-----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, O6OlbSXy/fwgJ6lz9HpT1JAhCXeps1DS92+/a7aKa+DB67seShSAbubVQShhe2bz 5oAYWy8XT63QM01V3BqvkQ== 0000050471-01-500004.txt : 20010516 0000050471-01-500004.hdr.sgml : 20010516 ACCESSION NUMBER: 0000050471-01-500004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERINET GROUP COM INC CENTRAL INDEX KEY: 0000050471 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [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: 1640460 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 form-10qsb_33101.txt U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-QSB QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal quarter ended: March 31, 2001 Commission file number: 000-03718 AMERINET GROUP.COM, INC. (Exact name of registrant as specified in its charter) Delaware 65-0957587 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2500 N. Military Trail, Suite 225 Boca Raton, Florida 33431 (Address of principal executive offices) (Zip code) (561) 998-3435 (Registrant's telephone number, including area code) Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No APPLICABLE TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practical date: On March 31, 2001, the issuer had outstanding 12,479,522 shares of common stock, $.01 par value per share. 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. Our company's maintains a web site at http://www.amerinetgroup.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. Page 2 AMERINET GROUP.COM, INC. AND SUBSIDIARIES FORM 10-QSB QUARTERLY PERIOD ENDED MARCH 31, 2001 INDEX PART I - FINANCIAL INFORMATION Item 1 - Consolidated Financial Statements Condensed Balance Sheet (Unaudited) As of March 31, 2001............................................4 Condensed Statements of Operations (Unaudited) For the Three and Nine Months Ended March 31, 2001 and 2000.....5 Condensed Statements of Cash Flows (Unaudited) For the Nine Months Ended March 31, 2001 and 2000...............6 Condensed Notes to Consolidated Financial Statements.................7-13 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations...................................13-16 PART II - OTHER INFORMATION Item 1 - Legal Proceedings..........................................16-20 Item 2 - Changes in Securities and use of Proceeds.....................21 Item 4 - Submission of Matters to a Vote of Security Holders...........21 Item 6 - Exhibits and Reports on Form 8-K...........................21-22 Signatures.............................................................23 Page 3 AMERINET GROUP.COM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET March 31, 2001 (Unaudited) ASSETS Current assets: Cash $ 7,815 Accounts receivable,net 142 ------------------- Total current assets 7,957 ------------------- Property and equipment, net 4,865 ------------------- Other assets: Investment in subsidiary - WRIwebs.com, Inc. 642,108 Property and equipment -idle, net 292,719 ------------------- Deposits 400 Total assets $ 948,049 =================== Current liabilities: Checks outstanding in excess of bank balance $4,373 Accounts payable 259,454 Accrued expenses 106,761 Loans payable - related parties 5,077 Current maturities of loans payable 389,808 Current maturities of capital leases 36,623 -------------- Total current liabilities 802,096 Equity subject to potential redemptions 640,987 -------------- Stockholders' deficit: Preferred stock, $.01 par value, 5,000,000 shares authorized, 412,116 issued and outstanding 4,121 Common stock, $0.01 par value, 20,000,000 shares authorized, 12,479,522 shares issued and outstanding 124,795 Subscription Payable 209,687 Outstanding stock options 17,270 Additional paid in capital 14,911,398 Accumulated deficit (15,762,305) -------------- Total stockholders' deficit (495,034) -------------- Total liabilities and stockholders' deficit $ 948,049 ============== See accompanying notes to condensed consolidated financial statements. Page 4 AMERINET GROUP.COM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Nine and Three Months Ended March 31, 2001 and 2000 Three Months Ended Nine Months Ended March 31, March 31, 2001 2000 2001 2000 Revenues earned $ 22,524 $ 45,063 $ 367,793 $ 249,941 Cost of revenues earned 2,355 18,398 248,569 176,476 ------ ------- -------- -------- Gross profit 20,169 26,665 119,224 73,465 ------- ------- -------- ------- Operating expenses: Selling, general and administrative expenses 1,505,264 522,096 3,403,954 1,318,983 Depreciation and amortization 9,313 342,084 106,368 554,527 Goodwill - charges and transactions - - 630,791 522,201 -------- -------- -------- -------- Total operating expenses 1,514,577 864,180 4,141,113 2,395,711 --------- -------- ---------- --------- Loss from operations (1,494,408) (837,515) (4,021,889) (2,322,246) ----------- --------- ----------- ---------- Other (expenses): Interest expense (10,684) (8,853) (47,087) (34,290) Debt Forgiveness - - (222,983) Equity in losses of subsidiary (34,452) (38,269) (19,710) (45,021) ---------- -------- -------- -------- Total other (expenses) (45,136) (47,122) (289,780) (79,311) ---------- -------- --------- --------- Net loss $(1,539,544) $ (884,637) $(4,311,669) $(2,401,557) ============= =========== ============ ============ Discount Attributable to Beneficial Conversion Privilege of Preferred Stock - - (814,246) - ------------ ---------- --------- ----------- Net Loss Applicable to Common Stock $ (1,539,544) $ (884,637) $(5,125,915 $(2,401,557) ============= =========== =========== ============ Basic loss per share $ (0.12) $ (0.08) $ (0.41) $ (0.27) ============= =========== ========== ============ Weighted average shares outstanding 12,467,743 10,482,350 12,466,042 8,951,827 ============ =========== =========== ========== Fully diluted loss per share $ (0.12) $ (0.08) $ (0.41) $ (0.27) ============ =========== ========== ========= Fully diluted average shares outstanding 12,467,743 10,482,350 12,466,042 8,951,827 ============ =========== =========== ========= See accompanying notes to condensed consolidated financial statements. Page 4 AMERINET GROUP.COM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended March 31, 2001 and 2000 Nine Months Ended March 31, ========================== 2001 2000 ---------- ---------- Net cash used by operating activities $ (564,029) $ (1,130,198) ----------- ------------- Cash flows from investing activities: Purchase of property and equipment (3,391) (36,650) Cash overdraft acquired in acquisition - (69,838) ----------- ------------- Net cash used by investing activities: (3,391) (106,488) ----------- ------------- Cash flows from financing activities: Common stock issued for cash, net of costs - 906,950 Preferred stock issued for cash 88,000 - Capital contributions - 25,000 Proceeds from loans payable 561,671 - Net payments on capital lease obligations (36,008) - Payments on mortgage and loans payable (76,854) 345,500 ----------- ------------ Net cash provided by financial activities 536,809 1,277,450 ----------- ------------ Net (decrease) increase in cash (30,611) 40,764 Cash at beginning of period 38,426 79,021 ---------- ----------- Cash at end of period $ 7,815 $ 119,785 =========== =========== Supplemental disclosure of cash flow information: Cash paid during the year for: Interest $ - $ 25,601 =========== =========== Non-cash transactions affecting investing and financing activities: Common stock issued for equipment $ - $ 6,075 =========== ========== Common stock issued for interest $ - $ 22,500 =========== ========== Common stock issued for acquisitions $ - $4,851,562 =========== ============ Contribution of professional services $ - $ 644,295 =========== ============ Preferred stock issued for debt $ 1,135,890 $ - =========== ============ See accompanying notes to condensed consolidated financial statements. Page 5 AMERINET GROUP.COM, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated. 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 our Annual Financial Statements for the year ended June 30, 2000. Operating results for the three months and nine months ended March 31, 2001 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 our Annual Report on Form 10-KSB as filed with the Securities and Exchange Commission. NOTE 2 - GOODWILL IMPAIRMENT AND FORGIVENESS OF LOAN RECEIVABLE Pursuant to SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," we evaluated the recoverability of the long-lived assets, primarily the loan receivable from WRI and the goodwill recorded upon the acquisition of Lorilei. On January 26, 2001, we entered into a Superseder and Exchange Agreement with Yankees, WRI and Michael A. Caputa. In summary the agreement calls for Michael Caputa, WRI's president, to return 500,380 shares of our common stock originally issued to him. In exchange for the common stock, we have forgiven the debt owed to us by WRI and for WRI to distribute to the stockholders of our company 20% of its common stock after its registration with the Commission. Upon completion of the transactions contemplated by the agreements, we will no longer have any equity interest in WRI. In connection with this agreement, we recorded a non-cash charge of $222,983, adjusting the carrying value of the loan to its estimated fair value of $-0-. Additionally, we recorded a non-cash charge of $630,791, adjusting the carrying value of the unamortized portion of the goodwill recorded upon the acquisition of Lorilei to its estimated fair value of $-0-. NOTE 3 - STOCKHOLDERS' EQUITY Common Stock In March 2001, in connection with the disposition of our subsidiary, Trilogy International, Inc, we issued 14,352 shares of common stock that were held in escrow. These common shares were value at fair value of $2,870 and charged to operations. Page 6 NOTE 3 - STOCKHOLDERS' EQUITY (Continued) Common Stock (Continued) On January 1, 2000 and on March 8, 2000 our company adopted Non-Qualified and Incentive Stock Option Plans. The objectives of these plans include attracting and retaining the best personnel and promoting the success of the Company by providing employees and directors the opportunity to acquire common stock. The Stock Option Plans authorize our company to grant up to 3,000,000 common shares of which 529,800 have been granted at December 31, 2000. Preferred Stock On June 29, 2000 our company's Board of Directors adopted a resolution creating and designating the initial series of our company's Preferred Stock. The shares are designated Class A Preferred Stock and the number of shares authorized to be issued was 500,000 shares. On February 21, 2001, the Board of directors amended the resolution and increased the authorizesd shares to 1,000,000. Each share of Class A Preferred Stock is convertible into a minimum of 20 shares of our Company's common stock. During the nine months ended March 31, 2001, we issued Class A Preferred Stock for cash, for conversion of debt and in exchange for services as follows: During July and August 2000, we 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. During July and August 2000, we converted $16,965 of debt to 3,393 shares of Class A Preferred Stock at $5.00 per share. During August 2000, we converted $115,000 of our debt to Yankee's by issuing 46,000 shares of Class A Preferred Stock at $2.50 per share in accordance with Yankee's preferred subscription rights. During the quarter ended December 31, 2000, we converted $434,493 of our debt to Yankee's by issuing 173,797 shares of Class A Preferred Stock at $2.50 per share in accordance with Yankee's preferred subscription rights. During the quarter ended March 31, 2001, we converted $225,608 of debt to 137,072 and 10,000 shares of Class A Preferred Stock at $1.50 and $2.00 per share, respectively, in accordance with Yankee's preferred subscription rights. During the quarter ended March 31, 2001, we issued converted 18,334 shares of Class A Preferred Stock for consulting services rendered amounting to $30,000. The beneficial conversion feature present in the issuance of the Class A Preferred Stock as determined on the date of issuance of the Class A Preferred Stock totaled $1,842,690 for the nine months ended March 31, 2001 and is treated as a reduction in earnings available (increase in loss attributable) to common stockholders over the period from the date of issuance of the Class A Preferred Stock to the earliest date such shares may be converted Page 7 NOTE 3 - STOCKHOLDERS' EQUITY (Continued) Stock Options On December 21, 2000, we adopted the "Amerinet Group.com, Inc. 2001 Officers' & Directors' Stock Option Plan" (the Plan). The Plan became effective on January 1, 2001. The purpose of this plan include attracting and retaining the best personnel and promoting the success of the Company by providing employees and directors the opportunity to acquire common stock. The Plan authorizes us to grant to each board member options to purchase 15,000 common shares during the twelve-month period commencing January 1, 2001 to December 31, 2001 at $.27 per share. These options vest as at 1,000 options per month with all unvested options vesting on December 31, 2001. For services on a permanent committee, the option will increase by an additional 10,000 shares and will vest at a rate of 800 shares per month with all unvested options vesting on December 31, 2001. For service as the chair of a permanent committee, the option will increase by an additional 5,000 shares and will vest at a rate of 400 shares per month with all unvested options vesting on December 31, 2001. As of March 31, 2001, no options have been granted under this plan. We have 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. We account for stock options granted to consultants under Financial Accounting Standards Board Statement No. 123, "Accounting For Stock-Based Compensation". We issued 223,440 stock options to Yankee during the quarter ended September 30, 2000. We recorded compensation expense of $151,939. We recognized $129,505 in compensation expense for the three months ended December 31, 2000 in connection with an increase of 479,649 shares of common stock underlying the Yankee option to purchase up to 12 1/2% of the outstanding and reserved common shares of our company. We recognized $138,434 in compensation expense for the three months ended March 31, 2001 in connection with an increase of 516,545 shares of common stock underlying the Yankee option to purchase up to 12 1/2% of the outstanding and reserved common shares of our company. With this increase in the underlying shares, Yankees now has the option to purchase 3,377,167 shares of our company's common stock for an aggregate price of $90,000. We issued 164,800 common stock options to Directors of our company for services provided during the quarter ended December 31, 2000 at an exercise price of $1.4375 per share of common stock. 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", our company's net loss for the three months ended December 31, 2000 would have increased by $1,648 to $1,864,088. During the quarter ended March 31, 2001, we did not grant any stock options. Page 8 NOTE 3 - STOCKHOLDERS' EQUITY (Continued) A summary of the option transactions during the three months ended March 31, 2001 is shown below: Weighted- Number of Average Shares Exercise Price ---------------- --------------- Outstanding at December 31, 2000 3,185,738 $ 0.43 Granted 516,545 .02 Exercised - - Forfeited - - ----------------- --------------- Outstanding at March 31, 2001 3,732,283 $ 0.37 ================= ================= Other Yankee contributed professional services of $112,530 to the Company during the three month period ended September 30, 2000. Yankees contributed professional services of $112,525 to our company during the three month period ended December 31, 2000. NOTE 4 - RELATED PARTY TRANSACTIONS At March 31, 2001, we had outstanding payables to stockholders in the amount of $5,077. The transactions are summarized as follows: Balance at beginning of period $ 52,082 Advances during the period 185,000 Payments during the period (6,397) Conversions to equity (225,608) ------------------ Balance at end of period $ 5,077 =================== During the three months ended December 31, 2000, Yankees contributed professional services valued at $112,525 to our company. Our company recognized the $112,525 as consulting fees expense and the entire amount was contributed to our company as additional paid in capital. Our company shares office space in Boca Raton, Florida with a related party. Rent expense for the nine months ended March 31, 2001 was $4,103. Page 9 NOTE 5 - SUBSCRIPTIONS PAYABLE Certain officers of our company and/or one of its subsidiaries as well as certain independent contractors provide services to our company valued individually at $5,000 to $8,333 per month. The compensation earned by these individuals is due and payable at the end of one year's service with our company in the form of our company's common stock, provided they were employed for such period. As of March 31, 2001, we had incurred a total expense for executive compensation, consulting services and legal services provided by these individuals in the amount of $209,687. NOTE 6 - MATERIAL CONTRACTS WRI Superseder and Exchange Agreement On January 26, 2001, we entered into a Superseder and Exchange Agreement with Yankees, WRI and Michael A. Caputa. In summary the agreement calls for Michael Caputa, WRI's president, to return 500,380 shares of our common stock originally issued to him. In exchange for the common stock, we have forgiven the debt owed to us by WRI and for WRI to distribute to the stockholders of our company 20% of its common stock after its registration with the Commission. Upon completion of the transactions contemplated by the agreements, we will no longer have any equity interest in WRI. As Off March 31, 2001, we had not completed closing on this agreement. The closing will take place when the shares are registered with the Commission and distributed to our shareholders. Subsequent to March 31, 2001, Michael Caputa returned all of our common shares originally issued to him. PriMed Consulting Agreement Our company entered into an agreement on January 16, 2001, which was fully executed on January 31, 2001, with PriMed Technologies, Inc., and PriMed Technologies LC of Deerfield Beach, Florida (website at www.primedtech.com; "PriMed"), pursuant to which our company's stockholders will, subject to prior registration under Section 5 of the Securities Act, receive 10% of the common stock of an entity to be formed consolidating the operations of PriMed and its affiliates ("New PriMed"). The stock will be issued to our company's stockholders of record at the close of business on the day the required registration statement is declared effective by the Commission provided that their shares were outstanding prior to May 31, 2001. As currently contemplated, our company's stockholders will receive one share of New PriMed common stock for every 10 shares of our company's common stock held. A copy of the agreement was filed on Form 8-K on February 8, 2001. Negotiations are continuing concerning our company's acquisition of a majority interest in New PriMed, in addition to the shares to be issued directly to our companies stockholders. PriMed, which is in the process of consolidating and expanding its current operations, is involved in the provision of management and support services to the health care industry along with the latest on-line technologies to its growing client base of physicians, hospitals and ancillary service organizations in South Florida. Page 10 NOTE 7 - SUBSEQUENT EVENTS During April 2001, we granted 83,000 options pursuant to the "Amerinet Group.com, Inc. 2001 Officers' & Directors' Stock Option Plan". The options can be exercised at $.27 per share and expire on December 31, 2003. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Recent Developments Pertaining to Implementation of Plan of Operation Our 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 its unprofitable subsidiaries, Trilogy International, Inc. and Vista Vacations, Inc. at June 30, 2000, was a significant step towards accomplishing this goal. AmeriCom In September 2000, our company organized a new subsidiary, AmeriNet Communications, Inc., A Florida corporation ("AmeriCom") and assigned it most of Lorilei's assets, personnel and operations. AmeriCom's target markets were redirected and expanded. All business formerly conducted by our company's Lorilei subsidiary have been conducted by AmeriCom since October 1, 2000. Based on an operating plan developed by our company's chief financial officer and chief operating officer, it was expected that AmeriCom would produce net operating income for the three month period ended December 31, 2000 and that by the end of our fiscal year June 30, 2001 AmeriCom would significantly contribute to the earnings of our company. Operations of AmeriCom did not produce the expected results and the subsidiary experienced significant operating losses for the three-month period ended December 31, 2000. Because of the disappointing operating results of AmeriCom and without assurances of an immediate turnaround, Yankees informed our company in early December 2000, that it was unwilling to lend any additional funds to our company for use in funding the operating deficit at AmeriCom. In as much as our company has no current financing available from sources other than Yankees it has been unable to provide any funds to AmeriCom since early December. AmeriCom has continued to operate by deferring payables, but without additional financing it is uncertain as to whether the company can continue in business. AmeriCom has made major management changes, and Edward C. Dmytryk, also the president of our company, was elected president of AmeriCom during February of 2001. In addition, in February, our AmeriCom subsidiary has ceased operations. AmeriCom is re-evaluating its market and is in the process of developing projects such as The GreenGrouper website and related businesses. Page 11 WRI Our company and the principals of WRI have entered into a superseder and exchange agreement. The agreement was filed with the Commission on Form 8-K on February 8, 2001. In summary the agreement calls for Michael Caputa, WRI's president, to return 500,380 shares of our company's common stock originally issued to him, for our company to forgive the debt owed to it by WRI and for WRI to distribute to the stockholders of our company 20% of its common stock after its registration with the Commission. Upon completion of the transactions contemplated by the agreements our company will no longer have any equity interest in WRI. The parties executed the final agreement on January 26, 2001, although we have not closed this transaction as of March 31, 2001. Park City Group, Inc. On March 12, 2001, we signed a letter of intent to acquire Park City Group, Inc. ("Park City"), a software developer headed by the co-founder of the internationally renowned Mrs. Fields' Cookies. Under the terms of the proposed agreement, Park City would receive 78% of all the issued and outstanding shares of AmeriNet in exchange for 100 percent of its common shares. AmeriNet shareholders would retain 18% of the company. AmeriNet will also raise up to $1 million through a private placement, which will account for up to 4 % of the common stock to be outstanding after the acquisition. The funds will be used for Park City operations, future acquisitions, as well as research and development. AmeriNet's existing operating subsidiaries, Wriwebs.com, Inc. and AmeriNet Communications, Inc., and all other investments in securities would be spun off to AmeriNet stockholders, or their successors in interest, as of a date preceding the Park City acquisition, or otherwise disposed of prior to closing. Park City is a Park City, Utah-based provider of proprietary software applications primarily for multi-unit retail operations. Through its ActionManager Enterprise Application Suite, Park City offers management and staff solutions to a variety of operations issues and greatly reduces dependence on paper transactions. Park City's Fresh Market Manager, the newest in supermarket technology, provides superior production planning and inventory management. Randall K. Fields, co-founder of the highly successful Mrs. Fields' Cookies stores, founded Park City Group, Inc. in 1990. The software applications that were the genesis of Park City are rooted in applications developed during the explosive growth of the more than 800 unit chain. Mr. Fields currently serves as the chairman of Park City's Board and as its chief executive officer. In its most recent fiscal year, Park City had un-audited revenues of just more than $6 million with pretax profits of $2.4 million. It currently has 56 employees servicing such major accounts as Victoria's Secret, The Home Depot, Pacific Sunwear, Crate & Barrel, Bath & Body Works, Universal Studios - Orlando, Bi-Lo Foods, William-Sonoma and Wawa. The transaction is contingent upon, among other things, certain due diligence, board approval, shareholder consent and the execution of definitive agreements. As a result, there are no assurances that the transaction will be consummated. Page 12 RESULTS OF OPERATIONS The condensed statement of operations for our company for the three months and nine months ended March 31, 2001 includes operations of our company at the holding company level and its wholly owned subsidiaries Lorilei and AmeriCom. In addition, 20% of the operating gains or losses of our company's affiliate WRI are included in our company's consolidated financials. For the three months and nine months ended March 31, 2000, the condensed statement of operations included our company for the entire period; our company's formerly wholly owned subsidiary AITC for the two months ended November 30, 1999; our formerly wholly owned subsidiary Trilogy for the four month ended March 31, 2000 and 20% of the operating losses of WRI for the four month ended March 31, 2000. For the three and nine months ended March 31, 2001, we reported revenues of $22,524 and $367,793, respectively, all of which were generated by our subsidiary company AmeriCom. Revenues for the three and nine months ended March 31, 2000 were $45,063 and $249,941, respectively, and were generated by our former subsidiaries AITC and Trilogy. Due to our decision to close our unprofitable subsidiaries, our revenues have decreased substantially. Cost of revenues for the three and nine months ended March 31, 2001, were $2,355 and $248,569, respectively, as compared to cost of revenues for the three and nine months ended March 31, 2000 of $18,398 and $176,476. Due to our decision to close our unprofitable subsidiaries, our cost of revenues have decreased substantially. Our company as a whole reported a net loss applicable to common stock for the nine months ended March 31, 2001 of $5,125,915. These losses were comprised of equity in the loss of WRI (20%) of $19,710; net operating loss of our subsidiaries Lorilei and AmeriCom of $1,015,862 which includes a writedown of the Lorilei's goodwill of $630,791 and a net loss for the holding company of $4,090,343. For the three months ended March 31, 2000, our company's losses were $1,539,544 based on the following factors: selling, general and administrative expenses for the three months ended March 31, 2001 were $1,505,264 compared to $522,096 for the three months ended March 31, 2000. $51,249 of the expense for the current period was incurred by our subsidiary AmeriCom in the normal course of business. The remaining $1,454,015 was incurred at the holding company level a large portion of which consisted of non-cash expenses. In connection with the issuance of our preferred stock for services and in exchange for debt, we recorded a charge of $1,028,444 to reflect the beneficial conversion feature of the preferred stock issued to Yankees and other related parties. Certain employees and consultants to our company agreed to defer a total of $92,873 in compensation earned by them during the period. The expense was recognized and a corresponding in subscriptions payable was added to stockholders' equity. Our company recognized a compensation expense of $138,434 in connection with the increase of 516,545 shares of common stock underlying the Yankee option to purchase up to 12 1/2% of the outstanding shares of our company's common stock. Additionally, we issued preferred shares for services amounting to $30,000. These non-cash expenses totaled $1,289,751. The remaining $164,264 of selling, general and administrative expense for the period was incurred at the holding company level in the normal course of conducting its business. Page 13 Depreciation and amortization expense for the three months ended March 31, 2001 was $9,313 as compared to an expense of $342,084 for the three months ended March 31, 2000. For the three months ended March 31, 2000, we recorded amortization of goodwill attributable to our company's former wholly owned subsidiary, Trilogy. Interest expense was $10,684 for the three months ended March 31, 2001 compared to $8,853 for the same period in 2000. LIQUIDITY AND CAPITAL RESOURCES At March 31, 2001 we had cash on hand of $3,442 compared to $119,785 at March 31, 2000. At March 31, 2001, we had a working capital deficit of $793,739 compared to a working capital deficit at March 31, 2000 of $_______. The deficit in working capital at March 31, 2001 was related principally to accounts payable and accrued expenses at the subsidiary level in excess of accounts receivable and the current portion of capital leases and loans payable at the subsidiary level. A similar situation existed at March 31, 2000; however, the subsidiary contributing to the deficit at that time was our former subsidiary Trilogy whereas at March 31, 2001 the deficit is principally attributable to our subsidiaries Lorieli and AmeriCom. Our company and its subsidiaries have accumulated a net deficit of $15,762,305 since inception. This gives rise to questions regarding the ability of our company to continue as a going concern. The deficit for the three months ended March 31, 2001 is $1,539,544. Management has implemented significant cost reductions though our discontinuance of unprofitable operations. With the assistance of Yankees, we are actively exploring acquisitions of operating companies and related infusions of capital which would materially improve our cash flow, liquidity and profitability, however we can not assure that it will be 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 March 31, 2001, Yankees had loaned our company an aggregate of $________. The loans are secured by all of our company's assets, including the capital stock in its subsidiaries. At our request, Yankees has converted all of its loans to date into shares of our company's common stock and Class A Preferred Stock. As of March 31, 2001, Yankees had converted $________ of its aggregate loans into equity. Our company's continuing liquidity and access to capital is totally reliant on Yankees and investors introduced to our company by Yankees. Page 14 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Our company has not been involved in any material legal proceedings, other than the 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". The inactive subsidiary Lorilei Communications, Inc., has been sued for $7813.30 for an unpaid bill. ITEM 2. CHANGES IN SECURITIES RECENT SALES OF UNREGISTERED SECURITIES Since December 31, 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. Consequently, as of March 31, 2001, 12,479,522 shares of our company's common stock were outstanding and 412,116 shares of our company's class A preferred stock were outstanding. 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 - ---- ----- ---------- ------------- -------------- --------- 2001 January 31 5,000 Debra Ellenson (4) (3) (2) January 31 5,000 Johnathan Eichner (5) (3) (2) January 31 5,000 Scott Heicken (5) (3) (2) February 28 10,000 Blue Lake Capital Corp (7) (3) (2) February 28 12,000 Yankees (6) (3) (2) February 28 2,500 K, Walker LTD (4) (3) (2) February 28 2,500 Palm Air, Inc (4) (3) (2) February 28 834 Vanessa Lindsey (4) (3) (2) February 28 833 Edward Dmytryk (4) (3) (2) March 1 10,000 Calvp Family Trust (8) (3) (2) March 31 4,000 K. Walker LTD (4) (3) (2) March 31 500 SRKD Trading Corp (4) (3) (2) March 31 667 Vanessa Lindsey (4) (3) (2) March 31 1,500 Yankees (9) (3) (2) March 31 3,500 Palm Air, Inc (6) (3) (2) March 31 1,500 K. Walker LTD (6) (3) (2) March 31 736 Vanessa Lindsey (6) (3) (2) March 31 83,336 Yankees (6) (3) (2) March 31 14,667 Blue Lake Capital Corp (7) (3) (2) March 31 1,333 Calvo Family Trust (8) (3) (2)
Page 15 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) Pursuant to the terms of the amended consulting agreement between our company and Yankees, it is entitled to receive $10,000 per month or $10,000 worth of stock per month for compensation. At Yankees request the shares were given to associates. (5) At the issuer's request, Yankees converted $20,000 of debt to equity (a total of 10,000 shares of preferred stock). At Yankees request the shares were given to associates. (6) At the issuer's request, Yankees converted $151,608 of debt to equity (a total of 101,072 shares of preferred stock). At Yankees request the shares were given to associates. (7) At the issuer's request, Blue Lake Capital Corp. converted $37,000 of debt to equity (a total of 24,667 shares of preferred stock). (8) At the issuer's request, the Calvo Family Spendthrift Trust converted $17,000 of debt to equity (a total of 11,333 shares of preferred stock). AMOUNT OF COMMON EQUITY SUBJECT TO OUTSTANDING OPTIONS OR WARRANTS TO PURCHASE, OR SECURITIES CONVERTIBLE INTO, COMMON EQUITY OF OUR COMPANY As of January 31, 2001, our company had 10,030,875 shares of its common stock reserved for issuance in conjunction with current obligations to issue additional shares, in the event that currently outstanding options and warrants are exercised and conversion of preferred to common. Page 16 NEW AUTHORIZED SHARES Our company's board of directors and stockholders authorized a change in the number of shares of Class A Preferred Stock from 500,000 to 1,000,000, however it did not increase the total number of authorized preferred stock. Our company's board of directors and stockholders also authorized an increase in the number of shares of common stock from 20,000,000 shares, $0.01 par value, to 200,000,000 shares, $0.01 par value. An amendment to the articles of incorporation reflecting an increase to 30,000,000 shares has been filed with the State of Delaware. It is anticipated that the authorized shares will be increased to 150,000,000 shares immediately prior to closing on the acquisition of Park City Group, Inc. 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 Regulation S-B By Reference Description (99) Additional Exhibits: (b) Reports on Form 8-K Filed During Quarter Ended March 31, 2001 During the calendar quarter ended March 31, 2001, we filed the following reports on Form 8-K with the Commission: Financial Items Reported Date Filed Statements Included 5 & 7 01/05/01 None 5 & 7 02/08/01 None 5 & 7 03/14/01 None Page 17 Signatures 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. May 15, 2001 By: /s/Edward C. Dmytryk /s/ ----------------------------- Edward C. Dmytryk President, Chief Executive 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 ed@amerinetgroup.com Corporate Headquarters: Officers Edward C. Dmytryk, President & Chief Executive Officer; Lawrence R. Van Etten, Vice President & Chief Operating Officer; Vanessa H. Lindsey, Secretary; Douglas L. Wilson, General Counsel Board of Directors Lawrence R. Van Etten; Vanessa H. Lindsey; Charles J. Champion, Jr.; G. Richard Chamberlin; Anthony Q. Joffe; Douglas L. Wilson; Edward C. Dmytryk; and J. Bruce Gleason 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 e-mailto:patrick@dbmsys.usa.com Transfer Agent: Liberty Transfer Company 274B 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 ended March 31, 2001 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 March 31, 2001, 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 ended March 31, 2001, with or without exhibits, should be addressed to Edward C. Dmytryk, President; AmeriNet Group.com, Inc.; Crystal Corporate Center; 2500 North Military Trail, Suite 225-C; Boca Raton, Florida 33431, or faxed to Mr. Dmytryk 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-4.7 2 exb4-7.txt CERTIFICATE OF AWARD 2000 TEMPLATE AMERINET GROUP.COM, INC. NON-QUALIFIED STOCK OPTION AND STOCK INCENTIVE PLAN EFFECTIVE AS OF JANUARY 1, 2000 CERTIFICATE OF AWARD STATE OF FLORIDA } COUNTY OF MARION } SS.: Pursuant to a duly adopted resolution of the Option Plan Committee of its Board of Directors, AmeriNet Group.com, Inc., a publicly held Delaware corporation with a class of securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (hereinafter referred to as the "Corporation"), intending to be legally bound, hereby certifies that the individual whose name is set forth below (the "Participant") has received an award of Incentive Stock Options [_] Non Qualified Stock Options [X] (the "Award" and the "Option," respectively) under and pursuant to its non-qualified stock option and stock incentive plan, effective as of January 1, 2000 (the "Plan"), a copy of which has been heretofore filed with the United States Securities and Exchange Commission. All provisions of the Plan not specifically inconsistent herewith are hereby incorporated by reference. Name of Recipient: _________________________________ Number of shares of common stock, $0.01 par value, underlying the Option:_______ Exercise price per share: $1.44 Earliest date that the Option may be exercised: January 1, 2001 Latest date that the Option may be exercised: December 31, 2002 Investment Representation: The Option is [_] is not [X] transferable (except as legally required by operation of law, e.g., by testamentary disposition or intestate succession). The Option has [_] has not [X] been registered under applicable federal and state securities laws. If it has not been registered, neither the Option (whether or not otherwise transferable) or the underlying shares of common stock may be sold, transferred or hypothecated until the legal restrictions on sale are no longer applicable and such inapplicability is demonstrated to the satisfaction of the Corporation and its legal counsel. The shares of common stock underlying the Option have [_] have not [X] been registered under applicable federal and state securities laws. If they have not been registered, the underlying shares of common stock may be sold, transferred or hypothecated until the legal restrictions on sale are no longer applicable and such inapplicability is demonstrated to the satisfaction of the Corporation and its legal counsel. Withholding Taxes: A. The Corporation shall have the right to deduct from all cash payments owed to the Participant for any reason, any federal, state, local or foreign taxes required by law to be withheld with respect to any Plan Awards. B. In the case of the issuance or distribution of Common Stock or other securities hereunder, either directly or upon the exercise of or payment upon any Plan Award, the Corporation, as a condition of such issuance or distribution, may require the payment (through withholding from the Participant's salary, reduction of the number of shares of Common Stock or other securities to be issued, or otherwise) of any such taxes. C. The Participant may satisfy the withholding obligations by paying to the Corporation a cash amount equal to the amount required to be withheld or by tendering to the Corporation a number of shares of Common Stock having a value equivalent to such cash amount, or by use of any available procedure as described under Article Three of the Plan. Exercise Upon Participant's Termination of Employment: A. If the employment of the Participant by the Corporation or by any Parent or Subsidiary is terminated for any reason other than death, any Incentive Stock Option granted to the Participant may not be exercised later than three months (one year in the case of termination due to Disability) after the date of such termination of employment. B. The reduction in the ownership of any Subsidiary by the Corporation below one share more than 50% shall be deemed a termination of the employment of the Participant if the Participant's determination of required status under this Plan is predicated on the Participant's status in connection with such Subsidiary. Maximum Amount of Incentive Stock Options. With reference to Incentive Stock Options, to the extent the aggregate of the Fair Market Value of the shares of Common Stock (determined as of the time of the grant of the Option) subject to such Incentive Stock Option and the fair market values (determined as of the date(s) of grant of the option(s) of all other shares of Common Stock subject to incentive stock options granted to the Participant by the Corporation or any Parent or Subsidiary, which are exercisable for the first time by any person during any calendar year, exceed(s) one hundred thousand dollars ($100,000), such excess shares of Common Stock shall not be deemed to be purchased pursuant to Incentive Stock Options. The terms of the immediately preceding sentence shall be applied by taking all options, whether or not granted under this Plan, into account in the order in which they are granted. * * * * In Witness Whereof, pursuant to a duly adopted resolution of the Option Plan Committee of the Corporation's Board of Directors, currently in effect, the undersigned have executed this Indenture, by and on behalf of the Corporation. AmeriNet Group.com, Inc. Dated: January 29, 2001 By:_____________________________ Edward C. Dmytryk President {Corporate Seal} Attest:______________________ Vanessa H. Lindsey Secretary Before me, an officer duly authorized to administer oaths by the State of Florida, did personally appear Edward C. Dmytryk and Vanessa H. Lindsey, known to me, who being duly sworn, did certify to me, in my presence, that they executed this Indenture, in the capacities indicated, on the date set forth above, as the act of AmeriNet Group.com, Inc., a publicly held Delaware corporation with a class of securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Corporation"), pursuant to authority of a duly promulgated and currently effective resolution of its duly elected and serving Board of Directors, and that by such action, the Corporation has become bound by the terms hereof. Witness my hand and seal, this ___d day of ________, 200_. My commission expires: {Notarial Seal} --------------------------------- Notary Public EX-4.8 3 exb4-8.txt CERTIFICATE OF AWARD FOR 2001 TEMPLATE AMERINET GROUP.COM, INC. 2001 OFFICERS' & DIRECTORS' STOCK OPTION PLAN EFFECTIVE AS OF JANUARY 1, 2001 CERTIFICATE OF AWARD STATE OF FLORIDA } COUNTY OF MARION } SS.: Pursuant to a duly adopted resolution of the Option Plan Committee of its Board of Directors, AmeriNet Group.com, Inc., a publicly held Delaware corporation with a class of securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (hereinafter referred to as the "Corporation"), intending to be legally bound, hereby certifies that the individual whose name is set forth below (the "Participant") has received an award of Incentive Stock Options [_] Non Qualified Stock Options [X] (the "Award" and the "Option," respectively) under and pursuant to its 2001 officers' & directors' stock option plan, effective as of January 1, 2001 (the "Plan"), a copy of which has been heretofore filed with the United States Securities and Exchange Commission. All provisions of the Plan not specifically inconsistent herewith are hereby incorporated by reference. Date of Grant: April 16, 2001 Name of Recipient: _______________________________ Number of shares of common stock, $0.01 par value, underlying the Option:______ Exercise price per share: $0.27 Earliest date that the Option may be exercised: April 16, 2001 Latest date that the Option may be exercised: December 31, 2003 Investment Representation: The Option is [_] is not [X] transferable (except as legally required by operation of law, e.g., by testamentary disposition or intestate succession). The Option has [_] has not [X] been registered under applicable federal and state securities laws. If it has not been registered, neither the Option (whether or not otherwise transferable) or the underlying shares of common stock may be sold, transferred or hypothecated until the legal restrictions on sale are no longer applicable and such inapplicability is demonstrated to the satisfaction of the Corporation and its legal counsel. The shares of common stock underlying the Option have [_] have not [X] been registered under applicable federal and state securities laws. If they have not been registered, the underlying shares of common stock may be sold, transferred or hypothecated until the legal restrictions on sale are no longer applicable and such inapplicability is demonstrated to the satisfaction of the Corporation and its legal counsel. Withholding Taxes: A. The Corporation shall have the right to deduct from all cash payments owed to the Participant for any reason, any federal, state, local or foreign taxes required by law to be withheld with respect to any Plan Awards. B. In the case of the issuance or distribution of Common Stock or other securities hereunder, either directly or upon the exercise of or payment upon any Plan Award, the Corporation, as a condition of such issuance or distribution, may require the payment (through withholding from the Participant's salary, reduction of the number of shares of Common Stock or other securities to be issued, or otherwise) of any such taxes. C. The Participant may satisfy the withholding obligations by paying to the Corporation a cash amount equal to the amount required to be withheld or by tendering to the Corporation a number of shares of Common Stock having a value equivalent to such cash amount, or by use of any available procedure as described under Article Three of the Plan. Exercise Upon Participant's Termination of Employment: A. If the employment of the Participant by the Corporation or by any Parent or Subsidiary is terminated for any reason other than death, any Incentive Stock Option granted to the Participant may not be exercised later than three months (one year in the case of termination due to Disability) after the date of such termination of employment. B. The reduction in the ownership of any Subsidiary by the Corporation below one share more than 50% shall be deemed a termination of the employment of the Participant if the Participant's determination of required status under this Plan is predicated on the Participant's status in connection with such Subsidiary. Maximum Amount of Incentive Stock Options. With reference to Incentive Stock Options, to the extent the aggregate of the Fair Market Value of the shares of Common Stock (determined as of the time of the grant of the Option) subject to such Incentive Stock Option and the fair market values (determined as of the date(s) of grant of the option(s) of all other shares of Common Stock subject to incentive stock options granted to the Participant by the Corporation or any Parent or Subsidiary, which are exercisable for the first time by any person during any calendar year, exceed(s) one hundred thousand dollars ($100,000), such excess shares of Common Stock shall not be deemed to be purchased pursuant to Incentive Stock Options. The terms of the immediately preceding sentence shall be applied by taking all options, whether or not granted under this Plan, into account in the order in which they are granted. * * * * In Witness Whereof, pursuant to a duly adopted resolution of the Option Plan Committee of the Corporation's Board of Directors, currently in effect, the undersigned have executed this Indenture, by and on behalf of the Corporation. AmeriNet Group.com, Inc. Dated: ________________ By:___________________________ Edward C. Dmytryk President {Corporate Seal} Attest:______________________ Vanessa H. Lindsey Secretary Before me, an officer duly authorized to administer oaths by the State of Florida, did personally appear Edward C. Dmytryk and Vanessa H. Lindsey, known to me, who being duly sworn, did certify to me, in my presence, that they executed this Indenture, in the capacities indicated, on the date set forth above, as the act of AmeriNet Group.com, Inc., a publicly held Delaware corporation with a class of securities registered under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Corporation"), pursuant to authority of a duly promulgated and currently effective resolution of its duly elected and serving Board of Directors, and that by such action, the Corporation has become bound by the terms hereof. Witness my hand and seal, this 16th day of April, 2001. My commission expires: {Notarial Seal} ---------------------------------- Notary Public EX-10.85 4 exb10-85.txt CONVERSION AGREEMENT TEMPLATE Conversion Agreement This Conversion Agreement (the "Agreement") is made and entered into by and among AmeriNet Group.com, Inc., a publicly held Delaware corporation with a class of securities registered under Section 12(g) of the Exchange Act ("AmeriNet") and, ABC Company, a __________ corporation ("ABC"), AmeriNet and ABC being sometimes hereinafter collectively referred to as the "Parties" or generically as a "Party"). Preamble: WHEREAS, in order for AmeriNet to more effectively organize its operations and acquire promising operating companies, it needs to reduce its current indebtedness; and WHEREAS, ABC has agreed to converting $_________ of the debt currently owed by AmeriNet to ABC (the "AmeriNet Debt") into equity at the rate of $_____ per share of AmeriNet's Class A preferred stock, $0.01 per share par value (the "Preferred Stock"): NOW, THEREFORE, in consideration of the covenants, promises and representations set forth herein, and for other good and valuable consideration, the Parties, intending to be legally bound, hereby agree as follows: Witnesseth: Article I Definitions The following terms or phrases, as used in this Agreement, shall have the following meanings: (A) Accredited Investor: An investor that meets the requirements for treatment as an accredited investor, as defined in Rule 501(a) of Commission Regulation D, which provides as follows: "Accredited investor" shall mean any person who comes within any of the following categories, or who the issuer reasonably believes comes within any of the following categories, at the time of the sale of the securities to that person: (1) Any bank as defined in section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Securities Exchange Act of 1934; any insurance company as defined in section 2(13) of the Act; any investment company registered under the Investment Company Act of 1940 or a business development company as defined in section 2(a)(48) of that Act; Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of $5,000,000; employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan fiduciary, as defined in section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors; (2) Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940; (3) Any organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000; (4) Any director, executive officer, or general partner of the issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that issuer; (5) Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his purchase exceeds $1,000,000; (6) Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; (7) Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in ss.230.506(b)(2)(ii); and (8) Any entity in which all of the equity owners are accredited investors. (B) Commission: The United States Securities and Exchange Commission. (C) Exchange Act: The Securities Exchange Act of 1934, as amended. (D) Exchange Act Reports: The reports on Commission Forms 10-SB, 10-KSB, 10-QSB and 8-K and Commission Schedules 14A and 14C, that AmeriNet is required to file pursuant to Sections 13, 14, 15(d) and 12(g) of the Exchange Act. (E) Florida Act: The Florida Securities and Investor Protection Act. (F) Florida Rule: Florida Rule 3E-500.005, which provides as follows: Disclosure requirements of Section 517.061(11)(a)3, Florida Statutes. (1) Transactions by an issuer which do not satisfy all of the conditions of this rule shall not raise any presumption that the exemptions provided by Section 517.061(11), Florida Statutes is not available for such transactions. Attempted compliance with this rule does not act as an election; the issuer can also claim the availability of Section 517.061(11), Florida Statutes, outside this rule. (2) The determination as to whether sales of securities are part of a larger offering (i.e., are deemed to be integrated) depends on the particular facts and circumstances. In determining whether sales should be regarded as part of a larger offering and thus should be integrated, the facts described in Rule 3E-500.01 should be considered. (3) Although sales made pursuant to Section 517.061(11), Florida Statutes, and in compliance with this rule, are exempt from the registration provisions of this Act, such exemption does not avoid the antifraud provisions of Sections 517.301 and 517.311, Florida Statutes. (4) The provisions of this rule shall apply only to transactions which are consummated with persons in the State of Florida. (5) The requirements of Sections 517.061(11)(a)(3), Florida Statutes, that each purchaser, or his representative be provided with or given reasonable access to full and fair disclosure of all material information shall be deemed to be satisfied if either paragraphs (5)(a) or (5)(b) are complied with: (a) Access to or Furnishing of Information. Reasonable access to, or the furnishing of, material information shall be deemed to have been satisfied if prior to the sale a purchaser is given access to the following information: 1. All material books and records of the issuer; and 2. All material contracts and documents relating to the proposed transaction; and 3. An opportunity to question the appropriate executive officers or partners. .... (6) In the case of an issuer that is subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the provisions of paragraph (5)(b) of this rule shall be deemed satisfied by providing the following: (a) The information contained in the annual report required to be filed under the Securities Exchange Act of 1934 or a registration statement on Form S-1 under the Securities Act of 1933, whichever filing is the most recent required to be filed, and the information contained in any definitive proxy statement required to be filed pursuant to Section 14 of the Securities Exchange Act of 1934 and in any reports or documents required to be filed by the issuer pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, since the filing of such annual report or registration statement; and (b) A brief description of the securities being offered, the use of the proceeds from the offering, and any material changes in the issuer's affairs which are not disclosed in the documents furnished. (G) Securities Act: The Securities Act of 1933, as amended. Article II Conversion (A) ABC hereby converts $________ of the AmeriNet Debt into shares of AmeriNet unregistered Preferred Stock, at a conversion price of $_____ per share, the transaction being effected without registration under the Securities Act or the Florida Act, based on the exemption from registration provided by Section 4(6) of the Securities Act and Section 517.061(11) of the Florida Act. (B) In consideration for ABC' conversion of the AmeriNet Debt, AmeriNet hereby agrees to issue to ABC the ____ shares of AmeriNet' Preferred Stock subscribed for hereby. (C) As a material inducement to AmeriNet's consideration of ABC' offer to convert AmeriNet Debts into the ABC' shares, ABC represents, warrants and covenants to AmeriNet, as follows: (1) ABC is familiar with the requirements for treatment as an "accredited investor" under Regulation D and Section 4(6) of the Securities Act and meets one or more of the definitions of an "accredited investor" contained in Rule 501(a) promulgated under authority of Securities Act and has, alone or together with its advisors or representatives, if any, such knowledge and experience in financial matters that ABC is capable of evaluating the relative risks and merits of this subscription, the text of Rule 501(a) being set forth, in full, above; (2) ABC acknowledges that it has, based on its own substantial experience, the ability to evaluate the transactions contemplated hereby and the merits and risks thereof in general and the suitability of the transaction for it in particular; (3) (a) ABC understands that the offer and issuance of AmeriNet Stock is being made in reliance on ABC's representation that it has reviewed AmeriNet's Exchange Act Reports and, has become familiar with the information disclosed therein, including that contained in exhibits filed therewith. (b) ABC is fully aware of the material risks associated with becoming an investor in AmeriNet and confirms that it was previously informed that all documents, records and books pertaining to this investment have been available from AmeriNet and that all documents, records and books pertaining to this transaction requested by it have been made available to it; (4) ABC has had an opportunity to ask questions of and receive answers from the officers of AmeriNet concerning the terms and conditions of this Agreement and the transactions contemplated hereby, as well as the affairs of AmeriNet and related matters; (5) ABC has had an opportunity to obtain additional information necessary to verify the accuracy of the information referred to in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the information in the Exchange Act Reports; (6) ABC has represented to AmeriNet that it has the general ability to bear the risks of the subject trans action and that it is a suitable investor for a private offering and ABC hereby affirms the correctness of such information to AmeriNet, including, without limitation, the representations in the form of the investment letter annexed hereto and made a part hereof as exhibit 3(D)(6); (7) ABC acknowledges and is aware that: (a) The AmeriNet Stock is a speculative investment with no assurance that AmeriNet will be successful, or if successful, that such success will result in payments to ABC or to realization of capital gains by ABC on disposition of the AmeriNet Stock; and (b) The AmeriNet Stock to be issued to it has not been registered under the Securities Act or under any state securities laws, accordingly ABC may have to hold such Preferred Stock and may not be able to liquidate, pledge, hypothecate, assign or transfer it; (8) ABC has obtained its own opinion from its legal counsel to the effect that after an examination of the transactions associated herewith and the applicable law, no action needs to be taken by either ABC or AmeriNet in conjunction with this Agreement and the issuance of the AmeriNet Stock in conjunction therewith, other than such actions as have already been taken in order to comply with the securities law requirements of ABC' state of domicile, including the safe harbor provided in conjunction with compliance with the Florida Rule; and (9) (a) The certificates for the AmeriNet Stock will bear restrictive legends and AmeriNet's transfer agent will be instructed not to transfer the subject securities unless they have been registered pursuant to Section 6 of the Securities Act or an opinion of counsel to ABC satisfactory to legal counsel to AmeriNet and AmeriNet's president has been provided, to the effect that the proposed transaction is exempt from registration requirements imposed by the Securities Act, the Exchange Act and any applicable state or foreign laws. (b) The legend shall read as follows: "The securities represented by this certificate were issued without registration under the Securities Act of 1933, as amended, or comparable state laws in reliance on the provisions of Section 4(6) of such act, and comparable state law provisions. These securities may not be transferred pledged or hypothecated unless they are first registered under applicable federal, state or foreign laws, or the transaction is demonstrated to be exempt from such requirements to AmeriNet's satisfaction." Article III General Provisions 3.1 Interpretation. (A) When a reference is made in this Agreement to Schedules or Exhibits, such reference shall be to a Schedule or Exhibit to this Agreement unless otherwise indicated. (B) The words "include," "includes" and "including" when used herein shall be deemed in each case to be followed by the words "without limitation." (C) The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. (D) The captions in this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope of this Agreement or the intent of any provisions hereof. (E) All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the Party or Parties, or their personal representatives, successors and assigns may require. (F) The Parties agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document. 3.2 Notice. (A) All notices, demands or other communications given hereunder shall be in writing and shall be deemed to have been duly given on the first business day after mailing by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: (1) To AmeriNet: AmeriNet Group.com, Inc. Crystal Corporate Center; 2500 North Military Trail, Suite 225-C; Boca Raton, Florida 33431 Attention: Edward C. Dmytryk Telephone (561) 998-3435, Fax (561) 998-3425; and, e-mail ed@amerinetgroup.com; (2) ABC: ABC Limited LTD Address or such other address or to such other person as any Party shall designate to the other for such purpose in the manner hereinafter set forth. (B) At the request of any Party, notice will also be provided by overnight delivery, facsimile transmission or e-mail, provided that a transmission receipt is retained. (C) (1) The Parties acknowledge that the Yankee Companies, Inc., a Florida corporation ("Yankees') serves as a strategic consultant to AmeriNet and has acted as scrivener for the Parties in this transaction but that Yankees is neither a law firm nor an agency subject to any professional regulation or oversight. (2) Yankees has advised ABC and AmeriNet to retain independent legal and accounting counsel to review this Agreement and its exhibits and incorporated materials on their behalf. (3) The decision by any Party not to use the services of legal counsel in conjunction with this transaction shall be solely at their own risk, each Party acknowledging that applicable rules of the Florida Bar prevent AmeriNet's general counsel, who has reviewed, approved and caused modifications on behalf of AmeriNet, from representing anyone other than AmeriNet in this transaction. 3.3 Merger of All Prior Agreements Herein. (A) This instrument, together with the instruments referred to herein, contains all of the understandings and agreements of the Parties with respect to the subject matter discussed herein. (B) All prior agreements whether written or oral are merged herein and shall be of no force or effect. 3.4 Survival. The several representations, warranties and covenants of the Parties contained herein shall survive the execution hereof and the Reorganization and shall be effective regardless of any investigation that may have been made or may be made by or on behalf of any Party. 3.5 Severability. If any provision or any portion of any provision of this Agreement, other than one of the conditions precedent or subsequent, or the application of such provision or any portion thereof to any person or circumstance shall be held invalid or unenforceable, the remaining portions of such provision and the remaining provisions of this Agreement or the application of such provision or portion of such provision as is held invalid or unenforceable to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby. 3.6 Governing Law. This Agreement shall be construed in accordance with the substantive and procedural laws of the State of Florida (other than those regulating taxation and choice of law). 3.7 Indemnification. (A) Each Party hereby irrevocably agrees to indemnify and hold the other Parties harmless from any and all liabilities and damages (including legal or other expenses incidental thereto), contingent, current, or inchoate to which they or any one of them may become subject as a direct, indirect or incidental consequence of any action by the indemnifying Party or as a consequence of the failure of the indemnifying Party to act, whether pursuant to requirements of this Agreement or otherwise. (B) In the event it becomes necessary to enforce this indemnity through an attorney, with or without litigation, the successful Party shall be entitled to recover from the indemnifying Party, all costs incurred including reasonable attorneys' fees throughout any negotiations, trials or appeals, whether or not any suit is instituted. 3.8 Dispute Resolution. (A) In any action between the Parties to enforce any of the terms of this Agreement or any other matter arising from this Agreement any proceedings pertaining directly or indirectly to the rights or obligations of the Parties hereunder shall, to the extent legally permitted, be held in Broward County, Florida, and the prevailing Party shall be entitled to recover its costs and expenses, including reasonable attorneys' fees up to and including all negotiations, trials and appeals, whether or not any formal proceedings are initiated. (B) In the event of any dispute arising under this Agreement, or the negotiation thereof or inducements to enter into the Agreement, the dispute shall, at the request of any Party, be exclusively resolved through the following procedures: (1) (a) First, the issue shall be submitted to mediation before a mediation service in Broward County, Florida to be selected by lot from four alternatives to be provided, two by ABC and two by AmeriNet; and (b) The mediation efforts shall be concluded within ten business days after their initiation unless the Parties unanimously agree to an extended mediation period; (2) In the event that mediation does not lead to a resolution of the dispute then at the request of any Party, the Parties shall submit the dispute to binding arbitration before an arbitration service located in Broward County, Florida to be selected by lot, from four alternatives to be provided, two by ABC and two by AmeriNet. (3) (a) Expenses of mediation shall be borne equally by the Parties, if successful. (b) Expenses of mediation, if unsuccessful and of arbitration shall be borne by the Party or Parties against whom the arbitration decision is rendered. (c) If the terms of the arbitral award do not establish a prevailing Party, then the expenses of unsuccessful mediation and arbitration shall be borne equally by the Parties involved. 3.9 Benefit of Agreement. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties, their successors, assigns, personal representatives, estate, heirs and legatees but are not intended to confer upon any other person any rights or remedies hereunder. 3.10 Further Assurances. The Parties agree to do, execute, acknowledge and deliver or cause to be done, executed, acknowledged or delivered and to perform all such acts and deliver all such deeds, assignments, transfers, conveyances, powers of attorney, assurances, stock certificates and other documents, as may, from time to time, be required herein to effect the intent and purpose of this Agreement. 3.11 Counterparts. (A) This Agreement may be executed in any number of counterparts. (B) All executed counterparts shall constitute one Agreement notwithstanding that all signatories are not signatories to the original or the same counterpart. (C) Execution by exchange of facsimile transmission shall be deemed legally sufficient to bind the signatory; however, the Parties shall, for aesthetic purposes, prepare a fully executed original version of this Agreement which shall be the document filed with the Commission in conjunction with the contemplated filing of AmeriNet' Form 10-KSB under the Exchange Act. 3.12 License. (A) This form of agreement is the property of Yankees and has been customized for this transaction with the consent of Yankees. (B) The use of this form of agreement by the Parties is authorized hereby solely for purposes of this transaction. (C) The use of this form of agreement or of any derivation thereof without Yankees' prior written permission is prohibited. In Witness Whereof, AmeriNet and ABC have caused this Agreement to be executed by themselves or their duly authorized respective officers, all as of the last date set forth below: Signed, sealed and delivered In Our Presence: AmeriNet Group.com, Inc. _________________________________ (A Delaware corporation) _________________________________ By: _____________________________ Edward C. Dmytryk, President (Corporate Seal) Attest: _____________________________ Vanessa H. Lindsey, Secretary Dated: ____________, 200_ State of Florida } County of Palm Beach } ss.: On this ___ day of __________, 200_, before me, a notary public in and for the county and state aforesaid, personally appeared Edward C. Dmytryk and Vanessa H. Lindsey, to me known, and known to me to be the president and secretary of AmeriNet Group.com, Inc., the above-described corporation, and to me known to be the persons who executed the foregoing instrument, and acknowledged the execution thereof to be their free act and deed, and the free act and deed of AmeriNet Group.com, Inc., for the uses and purposes therein mentioned. In witness whereof, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. My commission expires the ___day of ______________, ____. {Seal} -------------------------------- Notary Public ABC Company - --------------------------------- _________________________________ By: _____________________________ (Corporate Seal) Dated: ______________________, 200_ State of Florida } County of Palm Beach } ss.: On this ___ day of ________, 200_, before me, a notary public in and for the county and state aforesaid, personally appeared _________________., to me known, and known to me to be the managing agent of ABC Company, the above-described corporation, and to me known to be the person who executed the foregoing instrument, and acknowledged the execution thereof to be their free act and deed, and the free act and deed of ABC Company, for the uses and purposes therein mentioned. In witness whereof, I have hereunto set my hand and affixed my notarial seal the day and year in this certificate first above written. My commission expires the ___day of _______________, ____. (Seal) ---------------------------- Notary Public Exhibit 3(D)(6) ABC' Investment Letter ___________________, 200_ Edward C. Dmytryk President AmeriNet Group.com, Inc. Crystal Corporate Center 200 North Military Trail, Suite 225-C Boca Raton, Florida 33431 Re.: Conversion of AmeriNet's Obligations for AmeriNet's Securities Dear Sir: I hereby certify and warrant that the ABC Company, a __________ corporation ("ABC") for which _______________, is relinquishing all rights to repayment of $______, together with accrued interest, owed to ABC by AmeriNet, Inc., a Delaware corporation ("AmeriNet") in consideration for the issuance to ABC of ______ shares of AmeriNet's Preferred Stock (the "AmeriNet Stock,"). I hereby certify under penalty of perjury that upon receipt of the AmeriNet Stock, ABC will be acquiring it for its own account for investment purposes without any intention of selling or distributing all or any part thereof, except in the form of permissible distributions to its stockholders. I represent and warrant that ABC qualifies as an accredited investor (s that term is defined in Rule 501(a) of Regulation D promulgated under authority of the Securities Act of 1933, as amended [the "Securities Act"]) and that I, on ABC behalf, am sophisticated in financial affairs, or have relied on the advice of someone sophisticated in financial affairs, and ABC is able to bear the economic risks of this investment and I do not have any reason to anticipate any change in ABC' circumstances, financial or otherwise, or any other particular occasion or event which should cause ABC to sell or distribute, or necessitate or require its sale or distribution of the AmeriNet Stock. No one other than ABC and its stockholders has any beneficial interest in the AmeriNet Stock. I further certify that I have consulted with ABC' legal counsel who, after having been apprized by me of all the material facts surrounding this transaction, opined to ABC, for the benefit of AmeriNet, that this transaction was being effected in full compliance with the applicable securities laws of ABC' state of domicile, based on the exemption provided by Rule 3E-500.005 promulgated under authority of Section 517.061(11) of the Securities Act of Florida. I agree that ABC will in no event sell or distribute any of the AmeriNet Stock unless in the opinion of AmeriNet's counsel (based on an opinion of ABC' legal counsel) the AmeriNet Stock may be legally sold without registration under the Securities Act, and/or registration and/or other qualification under then-applicable State and/or Federal statutes, or the AmeriNet Stock shall have been so registered and/or qualified and an appropriate prospectus, shall then be in effect. I am fully aware that the AmeriNet Stock is being offered and issued by AmeriNet to ABC in reliance on the exemption provided by Section 4(6) or the Securities Act which exempts the sale of securities by an issuer solely to accredited investors, based on my certifications and warranties on behalf of ABC. In connection with the foregoing, ABC consents to AmeriNet' legending ABC' certificates representing the AmeriNet Stock to indicate its investment intent and the restriction on transfer contemplated hereby and to AmeriNet placing a "stop transfer" order against the AmeriNet Stock in AmeriNet's securities transfer books until the conditions set forth herein shall have been met. I acknowledge by my execution hereof that ABC has had access to AmeriNet's Exchange Act Reports, books, records and properties, and have inspected the same to my full and complete satisfaction prior to ABC' acquisition of the AmeriNet Stock. I represent and warrant that because of my experience in business and investments, I am competent to make an informed investment decision with respect thereto on the basis of my inspection of AmeriNet's records and my questioning of AmeriNet's officers. Edward C. Dmytryk _____________, 200_ I further certify that ABC' domicile is located at the address set forth in the Agreement. Very truly yours, ABC Company Name & Title EX-10.86 5 exb10-86.txt SUBSCRIPTION AGREEMENT TEMPLATE AmeriNet Group.com, Inc. Accredited Investor Subscription Agreement THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER THE SECURITIES LAWS OR REGULATIONS OF ANY STATE OR OTHER JURISDICTION. RATHER, THEY ARE OFFERED IN RELIANCE ON THE EXEMPTION FROM REGISTRATION REQUIREMENTS IMPOSED BY THE SECURITIES ACT PROVIDED BY SECTION 4(6) THEREOF. IF STATE LAW IS NOT PREEMPTED UNDER APPLICABLE FEDERAL LAW PERTAINING TO THE EXEMPTION UNDER SECTION 4(6) OF THE SECURITIES ACT, THE SECURITIES REFERRED TO IN THIS SUBSCRIPTION AGREEMENT WILL ALSO BE OFFERED, SOLD TO AND ACQUIRED BY THE HOLDER IN A TRANSACTION EXEMPT UNDER SECTION 517.061(11) OF THE FLORIDA SECURITIES & INVESTOR PROTECTION ACT (THE "FLORIDA ACT"). THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE FLORIDA ACT AND IF IT HAS NOT BEEN PREEMPTED BY APPLICABLE FEDERAL LAW, THEN ALL FLORIDA RESIDENTS HAVE THE RIGHT TO VOID THE PURCHASE WITHIN THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN 3 DAYS AFTER THE AVAILABILITY OF THAT RIGHT IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER. TERMS: 1. General. (a)(1)(A) This Subscription is part of a limited subscription by current stockholders of AmeriNet Group.com, Inc. ("AmeriNet"; a publicly held Delaware corporation formerly known as Equity Growth Systems, inc., with a class of securities currently registered under Section 12 of the Securities Exchange Act of 1934, as amended [the "Exchange Act"]), all of whom qualify as accredited investors, as that term is defined in Rule 501 of Securities and Exchange Commission (the "Commission") Regulation D promulgated under authority of the Securities Act of 1933, as amended ("Rule 501", "Regulation D" and the "Securities Act", respectively) for an aggregate of up to _______ shares of AmeriNet's Class A Preferred Stock, $0.01 par value (the "Class A Preferred Stock"). (B) The attributes, rights and preferences of the Class A Preferred Stock are set forth on the certificate of designation annexed hereto and made a part hereof as exibit1(a)(1)(B). (2)(A) The issuance of the Class A Preferred Stock is to be effected without registration under the Securities Act pursuant to the exemptive provisions of Section 4(6) of Securities Act, providing for the issuance of restricted securities solely to accredited investors; however, if it has not already done so, within 90 days after the filing by AmeriNet of its report on Commission Form 10-KSB for last fiscal year (the "Annual Report"), it will also: (1) File either a proxy statement of Commission Schedule 14-A or an information statement on Commission Schedule 14-C (both being hereinafter generically referred to as the "Information Statement[s]") with the Commission; (2) Distribute the Information Statement and the Annual Report to the Accredited Subscribers; and (3) If legally eligible, prepare and file a registration statement on Commission Form S-3 registering the shares of AmeriNet's common stock into which the then Certain matters discussed in this agreement pertain to "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties including but not limited to changes in general economic conditions, access to capital, renegotiation of terms for acquisitions, abandonment of acquisitions based on due diligence concerns or post acquisition developments; economic factors and governmental regulations. Stock are convertible and use its best efforts to have the S-3 registration statement declared effective by the Commission. (B) Subscription proceeds must be prepaid with the tender of the executed form of this Agreement, and will be accepted by AmeriNet on an Agreement per Agreement basis. (C) The initial __________ shares will be offered at a subscription price of $_.00 per share. (3) AmeriNet will, immediately following closing on the first subscriptions accepted in this limited offering, file a Form D with the Securities and Exchange Commission, as required to permit the contemplated subscription. (b)(1) Current information concerning AmeriNet is contained on the SEC's EDGAR web site on the Internet located at www.sec.gov (including annual reports on Form 10-KSB containing certified financial statements, quarterly reports on Form 10-QSB containing unaudited financial statements and current reports of Form 8-K updating information, all of which are hereby incorporated by reference herein and are collectively and generically hereinafter referred to as the "Exchange Act Reports"). (2) The information contained in the Exchange Act Reports supersedes and is hereby deemed to amend any contrary information contained in this Agreement or the exhibits thereto that predate such filings, but is superseded by the updating information, if any, annexed hereto and made a part hereof as exhibit 1(b)(2) (the "Information Update"). (c)(1) The proceeds of this limited offering are to be used to provide expansion capital for: (A) Corporations to be acquired by AmeriNet; (B) AmeriNet's current subsidiaries; and (C) Working capital for AmeriNet (not more than 10% of the gross proceeds derived from the limited offering). (2) AmeriNet may elect to borrow funds required for the purposes identified in Section 1(c)(1) and to repay such loans using proceeds of this limited offering. (3) AmeriNet's management is of the opinion that the net proceeds from the offering would be sufficient to meet current operating requirements but that AmeriNet will require substantial additional capital in order to effect and properly capitalize acquisitions it may make in the future which it intends to obtain through secondary public offerings or private placements of its securities in amounts based on the circumstances then existing; however, no assurances can be provided that either source of funding will actually become available. (4)(A) AmeriNet may temporarily invest any unexpended balances on hand in government securities, certificates of deposit, money market funds. (B) AmeriNet intends to make such investments only temporarily in order to avoid any requirement to register AmeriNet under the Investment Company Act of 1940. (C) Any income realized from investment of the net proceeds of this limited offering will be general revenues of AmeriNet. (5) AmeriNet will provide reports on the actual use of proceeds on a quarterly basis until all proceeds have been expended, in its periodic reports to the Commission on Forms 8-K, 10-QSB and 10-KSB. (d) Certain risks associated with AmeriNet are disclosed in the Exchange Act Reports and supplemental risks associated with this limited offering are disclosed in Section 3, all of which must be carefully reviewed by prospective Accredited Subscribers prior to making an investment decision. (e) Except as disclosed in the Exchange Act Reports, AmeriNet will not use any general solicitation or advertising nor will it pay any commissions or grant any discounts in conjunction with this limited offering. 2. Subscription Consideration. (a) The undersigned Accredited Subscriber hereby subscribes for _________ shares of the Class A Preferred Stock at $____ per share ($_________ in the aggregate) and will tender payment in full therefor immediately following receipt of an executed copy of this Agreement evincing acceptance of this subscription by AmeriNet. (b) Within fifteen business days after acceptance of the subscription and payment for the Class A Preferred Stock, AmeriNet's transfer agent will issue and deliver to the Accredited Subscriber, at AmeriNet's expense, an appropriately legended certificate for the Class A Preferred Stock, a form of AmeriNet's common stock certificates being provided to the Accredited Subscriber as an exhibit to this Agreement. (c) If this subscription is not accepted or accepted only in part, then AmeriNet will return all funds paid by the Accredited Subscriber other than those allocated to any part of the subscription accepted, within five business days after the date of rejection or partial acceptance. 3. Accredited Subscriber's Representations, Warranties and Covenants. As a material inducement to AmeriNet's consideration of the Accredited Subscriber's offer to acquire Shares of the Class A Preferred Stock, the Accredited Subscriber represents, warrants and covenants to AmeriNet, as follows: (a) The Accredited Subscriber is familiar with the requirements for treatment as an "accredited investor" under Regulation D and Section 4(6) of the Securities Act and meets one or more of the definitions of an "accredited investor" contained in Rule 501 promulgated under authority of Securities Act and has, alone or together with his Offeree's Representative, if any, (as hereinafter defined) such knowledge and experience in financial matters that the Accredited Subscriber is capable of evaluating the relative risks and merits of this subscription; (b) The Accredited Subscriber acknowledges that he, she or it has, based on his, her or its own substantial ex perience, the ability to evaluate the transactions contemplated hereby and the merits and risks thereof in general and the suitability of the transaction for the Accredited Subscriber in particular; (c)(1) The Accredited Subscriber understands that the offer and issuance of the Class A Preferred Stock is being made in reliance on the Accredited Investor's representation that he, she or it has reviewed all of AmeriNet's Exchange Act Reports, including that contained in exhibits filed with such reports, as well as that provided in the exhibits to this Agreement and has become familiar with the information disclosed therein. (2) The Accredited Subscriber is fully aware of the material risks associated with becoming an investor in AmeriNet and confirms that he, she or it was previously informed that all documents, records and books pertaining to this investment have been available from AmeriNet and that all documents, records and books pertaining to this transaction requested by the Accredited Subscriber have been made available to the Accredited Subscriber. (d) The Accredited Subscriber has had an opportunity to ask questions of and receive answers from the officers of AmeriNet concerning: (1) The terms and conditions of this Subscription Agreement and the transactions contemplated hereby, as well as the affairs of AmeriNet and related matters; and (2) Any arrangements or proposed arrangements of AmeriNet in conjunction with this limited offering that are not identical to those relating to all subscribers to this limited offering. (e) The Accredited Subscriber has had an opportunity to obtain additional information necessary to verify the accuracy of the information referred to in subparagraphs (a), (b), (c) and (d) hereof, as well as to supplement the information in the Exchange Act Reports, as called for by Florida Rule 3E-500.005 [which describes information that would meet the informational provisions of Section 517.061(11), Florida Statutes]. (f) The Accredited Subscriber has provided AmeriNet with personal and business financial information which he, she or it agrees demonstrates the Accredited Subscriber's general ability to bear the risks of the subject trans action and suitability as a subscriber in a private offering and the Accredited Subscriber hereby affirms the correctness of such information, including, without limitation, the representations in the form of investment letter annexed hereto and made a part hereof as exhibit 3(f). (g) The Accredited Subscriber acknowledges and is aware that: (1) The Class A Preferred Stock is a speculative investment with no assurance that AmeriNet will be successful, or if successful, that such success will result in payments to the Accredited Subscriber or to realization of capital gains by the Accredited Subscriber on disposition of the Class A Preferred Stock or of the shares of AmeriNet common stock into which it is convertible; (2) The Class A Preferred Stock being subscribed for and the shares of common stock into which they are convertible have not been registered under the Securities Act or under any state securities laws, accordingly the Accredited Subscriber may have to hold such common stock and may not be able to liquidate, pledge, hypothecate, assign or transfer it; and (3) While AmeriNet has agreed, if legally available, to file an S-3 registration statement with the Commission registering the shares of AmeriNet common stock into which the shares of Class A Preferred Stock outstanding at the time the S-3 registration statement becomes effective are convertible and to use its best efforts to have the Commission declare the S-3 registration statement effective, the Commission and not AmeriNet will determine when and if, the S-3 registration statement will become effective. (h) The Accredited Subscriber has obtained his, her or its own oral opinion from his, her or its legal counsel to the effect that after an examination of the transactions associated herewith and the applicable law, no action needs to be taken by either the Accredited Subscriber or AmeriNet in conjunction with this Subscription and the issuance of the Class A Preferred Stock in conjunction therewith, other than such actions that have already been taken in order to comply with the securities law requirements of the Accredited Subscriber's state of domicile, other than such actions or such restrictions on actions as have in fact been taken or avoided, as the case requires; and (i)(1) The certificates for the Class A Preferred Stock and the certificates for any shares of AmeriNet's common stock into which they are converted which are not subject to a then effective registration statement filed with the Commission in compliance with the requirements of the Securities Act, will bear restrictive legends and AmeriNet's transfer agent will be instructed not to transfer the subject securities unless they have been registered pursuant to Sections 5 and 6 of the Securities Act or an opinion of counsel to the Accredited Subscriber satisfactory to legal counsel to AmeriNet and AmeriNet's president has been provided, to the effect that the proposed transaction is exempt from registration requirements imposed by the Securities Act, the Exchange Act and any applicable state or foreign laws. (2) The legend shall read as follows: "The securities represented by this certificate were issued without registration under the Securities Act of 1933, as amended, or comparable state laws in reliance on the provisions of Section 4(6) of such act, and comparable state law provisions. These securities may not be transferred pledged or hypothecated unless they are first registered under applicable federal, state or foreign laws, or the transaction is demonstrated to be exempt from such requirements to AmeriNet's satisfaction." 4. Responsibility. (a) The officers of AmeriNet will endeavor to exercise their best judgment in the conduct of all matters arising under this Subscription Agreement; provided, however, that this provision shall not enlarge, limit or otherwise affect the liability of AmeriNet or its officers. (b) The Accredited Subscriber shall indemnify and hold harmless AmeriNet; any corporation or entity affiliated with AmeriNet; the officers, directors and employees of any of the foregoing; or any professional adviser thereto, from and against any and all loss, damage, liability or expense, including costs and reasonable attorney's fees at trial or on appeal, to which said entities and persons may be subject or which said entities and persons incur by reason of or in connection with any misrepresentation made by the Accredited Subscriber, any breach of any of the Accredited Subscriber's warranties or the Accredited Subscriber's failure to fulfill any of the covenants or agreements under this Subscription Agreement. 5. Survival of Representations, Warranties and Agreements. The representations, warranties, covenants and agreements contained herein shall survive the delivery of and the payment for the Class A Preferred Stock being subscribed for. 6. Notices. Any and all notices, designations, consents, offers, acceptances or any other communication provided for herein shall be given in writing by registered or certified mail which shall be addressed in the case of AmeriNet to AmeriNet Group.com, Inc.; The Crystal Corporate Center; 2500 North Military Trail, Suite 225-C; Boca Raton, Florida 33431; Priority Attention: Secretary; and, in the case of the Accredited Subscriber, to the address set forth at the end of this Agreement, or to the address appearing on the books of AmeriNet or to such other address as may be designated by the Accredited Subscriber or AmeriNet in writing. Accredited Subscriber Information Please Print the following Information Accredited Subscriber's Name: _______________________________________ Accredited Subscriber's Address: _______________________________________ Accredited Subscriber's Telephone Number:_______________________________________ Accredited Subscriber's Tax ** Number: _________________________________ ______ * If applicable (e.g., if the Subscriber is a corporation, partnership, joint venture, etc.) ** FEIN or Social Security number - 7. Miscellaneous. (a) This Agreement shall be governed by, construed and enforced in accordance within the laws of the State of Delaware, both substantive, procedural (except for choice of law provisions) and remedial. (b) The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. (c) This Agreement shall be binding on and shall inure to the benefit of the Parties and their respective successors, assigns, executors and administrators, but this Agreement and the respective rights and obligations of the Parties hereunder shall not be assumable by any Party hereto without the prior written consent of the other. (d) This Agreement represents the entire understanding and agreement between the Parties hereto with respect to the subject matter hereof; and cannot be amended, supplemented or modified except by an instrument in writing signed by the Party against whom enforcement of any such amendment, supplement or modification is sought. (e) The failure of any provision of this Agreement shall in no manner affect the right to enforce the other provisions of same, and the waiver of any Party of any breach of any provision of this Agreement shall not be construed to be a waiver by such Party of any succeeding breach of such provision or waiver by such Party of any breach of any provision. * * * In Witness Whereof, I have executed this Agreement on behalf of the Accredited Subscriber this ___ day of _____________________, 2000. Accredited Subscriber ------------------------------------------ (Print or Type Name) By: _________________________________ (Signature) Subscription Accepted: AmeriNet Group.com, Inc. Dated: __________________, 2001. By: _______________________ Edward C. Dmytryk President Attest: _______________________ Vanessa H. Lindsey Secretary Exhibit Index Exhibit Description 1(a)(1)(B) Certificate of Designation 1(b)(2) Information Update 2(a) Form of the Class A Preferred Common Stock Certificate 3(f) Investment Letter Exhibit 1(a)(1)(B) CERTIFICATE OF DESIGNATION PREFERENCES & RIGHTS OF CLASS A PREFERRED STOCK AmeriNet Group.com, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"), does by its president and its secretary and under its corporate seal hereby certify as follows: FIRST: That by the certificate of incorporation duly filed in the State of Delaware, as currently amended, the Corporation is "authorized to issue 5,000,000 shares of preferred stock, $0.01 par value, the attributes of which are to be determined by resolution of the Corporation'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." SECOND: That pursuant to the authority vested in the Board of Directors by the certificate of incorporation, the board of directors at a meeting duly convened an held on the 29th day of June, 2000, adopted the following resolution: RESOLVED, that the Board of Directors hereby creates and designates the initial series of Preferred Stock, $0.01 par value, of the Corporation, authorizes the issuance thereof, and fixes the designation and amount thereof and the preferences and relative, participating, optional and other special rights of such shares, and the qualifications, limitations or restrictions thereof as follows: 1.1 Designation and amount. The shares of the initial class of Preferred Stock shall be designated "Class A Preferred Stock, (hereinafter sometimes called "Preferred Stock"), and the number of shares which may be issued shall be 500,000. 1.2 Dividends. (A) The holders of shares of the Preferred Stock shall be entitled to receive, out of the assets of the Corporation legally available therefore, and as and when declared by the Board of Directors, dividends of every kind declared and paid to holders of the Corporation's Common Stock, at a rate per share twenty times that paid per share of Common Stock. (B) Each such dividend shall be paid to the holders of record of shares of the Preferred Stock as they appear on the stock register of the Corporation on the last day of the month next preceding the payment date thereof. 1.3 Conversion. The holders of shares of the Preferred Stock shall have the right, at their option, to convert all or any part of such shares into shares of Common Stock of the Corporation at any time on and subject to the following terms and conditions: (A) The shares of Preferred Stock shall be convertible at the office of transfer agent for the Preferred Stock (the "Transfer Agent"), and at such other place or places, if any, as the Board of Directors of the Corporation 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. (B) The number of shares of Common Stock issuable upon conversion of each share of the Preferred Stock shall 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 the Corporation (the "Issuance Price") by 80% of the closing price for the Corporation's Common Stock, as reported on the public stock market or securities exchange (in both cases, registered as such by the United States Securities Exchange Commission [the "Commission"]) having the highest average trading volume in the Corporation'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 the Corporation is executed and dated by the holder with medallion signature guarantee (the "Market Conversion Rate"). (C) The Set Conversion Rate shall be subject to adjustment from time to time in certain instances as hereinafter provided. (D) No payment or adjustment shall be made in respect of dividends on the Common Stock or the Preferred Stock upon conversion of shares of the Preferred Stock. (E) No fractional shares of Common Stock will be issued, rather, one fractional share per holder will be rounded up to a whole share. (F) Before any holder of shares of the Preferred Stock shall be entitled to convert the same into Common Stock, he shall surrender the certificate or certificates therefor, duly endorsed and dated to the Corporation with a medallion signature guarantee, at the office of the Transfer Agent or at such other place or places, if any, as the Board of Directors of the Corporation has designated, and shall give written notice to the Corporation at said office or place that he elects to convey the same and shall state in writing therein the name or names (with addresses) in which he wishes the certificate or certificates for Common Stock to be issued. (G) The Corporation will, as soon as practicable thereafter, issue and deliver at said office or place to such holder of shares of the Preferred Stock, or to his nominee or nominees, certificates for the number of full shares of Common Stock to which he shall be entitled as aforesaid. (H) Shares of the Preferred Stock shall be deemed to have been converted as of the close of business on the date of the medallion signature guarantee on the certificate surrendered for conversion as provided above so long as it is received by the Corporation or the Corporation's transfer agent no later than the tenth business day thereafter, and the person or persons entitled to receive the Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such Common Stock as of the close of business on such date. 1.4 Adjustments (A) The Set Conversion Rate in effect at any time shall be subject to adjustment as follows: (1) The Set Conversion Rate in effect at the time of the record or effective date for the following listed events shall be proportionately adjusted so that the holder of any share of the Preferred Stock surrendered for conversation after such time shall be entitled to receive the kind and amount of shares which he would have owned or have been entitled to receive had such share of the Preferred Stock been converted immediately prior to such time: (a) If the Corporation declares a dividend on its Common Stock in shares of its capital stock; (b) If the Corporation subdivides its outstanding shares of Common Stock; (c) If the Corporation combines its outstanding shares of Common Stock into a smaller number of shares; or (d) If the Corporation issues by reclassification of its Common Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing corporation) any shares of its capital stock. (2) Such adjustment shall be made successively whenever any event listed above shall occur. (3) In case the Corporation shall issue rights or warrants to all holders of its Common Stock entitling them to subscribe for or purchase shares of Common Stock at a price per share less than the closing price for the Corporation's Common Stock, as reported on the public stock market or securities exchange [as described in Section 1.3(B)(2)], if the underlying shares of Common Stock are to be pre-registered with the Commission (the "Current Market Price"), or 50% of the Current Market Price if the underlying shares of Common Stock are to be issued without registration pursuant to exemptions from applicable securities laws restricting their transferability as provided in Commission Rule 144 (the "Current Private Placement Price"), in each case on the date fixed for the determination of stockholders entitled to receive such rights or warrants, the Set Conversion Rate shall be reduced by multiplying the Set Conversion Rate by a fraction of which the numerator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchaser would purchase at such Current Market Price or Current Private Placement Price (as the case may be) and the denominator shall be the number of shares of Common Stock outstanding at the close of business on the date fixed for such determination plus the number of shares of Common Stock so offered for subscription or purchase, such reduction to become effective immediately after the opening of business on the day following the date fixed for such determination. (4) In case the Corporation shall distribute to all holders of its Common Stock (including any such distribution made in connection with a consolidation or merger in which the Corporation is the continuing corporation) evidences of its indebtedness or assets (excluding dividends or other distributions paid out of earned surplus) or subscription rights or warrants (excluding those referred to in Section 1.4(A)(3) above), the Set Conversion Rate shall be adjusted so that the same shall equal the price determined by multiplying the Set Conversion Rate in effect immediately prior to the close of business on the date fixed for the determination of stockholders entitled to receive such distribution by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the date fixed for such determination less the then fair market value (as determined by the Board of Directors of the Corporation, whose determination shall be conclusive and described in a Board Resolution of the Corporation filed with the Transfer Agent) of the portion of the assets or evidences of indebtedness so distributed applicable to one share of Common Stock and the denominator shall be such Current Market Price per share of the Common Stock, such adjustment to become effective immediately prior to the opening of business of the day following the date fixed for the determination of stockholders entitled to receive such distribution. (5) All calculations under this Section 1.4 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. (6) In case of any consolidation or merger of the Corporation with or into any other corporation (other than a consolidation or merger in which the Corporation is the continuing corporation), or in case of any sale or transfer of all or substantially all of the assets of the Corporation, the holder of each share of the Preferred Stock shall after such consolidation, merger, sale or transfer have the right to convert such share of the Preferred Stock into the kind and amount of shares of stock and other securities and property which such holder would have been entitled to receive upon such consolidation, merger, sale or transfer if he had held the Common Stock issuable upon the conversion of such share of the Preferred Stock immediately prior to such consolidation, merger, sale or transfer. (B) In the event that at any time, as a result of an adjustment made pursuant to this Section 1.4, the holder of any share of the Preferred Stock surrendered for conversation shall become entitled to receive any securities other than shares of Common Stock, thereafter the amount of such other securities so receivable upon conversion of any share of the Preferred Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock set forth in the foregoing subsections of this Sections 1.3 and the provisions of this Section 1.3 with respect to the Common Stock shall apply on like terms to any such other securities. (C) No adjustment in the Set Conversion Rate shall be required unless such adjustment would require a change of at least 1% in such price; provided, however, that any adjustments which by reason of this Section 1.4(C) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. (D) Whenever the Set Conversion Rate is adjustable as herein provided: (1) The Corporation shall promptly file with the Transfer Agent for the Preferred Stock a certificate of the treasurer of the Corporation setting forth the adjusted Set Conversion Rate and showing in reasonably detail the facts upon which such adjustment is based, including a statement of the consideration received or to be received by the Corporation for any shares of Common Stock issued or deemed to have been issued; and (2) A notice stating that the Set Conversion Rate has been adjusted and setting forth the adjusted Set Conversion Rate shall forthwith be required, and as soon as practicable after it is required, such additional notice shall be deemed to be required pursuant to this Section 1.4(D)(2) as of the opening of business on the tenth day after such mailing and shall set forth the Set Conversion Rate as adjusted at such opening of business, and upon the mailing of such additional notice no other notice need be given of any adjustment in the Set Conversion Rate occurring at or prior to such opening of business and after the time that the next preceding notice given by mailing became required. (E) In each of the following instances the Corporation shall cause to be filed with the Transfer Agent and shall cause to be mailed, first class postage prepaid, to the holders of record of the outstanding shares of Preferred Stock, at least 10 days prior to the applicable record date hereinafter specified, a notice stating the date on which a record is to be taken for the purpose of such distribution or rights, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such distribution or rights are to be determined, or the date on which such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up: (1) If the Corporation shall authorize the distribution to all holders of its Common Stock of evidences of its indebtedness or assets (other than dividends or other distributions paid out of earned surplus); or (2) If the Corporation shall authorize the granting to the holders of its Common Stock of rights to subscribe for or purchase any shares of capital stock of any class or of any other rights; or (3) In the event of any reclassification of the Common Stock (other than a subdivision or combination of its outstanding shares of Common Stock), or of any consolidation or merger to which the Corporation is a party and for which approval of any stockholders of the Corporation is required, or of the sale or transfer of all or substantially all of the assets of the Corporation; or (4) In the event of any reclassification of the voluntary or involuntary dissolution, liquidation or winding up of the Corporation. 1.5 Required Corporate Actions (A) (1) The Corporation will at all times reserve, keep available and be prepared to issue, free from any preemptive rights, out of its authorized but unissued Common Stock, solely for the purpose of effecting conversion of the Preferred Stock, the full number of shares of Common Stock then issuable upon the conversion of all outstanding Preferred Stock. (2) The Corporation shall from time to time, in accordance with the laws of the State of Delaware, endeavor to amend its Certificate of Incorporation to increase the authorized amount of its Common Stock if at any time the Authorized amount of its Common Stock remaining unissued shall be not sufficient to permit the conversion of all Preferred Stock. (3) The Corporation shall, if any shares of Common Stock required to be reserved for issuance upon conversion of Preferred Stock pursuant to this section 1.3(F) required registration with or approval of any governmental authority under any Federal or state law before such shares may be issued upon such conversion, endeavor to cause such shares to be so registered or approved as expeditiously as possible. (B) (1) The Corporation will pay any and all taxes that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of shares of the Preferred Stock pursuant hereto. (2) The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue or transfer and delivery of shares of Common Stock in a name other than that in which the shares of the Preferred Stock so converted were registered, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Corporation the amount of any such tax or has established to the satisfaction of the Corporation that such tax has been paid. (C) Whenever reference is made in Sections 1.3. 1.4 or 1.5 to the issuance or sale of shares of Common Stock, the term "Common Stock" shall include any stock of any class of the Corporation other than preferred stock of any class with a fixed (absolutely or by reference to an adjustment formula) limit on dividends and a fixed amount payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation. 1.6 Liquidation rights. In the event of any liquidation or dissolution or winding up of the Corporation, voluntary or involuntary, the holders of the Preferred Stock shall be entitled to receive, subject to the rights of any other class of stock which ranks senior to the Preferred Stock as to distribution of assets on liquidation, but before any distribution is made on any class of stock ranking junior to the Preferred Stock as to the payment of dividends or the distribution of assets (including, without limitation, the Corporation's Common Stock, a sum per share of Preferred Stock equal to the Issuance Price per share. 1.7 Voting Rights. The Preferred Stock shall 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. THIRD: That said resolution of the Corporation's board of directors, and the creation and authorization of issuance thereby of said series of 500,000 shares of convertible preferred stock and determination thereby of the dividend rate, liquidation preferences, voting rights and provisions in respect to conversion or exchange of said stock, were duly made by the Board of Directors pursuant to authority as aforesaid and in accordance with Sections 103, 151 and 102(4) of the Delaware General Corporation Law. Exhibit 1(b)(2) Information Update Provided in independent form separate from this Agreement, but the receipt thereof is hereby acknowledged by the Accredited Subscriber: Dated: ___________________, 2000 --------------------------- Accredited Subscriber's Signature Exhibit 2(a) Form of the Class A Preferred Stock Certificate Provided in independent form separate from this Agreement, but the receipt thereof is hereby acknowledged by the Accredited Subscriber: Dated: __________________, 2000 --------------------------- Accredited Subscriber's Signature Exhibit 3(f) Form of Investment Letter Date: __________________, 2001 Edward C. Dmytryk President AmeriNet Group.com, Inc. The Crystal Corporate Center 2500 North Military Trail, Suite 225-C Boca Raton, Florida 33431 Re.: Subscription for AmeriNet Class A Preferred Stock Dear Sir: I hereby certify and warrant that I am acquiring _______ shares of AmeriNet Group.com, Inc.'s Class A Preferred Stock $0.01 par value at a price of $_____ per share ("AmeriNet" and the "AmeriNet Stock," respectively). I hereby certify under penalty of perjury that upon receipt of the Class A Preferred Stock, I will be acquiring it for my own account for investment purposes without any intention of selling or distributing all or any part thereof. I represent and warrant that I currently hold shares of AmeriNet's common stock, that I am an accredited investor (as that term is defined in Rule 501 of Regulation D promulgated under authority of the Securities Act of 1933, as amended [the "Securities Act"]) and that I am sophisticated in financial affairs or have relied on the advice of someone sophisticated in financial affairs, and that I am able to bear the economic risks of this investment and I do not have any reason to anticipate any change in my circumstances, financial or otherwise, nor any other particular occasion or event which should cause me to sell or distribute, or necessitate or require my sale or distribution of the Class A Preferred Stock. No one other than me has any beneficial interest in the Class A Preferred Stock. I further certify that I have consulted with my own legal counsel who, after having been apprized by me of all the material facts surrounding this transaction, opined to me, for the benefit of AmeriNet, that this transaction was being effected in full compliance with the applicable securities laws of my state of domicile. I agree that I will in no event sell or distribute any shares of the Class A Preferred Stock or the shares of AmeriNet's common stock into which they are convertible unless, in the opinion of AmeriNet's legal counsel (based on an opinion of my legal counsel) the subject securities may be legally sold without registration under the Securities Act, and/or registration and/or other qualification under then-applicable state or federal statutes, or the subject securities shall have been so registered and/or qualified and an appropriate prospectus, shall then be in effect. I am fully aware that the Class A Preferred Stock is being offered and sold by AmeriNet to me in reliance on the exemption provided by Section 4(6) or the Securities Act which exempts the sale of securities by an issuer solely to accredited investors, based on my certifications and warranties. In connection with the foregoing, I consent to your legending my certificates representing the Class A Preferred Stock to indicate my investment intent and the restriction on transfer contemplated hereby and to your placing a "stop transfer" order against the Class A Preferred Stock in AmeriNet's securities transfer books until the conditions set forth herein shall have been met. I acknowledge by my execution hereof that I have had access to your books, records and properties, and have inspected the same to my full and complete satisfaction prior to my acquisition of the Class A Preferred Stock. I represent and warrant that because of my experience in business and investments, I am competent to make an informed investment decision with respect thereto on the basis of my inspection of your records and my questioning of your officers. Edward C. Dmytryk ____________ __,2001 Page 2 I further certify that my domicile is located at the following address: Accredited Subscriber's Name: ______________________________________ Accredited Subscriber's Address: _______________________________________ Very truly yours, Accredited Subscriber (Signature and, if applicable, title) -----END PRIVACY-ENHANCED MESSAGE-----