the year ended December
31, 1994.
(10)-2 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7, Exhibits," from the correspondingly numbered exhibit filed
with the our company's report on Form 8-K filed with the Commission on
September 9, 1997.
(10)-3 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 13(c), Exhibits," from the correspondingly numbered exhibit filed
with the our company's report on Form 10-KSB for the year ended
December 31, 1996.
(10)-4 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 6, Exhibits," from the correspondingly numbered exhibit filed
with our company's report on Form 10-QSB for the period ended September
30, 1998, filed with the Commission on December 17, 1998.
(10)-5 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from the correspondingly numbered exhibit filed
with the our company's report on Form 8-K filed with the Commission on
March 5, 1998.
(10)-6 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 13(a), Exhibits," from the correspondingly numbered exhibit filed
with the our company's report on Form 10-KSB for the year ended
December 31, 1998, filed with the Commission on May 26, 1999.
(10)-7 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from exhibit 10.34 filed with our company's
report on Form 8-K filed with the Commission on July 12, 1999.
(10)-8 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from exhibit 10.35 filed with our company's
report on Form 8-K filed with the Commission on July 12, 1999.
(10)-9 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from exhibit 10.35 filed with our company's
report on Form 8-K filed with the Commission on July 12, 1999.
(10)-10 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from exhibit 10.36 filed with our company's
report on Form 8-K filed with the Commission on July 12, 1999.
(10)-11 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from exhibit 10.37 filed with our company's
report on Form 8-K filed with the Commission on July 12, 1999.
(10)-12 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from exhibit 10.39 filed with our company's
report on Form 8-K filed with the Commission on August 24, 1999.
(10)-13 Incorporated by reference, as permitted by Commission Rule 12b-23,from
"Item 7(c), Exhibits," from exhibit 10.39 filed with our company's
report on Form 8-K filed with the Commission on August 24, 1999.
(10)-14 Incorporated by reference, as permitted by Commission Rule 12b-23,from
"Item 13, Exhibits," from exhibit 10.38 and 10.39 filed with our
company's report on Form 10-KSB for the year ended June 30, 1999.
(10)-15 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 13(a), Exhibits," from the correspondingly numbered exhibit filed
with the our company's report on Form 10-KSB for the year ended
December 31, 1999.
(10)-16 Incorporated by reference, as permitted by Commission Rule 12b-23, from
"Item 7(c), Exhibits," from the correspondingly numbered exhibit filed
with the our company's report on Form 8-K filed with the Commission on
December 12, 1999.
(11) Incorporated by reference, as permitted by Commission Rule 12b-23, from
" Part II, Item 7, Note __@@ of Financial Statements, for our company,
of this report, at page __@@.
(17)-1 Incorporated by reference, as permitted by Commission Rule 12b-23, from
Item 7(c) of our company's report on Form 8-K filed with the Commission
on August 24, 1999.
(21) Incorporated by reference, as permitted by Commission Rule 12b-23,
from "Additional Information," at page ---@@.
* REPORTS ON FORM 8-K FILED DURING QUARTER ENDED JUNE 30, 1999
During the calendar year ended June 30, 2000, our company filed the
following reports on Form 8-K with the Commission:
FINANCIAL
ITEMS REPORTED STATEMENTS INCLUDED DATE FILED
1, 2, 4, 5, 7 and 8 None July 12, 1999
4 and 7 (amendments) None August 18, 1999
5, 6 and 7 None August 24, 1999
5, 6 and 7 (amendment) None September 9, 1999
4 and 7 (amendment) None September 9, 1999
2 and 7 (amendment) American Internet Technical Center, Inc. April 15, 1998 September 9, 1999
to December 31, 1998 audited and pro forma statements
as required by Regulation S-B as a result of its
acquisition on June 25, 1999.
2,5 and 7 Trilogy International, Inc. May 1, 1998 to September 30, December 16, 1999
1999 certified financial statements and pro forma
statements as required by Regulation S-B as a
result of its acquisition on December 2, 1999.
5, and 7(a)(b) Wriwebs.com, Inc. audited financial statements for the January 26, 2000
Years ended December 31, 1999 and Unaudited Financial
Statements for the nine months ended September 30,
1999 and our company's pro forma combined balance sheet
at December 31, 1998 and combined statements of
operations for the 12 months ended 12-31-98, for the
3 and 6 months ended 9-30-99.
5 and 7(a) (amendment) Trilogy International, Inc. audited financial statements February 8, 2000
for the years ended December 31, 1998 and Unaudited
Financial Statements for the nine months ended September
30, 1999 and our company's Pro forma combined balance
sheet for the 12 months ended 12-31-98 and combined
statements of operation for the 6 months ended 6-30-99
and 3 months ended 9-30-99.
5 and 7(a)(b)(amended) Audited financial statements of WRI for the years ended March 3, 2000
December 31, 1998 and Unaudited Financial statements
For the nine months ended September 30, 1999 and Our
Company's proforma combined balance sheet for the 12
Months ended 12-31-98 and combined statements of operation
For the 3 months ended 9-30-99 and 6 months ended 6-30-99.
303,5 and 7(b)(amended) Proforma combined balance sheet at
12-31-98,combined March 8, 2000 statements of
operations for 6 months ended 6-30-99 and 3 months
ended 9-30-99.
1,5 and 7(c) None March 29, 2000
1, 2, 3.5 and 7(c) None May 30, 2000
5 and 7(c) None June 15, 2000
As material subsequent events, the Registrant filed the following reports
on Form 8-K with the Commission after June 30, 2000:
FINANCIAL
ITEMS REPORTED STATEMENTS INCLUDED DATE FILED
2 and 7(c) None July 17, 2000
2 and 7(c) None August 15, 2000
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, as amended, our
company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERINET GROUP.COM, INC.
September 28,2000
BY: /S/ LAWRENCE R. VAN ETTEN
Lawrence R. Van Etten
Acting President & Director
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of our company and in the capacities indicated:
Signature Date Title
/s/Lawrence R. Van Etten/s/ September 28,2000 Acting President, Chief Operating Officer, Director
/s/Vanessa H. Lindsey/s/ September 28, 2000 Secretary & Director
/s/David K. Cantley/s/ September 28,2000 Vice-President, Chief Financial Officer, Treasurer &
Director
/s/Saul B. Lipson /s/ September 28, 2000 Director & Audit Committee Chair
/s/Edward Dmytryk/s/ September 28, 2000 Director & Audit Committee Member
/s/Anthony Q. Joffe/s/ September 28, 2000 Director, Audit Committee Member
/s/ G. Richard Chamberlin /s/ September 28,2000 Director
/s/ J. Bruce Gleason/s/ September 28,2000 Director
/s/Michael A. Caputa/s/ September 28,2000 Director
ADDITIONAL INFORMATION
AmeriNet Group.com, Inc.
Crystal Corporate Center
2500 North Military Trail, Suite 225-C; Boca Raton, Florida 33431
Telephone (561) 998-3435; Fax (561) 998-4635
web-site, amerinetgroup.com; e-mail larry@amerinetgroup.com
-----------------
Corporate Headquarters:
Lawrence R. Van Etten, President; David K. Cantley, Vice President, Treasurer &
Chief Financial Officer; Vanessa H. Lindsey, Secretary
------
Officers
Lawrence R. Van Etten; David K. Cantley; Vanessa H. Lindsey; Michael Jordan;
G. Richard Chamberlin; Anthony Q. Joffe; Saul B. Lipson; Edward C. Dmytryk;
J. Bruce Gleason; and, Michael A. Caputa
------
Board of Directors
Current Subsidiaries (Florida corporations)
Wriwebs.com, Inc.
100 East Sample Road, Suite 210;
Pompano Beach, Florida 33064
Telephone (954) 569-0200; Fax (954) 569-0300
Web site and e-mail www.wriwebs.com
AmeriNet Communications, Inc.
"Doing Business as The Firm MultiMedia"
7325 Southwest 32nd Street; Ocala, Florida 34474
Post Office Box 770787; Ocala, Florida 34477
Telephone (352) 861-1350; Fax (352) 861-1339
Web site and e-mail www.callthefirm.com
Independent Public Accountants:
Daszkal, Bolton & Manela, P.A.
240 West Palmetto Park Road, Suite 300; Boca Raton, Florida 33432
Telephone (561) 367-1040; Facsimile Transmission (561) 750-3236
Transfer Agent:
Liberty Transfer Company
191 New York Avenue, Huntington, New York 11743
Telephone (516)-385-1616; Facsimile Transmission (516) 385-1619
Our company's report on Commission Form 10-KSB for the fiscal year ended
June 30, 2000 will be furnished free of charge without exhibits to any
beneficial owner of our company's common stock eligible to vote at our company's
annual stockholders' meeting and will furnish the exhibits thereto to any such
person specifically requesting them, subject to payment of our company's actual
reproduction, handling and delivery costs associated therewith. Our company's
report on Commission Form 10-KSB for the fiscal year ended June 30, 2000,
including exhibits, is available without charge on the Securities and Exchange
Commission's web-site located at www.sec.gov in the EDGAR archives. Requests for
our company's report on Commission Form 10-KSB for the fiscal year ended June
30, 2000, with or without exhibits, should be addressed to Lawrence R. Van
Etten, President; AmeriNet Group.com, Inc.; Crystal Corporate Center; 2500 North
Military Trail, Suite 225-C; Boca Raton, Florida 33431, or faxed to Mr. Van
Etten at (352) 998-4635.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THIS REPORT NOR HAS IT PASSED UPON ITS ACCURACY OR ADEQUACY.