-----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, AyCJRIUFcfeOwfd7jzO7MW5suUPc8F3hwU0v9GlpOMJnudnPVf8aR2I3QHjK2rq/ QRm0XZZ6QtxO7t7rf6C27w== 0000050471-99-000018.txt : 19990910 0000050471-99-000018.hdr.sgml : 19990910 ACCESSION NUMBER: 0000050471-99-000018 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990625 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990909 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERINET GROUP COM INC CENTRAL INDEX KEY: 0000050471 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 112050317 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-03718 FILM NUMBER: 99708485 BUSINESS ADDRESS: STREET 1: 902 CLINT MOORE ROAD SUITE 136 CITY: BOCA RATON STATE: FL ZIP: 33487 BUSINESS PHONE: 5619983435 MAIL ADDRESS: STREET 1: 902 CLINT MOORE ROAD SUITE 136 CITY: BOCA RATON STATE: FL ZIP: 33487 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 8-K/A 1 AMENDMENT TO 8-K Securities and Exchange Commission Washington, D.C. 20549 Form 8-K/A Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): June 25, 1999 AmeriNet Group.com, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation 0-3718 (Commission File Number) 11-2050317 (IRS Employer Identification No.) 902 Clint Moore Road, Suite 136: Boca Raton, Florida 33487 (Address of principal executive offices) (Zip Code) (561) 998-3435 Registrant's telephone number, including area code Not Applicable (Former name or former address, if changed since last report) TABLE OF CONTENTS Item Number Description Page Number Item 2. Acquisition or Disposition of Assets 3 Item 7. Financial Statements and Exhibits (a) Financial statements of American Internet from inception until December 31, 1998 7 (b) Pro forma financial statements for the Registrant and American Internet. 17 (c) Exhibits 23 Signatures 6 FORWARD LOOKING STATEMENTS This Form 8-KSB contains certain "forward-looking statements" relating to the Registrant which represent the Registrant's current expectations or beliefs, including, but not limited to, statements concerning the Registrant's operations, performance, financial condition and growth. For this purpose, any statements contained in this Form 8-KSB that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as "may", "will", "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, such as credit losses, dependence on management and key personnel and variability of quarterly results, ability of the Registrant to continue its growth strategy and competition, certain of which are beyond the Registrant's control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual outcomes and results could differ materially from those indicated in the forward looking statements. 2 Item 2. Acquisition or Disposition of Assets. This current report amends and supplements the information concerning the Registrant's acquisition of American Internet Technical Center, Inc., a Florida corporation ("American Internet"), on June 25, 1999, as originally reported in a current report filed with the Commission on July 12, 1999 (the "Original Report"). The audited financial statements for American Internet filed herewith (see "Item 7[a], Financial Statements") disclosed results different from those used by the Registrant and American Internet during the negotiation of the acquisition, as a result of which, the Registrant, J. Bruce Gleason and Mike D. Umile, the former principal stockholders of American Internet ("Messers Gleason and Umile") have amended the reorganization agreement filed as an exhibit to the Original Report (the "Reorganization Agreement"), as follows: The provisions of the Reorganization Agreement pertaining to the shares of the Registrant's common stock (the "AmeriNet Stock") to be exchanged for all of the American Internet capital stock (the "American Stock"), were modified as follows: The initial shares of AmeriNet Stock issued to Messers Gleason and Umile were reduced from 2,232,756 shares to 1,482,756 shares, 250,000 of which were sold by them to The Yankee Companies, Inc., a Florida corporation ("Yankees") in consideration for the sum of $25,000, which Messers Gleason and Umile contributed to American Internet as an additional capital contribution, correcting inaccuracies in the representations and warranties in the Reorganization Agreement; The remaining 750,000 shares of AmeriNet Stock deducted from the shares originally received by Messers Gleason and Umile were returned to the Registrant for cancellation and are now reserved for re-issuance to the former American Internet stockholders (the "Subscribers") as a component of the AmeriNet Stock issuable pursuant to the Reorganization Agreement's "Performance Criteria", as a result of which, the aggregate number of shares of AmeriNet Stock issuable to the Subscribers thereunder has increased from 4,500,000 shares to 5,250,000 shares, as described in the following paragraph: AmeriNet will now issue additional shares of AmeriNet Stock to the Subscribers as additional shares exchanged for American Stock (the "Additional Exchange Shares"), predicated on American Internet attaining the following annual net, pre-tax profit thresholds determined as of June 30 of each year in accordance with generally accepted accounting principals, consistently applied ("GAAP"), as follows: Goal Time Frame Additional Exchange Shares (A) $200,000 2000 500,000 Shares; or $259,000 2000 875,000 Shares; (B) $500,000 2001 800,000 Shares; or $559,000 2001 1,175,000 Shares; (C) $1,000,000 2002 800,000 Shares; $1,500,000 2003 800,000 Shares; $2,000,000 2004 800,000 Shares; $2,500,000 2005 800,000 Shares. 3 As set forth in the original Reorganization Agreement, in the event that the thresholds are not attained and the Registrant has provided American Internet with at least $250,000 in funding for its operations, then: If the net, pre tax earnings are less than 33% of the required threshold during the subject 12 month period, the Additional Exchange Shares for such period will be forfeited; If the net, pre tax earnings are between 33% and 80% of the required threshold during the subject 12 month period, the Additional Exchange Shares for such period and the required threshold will be carried over to the next year, increasing both the aggregate threshold and the aggregate bonus attainable for such year; and If the net, pre tax earnings are between 80% and 100% of the required threshold during the subject 12 month period, the Additional Exchange Shares for such period shall be prorated. In the event that the thresholds are not attained but AmeriNet has not provided American Internet with at least $250,000 in funding for its operations, then, the Additional Exchange Shares for such period shall be prorated. In addition to changes in the quantity of shares exchanged, other provisions of the Reorganization Agreement were modified, as follows: The ratio of seats on American Internet's board of directors allocated to designees of the Subscribers was reduced from 2/3 to 1/2, the initial board membership being Messrs. Gleason and Umile, Michael Harris Jordan, currently the Registrant's president, and a further designee of the Registrant to be determined. Messrs. Gleason's and Umile's annual salaries under their employment agreements with American Internet were reduced from $75,000 to $52,000, until profits from operations (after required internal investments for expansion) attain the levels contemplated in the Reorganization Agreement, such issue to be revisited monthly until resolved. If required by the Registrant, American Internet will hire a senior marketing and production executive to be designated by the Registrant on terms materially identical to those reflected in the employment agreements between American Internet and Messrs. Gleason and Umile, and American Internet will acquire the assets and operations of another Internet business capable of in house production and hosting of web sites, designated by the Registrant. A copy of the amendment to the Reorganization Agreement is filed as an exhibit to this report, see "Item 7(c), Exhibit Index." 4 Item 7. Financial Statements and Exhibits. The following financial statements, pro forma financial information and exhibits, are filed as a part of this report. (a) Financial statements of American Internet from inception until December 31, 1998, pursuant to Item 310(c) of Regulation S-B, pages 7 - 16. Independent Auditor's Report 8 Financial Statements: Balance Sheet 9 Statement of Income 10 Statements of Changes in Stockholders' Equity 11 Statements of Cash Flows 12 Notes to Financial Statements 13 - 16 (b) Pro forma financial statements for the Registrant and American Internet, pursuant to Item 310(d) of Regulation S-B, see pages 17 - 22. On June 25, 1999, the Registrant, completed the acquisition of 99%+ of the issued and outstanding stock of American Internet Technical Center, Inc. ("American Internet"), a Florida corporation, from J. Bruce Gleason and Mike D. Umile in exchange for 2,232,756, shares of the Registrant's common stock, reduced on August 25,1999, to 1,482,756 shares, with an additional 5,250,000 shares issuable based on performance during the period ending on June 30, 2005. The following Pro Forma Combined Balance Sheet of the Registrant has been prepared by management of the Registrant based upon the balance sheets of the Registrant as of December 31, 1998 and June 30, 1999 and of American Internet as of December 31, 1998 and June 30, 1999. The Pro Forma Combined Statement of Income was prepared based on the statement of income for the Registrant and American Internet for the twelve months ended December 31, 1998 and the six months ended June 30, 1999. The pro forma statements give effect to the transaction under the purchase method of accounting and the assumptions and adjustments in the accompanying notes to pro forma combined financial statements. The pro forma combined balance sheet gives effect to the acquisition as if it had occurred as of American Internet's organization on April 15, 1998. The pro forma adjustments are based upon available information and certain assumptions that management believes are reasonable. The pro forma combined financial statements do not purport to represent what the combined companies's financial position or results of operations would actually have been had the acquisition occurred on such date or as of the beginning of the period indicated, or to project the combined companies' financial position or results of operations for any future period. (c) Pursuant to the requirements of Item 601 of Regulation S-B, the following exhibits are filed herewith, see pages 23 to 31. 5 Regulation S-B Exhibit Page or Table Number Source Description 10.40 23 First amendment to Reorganization Agreement with American Internet. 22.9 31 Consent of experts and counsel: consent of Daszkal, Bolton & Manela, P.A., certified public accountants American Internet's auditors (now also the Registrant's auditors) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AmeriNet Group.com, Inc. Dated: September 8, 1999 /s/ Micheal Harris Jordan --------------------------------- Michael Harris Jordan President 6 AMERICAN INTERNET TECHNICAL CENTER, INC. FINANCIAL STATEMENTS FROM APRIL 15, 1998 (INCEPTION) THROUGH DECEMBER 31, 1998 TABLE OF CONTENTS Independent Auditor's Report . . . . . . . . . . . . . . . . 8 Financial Statements: Balance Sheet . . . . . . . . . . . . . . . . . . . . . 9 Statement of Income . . . . . . . . . . . . . . . . . . . . 10 Statements of Changes in Stockholders' Equity . . . . . . 11 Statements of Cash Flows. . . . . . . . . . . . . . . . . . 12 Notes to Financial Statements. . . . . . . . . . . . . . . . 13 7 DASZKAL, BOLTON, MANELA, DEVLIN & CO. CERTIFIED PUBLIC ACCOUNTANTS A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS 2401 N.W. BOCA RATON BOULEVARD, SUITE 100 BOCA RATON, FLORIDA 33431 TELEPHONE (561) 367-1040 FAX (561) 750-3236 JEFFREY A. BOLTON, CPA, P.A. MEMBER OF THE AMERICAN INSTITUTE MICHAEL I. DASZKAL, CPA, P.A. OF CERTIFIED PUBLIC ACCOUNTANTS ROBERT A. MANELA, CPA, P.A. TIMOTHY R. DEVLIN. CPA, P.A. MICHAEL S. KRIDEL, CPA, P.A. INDEPENDENT AUDITOR'S REPORT To The Board of Directors and Stockholders American Internet Technical Center, Inc. We have audited the accompanying balance sheet of American Internet Technical Center, Inc. as of December 31, 1998, and the related statement of income, changes in stockholders' equity and cash flows from April 15, 1998 (inception) to December 31, 1998. These financial statements are the responsibility of the management of American Internet Technical Center, Inc. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of American Internet Technical Center, Inc. as of December 31, 1998, and the results of its operations and its cash flows from April 15, 1998 (inception) to December 31, 1998, in conformity with generally accepted accounting principles. Boca Raton, Florida August 19, 1999 8 AMERICAN INTERNET TECHNICAL CENTER, INC. BALANCE SHEET DECEMBER 31, 1998 ASSETS Current assets: Cash $ 3,694 Accounts receivable - net of allowance for doubtful accounts $45,932 68,903 Prepaid expenses 3,161 Total current assets 75,758 Property and equipment, net 22,266 Other assets: Deposits 16,092 Total assets $ 114,116 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 28,741 Accrued expenses 8,106 Billings in excess of costs and estimated earnings on uncompleted contracts 41,552 Loans to stockholders 9,333 Total current liabilities 87,732 Stockholders' equity: Common stock, $1.00 par value, 7500 shares authorized, 200 shares issued and outstanding 200 Retained earnings 26,184 Total stockholders' equity 26,384 Total liabilities and stockholders' equity $ 114,116 See accompanying notes to financial statements 9 AMERICAN INTERNET TECHNICAL CENTER, INC. STATEMENT OF INCOME FROM APRIL 15, 1998 (INCEPTION) THROUGH DECEMBER 31, 1998 Revenues earned $ 784,463 Costs of revenues earned 137,752 Gross profit 646,711 Operating expenses: Selling expenses 323,762 Bad debts expense 45,932 General and administrative expenses 132,517 Total operating expenses 502,211 Net income $ 144,500 See accompanying notes to financial statements 10 AMERICAN INTERNET TECHNICAL CENTER, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FROM APRIL 15, 1998 (INCEPTION) THROUGH DECEMBER 31, 1998 Additional Number of Common Paid-In Retained Total Shares Stock Capital Earnings Common stock issued for cash 200 $ 200 $ - $ - $ 200 Distributions to stockholders - - - (118,316) (118,316) Net income - 1998 - - - 144,500 144,500 Balance, December 31, 1998 200 $ 200 $ - $ 26,184 $ 26,384
See accompanying notes to financial statements 11 AMERICAN INTERNET TECHNICAL CENTER, INC. STATEMENT OF CASH FLOWS FROM APRIL 15, 1998 (INCEPTION) THROUGH DECEMBER 31, 1998 Cash flows from operating activities: Net income $ 144,500 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 3,930 Bad debts expense 45,932 (Increase) decrease in: Accounts receivables (114,835) Prepaid expenses (3,161) Deposits (16,092) Increase (decrease) in: Accounts payable 28,741 Accrued expenses 8,106 Billings in excess of costs and estimated earnings on uncompleted contracts 41,552 Loans to stockholders 9,333 Net cash provided by operating activities 148,006 Cash flow used by investing activities: Purchases of property and equipment (26,196) Cash flows from financing activities: Issuance of common stock 200 Distributions to stockholders (118,316) Net cash used by financing activities (118,116) Net increase in cash 3,694 Cash at beginning of period - Cash at end of period $ 3,694 Additional cash payment information: Interest paid $ - Income taxes $ - See accompanying notes to financial statements 12 AMERICAN INTERNET TECHNICAL CENTER, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS American Internet Technical Center, Inc. (the "Company"), a Florida corporation, was established on April 15, 1998, to design and host websites and provide e-commerce programs, marketing and other Internet services. Hosting services, including search engine registrations, are typically six month or one year contracts. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all cash and other demand deposits to be cash and cash equivalents. As of December 31, 1998, the Company had no cash equivalents. Property and Equipment Property and equipment are stated at cost and are being depreciated using the straight-line method over the estimated useful lives of five to seven years. Revenue and Cost Recognition Revenues from long-term contracts are recognized on the percentage-of-completion method, measured by the percentage of costs incurred to date to estimated total costs for each contract (i.e., cost-to-cost method). This method is used because management considers total cost to be the best available measure of progress on the contracts. Because of inherent uncertainties in estimating cost, it is possible that the estimates used will change within the near term. Contract costs include all direct material and labor costs and those indirect costs related to contract performance, such as subcontractors, equipment rental, and supplies and, certain general administrative expenses are charged to expense. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Claims are included in revenues when realized. The liability, "Billings in excess of costs and estimated earnings on uncompleted contracts," represents billings in excess of revenues recognized. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Advertising Advertising costs are expensed when incurred. The advertising cost incurred for the period ended December 31, 1998, was $2,104. 13 AMERICAN INTERNET TECHNICAL CENTER, INC. NOTES TO FINANCIAL STATEMENTS NOTE 3 - COST AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS The following schedule presents the status of costs and estimated earnings on uncompleted contracts at December 31, 1998. Costs incurred on uncompleted contracts $ 15,468 Estimated earnings 11,441 Total 26,909 Less: billings to date (68,461) Total $ (41,552) Included in accompanying balance sheet under the following captions: Costs and estimate earnings in excess of billings on uncompleted contracts $ - Billings in excess of cost and estimated earnings on uncompleted contracts (41,552) Total $ (41,552) NOTE 4 - FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying value of cash, accounts receivable, accounts payable and loans to stockholders approximates fair value because of their short maturities. NOTE 5 - RELATED PARTY TRANSACTIONS At December 31, 1998, the Company had an outstanding payable to the stockholders in the amount of $9,333. The transactions involving the stockholders/officers are summarized below: Balance at April 15, 1998 $ - Advances from stockholders 9,333 Balance at December 31, 1998 $ 9,333 14 AMERICAN INTERNET TECHNICAL CENTER, INC. NOTES TO FINANCIAL STATEMENTS NOTE 6 - PROPERTY AND EQUIPMENT Property and equipment consisted of the following at December 31, 1998: Machinery and equipment $ 21,400 Furniture and fixtures 4,796 Total property and equipment 26,196 Less: accumulated depreciation (3,930) Property and equipment, net $ 22,266 Depreciation expense for the period ended December 31, 1998, was $3,930. NOTE 7 - OPERATING LEASES The Company leases its facilities in Florida under an operating lease with no fixed term. Total lease expense for the period ended December 31, 1998 was $13,939. NOTE 8 - CONCENTRATION OF CREDIT RISK Financial instruments, which potentially expose the Company to concentrations of credit risk, as defined by Statement of Financial Accounting Standards No. 105, consist primarily of trade receivables. The Company officers have attempted to minimize this risk by monitoring the companies for whom they provided credit and also avail themselves of the lien process for contracts. NOTE 9 - SIGNIFICANT VENDOR During the initial six months of operation, the Company had its website production department in house. Beginning September 1998, the Company subcontracted the production of its websites to an unrelated party. This unrelated party provides 100% of the website development to the company. NOTE 10 - INCOME TAXES The Company has elected to be treated as an S Corporation for Federal and State income tax purposes. Under this election, all taxable income, losses and credits pass through to the individual stockholders and are reflected on their individual income tax returns. Consequently, no provision for income taxes has been provided by the corporation. The financial statements reflect earnings on the percentage of completion method of accounting whereas the completed contract method is used for income tax purposes. 15 AMERICAN INTERNET TECHNICAL CENTER, INC. NOTES TO FINANCIAL STATEMENTS NOTE 11 - SUBSEQUENT EVENTS The Company raised $20,000 through a private placement offering of common stock during the period January 1, 1999, through March 31, 1999. On April 26, 1999, the Company was acquired by Ascot Industries, Inc., a Nevada corporation ("Ascot"), in a stock exchange agreement. Ascot exchanged 90% of its common stock for all the common shares of American Internet. On July 9, 1999, this agreement was rescinded and control of Ascot was re-acquired by AmeriNet Group.com, Inc., as the sucessor in interest to the original stockholders. On June 25, 1999 AmeriNet Group.Com, Inc., (f/k/a Equity Growth Systems, Inc.) acquired all of the outstanding common stock of American Internet Technical Center, Inc. As consideration AmeriNet Group.Com, Inc., issued 1,632,978 of its common stock. The acquisition will be recorded as a purchase, and the results of operations and goodwill will be included in the consolidated financial statements beginning with the date of closing. On the date of acquisition, the Company's tax status changed to a regular corporation from a S corporation. 16 AmeriNet Group.com Pro Forma Combined Balance Sheets (Unaudited) American Internet AmeriNet Group.com Technical Center Pro Forma December 31, 1998 December 31, Total Adjustments Combined 1998 Assets: Cash $13,182 $ 3,694 $ 16,876 (B) $ 25,000 $ 41,876 Accounts receivable - 68,903 68,903 68,903 Prepaids - 3,161 3,161 3,161 ------------------------------------------------------------------------------------------- Total Current Assets 13,182 75,758 88,940 25,000 113,940 Property and equipment - 26,196 26,196 26,196 Less acumulated depreciation - (3,930) (3,930) (3,930) ------------------------------------------------------------------------------------------- Total Property & equipment - 22,266 2,266 - 22,266 Other assets: Goodwill (A) - - - 1,198,350 1,198,350 Accumulated amortization - - - - Deposits - 16,092 16,092 16,092 ------------------------------------------------------------------------------------------- Total other assets - 16,092 16,092 1,198,350 1,214,442 =========================================================================================== Total Assets $13,182 $ 114,116 $ 127,298 $1,223,350 $ 1,350,648 17 Liabilities and stockholders' equity Current liabilities: Accounts payable $4,661 $ 28,741 $ 33,402 $ - $ 33,402 Accrued expenses - 8,106 8,106 - 8,106 Billings in excess of costs and estimated earnings on uncompleted contracts - 41,552 41,552 41,552 Loans to stockholders - 9,333 9,333 9,333 ------------------------------------------------------------------------------------------- Total current liabilities 4,661 87,732 92,393 - 92,393 ------------------------------------------------------------------------------------------- Stockholders' equity: Common stock (A) 59,911 200 60,111 16,130 76,241 Additional paid in capital (A) 2,914,395 - 2,914,395 1,233,404 4,147,799 Retained earnings (2,965,785) 26,184 (2,939,601) (26,184) (2,965,785) ------------------------------------------------------------------------------------------- Total stockholders' equity 8,521 26,384 34,905 1,223,350 1,258,255 ------------------------------------------------------------------------------------------- =========================================================================================== Total liabilities and $13,182 $ 114,116 $ 127,298 $1,223,350 $ 1,350,648 stockholders' equity 18 AmeriNet Group.com, Inc. Pro Forma Combined Statement of Income (Unaudited) For the period ended American Internet AmeriNet Group.com Technical Center Pro Forma December 31, 1998 December 31, Total Adjustments Combined 1998 Revenues earned $ - $ 784,463 $ 784,463 $ - $ 784,463 Costs of revenue earned - 137,752 137,752 - 137,752 Gross profit - 646,711 646,711 - 646,711 Operating expenses: Selling - 323,762 323,762 - 323,762 General & Administrative (A) expenses - 132,517 132,517 79,890 463,240 (C) 118,316 Bad debt expense - 45,932 45,932 - 45,932 ------------------------------------------------------------------------------------------- Total operating expenses - 502,211 502,211 198,206 700,417 ------------------------------------------------------------------------------------------- Income (loss) from operations - 144,500 144,500 (198,206) (53,706) Loss from discontinued operations (399,415) - (399,415) - (399,415) =========================================================================================== Net income (loss) $(399,415) $ 144,500 $ (254,915) $(198,206) $ (453,121) Basic income (loss) per share ($0.096) ($0.061) ($0.109) Weighted average shares 4,174,778 4,174,778 4,174,778 Fully diluted income (loss) ($0.095) ($0.060) ($0.107) per share Fully diluted average shares 4,222,199 4,222,199 4,222,199
19 AmeriNet Group.com Pro Forma Combined Balance Sheets (Unaudited) American Internet AmeriNet Group.com Technical Center Pro Forma June 30, 1999 June 30, 1999 Total Adjustments Combined Assets Cash $(290) $74,046 $73,756 (B) $25,000 $98,756 Accounts receivable - 91,907 91,907 - 91,907 Prepaids - 4,360 4,360 - 4,360 Total Current Assets (290) 170,313 170,023 25,000 195,023 Property and equipment - 49,810 49,810 - 49,810 Less acumulated depreciation - (3,930) (3,930) - (3,930) Total Property & equipment - 45,880 45,880 - 45,880 Other assets: Investment shares 100,000 - 100,000 - 100,000 Goodwill - - - (A) 1,070,643 1,070,643 Accumulated amortization - - - - - Deposits - 19,092 19,092 - 19,092 Total other assets 100,000 19,092 119,092 - 1,070,643 1,189,735 Total Assets $99,710 $235,285 $334,995 $1,095,643 $1,430,638 Liabilities and stockholders' equity Current liabilities: Accounts payable $4,678 $22,906 $27,584 $ - $27,584 Billings in excess of costs and estimated earnings on uncompleted contracts - 28,955 28,955 - 28,955 Debentures payable 100,000 - 100,000 - 100,000 Loans to stockholders - 29,333 29,333 - 29,333 Total current liabilities 104,678 81,194 185,872 - 185,872 Stockholders' equity: Common stock 59,911 200 60,111 (A) 16,130 76,241 Additional paid in capital 2,914,395 92,000 3,006,395 (A) 1,141,404 4,147,799 Retained earnings (2,979,274) 61,891 (2,917,382) (61,891) (2,979,273) Total stockholders' equity (4,968) 154,091 149,124 1,095,643 1,244,767 Total liabilities and stockholders' equity $99,710 $235,285 $334,995 $1,095,643 $1,430,638 20 AmeriNet Group.com, Inc. Pro Forma Combined Statement of Income (Unaudited) For the period ended American Internet AmeriNet Group.com Technical Center Pro Forma June 30, 1999 June 30, 1999 Total Adjustments Combined Revenues earned $- $550,147 $550,147 $ - $550,147 Costs of revenue earned - 124,448 124,448 - 124,448 Gross profit - 425,699 425,699 - 425,699 Operating expenses: Selling - 145,912 145,912 - 145,912 General & Administrative expenses 13,489 244,080 257,569 (A) 35,688 293,257 Total operating expenses 13,489 389,992 403,481 35,688 439,169 Income from operations (13,489) 35,707 22,218 (35,688) (13,470) Loss from discontinued operations - - - - - Net loss $(13,489) $35,707 $22,218 $(35,688) $(13,470) Basic income (loss) per share ($0.096) ($0.003) Weighted average shares 4,174,778 4,174,778 Fully diluted income (loss) per share ($0.095) ($0.003) Fully diluted average shares 4,222,199 4,222,199
21 AMERINET GROUP COMMUNICATIONS, INC. NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS (UNAUDITED) A) The initial purchase price for the acquisition of all of the common stock of American Internet Technical Centers was 1,632,978 shares of the company=s common stock. However, the purchase price is subject to adjustment based upon the earnings of American Internet Technical Center over the next six years. The Company recorded approximately $1,198,500 at December 31, 1998 and $1,070,643 at June 30, 1999 in goodwill which will be amortized using the straight line method over 15 years. B) This reflects the capital contribution made by Messers Gleaosn and Umile. C) To reflect the increase in salaries and benefits paid to the former owner of American Internet Technical Centers, Inc. D) To reflect the increase in the amortization expense associated with the goodwill. 22 EX-10.40 2 AMENDMENT & SUPPLEMENT TO REORGANIZATION AGREEMENT Amendments & Supplements to Reorganization Agreement These amendments and supplements (the "Amendment") to the Reorganization Agreement closed on by the following defined Parties on June 25, 1999 (the "Agreement") are made and entered into by and among AmeriNet Group.com, inc., a Delaware corporation with a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended formerly operating as Equity Growth Systems, inc. ("AmeriNet" and the "Exchange Act," respectively); American Internet Technical Center, Inc., a Florida corporation now wholly owned by AmeriNet ("American") and, Messrs. J. Bruce Gleason, a Florida resident ("Mr. Gleason") and Michael D. Umile, a Florida resident ("Mr. Umile;" Messrs. Gleason and Umile being sometimes collectively hereinafter referred to as the "Subscribers"; AmeriNet, American and the Subscribers being sometimes hereinafter collectively referred to as the "Parties" and each being sometimes hereinafter generically referred to as a "Party"). This Agreement is also executed by The Yankee Companies, Inc., a Florida corporation ("Yankees"), for the limited purposes specifically set forth in this Agreement directly involving Yankees. Preamble: WHEREAS, a number of the representations by American and the Subscribers in the Reorganization Agreement and the exhibits thereto have, after post closing review, proved to be materially inaccurate, requiring adjustments to the substantive terms of the Reorganization Agreement; but WHEREAS, the Parties have agreed that the inaccuracies were inadvertent and that the long term consequences thereof may prove minimal, justifying a restructuring that permits the Subscribers to recapture the bulk of the consideration originally contemplated in the Reorganization Agreement; and WHEREAS, the Subscribers have advised AmeriNet and Yankees that American requires an immediate infusion of $25,000, in addition to the short term capital requirements disclosed in the Reorganization Agreement; and WHEREAS, Yankees has indicated that it is willing to provide such short term capital immediately, by purchasing 250,000 shares of AmeriNet Stock (as hereinafter defined) from the Subscribers, and the Subscribers have agreed to make such AmeriNet stock available for such purposes, immediately paying over such proceeds to American; and WHEREAS, the Parties desire to formally memorialize their understandings concerning the required modifications and supplements to the Reorganization Agreement required to effect the foregoing: 23 NOW, THEREFORE, in consideration of the premises, as well as the mutual covenants hereinafter set forth, the Parties, intending to be legally bound, hereby amend and supplement the Reorganization Agreement, as follows: Witnesseth: Article One Amendments & Supplements The Parties hereby amend & supplement the Reorganization Agreement, in all manners required to reflect the following changes in the terms thereof: A. The Parties hereby agree to modify the provisions of the Reorganization Agreement pertaining to the shares of AmeriNet common stock (the "AmeriNet Stock") to be exchanged for all of American capital stock (the "American Stock"), as follows: (1) The initial shares of AmeriNet Stock issued to the Subscribers shall be reduced to 1,482,756 shares of AmeriNet Stock and the Subscribers will immediately convey 250,000 of such shares to Yankees in consideration for the sum of $25,000, to be immediately paid by the Subscribers to American as an additional capital contribution, correcting a number of the inaccuracies in their original representations and warranties in the Reorganization Agreement; (2) The remaining 750,000 shares of AmeriNet Stock deducted from the shares originally received by the Subscribers shall be immediately returned to AmeriNet for cancellation and shall be reserved for re-issuance to the Subscribers as a component of the shares of AmeriNet Stock issuable pursuant to the Performance Criteria, as a result of which, the aggregate number of shares of AmeriNet Stock issuable shall be increased from 4,500,000 shares to 5,250,000 shares, as follows: (3) AmeriNet will issue additional shares of AmeriNet Stock to the Subscribers as additional shares exchanged for American Stock (the "Additional Exchange Shares"), predicated on American's attaining the following annual net, pre-tax profit thresholds determined as of June 30 of each year in accordance with generally accepted accounting principals, consistently applied ("GAAP"), as follows: Goal Time Frame Additional Exchange Shares (A) $200,000 2000 500,000 Shares; or $259,000 2000 875,000 Shares; (B) $500,000 2001 800,000 Shares; or $559,000 2001 1,175,000 Shares; (C) $1,000,000 2002 800,000 Shares; $1,500,000 2003 800,000 Shares; $2,000,000 2004 800,000 Shares; $2,500,000 2005 800,000 Shares. 24 (D) In the event that the thresholds are not attained and AmeriNet has provided American with at least $250,000 in funding for their operations, then: (1) If the net, pre tax earnings are less than 33% of the required threshold during the subject 12 month period, the Additional Exchange Shares for such period will be forfeited; (2) If the net, pre tax earnings are between 33% and 80% of the required threshold during the subject 12 month period, the Additional Exchange Shares for such period and the required threshold will be carried over to the next year, increasing both the aggregate threshold and the aggregate bonus attainable for such year; and (3) If the net, pre tax earnings are between 80% and 100% of the required threshold during the subject 12 month period, the Additional Exchange Shares for such period shall be prorated. (E) In the event that the thresholds are not attained but AmeriNet has not provided American with at least $250,000 in funding for its operations, then, the Additional Exchange Shares for such period shall be prorated. B. The ratio of seats on American's board of directors allocated to designees of the Subscribers shall be reduced from 2/3 to 1/2, the initial board membership being Messrs. Gleason and Umile, Michael Harris Jordan, currently AmeriNet's president, and a further designee of AmeriNet. C. Messrs. Gleason's and Umile's annual salaries under their employment agreements with American will be reduced from $75,000 to $52,000, until profits from operations (after required internal investments for expansion) attain the levels contemplated in the Reorganization Agreement, such issue to be revisited monthly until resolved. D. If required by AmeriNet, American will hire a senior marketing and production executive to be designated by AmeriNet on terms materially identical to those reflected in the employment agreements between American and the Subscribers and American will acquire the assets and operations of another Internet business capable of in house production and hosting of web sites, designated by AmeriNet. E. Yankees hereby covenants and agrees to immediately purchase 250,000 shares of AmeriNet Stock from the Subscribers in consideration for $25,000, provided that such sum is paid directly to American, for the purpose reflected above, and acknowledges that such shares have not been registered under state or federal securities laws, but rather, are being transferred in reliance on exemptions from the registration requirements thereof predicated on Yankees' status as an accredited investor, investment intent and agreement to legending and stop transfer restrictions required to assure that the shares will not be transferred except in compliance with applicable state and federal securities laws. 25 Article Five Miscellaneous 5.1 Amendment. No modification, waiver, amendment, discharge or change of this Amendment shall be valid unless the same is evinced by a written instrument, subscribed by the Party against which such modification, waiver, amendment, discharge or change is sought. 5.2 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 unaudited mail, return receipt requested, postage prepaid, addressed as follows: To AmeriNet: AmeriNet Group.com, Inc. 902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487 Attention: Michael Harris Jordan, President Telephone (561) 998-3435, Fax (561) 998-3425; and, e-mail carrington@flinet.com; ; with a copy to G. Richard Chamberlin, Esquire; General Counsel Equity Growth Systems, inc. 14950 South Highway 441; Summerfield, Florida 34491 Telephone (352) 694-6714, Fax (352) 694-9178; and, e-mail, GrichardCh@aol.com. To the Subscribers: At such addresses as they provide AmeriNet's transfer agent for such purpose. To American: American Internet Technical Center, Inc. 440 East Sample Road; Pompano Beach, Florida 33056 Attention: J. Bruce Gleason, President. Telephone (954) 943-4748; Fax (954) 943-4046; e-mail aitc2@bellsouth.net To Yankees: The Yankee Companies, Inc. 902 Clint Moore Road, Suite 136; Boca Raton, Florida 33487 Attention: Leonard Miles Tucker, President Telephone (561) 998-2025, Fax (561) 998-3425; and, e-mail carrington@flinet.com; 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) (1) The Parties acknowledge that 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) Because of the inherent conflict of interests involved, Yankees has advised all of the Parties to retain independent legal and accounting counsel to review this Amendment 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 Part 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. 26 5.3 Merger. 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. All prior agreements whether written or oral are merged herein and shall be of no force or effect. 5.4 Survival. The several representations, warranties and covenants of the Parties contained herein shall survive the execution hereof and the Closing hereon and shall be effective regardless of any investigation that may have been made or may be made by or on behalf of any Party. 5.5 Severability. If any provision or any portion of any provision of this Amendment, 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 Amendment 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 af- fected thereby. 5.6 Governing Law. This Amendment shall be construed in accordance with the substantive and procedural laws of the State of Delaware (other than those regulating taxation and choice of law) but 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. 5.7 Indemnification. 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 con- sequence of the failure of the indemnifying Party to act, whether pursuant to requirements of this Amendment or otherwise. 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. 27 5.8 Dispute Resolution. (a) In any action between the Parties to enforce any of the terms of this Amendment or any other matter arising from this Amendment, 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 Amendment, or the negotiation thereof or inducements to enter into the Amendment, 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 six alternatives to be provided, one by Yankees, two by AmeriNet, one by American and one by each of the Subscribers. (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 six alternatives to be provided, one by Yankees, two by AmeriNet, one by American and one by each of the Subscribers. (3) (A) Expenses of mediation shall be borne by American, 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. 28 5.9 Benefit of Amendment. The terms and provisions of this Amendment shall be binding upon and inure to the benefit of the Parties, their successors, assigns, personal representatives, estate, heirs and legatees. 5.10 Captions. The captions in this Amendment are for convenience and reference only and in no way define, describe, extend or limit the scope of this Amendment or the intent of any provisions hereof. 5.11 Number and Gender. 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. 5.12 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, as- signments, 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 Amendment. 5.13 Status. Nothing in this Amendment shall be construed or shall constitute a partnership, joint venture, employer-employee relationship, lessor-lessee relationship, or principal-agent relationship, rather, the relationships established hereby are those of exchanging stockholders in a transaction meeting the requirements of Section 368)(a)(1)(B) of the Code, and parties incidental thereto. 5.14 Counterparts. (a) This Amendment may be executed in any number of counterparts. (b) All executed counterparts shall constitute one Amendment 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 Amendment which shall be the document filed with the Commission. 29 5.15 License. (a) This Amendment is the property of Yankees and the use hereof by the Parties is authorized hereby solely for purposes of this transaction. (b) The use of this form of Amendment or of any derivation thereof without Yankees' prior written permission is prohibited. (c) This Amendment shall not be construed more strictly against any Party as a result of its authorship. In Witness Whereof, the Parties have caused this Agreement to be executed effective as of the date last set forth below. Signed, sealed and delivered In Our Presence: AmeriNet Group.com, Inc. -------------------------------- _________________________________ By: /s/ Michael H. Jordan Michael Harris Jordan, President (Corporate Seal) Attest: /s/ G. Richard Chamberlin G. Richard Chamberlin, Secretary Dated: August 25, 1999 American Internet Technical Centers, Inc. _________________________________ (A Florida corporation) _________________________________ By: /s/ J. Bruce Gleason J. Bruce Gleason, President (Corporate Seal) Attest: /s/ Michael D. Umile Michael D. Umile, Secretary Dated: August 25, 1999 Subscribers --------------------------------- --------------------------------- /s/ J. Bruce Gleason --------------------------------- --------------------------------- /s/ Michael D. Umile Dated: August 25, 1999 The Yankee Companies, Inc. for the limited purposes specifically set forth in this Agreement --------------------------------- _________________________________ By: /s/ Leonard M. Tucker Leonard Miles Tucker, President (Corporate Seal) Attest: /s/ William A. Calvo, III William A. Calvo, III, Secretary 30 EX-22.9 3 CONSENT OF AUDITORS DASZKAL, BOLTON, MANELA, DEVLIN & CO. CERTIFIED PUBLIC ACCOUNTANTS A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS 2401 N.W. BOCA RATON BOULEVARD, SUITE 100 BOCA RATON, FLORIDA 33431 TELEPHONE (561) 367-1040 FAX (561) 750-3236 JEFFREY A. BOLTON, CPA, P.A. MEMBER OF THE AMERICAN INSTITUTE MICHAEL I. DASZKAL, CPA, P.A. OF CERTIFIED PUBLIC ACCOUNTANTS ROBERT A. MANELA, CPA, P.A. TIMOTHY R. DEVLIN. CPA, P.A. MICHAEL S. KRIDEL, CPA, P.A. We consent to the use of our report on the Financial Statements of American Internet Technical Center, Inc. for the year ended December 31, 1998 dated August 19, 1999, in the Form 8-K, dated September 8, 1999. /s/ Daskal Bolton Manela Devlin & Co. Boca Raton, Florida September 8, 1999 31 -----END PRIVACY-ENHANCED MESSAGE-----