-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GR2jvjUibs+jEBaDYAXpaDQQVpJseumtmYI/i87UL26l6piJj+qCx6VZebkjbzif pJ1vV1KB3U+T7P3tnhsyfQ== /in/edgar/work/0000050471-00-000019/0000050471-00-000019.txt : 20001121 0000050471-00-000019.hdr.sgml : 20001121 ACCESSION NUMBER: 0000050471-00-000019 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERINET GROUP COM INC CENTRAL INDEX KEY: 0000050471 STANDARD INDUSTRIAL CLASSIFICATION: [7374 ] IRS NUMBER: 112050317 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-03718 FILM NUMBER: 773476 BUSINESS ADDRESS: STREET 1: CRYSTAL CORPORATE CNTR STREET 2: 2500 N MILITARY TRAIL - STE 225C CITY: BOCA RATON STATE: FL ZIP: 33431 BUSINESS PHONE: 5619983435 MAIL ADDRESS: STREET 1: 2500 NORTH MILITARY TRAIL STREET 2: SUITE 225-C CITY: BOCA RATON STATE: FL ZIP: 33421 FORMER COMPANY: FORMER CONFORMED NAME: EQUITY GROWTH SYSTEMS INC /DE/ DATE OF NAME CHANGE: 19951214 FORMER COMPANY: FORMER CONFORMED NAME: INFOTEC INC DATE OF NAME CHANGE: 19930506 10QSB 1 0001.txt FORM 10-QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0416 Expires: May 31, 2000 Estimated average burden hours per response: 9708.0 Form 10-QSB Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 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, Boca Raton, Florida 33431 (Address of principal executive offices) 33431 (Zip Code) Issuer's telephone number: (561) 998-3435 State the number of shares outstanding of each of the small business issuer's classes of common equity, as of the latest practicable date. As of September 30,2000, there were 12,465,192 shares of the small business issuer's common stock outstanding. Transitional Small Business Disclosure Format (Check one): Yes No x Page 1 Available Information. The public may read and copy any materials filed by our company with 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. The Registrant's wholly owned operating subsidiary, Trilogy International, Inc, maintains a web site at http://www.trilogyonline.com.; Caveat Pertaining to Forward Looking Statements 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. Table of Contents & Cross Reference Sheet Part Item Page Number Number Number Caption I 1 Financial Statements 3 Condensed Consolidated Financial Statements 4 Condensed Consolidated Balance Sheet (Unaudited) as of September 30, 2000 5 Condensed Consolidated Statements of Operations (Unaudited),for the Three Months Ended September 30,2000 and 1999 6 Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended September 30, 2000 and 1999 7-12 Notes to Condensed Consolidated Financial Statements Page 2 2 Management's Discussion and Analysis or Plan of Operation 13 Recent Developments Pertaining to Plan of Operation 13 Results of Operations 15 Liquidity and Capital Resources II 1 15 Legal Proceedings 2 15 Changes in Securities 3 * Defaults Upon Senior Securities 4 * Submission of Matters to Vote of Securities Holders 5 16 Other Information 6 17 Exhibits and Reports on Form 8-K - - - ------------- * Not Applicable PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS: AMERINET GROUP.COM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) Page 3 AMERINET GROUP.COM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2000 (UNAUDITED) - -------------------------------------------------------------------------------- ASSETS Current assets: Cash $ 7,610 Accounts receivable, net 60,017 Note receivable 211,515 Costs and estimated earnings in excess of billings on uncompleted contracts 172 Prepaid expenses 2,612 ------- Total current assets 281,926 ------- Property and equipment, net 346,971 -------- Other assets: Investment in subsidiary - WRIwebs.com, Inc. 644,986 Goodwill, net 666,663 Deposits 400 -------- Total other assets 1,312,049 -------- Total assets $ 1,940,946 ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 220,446 Accrued expenses 31,005 Billings in excess of costs and estimated earnings on uncompleted contracts 32,289 Loans payable - related parties 320,800 Current maturities of loans payable 177,033 Current maturities of capital leases 29,641 -------- Total current liabilities 811,214 -------- Long term liabilities: Loans payable, net of current portion 238,882 Capital leases, net of current portion 21,619 -------- Total long term liabilities 260,501 -------- Equity subject to potential redemptions 640,987 -------- Stockholders' equity: Preferred stock, no par value, 5,000,000 shares authorized, 78,203 issued and outstanding 782 Common stock, $0.01 par value, 20,000,000 shares authorized, 12,465,192 shares issued and outstanding 124,652 Outstanding stock options 17,270 Additional paid in capital 11,945,862 Accumulated deficit (11,860,322) ------------ Total stockholders' equity 228,244 --------- Total liabilities and stockholders' equity $ 1,940,946 ============== Page 4 AMERINET GROUP.COM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) - -------------------------------------------------------------------------------- Three months Three months ended ended September 30, 2000 September 30, 1999 Revenues earned $ 216,636 $ 168,169 Cost of goods sold 192,640 69,109 -------------- ------------------- Gross profit 23,996 99,060 Selling, general and administrative expenses 844,281 412,501 Depreciation and amortization 50,063 63,840 -------------- -------------------- Total operating expenses 894,344 476,341 -------------- -------------------- Loss from operations (870,348) (377,281) -------------- -------------------- Other expense: Interest expense 22,505 - Equity in losses of subsidiary 16,832 - -------------- -------------------- Total other expense 39,337 - -------------- -------------------- Provision for income taxes - - -------------- -------------------- Net loss (909,685) (377,281) -------------- -------------------- Discount attributable to beneficial conversion privilege of preferred stock (314,246) - -------------- -------------------- Net loss applicable to common stock $ (1,223,931) $ (377,281) =============== ==================== Basic loss per share $ (0.10) $ (0.05) ==================== Fully diluted loss per share $ (0.10) $ (0.05) ==================== Weighted average shares outstanding 12,465,192 8,148,308 =============== ==================== Fully diluted average shares outstanding 12,465,192 8,148,308 ================= ==================== Page 5 AMERINET GROUP.COM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) - -------------------------------------------------------------------------------- Three months Three months ended ended September 30, 2000 September 30, 1999 Net cash used in operations (426,637) $ (132,029) ------------------ -------------------- Cash flows from investing activities: Purchase of property and equipment (23,179) (16,774) ------------------- -------------------- Cash flows from financing activities: Preferred stock issued for cash, net of cost 303,424 - Common stock issued for cash, net of costs - 27,500 Payments on capital leases (21,371) - Proceeds from loans payable 159,101 75,000 Payments on loans payable (22,154) - ------------------ -------------------- Net cash provided by financing activities 419,000 102,500 ------------------ -------------------- Net decrease in cash (30,816) (46,303) Cash at beginning of period 38,426 79,021 ------------------ -------------------- Cash at end of period $ 7,610 $ 32,718 =================== =================== Supplemental disclosure of cash flow information: Cash paid during the year for: Interest $ 22,505 $ - =================== =================== Non-cash transactions affecting investing and financing activities: Common stock issued for equipment $ - $ 7,500 =================== =================== Contribution of professional services $ 112,530 $ 192,115 ==================== =================== Conversion of debt to equity $ 375,387 $ - ==================== =================== Page 6 NOTES TO FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair presentation of the results for the interim periods presented have been included. These results have been determined on the basis of generally accepted accounting principles and practices applied consistently with those used in the preparation of the Company's Annual Financial Statements for the year ended June 30, 2000. Operating results for the three months ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ending June 30, 2001. It is recommended that the accompanying condensed financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K. NOTE 2 - AMORTIZATION OF GOODWILL Goodwill represents the amount by which the purchase price of businesses acquired exceeds the fair market value of the net assets acquired under the purchase method of accounting. The excess of the fair value of the net assets of Lorilei acquired was $717,450 and was recorded as goodwill. Goodwill is being amortized on a straight-line method over five years. The accumulated amortization of the excess fair value of net assets of the Company acquired over cost is $50,786 at September 30, 2000. The excess of the fair value of the net assets of WRI acquired was $943,365 and was recorded as goodwill. Goodwill is being amortized on a straight-line method over three years. The accumulated amortization of the excess fair value of net assets of the Company acquired over cost is $262,046 at September 30, 2000. NOTE 3 - ALLOWANCE FOR DOUBTFUL ACCOUNTS Accounts receivable are recorded net of an allowance for doubtful accounts of $5,000 at September 30, 2000. NOTE 4 - STOCKHOLDERS' EQUITY On June 29, 2000 the Company's Board of Directors adopted a resolution creating and designating the initial series of the Company's Preferred Stock. The shares are designated Class A Preferred Stock and the number of shares authorized to be issued is 500,000 shares. Each share of Class A Preferred Stock is convertible into a minimum of 20 shares of the Company's common stock. During the three months ended September 30, 2000, the Company issued its Class A Preferred Stock for cash, for conversion of debt and in exchange for services as follows: Page 7 NOTE 4 - STOCKHOLDERS' EQUITY, continued (a) The Company issued 23,520 shares of Class A Preferred Stock for cash at $5.00 per share through a private placement. The net amount obtained was $117,600. (b) The Company converted $16,965 of debt to 3,393 shares of Class A Preferred Stock at $5.00 per share. (c) The Company converted $115,000 of Yankee's debt to 46,000 shares of Class A Preferred Stock at $2.50 per share in accordance with Yankee's preferred subscription rights. (d) The Company issued 5,290 shares of Class A Preferred Stock to certain officers and consultants as compensation for services. The Company recorded a total compensation expense of $26,450. (e) The Company issued 223,440 stock options to Yankee during the three month period ended September 30, 2000. The Company recorded compensation expense of $151,939. (f) Yankee contributed professional services of $112,530 to the Company during the three month period ended September 30, 2000. NOTE 5 - COST AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS The following schedule presents the status of costs and estimated earnings on uncompleted contracts at September 30, 2000: Costs incurred on uncompleted contracts $ 47,764 Estimated earnings 34,051 ------------------- Total 81,815 Less: billings to date (113,932) ------------------- Total $ (32,117) ==================== Included in accompanying balance sheet under the following captions: Costs and estimated earnings in excess of billings on uncompleted contracts $ 172 Billings in excess of cost and estimated earnings on uncompleted contracts (32,289) ------------------- Total $ (32,117) ==================== Page 8 NOTE 6 - PROPERTY AND EQUIPMENT Property and equipment consisted of the following at September 30, 2000: Land $ 25,000 Building 197,483 Vehicles 49,220 Furniture and fixtures 13,633 Machinery and equipment 83,695 Less: accumulated depreciation (22,060) ---------------- Property and equipment, net $ 346,971 ================= Depreciation expense for the three months ended September 30, 2000 was $14,190. NOTE 7 - NOTES PAYABLE The Company's borrowings consisted of the following at September 30, 2000: Working Capital Revolving Line of Credit with Am-South Bank. Interest accrues at 11.5%. $ 28,110 Loan payable to Small Business Loan Source requiring monthly payments of $2,094 through March 18, 2022. The loan accrues interest at 12.25% and is collateralized by the building. 188,841 Loans payable for vehicles with varying terms and maturities. Interest rates range from 6% to 10%. 53,274 Loans payable to outside parties with varying terms and maturities. Interest rates range from 8.5% to 12%. 145,690 ---------------- Total 415,915 Less: current portion (177,033) --------- $ 238,882 ================ Maturities of borrowings are as follows: Year Ended September 30, 2001 $ 177,033 2002 19,892 2003 15,543 2004 12,479 2005 8,818 Thereafter 182,150 ---------------- Total 415,915 Less: current portion (177,033) ---------------- $ 238,882 =============== Page 9 NOTE 8- LEASE COMMITMENTS Certain non-cancelable leases are classified as capital leases, and the leased assets are included as part of property and equipment. Other leases are classified as operating leases and are not capitalized. The obligations under capital leases are at fixed rates ranging from 6.5% to 15.0% and are collateralized by property and equipment. Property under capital leases at September 30, 2000 consisted of the following: Machinery and equipment $ 50,145 Less: accumulated depreciation (5,853) ---------------- Total $ 44,292 ================ Future minimum rentals for property under capital leases at September 30, 2000 are as follows: Year Ended September 30, 2001 $ 46,858 2002 14,723 2003 3,052 2004 - ---------------- Total minimum lease obligation 64,633 Less: interest (13,373) ---------------- Present value of total minimum 51,260 Less: current portion (29,641) ---------------- $ 21,619 ================ NOTE 9 - RELATED PARTY TRANSACTIONS At September 30, 2000 the Company had outstanding payables to its stockholders in the amount of $320,800. The transactions are summarized as follows: Balance at beginning of period $ 276,800 Advances during the period 159,000 Conversions to equity (115,000) ------------------ Balance at end of period $ 320,800 ================== During the three months ended September 30, 2000, Yankee contributed professional services valued at $112,530 to the Company. The Company recognized the $112,530 as management fees and consulting fees expense and the entire amount was contributed to the Company as additional paid in capital. The Company shares office space in Boca Raton, Florida with a related party. Rent expense for the three months ended September 30, 2000 was $3,618. Page 10 NOTE 10 - INCOME TAXES The following table reconciles the income tax benefit at the US statutory rate to that in the financial statements at September 30, 2000: Taxes computed at 34% $ (309,293) Goodwill amortization 12,197 Compensation on stock option grants 483,304 Net operating losses and other losses (1,761,539) ----------- Income tax benefit $ (1,575,331) ================ As of September 30, 2000, AmeriNet Group.com, Inc. had an unused net operating loss carryforward of $3,186,843 available for use on its future corporate federal income tax returns. This amount includes the net operating losses of its subsidiary, Lorilei, since the date of acquisition. The Company's evaluation of the tax benefit of its net operating loss carryforward is presented in the following table. The tax amounts have been calculated using the 34% federal income tax rate. Taxes currently payable $ - Deferred income tax benefit 1,575,331 Change in beginning valuation allowance (1,575,331) -------------- Provision (benefit) for income $ - ================== The components of deferred tax assets at September 30, 2000 were as follows: Deferred tax asset: Net operating loss carryfoward $ 1,083,527 Stock options granted 483,304 Provision for doubtful accounts 1,700 Accrued interest 6,800 ------------------- Net deferred tax asset 1,575,331 Valuation allowance: Beginning of period (1,212,679) Increase during the period (362,652) ------------------ Ending balance (1,575,331) ------------------ Net deferred taxes $ - ====================== Year Loss Originated Year Expiring Amount December 31, 1997 2012 $ 74,043 December 31, 1998 2013 399,415 June 30, 1999 2014 97,646 June 30, 2000 2015 1,706,054 September 30, 2000 2016 909,685 ------------------- Total available net operating loss $ 3,186,843 ===================== Page 11 NOTE 11 - STOCK OPTIONS The Company adopted an Incentive Stock Option Plan and amended its Non-Qualified Stock Option Plan on March 8, 2000. The objectives of these plans include attracting and retaining the best personnel and promoting the success of the Company by providing employees the opportunity to acquire common stock. The incentive Stock Option Plan authorizes the Company to grant up to 2,000,000 common shares of which 365,000 have been granted at September 30, 2000. The Company has elected to account for the stock options under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. Accordingly, no compensation expense has been recognized on the employee stock options. The Company accounts for stock options granted to consultants under Financial Accounting Standards Board Statement No. 123, "Accounting For Stock-Based Compensation". The Company recognized $151,939 in compensation expense for the three months ended September 30, 2000 in connection with an increase of 223,440 shares of common stock underlying the Yankee option to purchase up to 12 1/2% of the outstanding common shares of the Company. With this increase in the underlying shares, Yankee now has the option to purchase 2,381,173 shares of the Company's common stock for an aggregate price of $90,000. Had compensation expense for the Incentive Stock Option Plan been determined based on the fair market value of the options at the grant date consistent with the methodology prescribed under Statement of Financial Standards No. 123 "Accounting for Stock Based Compensation", the Company's net loss for the three months ended September 30, 2000 would have increased by $74,513 to $984,198. The fair value of each option is estimated on the date of grant using the fair market option-pricing model with the assumption: Risk-free interest rate 6.5 % Expected life (years) various Expected volatility 1.688 Expected dividends None A summary of the option transactions during the three months ended September 30, 2000 is shown below: Number of Weighted-Average Shares Exercise Price Outstanding at June 30, 2000 3,061,675 $ 0.43 Granted 223,400 $ 0.04 Exercised - Forfeited (99,337) Outstanding at September 30, 2000 3,185,738 ---------------- Exercisable at September 30, 2000 2,820,778 ---------------- Available for issuance at September 30, 2000 2,514,733 ================= NOTE 12 - SUBSEQUENT EVENTS In October 2000, AmeriNet Group.com, Inc. informed Michael Caputa, President of WRI, that the Company elects to rescind the Agreement of Merger and Plan of Reorganization previously entered into by and among AmeriNet, American Internet Technical Center, Inc. n/k/a WRIwebs.com, Inc. and WRIwebs.com, Inc., including the return of 531,000 shares of the Company's common stock issued at the time of the acquisition and the return of the $211,515 advanced to WRI. Attorneys for WRI and Mr. Caputa have denied all allegations and claims made by the Company. Both parties have agreed to abide by the provision in the Agreement providing for mediation to resolve any disputes between the parties. Management expects that the issues will be presented to mediation in mid-December, 2000. Page 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION MANAGEMENT'S DISCUSSION AND ANALYSIS Recent Developments Pertaining to Implementation of Plan of Operation Our company's ability to continue as a going concern is dependent upon its ability to attain a satisfactory level of profitability and to continue to have access to suitable financing. Management believes that divesting our company of it's unprofitable subsidiaries, Trilogy International, Inc. and Vista Vacations, Inc. at June 30, 2000, was a significant step towards accomplishing this goal. Since acquiring WRIwebs.com, Inc. ("WRI") in December 1999, our company has endeavored to work with the management of WRI in order assist them in attaining the performance goalsprojected by WRI management. WRI has continued to perform below expectations and to provide materially innacurate information. As a result, on October 16, 2000 attorneys for our company informed Michael Caputa, President of WRI, that our company elects to rescind the Agreement of Merger and Plan of Reorganization. Our Company has demanded the return of the 531,000 shares of our company's common stock issued to Mr. Caputa and former WRI stockholders at the time of the acquisition and the $211,515 advanced to WRI by our company. Attorneys for WRI and Mr. Caputa have denied all allegations and claims made by our company. Both parties have agreed to abide by the provision in the Agreement providing for mediation and arbitration to resolve any disputes between the parties. It is expected that the issues will be presented to mediation in mid-December, 2000. Upon the resignation of its founders and executive officers Gerald and Leigh Cunningham, our company's President, Larry Van Etten assumed the role of acting president of Lorilei. Sales information proved materially inaccuarte and unprofitable segments of Lorilei's previous business have been eliminated resulting in operating losses for the three month period ended September 30, 2000. 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 most of Lorilei's assets, personnel and operations. AmeriCom's target markets have been redirected and expanded. As a result, it is expected that by the end of the three month period ended December 31, 2000 AmeriCom will produce net operating income and that by the end of its fiscal year on June 30, 2001 AmeriCom will significantly contribute to the earnings of our company. The assignment of assets and the conduct of all business of The Firm Multimedia by AmeriCom was not finalized until October 17, 2000. For accounting purposes and reporting of our company's consolidated financial statements the transfer of assets had no effect for the three months ended September 30, 2000 because both entities are wholly owned by our company. Results of Operations The consolidated income statement for our company for the three months ended September 30, 2000 includes operations of our company at the holding level and its wholly owned subsidiary Lorilei Communications, Inc. In addition, 20% of the operating losses of our company's affiliate WRI are included in our company's financials. For the three months ended September 30, 1999 the consolidated income statement included our company and its then wholly owned subsidiary AITC. Effective December 1, 1999, AITC was merged with WRI. Because WRI's former principal stockholder has an option to acquire between 70% and 80% of WRI's common stock until November 11, 2001, generally accepted accounting principals do not permit consolidation of WRI's financial statements with those of our company. Rather, the WRI affiliate is accounted for as though we had acquired between 20% and 30% of WRI's common stock as an investment. Therefore, 20% of WRI's profits or losses are reported by our company as losses of WRI for the three months ended September 30, 2000. Page 13 For the three months ended September 30, 2000 our company reported revenues of $216,636 all of which were generated by Lorilei. Revenues for the three months ended September 30, 1999 were $168,169 and were all generated by our former subsidiary AITC. Cost of revenues for the three months ended September 30, 2000 were $192,640 yielding a gross profit of $23,996 while cost of revenues for the three month period ended September 30, 1999 were $69,109 for a gross profit for that period of $99,060. Our company as a whole reported a net loss for the three months ended September 30, 2000 of $1,223,931 as compared to a net loss of $377,281 for the three months ended September 30, 1999. These losses were comprised of equity in the losses of WRI (20%), $ 16,832; net loss of Lorilei of $295,123 and a net loss for the holding company of $911,976. For the three months ended September 30, 1999 our company's losses were $377,281. Our company had selling, general and administrative expenses of $844,281 for the three months ended September 30,2000 as compared with $412,501 for the three months ended September 30, 1999. Of the $844,281 in expense for the current period, $256,277 was attributable to the operations of Lorilei as incurred in the normal course of operating its business. The remaining $588,004 of expense was incurred at the holding company level. $208,535 of this amount was expended in the normal course of conducting our company's business. The remaining $379,469 represents expenses incurred due to the required accounting treatment of preferred subscription rights exercised by Yankees during the period; options granted to Yankees during the period and consulting services provided to our company by Yankees. All of these charges are non-cash items and the additional paid in capital of our company has increased in an amount equal to these charges. Our company had depreciation expense of $14,190 and $3,179 for the three months ended September 30, 2000 and 1999 respectively. Virtually all of the depreciation for this period was attributable to the fixed assets of Lorilei, while the expense during the same period in 1999 was attributable to the fixed assets of AITC. Expense for the amortization of goodwill in connection with the acquisition of Lorilei was $35,873 for the three months ended September 30, 2000. For the three months ended September 1999, our company had an amortization of goodwill expense of $58,145 attributable to the acquisition of AITC. Interest expense for the three months ended September 30, 2000 was $22,505. No interest expenses was recorded by our company for the three months ended September 30, 1999. In addition to the losses from operations incurred for the period, our company's loss attributable to common stockholders was increased by $314,246 as a result of purchases made through a private placement of our company's Class A Preferred Stock. Because each share of the Preferred Stock is convertible into a minimum of 20 shares of our company's common stock, a discount attributable to the beneficial conversion of preferred stock must be taken in an amount equal to the difference between the conversion price of $.25 per share and the then market price of our company's common stock at the time of the preferred stock purchase. Page 14 LIQUIDITY AND CAPITAL RESOURCES Our Company had cash on hand in the amount of $7,610 at September 30, 2000, compared to $32,718 on September 30, 1999. At September 30, 2000, we had a working capital deficit of $529,288 compared to a working capital deficit on September 30, 1999 of $142,872. The decrease in working capital was related principally to a decrease in cash on hand; an increase in accounts payable in excess of accounts receivable at the subsidiary level; the current portion of capital leases payable at the subsidiary level and the current portion of loans payable which were incurred in funding the operation of our company's subsidiaries during the year ended June 30, 2000. Our company and its subsidiaries have accumulated a net deficit of $11,860,322 since their inception. This gives rise to questions regarding the ability of our Company to continue as a going concern. The deficit for the three month period ended September 30, 2000 is $1,223,931. Management has implemented significant cost reductions through is discontinuance of unprofitable operations. With the assistance of Yankee, we are actively exploring acquisitions of operating companies and related infusions of capital which would materially improve its cash flow, liquidity and profitability, if successfully implemented. Our company relies on Yankees for capital required to fund operating cash deficits and has a financing agreement with Yankees pursuant to which Yankees has granted our company a conditional $1,000,000 revolving line of credit. As of November 13, 2000, Yankees had loaned our company an aggregate of $576,400. The loans are secured by all of our company's assets, including the capital stock in its subsidiaries. At our request,Yankees has converted most of its loans to date into shares of our company's common stock and shares of our company's Class A Preferred Stock. As of November 13, 2000, Yankees had converted $298,000 of its aggregate loans to our company into equity. Our company's continuing liquidity and access to capital is currently totally reliant on Yankees and investors introduced to our company by Yankees. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Neither our company nor its subsidiaries have been involved in any material legal proceedings, except as disclosed in our company's report on Form 10-KSB for the fiscal year ended June 30, 2000 other than the pending mediation in connection with our company's election to rescind the WRI Merger and Reorganization Agreement as discussed previously in this report under "Managements Discussion and Analysis". ITEM 2. CHANGES IN SECURITIES RECENT SALES OF UNREGISTERED SECURITIES Since June 30, 2000, our company sold the securities listed in the table below without registration under the Securities Act in reliance on the exemption from registration requirements cited. All footnotes follow the last table. Class A Preferred Stock Amount of Total Total Registration Securities Offering Discounts Exemption Date Sold Subscriber Consideration or Commissions Relied on - ---- ----- ---------- ------------- -------------- --------- July 3 6,000 Bolina Trading Corp. $30,000 None (2) July 7 3,600 Bolina Trading Corp. $18,000 None (2) July 27 8,000 Bolina Trading Corp. $40,000 None (2) July 31 1,500 Lawrence R. Van Etten (7) (7) (2) August 15 46,000 Yankees $115,000(4) (3) (2) August 15 3,393 K. Walker LTD $16,965 (5) None (2) August 15 1,500 Coast to Coast Realty (6) (6) (2) August 30 5,920 Palmair, Inc. $29,600 None (2) August 31 500 Lawrence R Van Etten (7) (7) (2) August 31 415 George Franjola (8) (8) (2) September 15 500 Coast to Coast Realty (6) (6) (2) September 30 500 Lawrence R. Van Etten (7) (7) (2) September 30 375 George Franjola (8) (8) (2) 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. Page 15 (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) At the issuers request, Yankees converted $115,000 of debt to equity ( a total of 46,000 shares of preferred stock). (5) At the issuers request, K. Walker converted $16,965 of debt to equity ( a total of 3,393 shares of preferred stock). (6) Our company issued 2,000 shares of class a preferred stock to Charles J. Scimeca, owner of Coast to Coast Realty, Inc., for his compensation as our company's corporate spokesperson. Compensation expense to our company was $24,800 based on the average closing price of our company's common stock during the period (7) Our company issued 2,500 shares of class a preferred stock to Lawrence R. Van Etten as compensation. Compensation expense to our company, based on the average closing price of our company's common stock for the period was $32,552. (8) Our company issued 790 shares of class a preferred stock to George Franjola as compensation for services provided to Lorilei for the months of August and September, 2000. Compensation expense to Lorilei was $10,000 based on the average closing price of our company's common stock for the two month period. Consequently, as of September 30, 2000, 12,465,192 shares of our company's common stock were outstanding and 78,203 shares of our company's class a preferred stock were outstanding. AMOUNT OF COMMON EQUITY SUBJECT TO OUTSTANDING OPTIONS OR WARRANTS TO PURCHASE, OR SECURITIES CONVERTIBLE INTO, COMMON EQUITY OF OUR COMPANY As of September 30, 2000, our company had 5,034,675 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. ITEM 5. OTHER INFORMATION Material Subsequent Events Termination of Acquisition Negotiations with WeCU, Ltd. On November 16, 2000, Mr. Shawn Okun, a representative of WeCU, Ltd. a Panamanian corporation ("WeCU"), advised Lawrence R. Van Etten, as president of AmeriNet, that its attorneys believed the proposed sale of WeCU's United States Internet and communications operations and assets to an AmeriNet subsidiary would result in a current taxable event requiring immediate payments unacceptable to WeCU and a majority of its stockholders. Page 16 Consequently, WeCU will not enter into the contemplated acquisition agreement with AmeriNet. However, Mr. Okun requested that AmeriNet consider a strategic alliance with WeCU for joint marketing of products and services. AmeriNet is agreeable to such arrangements subject to preparation and execution of definitive agreements detailing the nature, extent and terms of the proposed strategic alliance. A copy of the letter from WeCU's attorneys advising AmeriNet of the termination of acquisition negotiations is filed as an exhibit to this report, see Part II, Item 6, "Exhibits & Reports on Form 8-K".) Resignation of Chief Financial Officer and Vice President 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. However, due to economic and personal reasons, Mr. Cantley felt it is in the best interest of our company for him to resign from those capacities, and did so on November 7, 2000, effective November 17, 2000. Mr. Cantley will stay on as a member of our company's board of directors for a term expiring after its next annual meeting of stockholders. He will be nominated for re-election to our company's board of directors at the next annual stockholders meeting, and for appointment as the chair of its audit committee. Withdrawl of Resignation from our Acting President On October 23, 2000, Lawrence R. Van Etten, our company's current acting president and chief operating officer, submitted his resignation as acting president. Mr. Van Etten felt he could better serve our company as a full time chief operating officer. His resignation was effective as of November 15, 2000 in order to give our company an opportunity to interview new candidates for a the full-time position as president. On November 10, 2000, Mr. Van Etten withdrew his resignation as acting president and will remain acting president until such time as several issues are resolved with potential mergers and ample time is allotted to find a suitable person as a replacement on a permanent basis. ITEM 6. 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 Description Regulation S-B (99) Additional Exhibits: .53 20 Letter from WeCU's attorney. .54 21 David Cantley's resignation letter. .55 22-23 Resignation letter of Lawrence R. Van Etten and Withdraw of his resignation. (b) Reports on Form 8-K Filed During Quarter Ended September 30, 2000 During the calendar quarter ended September 30, 2000, our company filed the following reports on Form 8-K with the Commission: Page 17 Financial Items Reported Date Filed Statements Included 2 and 7 July 17, 2000 None 2 and 7 August 15, 2000 None As a material subsequent event, our company filed the following reports on Form 8-K with the Commission: Items Reported Date Filed Financial Statements Included 5 and 7 November 2, 2000 None Signatures In accordance with the requirements of the Exchange Act, our company has duly caused this report to be In accordance with the requirements of the Exchange Act, our company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AmeriNet Group.com, Inc. November 20, 2000 By: /s/David K. Cantley /s/ David K. Cantley Vice-President, Chief Financial Officer & Director Page 18 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-QSB for the quarter year ended September 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-QSB for the quarter ended September 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-QSB for the quarter year ended September 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 (561) 998-4635. THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THIS REPORT NOR HAS IT PASSED UPON ITS ACCURACY OR ADEQUACY. Page 19 EX-99.53 2 0002.txt LETTER FROM WECU ATTORNEY Lane, Powell Spears Lubersky, LLP Law Offices A limited liability partnership including Professional Corporations 601 SW Second Avenue, Suite 2109; Portland, Oregon 97204-3158 (503) 778-3100 Facsimile: (503) 778-2200 www.lanepowell.com Lewis M. Horowitz horowitz@lanepowell.com November 16, 2000 VIA FACSIMILE & EMAIL William A. Calvo The Yankee Companies, Inc. 1941 Southeast 51st Terrace Ocala, Florida 34471 Re: Termination of further negotiations between AmeriNet Group.com, Inc. and WeCU Ltd. Dear Mr. Calvo: Pursuant to conversations between us and Shawn Okun of WeCU, this letter confirms the termination of merger negotiations between WeCU and AmeriNet Group.com, Inc. The principal reason for termination is potential adverse tax consequences to WeCu and/or its affiliates that render the proposed transaction uneconomical to consummate. In lieu of the merger agreement, I understand that representatives of both companies are discussing some form of cross-servicing agreement or maybe even a strategic alliance agreement. I will attempt to ascertain the status of these discussions and get back to you. Very truly yours, LANE POWELL SPEARS LUBERSKY LLP /s/ Lewis M. Horwitz Lewis M. Horowitz LMH Enclosure cc (via email): Shawn Okun James E. Kirk, Esq. Benjamin G. Lenhart, Esq. (via facsimile)Ernest C. Willie Page 20 EX-99.54 3 0003.txt RESIGNATION LETTER OF DAVID CANTLEY 4197 SE Bayview Street Stuart, Fl 34997 November 7, 2000 Mr. Lawrence R. Van Etten AmeriNetGroup.com, Inc. 2500 North Military Trail Boca Raton, FL 33421 Dear Larry, As previously discussed as in the best interest of the Company, please accept my resignation as Vice President , Treasurer and Chief Financial Officer of AmeriNet Group. Com, Inc. effective November 17, 2000. As you have requested, I will remain as a director until the next annual meeting of stockholders and stand for re-election to the Board and if elected serve as Chair of the Audit Committee. I will also remain available to the Company on a consulting basis to provide any assistance that I can to you and your staff in the future. Sincerely, /s/ David K. Cantley David K. Cantley Page 21 EX-99.55 4 0004.txt RESIGNATION & WITHDRAWL LETTER OF LARRY VAN ETTEN October 23, 2000 Lawrence R. Van Etten 2500 N. Military Trail Road Suite 225 Boca Raton, Fl. 33431 Dear AmeriNet Group.com Board of Directors: On May 6, 2000 i was nominated and accepted the position of Vice President and Chief Operating Officer for the corporation. Shortly thereafter, upon the resignation of Mr. Michael Jordan as President, I was asked to assume the position of Acting President and Chief operating Officer. I accepted this position with reservation since my background and experience were not commensurate with the responsibilities of this type position in a public corporation. My main concern stemmed from my lack of knowledge relating to SEC rules and regulations, and the possibility i could potentially make errors that would reflect negatively upon the corporation. I had further concern that representations made by me, stemming from the signing of the vast number of documents and press releases required of this office could jeopardize me personally if I were to make a statement or if there were an unintentional error or oversight on my part. While I have tried to the best of my ability to carry out the duties of this office, and to the best of my knowledge have not made any of the errors or omissions, I find that it is in my best interest and in the interest of the corporation, that I resign my position as President. It should be further noted, that the increased workload pressures dealing with subsidiaries and merger activities, for which I am best suited, consume a significant amount of my time that takes away from my duties as president of the corporation. If it so please the Board, I am very interested in serving the balance of my employment contract in the capacity of Vice President and Chief Operating Officer, the position for which I was originally engaged. I believe my operational background and expertise are an excellent match for this position. Additionally, I believe I have meritoriously demonstrated my capabilities in this capacity since joining the company. I will agree to continue as Acting President until November 15, 2000, to provide you with the ample time to find a suitable replacement. I have enjoyed this relationship, and look forward to continuing same as aforementioned. Sincerely yours, /s/ Lawrence R. Van Etten Lawrence R. Van Etten Page 22 From: " Larry Van Etten" To: "Vanessa Lindsey" Cc: "William A. Calvo, III"; "carrington" Sent: Friday, November 10, 2000 1:31 PM Subject: Resignation To all: I respectfully withdraw my resignation as acting President. I will stay on Board in this capacity until such time as several issues are resolved with potential mergers and ample time is allotted to find a suitable person as a replacement on a permanent basis. Concerning Mr. David Cantley, he will be leaving his position as CFO effective November 17, 2000. Mr. Cantley has agreed to stay on the Board as a Director. This will be proposed at the next meeting. Thank you Page 23 EX-27 5 0005.txt FDS --
5 THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE UNAUDITED FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 2000 AND 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000050471 AmeriNet Group.com, Inc. 3-MOS JUN-30-2001 JUL-1-2000 SEP-30-2000 7,610 0 65,017 (5000) 0 281,926 369,031 (22,060) 1,940,946 811,214 0 0 782 124,652 102,810 1,940,946 216,636 216,636 192,640 192,640 894,344 0 22,505 (909,683) 0 (909,683) 0 0 0 (1,223,931) (0.10) (0.10)
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