UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
{x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
For the Quarter Ended February 28, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For the transition period from ______________ to _________________
Commission file number 000-28935
OMNINET MEDIA.COM, INC.
(Name of Small Business Issuer)
Nevada 880398783
(State or Other (I.R.S. Employer
Jurisdiction of Identification
Incorporation or Number)
Organization)
3140 Venture Blvd. 89101
Las Vegas, NV (Zip Code)
Registrant's telephone number including area code: (702) 641-5030
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
February, 28 2001
1
TABLE OF CONTENTS
Page
Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Operations 2
Condensed Consolidated Statements of cash Flows 3
Notes to Condensed Consolidated Financial Statements 4 - 6
2
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
February 28 August 30,
2001 2000
Current Assets
Cash $ - $ 1,420
Prepaid expenses - 6,779
Total Current Assets - 8,199
Property and Equipment, net 142,223 158,507
Other Assets
License agreement, net - 703,916
Other assets 6 2,796
Total Assets $142,229 $873,418
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable and accrued expenses $413,815 $400,920
Current portion of note payable 19,000 642,000
Notes payable to related parties 627,046 623,956
Total Current Liabilities 1,059,861 1,666,876
Noncontrolling interest ( 304,148) ( 277,405)
Stockholders' Deficit
Preferred stock, $0.0001 par value;
10,000,000 shares authorized, no
shares issued and outstanding - -
Common stock, $0.0001 par value;
690,000,000 shares authorized;
42,278,173 shares issued and
outstanding 4,228 4,228
Additional paid in capital 1,759,262 1,759,262
Accumulated deficit (2,376,974) (2,279,543)
Total Stockholders' Deficit ( 613,484) ( 516,053)
Total Liabilities and Stockholders'
Deficit $ 142,229 $ 873,418
See accompanying summary of notes to unaudited condensed consolidated
financial statements.
-1-
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended, Six Months Ended
February 28 February 28
2001 2000 2001 2000
Revenues, net $ - $ 823,124 $ - $1,128,628
Cost of products sold - ( 80,302) - (243,371)
Gross Profit - 742,822 - 885,257
Expenses
General and administrative 8,142 963,392 62,258 1,274,371
Impaired loss on license
Agreements - - 61,916 -
Operating Loss (8,142) (220,570) (124,174) ( 389,114)
Non-controlling interest 1,977 53,544 26,743 93,995
Net Loss $ (6,165) $ (167,026) ( 97,431) ( 295,119)
Net Loss Per Common Share $( 0.000) $( 0.015) $( 0.002) $( 0.026)
Weighted Average Number
Of Common Shares
Outstanding 42,278,173 11,260,748 42,278,173 11,260,748
See accompanying summary of notes to unaudited condensed consolidated
financial statements.
-2-
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended February 28,
2001 2000
Cash Flows From Operating Activities
Net loss $ (97,431) $ (295,119)
Adjustment to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 16,284 123,240
Minority interest in net loss of
consolidated subsidiaries (26,743) (93,995)
Impairment loss on license agreements 61,916 -
Decrease in accounts receivable - (3,271)
Increase in inventory - (162,498)
Decrease in prepaid expenses 6,779
(4,639)
Decrease in security deposit 2,790
(2,790)
Increase in accounts payable and
accrued expenses 12,895 35,100
Net Cash Provided by (Used In)
Operating Activities (23,510) (403,972)
Cash Flows From Investing Activities
Disposal of property and equipment - 2,622
Net Cash Provided by Investing
Activities - 2,622
Cash Flows From Financing Activities
Proceeds from notes payable 22,090 311,632
Payments on notes payable - (30,464)
Capital contributed by shareholder - 37,560
Net Cash Provided by (Used In)
Financing Activities 22,090 318,728
Net Decrease in Cash (1,420) (82,622)
Cash at beginning of period 1,420 99,770
Cash at end of period $ - $ 17,148
See accompanying summary of notes to unaudited condensed consolidated
financial statements.
-3-
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Presentation of Interim Information
In the opinion of the management of OmniNet Media.Com, Inc.
and Subsidiaries, Inc. (the Company), the accompanying
unaudited condensed consolidated financial statements
include all normal adjustments considered necessary to
present fairly the financial position as of February 28,
2001, and the results of its operations and cash flows for
the three months ended February 28, 2001 and 2000. Interim
results are not necessarily indicative of results for a full
year.
The condensed consolidated financial statements and notes
are presented as permitted by Form 10-Q, and do not contain
certain information included in the Company's audited
consolidated financial statements and notes for the year
ended August 31, 2000.
2. Financial Statements
The condensed consolidated financial statements include the
accounts of the Company and its subsidiaries. All
significant intercompany transactions and balances have been
eliminated.
3. Supplemental Disclosures of Cash Flow Information
Three months ended February 28,
2001 2000
Operating Activities:
Interest paid $ - $ -
==== ====
4. Going Concern
As shown in the accompanying financial statements, the
Company incurred net losses of $6,165 and $97,431 for the three
months and the six months ended February 28, 2001. The
Company's current liabilities exceeded its current assets by
$1,059,861 and $1,508,369 at February 28, 2001 and August 31, 2000,
respectively. In addition, a subsidiary of the Company is involved
in litigation, the outcome which is unknown at this time and
has defaulted on the license agreements. The ability of the
Company to continue as a going concern is contingent upon
its ability to secure additional equity financing. The
Company will offer additional shares of its common stock to
raise capital and obtain financing on an as needed basis.
-4-
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. Stock Options
On August 31, 2000, the Company issued options to purchase
an aggregate of 250,000 shares of its common stock as $4.00
per share to a vendor of advertising services. These
options were fully vested as of the date of their issuance
with an exercise period of three years.
Activity related to the Company's stock options during the
three months and six months ended February 28, 2001, was as follows:
Outstanding Options
Weighted
Number Average
Of Exercise
Shares Price
September 1, 2000 22,000 $ 4.00
Grants - -
Exercises - -
Cancellations - -
________
Options exercisable at:
February 28, 2001 22,000 $ 4.00
=======
SFAS No. 123, "Accounting for Stock-Based Compensation"
(SFAS 123) was issued during 1995 and is effective for
fiscal years ending after December 15, 1996. This
pronouncement established financial accounting and reporting
standards for stock-based employee compensation plans. It
encourages, but does not require, companies to recognize
compensation expense for grants of stock, stock options and
other equity instruments to employees based on new fair
value accounting rules. Companies that choose not to adopt
the new fair value accounting rules are required to disclose
net income and earnings per share under the new method on a
pro forma basis. The Company accounts for its options and
warrants according to APB No. 25 and follows the disclosure
provisions of SFAS 123. Accordingly, if options or warrants
are granted to employees or others for services and other
consideration with an exercise price below fair market value
on the date of the grant, the difference between the
exercise price and the fair market value is charges to
operations. The fair value of the options granted during
the eight months ended August 31, 2000 reported below, has
been estimated at the dates of grant using the Black-Schole
option pricing model with the following assumptions:
Expected life (in years) 2
Risk-free interest rate 6.0%
Volatility 11.0%
Dividend yield 0.0%
- -5-
OMNINET MEDIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. Stock Options, (Continued)
The Black-Scholes option valuation method was developed for
use in estimating the fair value traded options that have no
vesting restrictions and are fully transferable. In
addition, option valuation models require the input of
highly subjective assumptions, including the expected stock
price volatility. Because the
Company's options have characteristics significantly
different from those of traded options, and because changes
in the subjective input assumptions can materially affect
the fair value estimate, in the opinion of management, the
existing models do not materially affect the fair value
estimate, in the opinion of management, the existing models
do not necessarily provide a reliable single measure of the
fair value of its options.
For the purpose of pro form disclosures, the estimated fair
values of the options amortized to expense over the options
vesting period. The Company's pro forma for the three
months ended February 28, 2001, is as follows:
Pro forma net loss $( 0)
Pro forma loss per share $( .000)
The effects on pro forma disclosures of applying SFAS 123
are not necessary indicative of the effects on pro forma
disclosures of future years.
6. Impairment Loss
In September 2000, the issuer of the license agreements to
the Company cancelled the agreements for non-payment of
license fees. An impairment loss in the amount of $61,916
was recognized.
7. Subsequent Event
On March 3, 2001, the Company received $40,000.00 in exchange for One Hundred
and Eight Thousand One Hundred and Eight shares (108,108) of the Common Stock,
$0.0001 par value ("Common Stock") of OmniNet Media.com, Inc., (ONMC) at a
Twenty Percent (20%) discount from the 3-month weighted average price during
the time period from December 5th, 2000 to March 5th,
2001.
- -6-
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OmniNet Media.Com, Inc. commenced active operations in January of 2000
which
have continued to the date of this report.
In note 1 to its financial statements as of August 31, 2000 its auditors
stated that the financial statements were presented on a going concern
basis which contemplated the realization of assets and satisfaction of
liabilities in the normal course of business. However, as noted there, the
Company has sustained recurring losses since inception and had negative
working capital for the eight months ended August 31, 2000 and the years
ended
December 31, 1999 and 1998. The Company experienced operating losses of
$1,560,604, $41,971 and $14,350, respectively, during those periods. Its
ability to continue as a going concern is contingent upon its ability to
secure additional equity financing, initiate sales of its products and
thereby attain profitable operations. The Company is continuing to pursue
financing by the issuance of common stock shares. Although the Company plans
to pursue additional financing on terms beneficial to the Company and its
stockholders. Without such funds the Company will be unable to comply with
its payment obligations to vendors.
The Company anticipates that it will require $5,000,000 in additional debt
or
equity financing in order to continue as a going concern during the next
twelve months of operation. The Company plans to attempt to enter
into arrangements to raise these funds through the private or public sale
of
common shares, and by initiating profitable operations. No assurance can be
given that either of these plans will be realized and thus, no assurance can
be given that the Company will be able to continue as a going concern in
the foreseeable future.
The company's plan of operation will target the $15,000,000,000 promotional
market, and the $12,000,000,000 television advertising market by providing
both the retailer and National advertiser with a wireless, digital video,
Internet-enabled networked plasma displays for the purpose of disseminating
timely multi-media in-store advertising messages directly into the retail
environment to influence the shopper at the moment of decision. The Plasma
system consists of a large thin (up to 60 inch) display screen, a server, a
management workstation, display controller packaged in a low profile complete
stand alone wall or ceiling mounted systems. The company's proprietary
system, referred to as WIPD (Wireless Internet Plasma Displays) ties the
complete system together and can be configured in a number of different ways
depending upon the specific requirements of the retailer.
Upon completion of months of diligent market research, the company has
concluded that its business model will focus on marketing its unique
advertising platform and promotional vehicle to both the National advertiser
and retailer. The company will market and supply a network of large plasma
display panels to the retailer for promotional and advertising messages. The
company will market this network of wireless plasma display panels, as opposed
to a large and complicated interactive kiosk unit, which requires physical
maintenance, individual configurations, servicing, and attention. The plasma
display screen advertising loops will be updated remotely via the Internet,
according to the National advertisers specifications, but will remain
non-interactive to the viewing public.
During March 2001, the company executed leases for its new Corporate Office at
3140 Venture Blvd, Las Vegas, Nevada and for its Executive and Marketing
Offices at One World Trade Center 8th Floor, Long Beach, California.
Global Glass Guard Inc., (3Gtm) a Nevada Corporation and wholly owned
subsidiary of OmniNet Media.Com, Inc., is in the final stages of completing
its unique proprietary adhesive process of the company's polyester-based
laminate film product line. The company intends to become a dominant provider
of safety and security laminate for glass protection.
The Company has suspended all active business operations in its subsidiary
U.S./Ace Security Laminates and does not expect to resume active operation of
this business in the foreseeable future.
PART II
ITEM 1. Legal Proceedings.
On March 3, 2001 the company received a complaint filed in San Diego,
California Superior Court, by J. Thomas Markham, a Media Communication firm.
The complaint alleges that OmniNet Media.com, Inc., should pay J. Thomas
Markham 4.5 Million for advertising literature and other expenses. The
company believes the suit is without merit and is vigorously defending its
position.
U.S./Ace Security Laminates Inc., a subsidiary of OmniNet Media.com, Inc., is
involved in litigation. U.S./Ace, including certain employees, officers, and
directors,is a defendant in a lawsuit filed by the original licensor (in Hull,
Quebec,Canada) of certain territories which U.S./Ace entered into
contracts
for dealership and distribution. The claim is for outstanding license fees
allegedly owing pursuant to contracts dated February 9, 1998 and July 7,
1998. The suit asks for damages totaling approximately $9.3 million
(Canadian)
plus legal costs. Outside counsel for U.S./ACE has advised that, at this
stage in the proceeding, the counsel cannot offer an opinion as to the
probable outcome. U.S./Ace believes the suit is without merit and is
vigorously defending its position. The plaintiffs attorney has been
sanctioned by the Court for no appearance at court hearings.
ITEM 2. Changes in Securities.
There have been no changes in the Company's securities.
ITEM 3. Defaults Upon Senior Securities.
There have been no defaults upon senior securities.
ITEM 4. Submission Of Matters To A Vote Of Security Holders.
There have been no Submission of matters to a vote of security holders.
ITEM 5. Other Information.
The Board of Directors plan to take all necessary action to implement the
following:
Change the name of the company from OmniNet Media.com, Inc. to OmniNet Media
Corporation.
Change the capitalization from Six Hundred and Ninety Million (690,000,000)
shares of $0.0001 par value to One Hundred Million (100,000,000) common
$0.0001 par value.
Rescind the June 5th, 2000 Business Combination Agreement by and between
U.S./ACE Security Laminates, Inc., a Delaware Corporation and Ace Security
Laminates International, Inc. and OmniNet Media.Com.
ITEM 6. Exhibits And Reports On Form 8-K.
The registrant has filed two Current Reports on Form 8-K, to wit:
1. Form 8-K filed September 27, 2000 which reported the change of
the registrant's fiscal year to August 31.
2. Form 8-K/A filed January 19, 2001 which reports (1) a change in control of
the registrant resulting from the election of Don Steffens as President to
replace Michael Knox, who resigned; (2) the resignation of Michael Knox as a
director of the registrant and the appointment of Don Steffens to fill his
unexpired term; and (3) a change of address of the registrant.
All of these reports are incorporated herein by reference.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: April 20, 2001
By:/s/ Don A. Steffens, President