U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-KSB
Annual Report Under
Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended
June 30, 2001
Commission file number
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000-03718
FIELDS TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 11-2050317
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(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
333 Main Street, Park City, Utah 84060
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(Address of principal executive offices)
(435) 649-2221
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(Registrant's telephone number, including area code)
AmeriNet Group.com, Inc., 2500 N. Military Trail, Suite 225,
Boca Raton, Florida 33431
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(Former name and former address if changed since last report)
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, $.01 Par Value Over-the-Counter Bulletin Board
Check whether the issuer (1) 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 [X] No [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
The issuer's revenues for the six month transition priod ending June
30, 2001 and year ended December 31, 2000 were $1,495,201its most recent fiscal
year were $6,513,142, respectively.
The aggregate market value of the voting and non-voting equity held by
non-affiliates computed by reference to the price at which common equity was
sold, or the average bid and asked price of such common equity (i.e., does not
include directors, executive officers or ten percent stockholders identified in
Item 11 hereof) of the issuer as of October 8, 2001 was approximately
$6,429,602.
TABLE OF CONTENTS TO ANNUAL REPORT
ON FORM 10-KSB
YEAR ENDED JUNE 30, 2001
PART I
Item 1. Description of Business...........................................3
Item 2. Description of Property...........................................9
Item 3. Legal Proceedings................................................10
Item 4. Submission of Matters to a Vote of Security Holders..............11
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.........11
Item 6. Management's Discussion and Analysis or Plan of Operation........12
Item 7. Financial Statements.............................................23
Item 8. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.......................................23
PART III
Item 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance With Section 16(a) of the Exchange Act.....23
Item 10. Executive Compensation...........................................25
Item 11. Security Ownership of Certain Beneficial Owners and Management...27
Item 12. Certain Relationships and Related Transactions...................28
Item 13. Exhibits and Reports on Form 8-K.................................29
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
Forward-Looking Statements
This annual report on Form 10-K contains forward looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. The words or phrases "would be," "will
allow," "intends to," "will likely result," "are expected to," "will continue,"
"is anticipated," "estimate," "project," or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Actual results could differ materially
from those projected in the forward looking statements as a result of a number
of risks and uncertainties, including the risk factors set forth below and
elsewhere in this report. See "Risk Factors" and Management's Discussion and
Analysis of Financial Condition and Results of Operations." Statements made
herein are as of the date of the filing of this Form 10-K with the Securities
and Exchange Commission and should not be relied upon as of any subsequent date.
Unless otherwise required by applicable law, we do not undertake, and
specifically disclaims any obligation, to update any forward-looking statements
to reflect occurrences, developments, unanticipated events or circumstances
after the date of such statement.
PART I
Item 1. Description of Business
General
We were incorporated in the State of Delaware on December 8, 1964 as Infotec,
Inc. From June 20, 1999 to approximately June 12, 2001, we were known as
Amerinet Group.com, Inc.
On June 13, 2001, we entered into a Reorganization Agreement" with Randall K.
Fields and Riverview Financial Corporation (hereafter referred to as
"Reorganization Agreement"), whereby we acquired Park City Group, Inc., which
became our wholly owned subsidiary. In connection with the Reorganization, Our
Board of Directors resigned and was replaced by the Board of Directors of Park
City Group, Inc., the stockholders of Park City Group gained voting control of
our common stock, and we changed our name to Fields Technologies, Inc.
We conduct our operations through, Park City Group, Inc., which was incorporated
in the State of Delaware in May 1990. Park City Group, Inc. on April 5,
2001acquired its wholly owned subsidiary, Fresh Market Manager, LLC (FMM), which
is a Limited Liability Company formed in the State of Utah. Park City Group,
Inc. has conducted its operations since 1990.
Through Park City Group, Inc., we provide development, support and consulting
services through our various software applications identified as "ActionManager"
and "Fresh Market Manager."
Our principal executive offices are located at 333 Main Street, Park City, Utah
84060. Our telephone number is (435) 649-2221. Our website address is
http://www.fieldstechnologies.com.
We have not been involved in any bankruptcy, receivership, or similar
proceeding.
3
Business
Today's business environment has become increasingly competitive, especially the
retail business environment. Retailers apply technology to three primary areas:
Money, People, and Things. Simply put, there are now technologies for:
Finance (money)
Technologies for operations (people)
Technologies for merchandise (things)
Our business offers its customers two of these three types of technology:
technology for operations (Action Manager) and technology for merchandise (Fresh
Market Manager).
Our patented technology is the result of having developed these applications at
Mrs. Fields Cookies, where our President was a co-founder and Chairman of the
Board. Our applications were designed to address the specific problems of retail
operators. We have designed solutions for users of our systems that are easy to
use, easy to implement, and easy to train.
The critical strength of our products is the artificial intelligence-like rules
based technology that allows our customers to tailor the operating rules to
replicate the expert knowledge and practices of their most successful managers.
Our rules based systems are applications in which the action to be taken is
determined by the rules defined by the user. As such, our customers who use our
rules based systems determine what action the system will perform when an
identified condition occurs, usually based on the policies and procedures or
"rules" of the customer's business operations. In this way, the customer
decomposes its business operation into different rules or the way in which it
wants certain conditions or actions to be addressed. In comparison, in non-rules
based systems, the applications perform action as they have been designed and
coded by the vendor, regardless of the action the customer might wish to take.
Action Manager
Our Action Manager applications are intended to replace costly paper-based and
manual processes with systems that substantially reduce time spent on
administrative tasks, non-productive (non-selling) labor costs, and excess
headcount in the corporate office. Our Action Manager applications provide an
automated method for managers to plan, schedule, and administer virtually every
tedious task at store-level. In addition to automating the bulk of all
administrative processes, Action Manager also provides the local manager with a
real-time "dashboard" view of the business, as well as a "cockpit management"
type alert system to notify the manager when something is or is not to be
planned, and suggests best practice advice as to what course of action to be
taken. By automating a great deal of the "process" and administrative burden of
management, Action Manager technologies allow management, at all levels, to
devote more time to customer-related activity and to improve their over-all
planning and decision making. The use of the Action Manager applications are
intended to result in cost savings and improved staff and customer focus in the
store.
Our Action Manager is a suite of software applications consisting of three
distinct modules or "workbenches". Each Action Manager Workbench incorporates
our core Action Board technology that allows a multi unit organization to embed
a company's "best practice" solutions into the system. ActionBoard software
automates:
o Tactical, routine tasks
o Alerts managers to issues that require immediate attention
o Gives advice on actions to be taken
As such, routine processes become automated and less time-consuming, allowing
managers to focus more time on people, rather than paper and processes. Our
Action Manager applications have been designed to overcome the limitations of
traditionally used paper and pen or traditionally used automated systems. We
have attempted to provide highly-functional, easy-to-use, scaleable, and cost
effective software applications and related services that automate and integrate
the management and information requirements of businesses with multiple and
often geographically dispersed locations or departments.
Our Action Manager applications have been marketed to large, as well as small to
mid-sized retailers with 50 or more locations. Our Action Manager applications
are intended to provide functional benefits to a company's employees, its
managers, and to the company as a whole.
Our Action Manager applications are distributed in two different configurations,
either individually or in the Workbench configuration. Existing customers, who
licensed the software by individual application, can continue to acquire
applications individually.
The following describes our software workbenches and the individual workbenches
within them:
ActionBase
ActionBase provides a set of utilities for menu creation, maintenance and
security. ActionBase is designed to efficiently and effectively manage and
control the software deployed to remote locations and insure that all locations
have the same consistent interfaces.
ActionBoard
ActionBoard is a user defined, rules based, and real-time display of events
requiring immediate managerial attention. ActionBoard provides best practices
advice to location managers through the critical alerts process and the
recommended action to be taken. This is accomplished by embedding corporate
rules and practices in an application that cross-references and consolidates
operating data.
ActionBoard is intended to be used by employees, managers, and the company as a
whole. It displays operational information and guides employee and manager
action. ActionBoard has been designed to provide the following potential
advantages to employees:
Maintaining employees focus on essential activities and tasks to ensure
that critical task is not overlooked or delayed
To increase performance quality and consistency
Improve employee response time and level of contribution
Spotlighting achievements and successes for management
Information Manager's Workbench
Our Information Manager's Workbench applications are ActionForm, ActionMail,
CashSheet, ScoreTracker, Internet Mail Gateway, Action Gatekeeper,
ReadyReference, and ReportBuilder which can automate data collection and
distribution, insuring data flow both to and from the locations and the
corporate office.
Labor Manager's Workbench
The Labor Manager's Workbench consists of the applications Scheduler,
Forecaster, and TimeMeter. These applications are designed to address the
problems of managing staff and insuring that staff is performing the right tasks
at the right time and in the right place. Labor requirements are determined by
analyzing the results created by the Forecaster and compliance to schedules and
monitoring time punches are provided by the TimeMeter application.
HR Manager's Workbench
The following software applications, SmartHire, Interactive Tutor, Checkup, and
HRAction, provide an automated process for personnel selection, training, and
retention. These applications are intended to assist managers by automating many
of the time consuming tasks that are associated with the hiring and training
process.
Fresh Market Manager
Fresh Market Manager is a fully integrated system for deli, bakery, food
service, meat, seafood and produce departments. This software enables item
management and category analysis by exception, with particular emphasis on
managing the production areas within the supermarket. In addition, this
application provides accurate cost of goods identification and sales
profitability analysis to determine gross profit and net profit by item.
Fresh Market Manager provides corporate, store and department managers with
total item information, providing comprehensive category analysis. Category and
store department managers can leverage this information in their attempt to
increase sales, decrease shrinkage, and improve the overall gross profit.
Combined with automated production, management attempts to ensure that variety
and item freshness increase, while overall waste decreases.
Fresh Market Manager automates the majority of the planning, forecasting,
ordering and administrative functions associated with merchandise or products.
Effectively managing the merchandise of a business requires solutions that
address two major concerns. First, the ability to accurately forecast demand is
essential. Second, and equally as problematic, is the demand for product that
the business has failed to anticipate (lost sales).
Focusing initially on perishable inventory needs, the applications gather data,
especially in areas where better product delivery based on real demand, can help
eliminate unnecessary waste, and can improve "right product" availability. The
applications will assist in the timely ordering of materials and provides real
time demand management (based on patented forecasting algorithms) by using
alerting functions. The net intended effect of these applications is to increase
sales (through better product availability and forecasting) and lower costs (by
reducing excess production, labor and packaging).
Store management may use this software application for:
o Assortment planning to respond to customer preferences for
variety and selection within the store
o Forecasting, to attempt to improve sales by anticipating the
expected demand
o Production planning, to build produced items efficiently, when
they are needed
o Item management, to quickly and accurately enter transactions
into the system
o Reporting, to see what the business is doing now and make
decisions based on current information
Corporate management may use the Fresh Market Manager software to control
detailed data through well-defined information groupings to:
Determine the product mix for the enterprise at any level of detail
To create rules that drive production scheduling to meet the company's
specific needs
Apply labor standards for production and for category management
Our Fresh Market Manager applications are Cost Control Monitor, Demand Forecast
and Production Planner, Inventory Manager, and Alert Advisor.
Cost Control Monitor
This application assists supermarket food service operations with analysis of
data collection and determining the amount of production waste verses throwaways
and markdowns. According to the International Deli, Dairy, Bakery Association,
the typical supermarket food service operations results in a 2% net loss while
traditional food service operations are accustomed to a 10% net profit.
Demand Forecast and Production Planner
Demand Forecast and Production Planner offers functions that: (a) deliver
assortment and production planning; (b) deliver corporate standards for core
items; (c) provides the ability for managers to select customer/market driven
items; and (d) develop a daily production plan based on forecasted needs. This
application is intended to assist an organization in making the right product in
the right quantity to improve the profitability of the perishable business by
effective production planning and accurate assortment planning.
Inventory Manager
Inventory Manager provides cost control and inventory management as well as
computer-assisted orders and receiving and actual cost of goods by item and
category. Inventory Manager is intended to address the needs of businesses to
control the cost of inventory and for ways to reduce the amount of inventory and
minimize costs.
Alert Advisor
Alert Advisor delivers real-time demand monitoring, exception reporting and
real-time category management with alerts that keep managers informed on a
real-time basis.
CONSULTING SERVICES
We provide consulting services ranging from accelerated implementations
(consultation support in conjunction with the customer's staff), to project
level advisory consulting. Focused primarily on the implementation of the
ActionManager and Fresh Market Manager applications, the professional services
consultants assist customers in decision-making and implementing the software.
Accelerated Implementation Strategy
Using experience and industry expertise, our team focuses on identifying the
company's mission, crucial business elements within the client company,
developing a rapid implementation program, and providing the customer with
continued assistance.
The elements of this strategy include:
o On-site support for pre-implementation analysis of
requirements o Consultants to augment the customer's project
team
o Defined project plans with timelines created to meet customer
requirements
o On-site support for installation and verification
o Completion and delivery of post-implementation and return on
investment analysis
Implementation Assistance Services We also provide services to our customers
including:
o Project management and consulting support for customer project
teams o Business rule recommendations and tailoring
o Technical systems analysis, assessment and configuration
o On-site training and educational services Dependence on One or
a Few Customers
Our business in not dependent upon one or a few customers. However,
there are no assurances that we will not become so dependent in the future.
Marketing and Sales
We employ three marketing and eight sales personnel. Our marketing
personnel are responsible for determining the functionality of our applications,
competitive product knowledge, and product information provided to the public.
Our sales personnel are responsible for identifying sales prospects and sales
activities. In addition, a combination of our sales and marketing management are
responsible for identifying and negotiating with potential strategic partners,
as well as working with our existing strategic partners. We will seek third
parties to market and distribute our applications in other segment markets
outside of the our primary retail market. We intend to have third party
strategic partners provide market expertise by tailoring our ActionManager and
Fresh Market Manager applications to meet the specific needs of certain markets
such as the energy market.
Patents and Proprietary Rights
Our policy is to seek patent protection for all developments,
inventions and improvements that are patentable and which have potential value
to the Company and to protect as trade secrets other confidential and
proprietary information. We intend to vigorously defend our intellectual
property rights to the extent our resources permit.
We own or control eight U.S. patents, eight U.S. trademarks and 37 U.S.
copyrights relating to our software technology. We have 14 international patents
and patent applications pending. The patents referred to above are continuously
reviewed and renewed as their expiration dates come due.
Our future success may depend upon the strength of our intellectual
property. Although we believe that the scope of our patents/patent applications
are sufficiently broad to prevent competitors from introducing devices of
similar novelty and design to compete with our current products and that such
patents and patent applications are or will be valid and enforceable, there are
no assurances that if such patents are challenged, this belief will prove
correct. In addition, patent applications filed in foreign countries and patents
granted in such countries are subject to laws, rules and procedures, which
differ from those in the U.S. Patent protection in such countries may be
different from patent protection provided by U.S. laws and may not be as
favorable to us. We plan to timely file international patents in all countries
in which we seek market share.
We are not aware of any patent infringement claims against us; however,
there are no assurances that litigation to enforce patents issued to us, to
protect proprietary information owned by us, or to defend against our alleged
infringement of the rights of others will not occur. Should any such litigation
occur, we may incur significant litigation costs, our resources may be diverted
from other planned activities, and result in a materially adverse effect on our
results of operations and financial condition.
Government Regulation and Approval
Our compliance with governmental regulations is limited to our
compliance with patent, copyright, and trademark. We rely on a combination of
patent, copyright, trademark, and other laws to protect our proprietary rights.
There are no assurances that our attempted compliance with patent, copyrights,
trademark or other laws will adequately protect our proprietary rights or that
we will have adequate remedies for any breach of our trade secrets. In addition,
should we fail to adequately comply with laws pertaining to our proprietary
protection, we may incur additional regulatory compliance costs.
Cost of Compliance With Environmental Laws
We currently have no costs associated with compliance with
environmental regulations. We do not anticipate any future costs associated with
environmental compliance; however, there can be no assurance that we will not
incur such costs in the future.
Research and Development
The industry is characterized by rapid changes in products and process
technologies. As such, we must continually improve our existing and new products
and process technologies in a cost-effective manner to meet ever-changing
consumer requirements and emerging industry standards. If we fail to do so, our
financial condition, operations, and operating results may be negatively
impacted. Our research and development expenditures over the past six months and
the two prior calander years have been:
Year Amount Percent of Revenues
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Six months ended 6/30/01 $ 289,537 19.4%
2000 $ 1,035,926 15.9%
1999 $ 878,064 16.8%
In addition, we expended $654,957 during the six months ended June 30,
2001 after the Action Manager and Fresh Market Manager revisions and the 4x
operating platform reached feasibility which costs have been capitalized.
Research and development expenses primarily consist of salaries and
related costs of employees, consultants, and subcontractors engaged in ongoing
research, design and development, coding and testing of our software
applications.
Reports to Security Holders
We are subject to the informational requirements of the Securities
Exchange Act of 1934. Accordingly, we file annual, quarterly and other reports
and information with the Securities and Exchange Commission. You may read and
copy these reports and other information we file at the Securities and Exchange
Commission's public reference rooms in Washington, D.C. and Chicago, Illinois.
Our filings are also available to the public from commercial document retrieval
services and the Internet world wide website maintained by the Securities and
Exchange Commission at www.sec.gov.
Employees
As of October 8, 2001, we employed 52 employees including 18 software
developers and programmers, 12 sales, marketing and account management
employees, 12 software service and support employees and 10 accounting and
administrative employees. All but two of these employees work for us on a full
time basis. We do expect to add additional employees during the next 12 months.
Our employees are not represented by any labor union. We believe that relations
with our employees are good.
Item 2. Description of Properties
The principal place of our business operations is 333 Main Street, Park
City, Utah. We lease approximately 14,050 square feet at this location. The
facilities consist primarily of office and storage areas and are leased from an
unrelated third party at an annual rental rate of $221,787 per year, subject to
a 4% annual cost of living increase. Prior to April 5, 2001 (the date FMM was
acquired) FMM was sharing 25% of the facilities rental cost pursuant to a cost
sharing arrangement. The property is sufficient for our business operations for
the foreseeable future. A new lease was renegotiated and executed February 28,
2001 to commence on January 1, 2001 and expires December 31, 2003.
Item 3. Legal Proceedings
As of June 30, 2001, we are involved in the following litigation:
1. Decision One Corporation v. Park City Group, Inc. (Third Judicial
District Court in Summit County, Utah, Case No. 000600258DC, filed on
August 24, 2000). The complaint seeks recovery of a debt in the amount
of approximately $15,500 for "merchandise/and or services purchased or
rendered on behalf of us by Decision One between March 1, 1998 and
February 1, 1999, together with interest and costs." We timely filed
our answer to the Complaint, we believe the plaintiff's claims are
without merit and we have been vigorously defending this action.
Presently, the parties are engaged in settlement negotiations, the
outcome of which cannot reasonably be predicted at this time.
2. 3Com Corporation v. Park City Group, Inc., (Santa Clara County
(California) Superior Court, Case No. CV 799017, filed on June 14,
2001). A civil action was filed by 3Com Corporation against us seeking
to recover certain amounts claimed to be due on a promissory note. The
Plaintiff alleges that the note is in default and seeks damages of
$250,000 plus interest and attorneys fees. We believe that the
Plaintiff's claims are without merit and we have been vigorously
defending this lawsuit. We have asserted several defenses and have
filed a cross-complaint for breach of contract, unjust enrichment, and
fraud. Because this case is in the very early stages of litigation, our
counsel is unable to predict the ultimate resolution of the case or our
liability, if any, in connection therewith. Should we lose this
lawsuit, and be required to pay the damages the Plaintiff is seeking,
our financial condition would be materially and adversely affected.
3. On October 1, 2001 and October 2, 2001, we received "demand letters"
from two shareholders threatening litigation unless their prior
investments in our stock are rescinded.
The first demand letter was issued on October 1, 2001 by The Yankee
Companies, Inc. ("Yankee Group"), an "investor relations" firm. The
Yankee Group has threatened to initiate "derivative and class action
lawsuits, as well as other judicial and regulatory actions" if we
refuse to seek rescission of our acquisition of Park City Group, Inc.,
and the entire private placement related thereto (totaling
approximately $2,040,000 consisting of cash collected and subscriptions
receivable. The Yankee Group has asserted that Park City Group, Inc.,
made material misrepresentations and omissions to Fields Technologies,
Inc. (then operating as AmeriNet Group.com, Inc.) in connection with
that acquisition and related private placement.
The second "demand letter" was issued on October 2, 2001 by
shareholder, Debra Elenson ("Elenson"). Elenson alleges that she
purchased 750,000 of the Company's common stock for a total of
$127,500, based on material misrepresentations concerning the our
financial position.
Both the Yankee Group, and Elenson, have primarily alleged various
deficiencies in our audited financial statements for the year ended
December 31, 2000, as well as in our unaudited, pro-forma financial
statements for the period ended March 31, 2001. Presently, we are
investigating this matter. We believe that the allegations made by the
Yankee Group and Elenson are meritless, and we intend to vigorously
defend any lawsuit brought by these parties. We also believe that we
have appropriate defenses and counter-claims to raise against the
Yankee Group, and their affiliates, based on fraud, unjust enrichment,
breach of contract, tortuous interference, as well as other legal and
equitable claims.
However, because no lawsuits have actually been initiated by either of
these parties, we are unable to reasonably predict the ultimate
resolution of these claims or our liability, if any, in connection
therewith. Should a derivative or class action lawsuit be filed against
us by the Yankee Group and/or Elenson, we would have to expend
substantial resources to defend such actions, which could have a
materially adverse affect on our operations and financial condition. In
addition, if we were to lose such a lawsuit, and if we were required to
rescind the Park City Group, Inc., acquisition and/or the related
private placement, the impact of such an outcome could also have a
materially negative impact on our operations and financial condition.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of our security holders during the
six months ended June 30, 2001.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Dividend Policy
To date, we have not paid dividends on our common stock. The payment of
dividends, if any, is within the discretion of the Board and will depend upon
our earnings, our capital requirements and financial condition, and other
relevant factors. See "Management's Discussion and Analysis of Financial
Condition and Results of Operation." The Board does not intend to declare any
dividends in the foreseeable future, but instead intends to retain all earnings,
if any, for use in our operations.
Share Price History
Our common stock (the "Common Stock") is traded in the over-the-counter
market in what is commonly referred to as the "Electronic" or "OTC Bulletin
Board" or the "OTCBB" under the trading symbol "FLDT.OB." The following table
sets forth the high and low bid information of the Common Stock for the periods
indicated. The price information contained in the table was obtained from IDD
Information Services, Inc. and other sources we consider reliable. Note that
such over-the-counter market quotations reflect inter-dealer prices, without
retail mark-up, markdown or commission and the quotations may not necessarily
represent actual transactions in the Common Stock.
Quarter Ended Low High
------------- --- ----
2000
----
September 30............... $0.375 $4.125
December 31................ $1.062 $2.750
March 31................... $1.062 $2.156
June 30.................... $0.375 $2.062
2001
----
September 30............... $0.343 $1.093
December 31................ $0.170 $0.670
March 31................... $0.160 $0.600
June 30.................... $0.210 $0.530
Holders of Record
At October 8, 2001, there were approximately 2,298 holders of record of
our Common Stock. The number of holders of record was calculated by reference to
our stock transfer agent's books.
Issuance of Securities
During the period July 1, 2000 through the date of our reorganization,
June 13, 2001, AmeriNet Group.com, Inc. ("AmeriNet") (the predecessor to Fields
Technologies, Inc.) issued shares of common stock as follows:
AmeriNet issued 196,073 shares of preferred stock for sash,
liabilities, debt and services aggregating in the amount of $1,488,227.
AmeriNet converted 442,783 shares of preferred stock to 8,855,660
shares of common stock.
AmerNet issued 6,700,145 shares of common stock for cash, services,
liabilities and debt aggregating in the amount of $1,656,536.
AmeriNet issued 9,000,000 shar4es of its common stock for a
subscription receivable of $1,530,000.
AmeriNet issued 3,122,995 shares of common stock from the exercise of
stock options.
AmeriNet retired 505,380 shares of its common stock for cash of
$131,599.
AmeriNet recorded expense of $233,043 and deferred stock compensation
of $92,873.
AmeriNet satisfied liabilities and debt with the distribution of
certain assets and investments through the issuance of 14,352 shares of its
common stock.
In connection with our reorganization, a total of 109,623,600 shares of
our common stock were issued to shareholders of Park City Group, Inc. in
exchange for their shares of common stock of that company.
Subsequent to June 13, 2001, shares of our common stock were issued as
follows:
In June 2001, 352,941 shares of common stock were issued in
satisfaction of certain debt valued in total at $134,118 based on the fair
market value of the shares issued.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operation
The following discussion and analysis provides information that we
believe is relevant to an assessment and understanding of our consolidated
results of operations and financial condition. The terms "Company", "we", "our"
or "us" are used in this discussion to refer to Fields Technologies, Inc.
(formerly AmeriNet Group.com, Inc.) and its wholly owned subsidiary, Park City
Group, Inc. along with Park City Group, Inc.'s wholly owned subsidiary, Fresh
Market Manager, LLC, on a consolidated basis, except where the context clearly
indicates otherwise.
Due to the reorganization of Park City Group, Inc. and Fresh Market
Manager LLC with Fields Technologies, Inc., the information presented here and
in the consolidated financial statements included elsewhere in this document are
as of December 31, 2000 and 1999 and the years then ended along with June 30,
2001 and 1999 and the six months then ended. Park City Group, Inc. and Fresh
Market Manager LLC had December 31 year ends; Fields Technologies, Inc. had a
June 30 year end. In conjunction with the reorganization, which was accounted
for as a reverse acquisition, a June 30 year end was retained for all entities.
Overview
Our principal business is the design, development, marketing and
support of our proprietary software products. These software products are
designed to be used in retail businesses having multiple locations by assisting
individual store locations and corporate management with managing daily business
operations and communicating results of those operations in a timely manner.
In accordance with U.S. generally accepted accounting principles, we
have expensed all software development costs as incurred through December 31,
2000 with our software having been viewed as an evolving product. During January
2001, technological feasibility of a major revision to our Action Manager and
Fresh Market Manager software and our 4x operating platform was established. In
accordance with U.S. generally accepted accounting principles, development costs
incurred from January 2001 through June 30, 2001, totaling $654,957 has been
capitalized. These costs will be amortized on a straight-line basis over a
period of four years. Amortization will begin when the products are available
for general release to the public, which is anticipated in approximately January
2002. In addition, our consolidated balance sheet does not reflect any value
attributable to intellectual property, the cost of which has been expensed as
incurred. To date, development and intellectual property expenditures have
resulted in the development of 20 different applications of the Action Manager
software and different applications of Fresh Market Manager software along with
five granted software patents and three patent applications with numerous
separate trademarks and copyrights. Through June 30, 2001, we have accumulated
consolidated losses totaling $8,088,808 which includes consolidated net loss of
$629,632 for the six months ended June 30, 2001 and consolidated net income of
$1,394,406 for the year ended December 31, 2000. The net loss through June 30,
2001 consisted of consolidated operating loss of $554,351, with net interest
expense of $353,576 and an extraordinary gain on the forgiveness of debt in the
amount of $278,295 resulting from the acquisition of Fresh Market Manager, LLC
and the discharge of indebtedness from note holders of FMM.
We plan to actively market our current software products both
domestically and internationally. We also intend to enhance our existing
software products and develop new software applications to augment our existing
portfolio of products. In addition, we are actively pursuing potential
acquisitions of existing technologies and businesses that are compatible with
our existing business operations and products.
Management Discussion and Analysis
Financial Position
We had $218,482 in cash and cash equivalents as of June 30, 2001
compared with $1,099,242 at December 31, 2000, representing a decrease of
$880,760. This decrease in cash for the six months ended June 30, 2001 relates
principally to a reduction in revenues and increases in operating expenses,
including reorganization and professional costs.
Working capital deficit as of June 30, 2001 increased to $3,483,012 as
compared to $232,096 at December 31, 2000. The increase in the working capital
deficit for the six months ended June 30, 2001 is principally attributable to:
(i) a decrease in net cash provided by operating activities; (ii) an increase in
the amount of the obligation on the line of credit; (iii) the current portion of
the long-term debt associated with the acquisition by Park City Group, Inc. of
Fresh Market Manager, LLC during the period; (iv) reduction in the receivable
from related parties, also due to the acquisition of Fresh Market Manager, LLC
by Park City Group, Inc.; and (v) an increase in accounts payable consisting
principally of professional costs incurred related to the reverse acquisition
transaction.
Six Months Ended June 30, 2001 and 2000
During the six months ended June 30, 2001, we had total revenues of
$1,495,201 compared to $4,343,301 for the six months ended June 30, 2000. The
difference in these total revenue amounts is principally attributable to: (a) we
have historically experienced seasonal revenue fluctuations, with generally
lower revenues during the first six months of any given year; and (b) During the
six months ended June 30, 2000 we recognized a significant amount of additional
software license and consulting revenue from one customer related to a sales
agreement entered into in a previous period for which the revenue recognition
was deferred until the six months ended June 30, 2000 when the related services
were performed and our revenue recognition policy had been met. During the six
months ended June 30, 2001, deferred revenue had increased from $1,294,773 at
December 31, 2000 to $1,535,742 at June 30, 2001.
Research and development expenses for the six months ended June 30,
2001 were $289,537 compared with $759,377 during the comparable six month period
ended June 30, 2000. The reduction in expense is primarily attributable to
$654,957 of software development costs associated with significant revisions to
our Action Manager and Fresh Market Manager products and the 4x operating
platform that were determined to be technologically feasible in January 2001 and
that were capitalized in accordance with U.S. generally accepted accounting
principles as previously discussed. No software development costs were
capitalized during the six months ended June 30, 2000. Overall software research
and development cost increased during the six months ended June 30, 2001 when
compared to the comparable six months of the prior year due to these related
costs have been incurred by Fresh Market Manager which were recognized after its
acquisition in April 2001.
Sales and marketing expenses of $556,534 incurred during the six months
ended June 30, 2001compared with $524,917 during the comparable six month period
ended June 30, 2000 were relatively comparable.
Selling, general and administrative expenses for the six months ended
June 30, 2001 were $292,723 compared with $269,045 for the six months ended June
30, 2000 which amounts are also relatively comparable.
Reorganization professional expenses totaling $420,970 incurred during
the six months ended June 30, 2001 relate principally to legal, accounting and
other associated expenses regarding the reverse acquisition transaction between
Fields Technologies, Inc. (formerly AmeriNet Group.com, Inc.) and Park City
Group, Inc. Such professional expenses for the six month period ended June 30,
2000 were $89, 555.
Net interest expense for the six months ended June 30, 2001 was
$353,576 compared to $92,712 for the six months ended June 30, 2000. The net
interest expense increase is attributable principally to: (i) interest
associated with the debt acquired during the 2001 period related to the
acquisition of Fresh Market Manager, LLC; (ii) additional interest related to an
increase in the average outstanding balance on the line of credit during the
2001 period; and (iii) interest related to an increase in the balance of the
obligations due to our principal shareholder.
Upon the acquisition of the member interest of Fresh Market Manager,
LLC by Park City Group, Inc. in April 2001, certain principal and related
accrued interest was discharged. Of the total accrued interest forgiven,
$278,295 related to interest due to an unrelated party and has been reflected
separately as a gain on the forgiveness of debt during the six month period
ended June 30, 2001. No such gain was recognized during the comparable six
months ended June 30, 2000.
Years Ended December 31, 2000 and 1999
During the year ended December 31, 2000, Park City Group had total
revenues of $6,513,142, compared with total revenues of $5,231,097 for the prior
year. Our operating revenues for the year ended December 31, 2000 consisted of
$2,115,545 in software license fees, $2,066,523 in maintenance and support fees,
$769,074 in consulting and other fees and $1,562,000 in development and software
enhancement fees. Our operating revenues for the year ended December 31, 1999
consisted of $2,321,655 in software license fees, $2,403,287 in maintenance and
support fees and $506,155 in consulting and other fees. The decrease in software
license fee revenues in 2000 compared with 1999 is attributable to a general
reduction in our sales and marketing effort while at the same time completing
remaining performance requirements for existing customers. The decrease in
maintenance and support fees in 2000 compared with 1999 is attributable to the
normal reduction in maintenance contracts for older existing customers with
fewer new maintenance contracts attributable to the decrease in the sale of new
software licenses. Deferred revenue totaling $1,294,773 at December 31, 2000,
consists primarily of revenue from maintenance and support contracts. These
contracts generally have terms of twelve months that extend beyond the end of
the period being reported for financial statement purposes. Revenues on those
contracts are recognized as the term of the agreement progresses.
Research and development expenses were $1,035,926 for the year ended
December 31, 2000, compared with $878,064 for the prior year. Our research and
development efforts during 2000 focused on regular enhancements to the existing
software products along with work on the development of the new 4x and the Fresh
Market Manager products that were not determined to be technologically feasible
until January 2001. Our research and development efforts during 1999 focused on
the initial development of the 4x and Fresh Market Manager products in addition
to the regular enhancements of existing software products. The increase in
research and development expenses resulted primarily from the addition of
development personnel to produce the 4x and Fresh Market Manager products along
with related employment and other overhead costs.
Sales and marketing expenses were $912,109 for the year ended December
31, 2000, compared to $1,115,543 for the prior year. The decrease resulted
primarily from a reduction in the number of trade shows we attended and a
reduction in sales and marketing personnel and related travel and other costs.
General and administrative expenses were $825,495 for the year ended
December 31, 2000, compared to $1,042,948 for the prior year. The general and
administrative expenses decrease resulted primarily from a reduction in general
and administrative personnel and related costs while consolidating
responsibilities and resources.
Professional expenses for the year ended December 31, 2000 were
$145,347 compared with $296,334 for the year ended December 31, 1999. These
costs consisted principally of legal and accounting fees related to our normal
business activities. The costs were higher in 1999 due to legal costs incurred
related to special issues related to customer contracts and several dispute
resolutions.
Interest expense for the year ended December 31, 2000 was $194,044
compared with $178,292 for the year ended December 31, 1999. The increase is
primarily attributable to an increase in interest rates on loans from our
majority shareholder and additional interest attributable to and increase in the
outstanding balances on those obligations during the year ended December 31,
2000.
Liquidity and Capital Resources
To date, we have financed our operations principally through operating
revenues from software licensing, maintenance and support, consulting and
related services along with short term bank borrowings, loans from a majority
shareholder and more recently, private placements of equity securities. We
generated $58,782 in net cash provided through financing activities during the
six months ended June 30, 2001, compared with $418,778 used in financing
activities during the year ended December 31, 2000. During the six months ended
June 30, 2001, we used $492,013 of net cash in investing activities compared
with $181,789 of net cash used in investing activities during the year ended
December 31, 2000. We used $447,529 of net cash in operating activities during
the six months ended June 30, 2001 compared with $560,982 of net cash provided
by operating activities during the year ended December 31, 2000. As of June 30,
2001, we had cash and cash equivalents amounting to $218,482 compared to
$1,099,2425 on December 31, 2000. Total current assets totaled $1,179,574 at
June 30, 2001 compared with $2,070,357 at December 31, 2000. Current liabilities
totaled $4,662,586 on June 30, 2001 compared with $2,302,453 on December 31,
2000. As such, these amounts represent an overall increase in working capital
deficit. These increases in working capital deficit, which equate to reduced
working capital, are largely due to decreases in net cash provided by operating
activities and an overall increase is short term indebtedness.
Our working capital and other capital requirements for the foreseeable
future will vary based upon a number of factors, including: (i) changes in the
software industry and environment which may require additional modifications to
our software and platforms; (ii) the pace at which our products are accepted by
and sold into the market and the related sales effort and support requirements,
and (iii) changes in existing financing arrangements. We intend to investigate
opportunities to expand into compatible businesses through possible acquisitions
or alliances. In addition, there may be unanticipated additional working capital
and other capital requirements to consummate such transactions and oversee the
related operations.
At June 30, 2001, we had had not committed any funds for capital
expenditures. We have committed to spend $10,892 in operating lease payments for
physical facilities during the remainder of 2001 and $230,655 and $239,882 in
lease payment for those same physical facilities for 2002 and 2003,
respectively. In addition, at June 30, 2001, we had outstanding certain capital
lease obligations related to certain equipment. We are obligated to pay $7,209
during the remainder of 2001 and $3,840 during 2002 related to those capital
leases. At June 30, 2001, we had debt obligations outstanding in the principal
amounts of $6,625,313 plus accrued interest. These loans bear interest at
various rates between six percent per annum and 17.4 percent per annum. Of these
outstanding debt obligations, a total of $3,260,714 plus accrued interest is
payable to our majority shareholder, Riverview Financial Corp. In addition, and
in connection with the acquisition of the 100% interest in Fresh Market Manager,
LLC, we have an obligation to pay $2,750,000 to Cooper Capital, LLC. This
obligation is payable in installments of $1,000,000 on or before December 31,
2001, $500,000 on June 20, 2002 and the remaining $1,250,000 on December 20,
2002. Interest on this loan accrues at a rate of 10% on any unpaid balance and
is payable monthly. In addition to the generation of net income from operations
to finance our operations and satisfy debt obligations, we expect that we will
also require additional capital infusions to be derived from debt or equity
financings.
As of October 8, 2001, we had outstanding stock options and warrants to
sell 1,011,073 shares of common stock with exercise prices varying from $.04 to
$1.44 per share. All of the options and warrants are fully vested at October 8,
2001. The exercise of all of these outstanding options and warrants would result
in an equity infusion of $855,504. There is no assurance that any of these
options or warrants will be exercised.
Acquisition of Fresh Market Manager, LLC
In April 2001, Park City Group, Inc. entered into an agreement wherein
100% of the ownership interest of Fresh Market Manager, LLC (formerly Cooper
Fields, LLC) was acquired from its members for $3,750,000. The payment terms
provided for $1,000,000 which was paid at closing with the remaining $2,750,000
evidenced by a promissory note of $1,000,000 payable on December 20, 2001,
$500,000 payable on June 20, 2002 with the remaining $1,250,000 payable on
December 20, 2002. This note bears interest at a rate of 10% on the remaining
unpaid balance and is payable monthly beginning April 10, 2001. This note is
guaranteed by Fresh Market Manager, LLC, Riverview Financial Corp. Randall K.
Fields and William Dunlavy. In addition, certain shares of our common stock
owned by Riverview Financial Corp. were pledged as security or are being held in
escrow as additional collateral along with a 50% interest in a condominium
property owned by Randall K. Fields.
Inflation
We do not expect the impact of inflation on our operations to be
significant.
Risk Factors
In addition to the risks set forth above, we are subject to certain
other risk factors due to the organization and structure of the business, the
industry in which we compete and the nature of our operations. These risk
factors include the following:
Risk Factors Related To The Company's Operations
Our future marketing strategy involves an emphasis on sales activities on our
Fresh Market Manager applications; if our marketing strategy fails, our revenues
and operations will be negatively affected. We plan to concentrate our future
sales efforts towards marketing the Fresh Market Manager applications. These
applications are designed to be highly flexible so that they can work in
multiple retail and supplier environments such as grocery stores, convenience
stores, quick service restaurants, and route-based delivery environments. There
is no assurance that the public will accept the Fresh Market Manager
applications in proportion to our increased marketing of this product line. We
may face significant competition that may negatively affect demand for our Fresh
Market Manager applications, including the public's preference for our
competitor's new product releases or updates over our releases or updates. If
our Fresh Market Manager applications marketing strategy fails, we will need to
refocus our marketing strategy to our other product offerings, which could lead
to increased marketing costs, delayed revenue streams, and otherwise negatively
affect our operations.
Because we are changing the emphasis of our sales activities from an annual
license fee structure to a monthly fee structure, our revenues may be negatively
affected. Historically, we offered the Action Manager applications and related
maintenance contracts to new customers on a one-time up front license strategy
and provided an option for annually renewing their maintenance agreements.
Because our licensing fee approach was subject to inconsistent and unpredictable
revenues, we now offer prospective customers an option for licensing these
products. Our customers may now choose to acquire the software in an Application
Solution Provider basis, resulting in monthly charges for use of our software
products and maintenance fees.
Our conversion from a one-time licensing strategy to a monthly-based fee
structure is subject to the following risks: o Our customers may prefer one-time
fees rather than monthly fees o Because public awareness pertaining to our
Application Solution Provider services will be delayed until we begin our
marketing campaign to promote those services, our revenues may decrease over the
short term o There maybe a threshold level (number of locations) at which the
monthly based fee structure may not be economical to the customer leading to a
customer request to convert from monthly fees to an annual fee
If the recent industry wide downturn in the market for Application Solution
Provider services continues, our sales of those services may be negatively
impacted. The Application Solution Provider services market has recently
experienced an industry wide decline. We cannot predict whether and how long
this decline will continue. Accordingly, any such continued market decline will
negatively affect our revenues.
We face competition from competing and emerging technologies that may affect our
profitability. The markets for our type of software products and that of our
competitors are characterized by: o Development of new software, software
solutions, or enhancements that are subject to constant change o Rapidly
evolving technological change o Unanticipated changes in customer needs
Because these markets are subject to such rapid change, the life cycle of our
products are difficult to predict; accordingly, we are subject to following
risks:
o Whether or how we will respond to technological changes in a
timely or cost-effective manner;
o Whether the products or technologies developed by our
competitors will render our products and services obsolete or
shorten the life cycle of our products and services
o Whether our products and services will achieve market
acceptance
If we are unable to adapt to our constantly changing markets and to continue to
develop new products and technologies to meet our customers' needs, our revenues
and profitability will be negatively affected. Our future revenues are dependent
upon the successful development and licensing of new and enhanced versions of
our products and potential product offerings. If we fail to successfully upgrade
existing products and develop new products or our product upgrades and new
products do not achieve market acceptance, our revenues will be negatively
impacted.
Our officers and directors serve as officers and directors of other corporations
and have ownership interests in other corporations; conflicts of interest may
arise which are not resolved in our favor and which may negatively impact our
operations and financial condition.
Our officers and directors are officers and directors of other corporations and
have ownership interests in other corporations. Our officers and directors are
in a position to control their own compensation and to approve dealings by us
with other entities with which our principals are also involved. For example, if
a company affiliated with one of our directors were to be considered as a
possible strategic alliance with us, our director would have a conflict of
interest in negotiating the most favorable terms for the director's affiliated
company or us. As a result there will be conflicts of interest. There is no
assurance that these conflicts will be resolved in our favor.
Our Chief Executive Officer, Randall K. Fields, has a 100% ownership interest in
Riverview Financial Corp. that has entered into financial transactions with us;
these transactions present conflicts of interest that may not be resolved in our
favor.
Our subsidiary, Park City Group, has an unpaid promissory note due to Riverview
Financial Corp. ("Riverview") in the amount of $3,260,714 with interest payable
at 10% per annum. In addition, another agreement provides that our subsidiary,
Park City Group, will pay to Riverview, an amount equal to 5% of the value of
any acquisition we enter into during the term of Mr. Fields' employment
agreement.
We may continue to have other transactions with Riverview that may create
conflicts of interest between our interests and Mr. Fields' sole ownership of
Riverview. There is no assurance that these conflicts will be resolved in our
favor.
Our officers and directors have limited liability and indemnification rights
under our organizational documents, which may impact our results.
Our officers and directors are required to exercise good faith and high
integrity in the management of our affairs. Our certificate of incorporation and
bylaws, however, provide, that the officers and directors shall have no
liability to the stockholders for losses sustained or liabilities incurred which
arise from any transaction in their respective managerial capacities unless they
violated their duty of loyalty, did not act in good faith, engaged in
intentional misconduct or knowingly violated the law, approved an improper
dividend or stock repurchase, or derived an improper benefit from the
transaction. As a result, you may have a more limited right to action than you
would have had if such a provision were not present. Our certificate of
incorporation and bylaws also provide for us to indemnify our officers and
directors against any losses or liabilities they may incur as a result of the
manner in which they operate our business or conduct our internal affairs,
provided that the officers and directors reasonably believe such actions to be
in, or not opposed to, our best interests, and their conduct does not constitute
gross negligence, misconduct or breach of fiduciary obligations.
Our business is currently dependent upon a limited customer base; should we lose
any of these customer accounts, our revenues will be negatively impacted. We
expect that our existing customers will continue to account for a substantial
portion of our total revenues in future reporting periods. Our ability to retain
existing customers and to attract new customers will depend on a variety of
factors, including the relative success of our expansion and marketing
strategies and the performance, quality, features, and price of current and
future products. Accordingly, if we lose customer accounts or our customer
orders decrease, our revenues and operating results will be negatively impacted.
In addition, our future revenues will be negatively impacted if we fail to add
new customers that make purchases of our products and services.
If we fail to expand our sales force or if our sales force is unsuccessful, we
will be unable to expand our now limited customer base. We must increase our
customer base to expand our operations and increase our revenues. Currently,
there is a shortage of sales personnel for our needs, specifically to target
senior management of our customers and who can generate and serve large
accounts. Our future customer base is dependent upon implementation of an
expanded marketing program and an increased sales force.
Our sales force expansion plans are subject to the following limitations and
risks:
o Our sales force is now insufficient to accomplish the planned
expansion of our customer base and we do not expect to hire
our planned additional 3 sales personnel for at least 4-6
months
o Once we hire additional sales personnel, we expect that it
will take at least 3-4 months for our newly hired sales
personnel to achieve full productivity
o There are no assurances that we will be able to hire sales
personnel with the necessary skills to expand our customer
base
Accordingly, if we fail to expand our sales force or our sales force fails to
generate sufficient customer accounts, our revenues will not expand and may
decline, which will negatively impact our operations and financial condition.
Our future plans involving acquisitions and partnership alliances that are
subject to significant risks. Our future plans involve:
o Acquiring companies that have businesses complementary to our
own
o Acquiring technologies that are complementary to our existing
or future technologies
o Entering into partnership alliances with other business
operators in market segments where we currently do not have a
presence such as financial services, managed healthcare
services, and manufacturing. By creating these partnerships,
we hope to increase the market for our products
o Creating partnership alliances with businesses that have
complementary offerings in our main business segments such as
Point-Of-Sale hardware vendors or payroll/personnel vendors
These strategies involve various risks to our future business operations and
financial condition, including the following:
If we fail to perform adequate due diligence, we may acquire a company
or technology that:
(a) is uncomplimentary to our business (b) is difficult to assimilate
into our business (c) subjects us to possible liability for technology
or product defects (d) involves substantial additional costs exceeding
our estimated costs
o We may spend significant funds conducting negotiations and due
diligence regarding a potential acquisition that may not
result in a successfully completed transaction
o We may be unable to negotiate acceptable terms of an
acquisition
o If financing is required to complete the acquisition, we may
be unable to obtain such financing
o Negotiating and completing an acquisition as well as
integrating the acquisition into our operations, will divert
management time and resources away from our current operations
and increase our costs
Our assimilation of the operations, products or technologies of other companies
may pose operational difficulties and risks. Our assimilation of the operations,
products or technologies of other companies may pose the following operational
difficulties and risks. For example:
o Whether we can retain key personnel of an acquired company
o Conflicting corporate cultures
o Whether we will have the ability to train and manage our
expanded employee base
o Geographically disbursed offices
o Whether we can continually adapt our business infrastructure
to having acquired a new company, including our in-house
systems for processing transactions, operational and financial
systems, and procedures and controls
We face substantial costs in connection with our expansion plans and, we may be
unable to complete our growth plans and our business will be negatively impacted
if we are not able to generate monies to cover these costs. We may not be able
to generate the revenues we will need to fund our expansion plans. If we fail to
raise adequate funds we may be unable to complete our expansion plans and our
business will be negatively impacted.
Our business is dependent upon the continued services of our founder and Chief
Executive Officer, Randall K. Fields; should we lose the services of Mr. Fields,
our operations will be negatively impacted. Our business is dependent upon the
expertise of our founder and Chief Executive Officer, Randall K. Fields. Mr.
Fields is essential to our operations. Accordingly, you must rely on Mr. Fields'
management decisions that will continue to control our business affairs after
the Offering. Our continued growth also depends upon Mr. Fields' ability to
attract and retain individuals skilled in software and marketing. We currently
maintain key man insurance on Mr. Fields' life in the amount of $10,000,000;
however, that coverage would be inadequate to compensate for the loss of his
services. The loss of the services of Mr. Fields would have a materially adverse
effect upon our business.
If we are unable to attract and retain qualified personnel, we may be unable to
develop, retain or expand the staff necessary to support our operational
business needs. Our current and future success depends on our ability to
identify, attract, hire, train, retain and motivate various employees, including
skilled software, technical, managerial and professional personnel, sales
marketing and customer service staff. Competition for such employees is intense
and we may be unable to attract or retain such professionals. If we fail to
attract and retail these professionals, our revenues and expansion plans will be
negatively impacted.
We face risks associated with proprietary protection of our software.
Our success depends on our ability to develop and protect existing and new
proprietary technology and intellectual property rights. We seek to protect our
software, documentation and other written materials primarily through a
combination of patents, trademark, and copyright laws, confidentiality
procedures and contractual provisions. While we have attempted to safeguard and
maintain our proprietary rights, there are no assurances there we will be
successful in doing so. Our competitors may independently develop or patent
technologies that are substantially equivalent or superior to ours.
Despite our efforts to protect our proprietary rights, unauthorized parties may
attempt to copy aspects of its products or obtain and use information that we
regard as proprietary. In some types of situations, we may rely in part on
"shrink wrap" or "point and click" licenses that are not signed by the end user
and, therefore, may be unenforceable under the laws of certain jurisdictions.
Policing unauthorized use of our products is difficult. While we are unable to
determine the extent to which piracy of our software exists, software piracy can
be expected to be a persistent problem, particularly in foreign countries where
the laws may not be protect proprietary rights as fully as the United States. We
can offer no assurance that our means of protecting our proprietary rights will
be adequate or that our competitors will not reverse engineer or independently
develop similar technology.
We incorporate third party software providers' licensed technologies into our
products; the loss of these technologies may prevent sales of our products or
lead to increased costs.
We now license and in the future will license technologies from third party
software providers that are incorporated into our products. The loss of
third-party technologies could prevent sales of our products and increase our
costs until substitute technologies, if available, are developed or identified,
licensed and successfully integrated into our products. Even if substitute
technologies are available, there can be no guarantee that we will be able to
license these technologies on commercially reasonable terms, if at all.
We may discover software errors in our products that may result in a loss of
revenues or injury to our reputation.
Non-conformities or bugs ("errors") may be found from time to time in our
existing, new or enhanced products after commencement of commercial shipments,
resulting in loss of revenues or injury to our reputation. In the past, we have
discovered errors in our products and, as a result, have experienced delays in
the shipment of products. Errors in our products may be caused by defects in
third-party software incorporated into our products. If so, we may not be able
to fix these defects without the cooperation of these software providers. Since
these defects may not be as significant to the software provider as they are to
us, we may not receive the rapid cooperation that may be required. We may not
have the contractual right to access the source code of third-party software
and, even if we do have access to the source code, we may not be able to fix the
defect. Since our customers use our products for critical business applications,
any errors, defects or other performance problems could result in damage to our
customers' business. These customers could seek significant compensation from us
for their losses. Even if unsuccessful, a product liability claim brought
against us would likely be time consuming and costly.
Market and Capital Risks
Future issuances of our shares may lead to future dilution in the value of our
common stock, a reduction in shareholder voting power, and prevent a change in
our control. Our shares may be substantially diluted due to the following:
Issuance of common stock in connection with funding agreements we have
with third parties; and Future issuances of common and preferred stock
by our Board of Directors. Our Board of Directors has the power to
issue additional shares of common stock and preferred stock and the
right to determine the voting dividend, conversion, liquidation,
preferences and other conditions of the shares without shareholder
approval.
Stock issuances may result in reduction of the book value or market price of our
outstanding shares of common stock. If we issue any additional shares of common
or preferred stock, proportionate ownership of our common stock and voting power
will be reduced. Further, any new issuance of common or preferred shares may
prevent a change in our control or management.
Issuance of our preferred stock could depress the market value of current
shareholders and could have a potential anti-takeover effect. We have 5,000,000
authorized shares of preferred stock that may be issued by action of our Board
of Directors. Our Board of Directors may designate voting control, liquidation,
dividend and other preferred rights to preferred stock holders. Our Board of
Directors' authority to issue preferred stock without shareholder consent may
have a depressive effect on the market value of our common stock. The issuance
of preferred stock, under various circumstances, could have the effect of
delaying or preventing a change in our control or other take-over attempt and
could adversely affect the rights of holders of our shares of common stock.
Our preferred stock holders will receive dividends, if any, at a rate twenty
times that paid per share of our common stock holders; accordingly, if dividends
are declared, our preferred stock holders will have preferential rights in the
payment of dividends.
The holders of shares of our preferred stock are entitled to receive, out of our
assets, legally available, and as when declared by our Board of Directors,
dividends of every kind declared and paid to holders of our commons
stockholders, at a rate of twenty times that paid for shares of common stock.
Because our Board of Directors has the authority to issue preferred stock to
such preferred stock holders will have preferential rights in the payment of
dividends.
Because our common stock is considered a penny stock, any investment in our
common stock is considered to be a high-risk investment and is subject to
restrictions on marketability. Our common stock has traded on the Over-the
Counter Bulletin Board since June, 2001. The bid price of our common stock has
been less than $5.00 during most of this period. We are subject to the penny
stock rules adopted by the Securities and Exchange Commission that require
brokers to provide extensive disclosure to its customers prior to executing
trades in penny stocks. These disclosure requirements may cause a reduction in
the trading activity of our common stock.
Broker-dealer practices in connection with transactions in penny stocks are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks generally are equity securities with a price of less
than $5.00. Penny stock rules require a broker dealer prior to a transaction in
a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document that provides information about penny stocks and the
risks in the penny stock market. The broker-dealer also must provide the
customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer makes a special
written determination that the penny stock is a suitable investment for the
purchaser and receives the purchaser's written agreement to the transaction.
Because we are subject to the penny stock rules our shareholders may find it
difficult to sell their shares.
Item 7. Financial Statements
See the index to consolidated financial statements and consolidated
financial statement schedules included herein as Item 13.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
On July 27, 2001, we engaged Tanner + Co. as our new certified public
accountants. In connection with that action, we dismissed Daszkal Bolton Manela
Devlin & Co., our auditor when we were known as AmeriNet Group.com, Inc. We also
dismissed Sorenson Vance & Company, P.C., which had previously served as the
certified public accountants for Park City Group, Inc. We filed a Form 8-K dated
July 27, 2001 on August 1, 2001 with the U.S. Securities and Exchange Commission
regarding these events.
There have been no disagreements with accountants on accounting and
financial disclosure.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act
Our Board of Directors and executive officers consist of the persons named
in the table below. Vacancies in the Board of Directors may only be filled by
the Board of Directors by majority vote at a Board of Director's meeting of
which stockholders holding a majority of the issued and outstanding shares of
capital stock are present. The directors are elected annually by the
stockholders at the annual meetings. Each director shall be elected for the term
of one year, and until his or her successor is elected and qualified, or until
his earlier resignation or removal. Our bylaws provide that we have at least one
director. Our directors and executive officers are as follows:
Name Age Position
---- --- --------
Randall Fields 54 President, Chief Executive Officer,
Chairman of the Board and Director
Narayan Krishnan 33 Chief Financial Officer, Secretary
and Treasurer
Edward C. Dmytryk 55 Director
Thomas W. Wilson 69 Director
William Jones 66 Director
Randall K. Fields has been our President, Chief Executive Officer, and Chairman
of the Board of Directors since June, 2001. Mr. Fields founded Park City Group,
Inc., a software development company based in Park City, Utah, in 1990 and has
been its President, Chief Executive Officer, and Chairman of the Board since its
inception in 1990. Mr. Fields has been responsible for the strategic direction
of Park City Group, Inc. since its inception, including the ActionManager family
of 20 integrated software applications for geographically distributed multi-unit
business environments and the Fresh Market Manager software suite that addresses
the needs of organizations with the perishable inventory, production, planning,
and product forecasting and costing requirements. Mr. Fields co-founded Mrs.
Fields Cookies with his wife, Debbi Fields. He served as Chairman of the Board
of Mrs. Fields Cookies from 1978 to 1990. In the early 1970's Mr. Fields
established a financial and economic consulting firm called Fields Investment
Group. Mr. Fields received a Bachelor of Arts degree in 1968 and a Masters of
Arts degree in 1970, respectively from Stanford University, where he was Phi
Beta Kappa, Danforth Fellow and National Science Foundation Fellow.
Edward C. Dmytryk has been a director since June, 2000. Since September 1999,
Mr. Dmytryk has also been the Acting President of GNR Health Systems, Inc., a
physical therapy products sales company located in Ocala, Florida. Since June of
1990, Mr. Dmytryk has also been the owner and Chief Executive Officer of
Benchmark Industries, Inc., a metal fabrications company headquartered in Fort
Worth, Texas. Mr. Dmytryk graduated Summa Cum Laude from the Citadel, the
Military College of South Carolina in 1968 with a Bachelor of Science Degree.
Thomas W. Wilson, Jr. has been a director since August, 2001. Mr. Wilson is also
currently a director and the Chairman of the Board of Productivity Solutions,
Inc., a Jacksonville, Florida builder of customer self-checkout point-of-sale
equipment. From 1995 to 1999, Mr. Wilson was the Chairman of the Board of
Information Resources, Inc., a Chicago, Illinois-based provider of point-of-sale
information based business solutions to the consumer packaged goods industry.
From 1998 to 1999, Mr. Wilson was the Interim Chief Executive Officer of
Information Resources, Inc. From 1966 to 1990, Mr. Wilson was employed in
various capacities with McKinsey & Co., a management consulting company. In
1968, Mr. Wilson was elected a Partner of McKinsey and Co., and in 1972 he was
elected a Senior Partner. Mr. Wilson received a Bachelor of Arts Degree from
Dartmouth College and a Masters of Business Administration Degree from the
Wharton school of the University of Pennsylvania.
William R. Jones has been a director since August, 2001. Mr. Jones founded WR
Jones Associates in 1996, a consulting firm that assists startup software
companies to form marketing strategies, management processes and management
teams. Mr. Jones served as a vice-president of Park City Group from 1991 to
1994. From 1984 to 1991, Mr. Jones was employed at International Business
Machines in various capacities, including having served as a vice-president and
was in charge of all marketing to the U.S. retail industry. Mr. Jones
participated in bringing IBM's technologies to market, including: o Universal
Product Code for item identification o The original IBM Personal Computer o
Computer Assisted Manufacturing o Just-in-Time inventory management o Quick
Response - supply chain inventory management
Our Executive Officers are elected by the Board on an annual basis and
serve at the discretion of the Board.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the our
executive officers, directors and persons who beneficially own more than 10% of
the Company's Common Stock to file initial reports of ownership and reports of
changes in ownership with the SEC. Such persons are required by SEC regulations
to furnish us with copies of all Section 16(a) forms filed by such persons.
Based solely on our review of such forms furnished to us and
representations from certain reporting persons, we believe that all filing
requirements applicable to our executive officers, directors and more than 10%
stockholders were complied with during 2000.
Item 10. Executive Compensation
The following table sets forth the total compensation currently being paid
by us for services rendered by our Executive Officers.
Summary Compensation Table
Annual Compensation Long-Term Compensation Awards
----------------------------------------- ---------------------------------
Securities
Restricted Underlying All Other
Name and Other Annual Stock Options/ LTIP Compensation
Principal Position Year Salary ($) Bonus ($) Compensation($) Awards ($) SARs (#) Payouts($) ($)
------------------ ---- ---------- --------- --------------- ---------- -------- ---------- -------------
Randall K. Fields 1998 283,500 -- 5,000 (1) -- -- -- --
Chariman, President 1999 302,450 -- 5,000 (1) -- -- -- --
And CEO 2000 315,900 -- 5,250 (1) -- -- -- --
2001 175,000 -- 30,942 (1) -- -- -- --
Shaun Broadhead 1998 79,063 -- 3,162 (2) -- -- -- --
PCG Director of 1999 94,479 17,333 4,473 (2) -- -- -- --
Research 2000 103,449 -- 4,535 (2) -- -- -- --
And Development 2001 55,000 -- 1,098 (2) -- -- -- --
Carolyn Doll 1998 120,000 -- 5,000 (3) -- -- -- --
PCG Vice President, 1999 120,000 -- 5,000 (3) -- -- -- --
Marketing 2000 120,000 -- 4,559 (3) -- -- -- --
2001 60,000 -- 13,605 (3) -- -- -- --
Drew Doll 1998 120,000 -- 11,421 (4) -- -- -- --
PCG Vice President, 1999 120,000 -- 25,712 (4) -- -- -- --
Professional Services 2000 120,000 -- 18,560 (4) -- -- -- --
2001 60,000 -- 4,492 (4) -- -- -- --
Will Dunlavy 1999 57,500 -- -- -- -- -- --
FMM Chief Operating 2000 115,000 34,250 2,800 (5) -- -- -- --
Officer 2001 57,500 6,250 1,148 (5) -- -- -- --
Note: Compensation amounts for 2001 are for the period January 1, 2001 through
June 30, 2001.
(1) These amounts represent employer contributions to the Company's 401(k) Plan
for the benefit of Mr. Fields, plus payment of accrued vacation of $27,945
during the six months ended June 30, 2001.
(2) These amounts represent employer contributions to the Company's 401(k) Plan
for the benefit of Mr. Broadhead.
(3) These amounts include employer contributions to the Company's 401(k) Plan
for the benefit of Mrs. Doll in the amount of $1,199, $4,214, $5,000 and
$5,000 for 2001, 2000, 1999 and 1998, respectively, in addition to
commissions of $12,406 and $345 in 2001 and 2000.
(4) These amounts include employer contributions to the Company's 401(k) Plan
for the benefit of Mr. Doll in the amount of $1,199, $5,249, $5,00 and
$5,000 for 2001, 2000, 1999 and 1998, respectively, in addition to
commissions of $3,293, $13,311, $20,712 and $6,421 in 2001, 2000, 1999 and
1998, respectively.
(5) These amounts represent the employer contribution to the Company's 401(k)
Plan for the benefit of Mr. Dunlavy.
Employment Agreement With Randall K. Fields
Park City Group has an employment agreement with its president and chief
executive officer, Randall K. Fields, dated effective January 1, 2001. The term
of the agreement is five years, with automatic one-year renewals. This
employment agreement provides for:
o An annual base salary of $350,000, subject to annual cost of living
increases of 5%.
o Use of a company vehicle.
o Employee benefits that are generally provided to Park City Group, Inc.
employees.
o A bonus of 5% of the consolidated and/or combined annual pretax
profits of Park City Group, Inc., and its affiliates and subsidiaries
beginning with the year ended December 31, 2001.
o Payment by Park City Group, Inc. to Mr. Fields' affiliate, Riverview
Financial Corporation, an amount equal to 5% of the value of any
acquisition entered into by Park City Group during the term of the
employment agreement.
Director Compensation
Our outside directors, Edward C. Dmytryk, Thomas W.Wilson, Jr. and William R.
Jones receive the following compensation:
o Annual cash compensation of $6,000 reflecting $2,000 per scheduled in
person director's meetings.
o Options to acquire 50,000 shares of our common stock (adjusted for any
stock splits) to be granted annually at the beginning of our Fiscal
Year, June 30, with an exercise price equal to the market price on the
date of grant with such options to fully vest at the end of the
respective fiscal year. Stock options pursuant to this arrangement
were granted on August 14, 2001.
o In November 1999, Mr. Dmytryk was granted options to purchase 25,000
shares of common stock at $1.44 that are exercisable until December
31, 2002. On April 16, 2001, Mr. Dmytryk was also granted options to
purchase 11,000 shares of common stock at $.27 per share that are
exercisable until December 31, 2003.
401(k) Retirement Plan
Effective in 1996, the Company adopted a 401(k) retirement plan whereby
the Company contributes up to five percent of payroll compensation to the plan,
matching employee contributions to the plan on a dollar for dollar basis up to
the maximum five percent contribution. The Named Executive Officers have
invested all of the funds in their 401(k) accounts in common stock of the
Company.
Indemnification for Securities Act Liabilities
Delaware law authorizes, and the Company's Bylaws and Indemnity
Agreements provide for, indemnification of the Company's directors and officers
against claims, liabilities, amounts paid in settlement and expenses in a
variety of circumstances. Indemnification for liabilities arising under the Act
may be permitted for directors, officers and controlling persons of the Company
pursuant to the foregoing or otherwise. However, the Company has been advised
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
Stock Options and Warrants
We have stock option plans that enable us to issue to officers,
directors, consultants and employees nonqualified and incentive options to
purchase our common stock. At October 8, 2001, a total of 297,800 of such
options were outstanding with exercise prices ranging from $0.27 to $1.44 per
share. All of these stock options outstanding expire at December 31, 2002 or
December 31, 2003.
In addition, we have granted a total of 713,273 warrant to purchase
shares of our common stock. Of those warrants, 315,000 have been issued to our
former officers as condition of employment and 398,273 were issued to
individuals in relation to certain transactions. These warrants have exercise
prices ranging from $0.56 to $1.4325 per share and expire between June 30, 2002
and June 30, 2004.
Compensation Committee Interlocks and Insider Participation
No executive officers of the Company serve on the Compensation
Committee (or in a like capacity) for the Company or any other entity.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information with respect to the
beneficial ownership of our Common Stock as of October 8, 2001, for each person
or entity that is known by us to beneficially own more than 5 percent of our
Common Stock. As of October 8, 2001, 2001, we had 150,476,542 shares of Common
Stock outstanding.
Title of Name and Address of Amount of Nature of Percent
Class Beneficial Owner Beneficial Ownership Ownership of Class
----- ---------------- -------------------- --------- --------
Common Randall K. Fields, Park City, Utah 16,083,900 Direct 10.69%
Common Riverview Financial Corp. (1)
Park City, Utah 87,923,100 Direct 58.43%
------------ ------
Total 104,007,000 69.12%
=========== =====
Randall K. Fields is the president and 100% shareholder of Riverview
Financial Corp.
Security Ownership of Management
The following table sets forth certain information with respect to the
beneficial ownership of our Common Stock as of October 8, 2001, for each of our
directors and each of our Named Executive Officers all directors and executive
officers as a group. As of October 8, 2001, 2001, we had 150,476,542 shares of
Common Stock outstanding.
Title of Class Name, Position and Address Amount of Nature of Percent
of Beneficial Owner Beneficial Ownership(1) Ownership Of Class
------------------- ----------------------- --------- --------
Common Randall K. Fields, President, CEO, 104,007,000(2) Direct and 69.12%
Chairman and Director Indirect
Park City, Utah
Common Narayan Krishnan, CFO, Secretary and 0 NA NA
Treasurer
Salt Lake City, Utah
Common Edward C. Dmytryk, Director 162,660(3)(4) Direct *
Ocala, Florida
Common Thomas W. Wilson, Jr., Director 0 NA NA
Westport, Connecticut
Common William R. Jones, Director 33,300 Direct *
Cumming, Georgia
Executive Officers and Directors as a 104,202,960 69.23%
Group (five persons)
* Less than 1%.
--------------
(1) Beneficial ownership is determined in accordance with SEC rules and
generally includes holding voting and investment power with respect to the
securities. Shares of Common Stock subject to options or warrants currently
exercisable, or exercisable within 60 days, are deemed outstanding for
computing the percentage of the total number of shares beneficially owned
by the designated person, but are not deemed outstanding for computing the
percentage for any other person.
(2) Includes 87,923,100 shares of common stock owned by Riverview Financial
Corp. that is owned 100% by Randall K. Fields.
(3) Includes fully vested options to purchase 36,000 shares of common stock.
(4) Does not include options to purchase 50,000 shares of common stock granted
to each of the outside directors none of which vest until June 30, 2002.
Change In Control
We are not currently engaged in any activities or arrangements that we
anticipate will result in a change in control of the Company.
Item 12. Certain Relationships and Related Transactions
In May 1999, Park City Group transferred to Riverview Financial
Corporation (Riverview) (its majority shareholder) all of its rights, title and
interest in a certain application software program known and marketed as "Fresh
Market Manager" including all related documentation, copyrights, patents,
intellectual property and other materials. The agreement specifically excluded
all of Park City Group's other software programs and applications. Park City
Group also retained the rights to the "Fresh Market Manager" software solely
necessary to perform Park City Group's obligations relating to the development
and software enhancement contract that Park City Group had with a retail
customer.
The chief executive of Riverview, who is also the chief executive of
Park City Group then assigned the "Fresh Market Manager" software to Cooper
Fields, LLC, a Utah limited liability company, which had been formed in April
1999 with chief executive as managing member. Cooper Fields acquired the
intellectual property rights for $4,750,000 by a cash payment of $2,750,000 to
Riverview and execution of a note payable in the amount of $2,000,000.
As part of the Cooper Fields organizational and operational documents,
the members agreed to an "Overhead Sharing and Referral Agreement" whereby
Cooper Fields was to pay Park City Group its allocable share of direct costs and
expense. CF was to pay PCG the allocated cost in twelve monthly payment of one
year with annual renewal terms. The amount was to cover the shared costs of
facilities, personnel and operating costs. Park City Group recorded the
reimbursed costs as a reduction to operating costs. Accordingly, shared cost
reimbursements were $620,232 in 2000 and $413,488 in 1999. The agreement also
provided for a referral fee to be paid to either company for the introduction of
prospective customers. Park City Group received $82,326 in the year 2000 for a
customer referral.
As of December 31, 2000, Park City Group had a receivable of $492,837
which was comprised of $371,355 for the overhead sharing costs, $26,350 for
interest on the unpaid amount and $95,152, net, for shared development costs. As
of December 31, 1999 Park City Group had a receivable of $76,594 which was
comprised of $78,613 for the overhead sharing costs, $3,145 for interest on the
unpaid amount and an offset of $5,164, net, for shared development costs.
Park City Group has a note payable with Riverview (see note 7). PCG,
also, has a receivable form Riverview for certain expenses paid by Park City
Group in 2000. The balance due Park City Group was $36,632 and $19,411 as of
June 30,2001 and December 31, 2000, respectively.
Park City Group has a note payable in the amount of $2,750,000 at June
20, 2001.
We have a receivable from our chief executive officer for certain non-business
expenses paid by us. The balance due to us was $48,990, $46,396 and $10,836 as
of June 30, 2001, December 31, 2000 and 1999, respectively.
Item 13. Exhibits and Reports on Form 8-K
Reports on Form 8-K
On June 28, 2001, the Company filed a Current Report on Form 8-K dated
June 13, 2001, disclosing under item 2 information relating to the Company's
acquisition of assets, under Item 5 information regarding changes in the
Company's board of directors and in Item 7 notice that the financial statements
and related pro forma financial information relating to that acquisition would
be filed in a subsequent amendment.
Exhibits, Financial Statements and Schedules
(a) The following documents are filed as a part of this Report:
1. Financial Statements. The following Consolidated Financial
Statements of Fields Technologies, Inc. and Report of
Independent Accountants are contained in this Form 10-K.
Page in the
Form 10-K
Independent Auditors' Report - Tanner & Company F-2
Independent Auditors' Report - Sorensen, Vance & Company, P.C. F-3
Consolidated Balance Sheets - As of June 30, 2001 and December 31, 2000 F-4
Consolidated Statements of Operations - For the six months ended
June 30, 2001 and June 30, 2000 (unaudited) and for the years ended
December 31, 2000, and 1999. F-6
Consolidated Statements of Stockholders' Deficit for the six months
ended June 30, 2001 and for the years ended December 31, 2000 and 1999 F-7
Consolidated Statements of Cash Flows for the six months ended
June 30, 2001 and June 30, 2000 (unaudited) and for the years ended
December 31, F-7 2000 and 1999. F-8
Notes to Consolidated Financial Statements F-9
Exhibits.
Exhibit
Number Description
2 Reorganization Agreement by and Among Amerinet.com, Inc., Randall K.
Fields and Riverview Financial Corp.*
3.1 Articles of Incorporation and amendments*
3.2 By-Laws*
10 Employment agreement between Park City Group and Randall K. Fields
effective January 1, 2001*
16 Letter on change in certifying accountant*
21 Subsidiaries of the registrant
*Indicated previously filed exhibits.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FIELDS TECHNOLOGIES, INC.
(Registrant)
By /s/ Randall K. Fields
Date: October 15, 2001 David A. Robinson
President, Chief Executive Officer,
Chairman of the Board and Director
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Randall K. Fields President, Chief Executive Officer, October 15, 2001
------------------------- Chairman of the Board and Director
Randall K. Fields (Principal Executive Officer)
/s/ Narayan Krishnan Chief Financial Officer, Secretary October 15, 2001
------------------------- and Treasurer (Principal Financial
Narayan Krishnan and Accounting Officer)
/s/ Edward C. Dmytryk Director October 15, 2001
-------------------------
Edward Dmytryk
/s/ William R. Jones Director October 15, 2001
-------------------------
William R. Jones
/s/ Thomas W. Wilson, Jr. Director October 15, 2001
-------------------------
Thomas W. Wilson, Jr.
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Financial Statements
June 30, 2001 and December 31, 2000
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements
--------------------------------------------------------------------------------
Page
Independent Auditors' Report
Tanner + Co. F-2
Sorensen, Vance & Company, P.C. F-3
Consolidated Balance Sheet as of
June 30, 2001 and December 31, 2000 F-4
Consolidated Statements of Operations for the six months ended
June 30, 2001 and June 30, 2000 (unaudited) and for the years
ended December 31, 2000 and 1999 F-6
Consolidated Statements of Stockholders' Deficit for the six months
ended June 30, 2001 and for the years ended December 31, 2000 and 1999 F-7
Consolidated Statements of Cash Flows for the six months ended
June 30, 2001 and June 30, 2000 (unaudited) and for the years
ended December 31, 2000 and 1999 F-8
Notes to Consolidated Financial Statements F-9
--------------------------------------------------------------------------------
F-1
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Fields Technologies, Inc.
We have audited the consolidated balance sheet of Fields Technologies, Inc. and
Subsidiaries as of June 30, 2001 and the related consolidated statements of
operations, stockholders' deficit, and cash flows for the six months ended June
30, 2001. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Fields
Technologies, Inc. and Subsidiaries as of June 30, 2001, and the results of
their operations and their cash flows for the six months ended June 30, 2001, in
conformity with accounting principles generally accepted in the United States of
America.
/s/ Tanner + Co.
Salt Lake City, Utah
October 8, 2001
--------------------------------------------------------------------------------
F-2
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
Park City Group, Inc.
We have audited the balance sheet of Park City Group, Inc. (a majority-owned
subsidiary of Riverview Financial Corporation) as of December 31, 2000, and the
related statements of income, stockholders' deficit and cash flows for the two
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 audits provide 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 Park City Group, Inc. as of
December 31, 2000, and the results of its operations and its cash flows for the
two years then ended in conformity with accounting principles generally accepted
in the United States of America.
/s/ Sorensen, Vance & Company, P.C.
Salt Lake City, Utah
April 10, 2001
--------------------------------------------------------------------------------
F-3
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
--------------------------------------------------------------------------------------------------------------
June 30, December 31,
2001 2000
----------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 218,482 $ 1,099,242
Receivables, net:
Trade 534,175 272,137
Related parties 85,622 558,643
Prepaid expenses and other current assets 8,495 20,335
Stock subscriptions receivable 206,800 -
Deferred tax asset 126,000 120,000
----------------------------------------
Total current assets 1,179,574 2,070,357
Property and equipment, net 219,928 177,497
Other assets:
Deposits 33,802 33,802
Capitalized software costs, net 654,957 -
Deferred tax asset 1,274,000 1,280,000
----------------------------------------
Total other assets 1,962,759 1,313,802
----------------------------------------
$ 3,362,261 $ 3,561,656
=======================================
--------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. F-4
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
--------------------------------------------------------------------------------------------------------------
June 30, December 31,
2001 2000
---------------------------------------
Liabilities and Equity
Current liabilities:
Line of credit $ 355,000 $ 150,000
Note payable 250,000 250,000
Accounts payable 621,261 192,607
Accrued liabilities 394,989 381,780
Current portion of long-term debt 1,505,594 33,293
Deferred revenue 1,535,742 1,294,773
---------------------------------------
Total current liabilities 4,662,586 2,302,453
---------------------------------------
Long-term liabilities:
Related party notes payable 3,260,714 2,150,000
Accrued interest on related party notes payable 274,659 267,203
Long-term debt 1,254,005 6,642
---------------------------------------
Total long-term liabilities 4,789,378 2,423,845
---------------------------------------
Total liabilities 9,451,964 4,726,298
---------------------------------------
Commitments - -
Stockholders' deficit:
Preferred stock, $.01 par value, 20,000,000
shares authorized, no shares issued - -
Common stock, $.01 par value, 175,000,000
shares authorized, 149,276,564 and 109,623,600
shares issued and outstanding, respectively 1,492,766 1,096,236
Additional paid-in capital 1,829,539 5,198,298
Stock subscriptions receivable (1,323,200) -
Accumulated deficit (8,088,808) (7,459,176)
---------------------------------------
Total stockholders' deficit (6,089,703) (1,164,642)
---------------------------------------
$ 3,362,261 $ 3,561,656
======================================
--------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. F-5
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
--------------------------------------------------------------------------------------------------------------
Six Months Ended June 30, Years Ended December 31,
-------------------------------------------------------------
2000
2001 (unaudited) 2000 1999
-------------------------------------------------------------
Revenues:
Software licenses $ 216,929 $ 2,619,241 $ 2,115,545 $ 2,321,655
Maintenance and support 1,002,816 978,209 2,066,523 2,403,287
Consulting and other 275,456 745,851 769,074 506,155
Development and software enhancement - - 1,562,000 -
-------------------------------------------------------------
1,495,201 4,343,301 6,513,142 5,231,097
Cost of revenues 489,788 474,374 1,013,930 1,021,526
-------------------------------------------------------------
Gross profit 1,005,413 3,868,927 5,499,212 4,209,571
Research and development 289,537 759,377 1,035,926 878,064
Sales and marketing 556,534 524,917 912,109 1,115,543
Selling, general and administrative expenses 292,723 179,490 825,445 1,042,948
Reorganization and professional expenses 420,970 89,555 145,347 296,334
-------------------------------------------------------------
(Loss) income from operations (554,351) 2,315,588 2,580,385 876,682
-------------------------------------------------------------
Other income:
Interest income (expense) (353,576) (92,712) (194,044) (178,292)
Gain on forgiveness of debt 278,295 - - -
-------------------------------------------------------------
Net (loss) income before income (629,632) 2,222,876 2,386,341 698,390
taxes
Provision for income taxes - (923,000) (991,935) (324,699)
-------------------------------------------------------------
Net (loss) income $ (629,632) $ 1,299,876 $ 1,394,406 $ 373,691
============================================================
Weighted average shares, basic 113,345,000 109,624,000 109,624,000 109,624,000
============================================================
Weighted average shares, diluted 113,345,000 109,624,000 109,624,000 109,624,000
============================================================
Basic (loss) earnings per share $ (0.01) $ 0.01 $ 0.01 $ 0.00
============================================================
Diluted (loss) earnings per share $ (0.01) $ 0.01 $ 0.01 $ 0.00
============================================================
--------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. F-6
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders' Deficit
Six Months Ended June 30, 2001 and
Years Ended December 31, 2000 and 1999
--------------------------------------------------------------------------------------------------------------
Common Stock Additional
---------------------------- Paid-In Subscription Retained
Shares Amount Capital Receivable Earnings Total
------------------------------------------------------------------------------------
Balance,
January 1, 1999 as
restated (see note 1) 109,623,600 $ 1,096,236 $ 5,198,298 $ - $ (9,227,273) $ (2,932,739)
Net income - - - - 373,691 373,691
------------------------------------------------------------------------------------
Balance,
December 31, 1999 109,623,600 1,096,236 5,198,298 - (8,853,582) (2,559,048)
Net income - - - - 1,394,406 1,394,406
------------------------------------------------------------------------------------
Balance,
December 31, 2000 109,623,600 1,096,236 5,198,298 - (7,459,176) (1,164,642)
Acquisition of Fresh
Market Manager - - (5,073,936) - - (5,073,976)
Acquisition of AmeriNet
Group.com, Inc. 39,300,023 393,000 1,574,589 (1,323,200) - 644,389
Common stock issued
for debt 352,941 3,530 130,588 - - 134,118
Net (loss) - - - - (629,632) (629,632)
------------------------------------------------------------------------------------
Balance, June 30, 2001 149,276,564 $ 1,492,766 $ 1,829,539 $ (1,323,200) $ (8,088,808) $ (6,089,703)
====================================================================================
--------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. F-7
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
--------------------------------------------------------------------------------------------------------------
Six Months Ended June 30, Years Ended December 31,
----------------------------------------------------------
2000
2001 (unaudited) 2000 1999
----------------------------------------------------------
Cash flows from operating activities:
Net (loss) income $ (629,632) $ 1,299,876 $ 1,394,406 $ 373,691
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 74,080 91,719 183,437 255,920
Bad debt expense (114,758) - 182,154 116,959
Gain on forgiveness of debt (278,295) - - -
Decrease (increase) in:
Deferred tax assets - 837,662 940,000 310,000
Trade receivables 161,169 (85,229) 304,155 (163,335)
Related party receivables 124,461 79,993 (471,854) (86,789)
Prepaid expenses and other current assets 12,794 18,871 8,094 (4,383)
Deposits - (635) 348 -
(Decrease) increase in:
Accrued interest to parent corporation 7,456 (151,394) 115,809 151,394
Bank overdraft - - - (67,922)
Accrued liabilities (18,975) (218,612) (288,478) (345,697)
Accounts payable 326,402 (200,850) (511) (155,185)
Deferred revenue (112,231) (1,110,419) (1,364,963) (541,337)
Related party payable - - - (9,021)
----------------------------------------------------------
Net cash (used in) provided by
operating activities (447,529) 560,982 1,002,597 (165,705)
----------------------------------------------------------
Cash flows from investing activities:
Purchases of property and equipment (16,296) (180,349) (68,641) (60,150)
Net cash received in acquisitions 179,240 - - -
Purchase of marketable securities - (1,440) - -
Capitalization of software costs (654,957) - - -
----------------------------------------------------------
Net cash used in
investing activities (492,013) (181,789) (68,641) (60,150)
----------------------------------------------------------
Cash flows from financing activities:
Proceeds from sale of equipment - - - 50,000
Proceeds from issuance of common stock - - - 426
Net proceeds from borrowing on line of credit (45,000) (137,000) 13,000 137,000
Proceeds from debt 134,118 - - 505,000
Principal payments on capital leases (30,336) (31,778) (95,156) (79,129)
Net proceeds from (principal payments on)
note payable with related party - (250,000) - (140,000)
----------------------------------------------------------
Net cash provided by (used in)
financing activities 58,782 (418,778) (82,156) 473,297
----------------------------------------------------------
Net (decrease) increase in cash
and cash equivalents (880,760) (39,585) 851,800 247,442
Cash and cash equivalents, beginning of period 1,099,242 247,442 247,442 -
----------------------------------------------------------
Cash and cash equivalents, end of period $ 218,482 $ 207,857 $ 1,099,242 $ 247,442
==========================================================
--------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. F-8
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2001 and December 31, 2000
--------------------------------------------------------------------------------
1. Summary of Organization and Principles of Consolidation
Significant The Company was incorporated in Delaware on May 11,
Accounting 1990 as Riverview Software, Inc. In 1990, the Company
Policies changed its name to Fields Software Group, Inc. and
in 1993, the Company's name was changed again to Park
City Group, Inc. (PCG).
On April 5, 2001, the Company acquired for $3,750,000
Fresh Market Manager (FMM) which was substantially
owned by the primary shareholder of the Company and
another individual. In as much as the transaction was
between entities of common ownership and FMM had a
deficit in equity, the deficit in equity and the
purchase price was accounted for as a distribution to
the primary shareholder. The consolidated statements
include the operations of FMM since April 5, 2001,
the date of the transaction.
On June 13, 2001, Fields Technologies, Inc. (FTI)
(formerly known as AmeriNet Group.com, Inc.) issued
109,623,600 shares of common stock in exchange for
98.76% of the issued and outstanding shares of PCG.
For accounting purposes the business combination is
treated as a reverse acquisition or a
recapitalization of PCG, with PCG being treated as
the accounting acquirer.
The financial statements presented herein reflect the
consolidated financial position of PCG and FTI as of
June 30, 2001, and operations of PCG and FTI since
June 13, 2001, the date of the reverse acquisition.
As of December 31, 2000 and 1999 and for the years
ended December 31, 2000 and 1999, the financial
statements presented herein reflect the financial
position and operations of PCG. All intercompany
transactions and balances have been eliminated in
consolidation.
The following unaudited proforma combined financial
data is presented for informational purposes only,
and assumes the consolidation of PCG, FMM and FTI as
if the entities had been together since January 1,
1999. They are not necessarily indicative of the
results of operations or of the financial position
which would have occurred had the merger been
completed during the periods or as of the date for
which the data are presented. They are also not
necessarily indicative of the Company's future
results of operations or financial position.
--------------------------------------------------------------------------------
F-9
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
1. Summary of Six Months
Significant Ended Year Ended December 31,
Accounting June 30, ------------------------
Policies 2001 2000 1999
Continued -------------------------------------
Revenue $ 1,759,201 $ 7,721,010 $ 5,436,533
=====================================
Net loss $(3,063,287) $(8,395,794) $(7,196,498)
=====================================
Loss per share basic and diluted $ (.03) $ (.08) $ (.07)
=====================================
Business Activity
The Company designs, develops, markets and supports
proprietary software products. These products are
designed to be used in retail businesses having
multiple locations to assist in the management of
business operations on a daily basis and communicate
results of operations in a timely manner. The
principal markets for the Company's products are with
retail companies which have operations in North
America and to a lesser extent in Europe and Asia.
Cash and Cash Equivalents
The Company considers all short-term instruments with
an original maturity of three months or less to be
cash equivalents.
Concentration of Credit Risk
The Company maintains cash in bank deposit accounts
which, at times, may exceed federally insured limits.
The Company has not experienced any losses in such
accounts and believes it is not exposed to any
significant credit risk on cash and cash equivalents.
Financial instruments which potentially subject the
Company to concentration of credit risk consist
primarily of trade receivables. In the normal course
of business, the Company provides credit terms to its
customers. Accordingly, the Company performs ongoing
credit evaluations of its customers and maintains
allowances for possible losses which when realized
have been within the range of management's
expectations.
--------------------------------------------------------------------------------
F-10
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
1. Summary of Concentration of Credit Risk - Continued
Significant The Company's accounts receivable are derived from
Accounting sales of products and services primarily to customers
Policies operating multi-location retail stores, hotels, and
Continued hospitals. At June 30, 2001, December 31, 2000 and
1999, accounts receivable includes amounts due from
four customers totaling $318,955, $216,202 and
$660,970, respectively. These customers accounted for
76%, 79% and 87% of accounts receivable at June 30,
2001, December 31, 2000 and 1999, respectively.
The Company provides credit terms to its customers in
the normal course of business. The Company performs
ongoing credit evaluations of customers and maintains
an allowance for doubtful accounts based upon
collection assessment. Collateral is not required
from customers.
In 2000, the Company generated approximately 24% of
its revenue from a development and software
enhancement contract (see note 10).
The Company received approximately 47%, 39% and 34%
of its revenue from five major customers during the
periods ended June 30, 2001, December 31, 2000 and
1999, respectively.
Depreciation and Amortization
Depreciation and amortization of property and
equipment is computed using the straight line method
based on the following estimated useful lives:
Years
-----
Furniture and fixtures 3 - 7
Computer equipment 3 - 7
Equipment under capital leases 3 - 7
Leasehold improvements see below
Leasehold improvements are amortized over the shorter
of the remaining lease term or the estimated useful
life of the improvements.
--------------------------------------------------------------------------------
F-11
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
1. Summary of Warranties
Significant The Company offers a limited warranty against
Accounting software defects for a general period of six months.
Policies Customers who are not completely satisfied with their
Continued software purchase may attempt to be reimbursed for
their purchases outside the warranty period. The
Company accrues amounts for such warranty settlements
that are probable and can be reasonably estimated.
Revenue Recognition
Revenue for the sale of software licenses is
recognized upon delivery of the software unless
specific delivery terms provide otherwise. If not
recognized upon delivery, revenue is recognized upon
meeting specified conditions, such as, meeting
customer acceptance criteria. In no event is revenue
recognized if significant Company obligations remain.
Customer payments are typically received in part upon
signing of license agreements, with the remaining
payments received in installments pursuant to the
agreements. Until revenue recognition requirements
are met, the cash payments received are treated as
deferred revenue.
Maintenance and support services that are sold with
the initial license fee are recorded as deferred
revenue and recognized ratably over the initial
service period. Revenues from maintenance and other
support services provided after the initial period
are generally paid in advance and are recorded as
deferred revenue and recognized on a straight-line
basis over the term of the agreements.
Consulting service revenues are recognized in the
period that the service is provided or in the period
such services are accepted by the customer if
acceptance is required by agreement.
--------------------------------------------------------------------------------
F-12
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
1. Summary of Software Development Costs
Significant The Company accounts for software development costs
Accounting in accordance with Statement of Financial Accounting
Policies Standards No. 86, Accounting for the Costs of
Continued Computer Software to be Sold, Leased, or Otherwise
Marketed. Research and development costs have been
charged to operations as incurred. From inception
through January 2001, the Company had viewed the
software as an evolving product. Therefore, all costs
incurred for research and development of the
Company's software products through December 31, 2000
and 1999 have been expensed as incurred. During
January 2001, technological feasibility of a major
revision to the Company's Fresh Market Manager and
Action Manager software and the Company's 4x
operating platform was established. Development costs
incurred from January 2001 through June 30, 2001 of
$654,957 have been capitalized.
Software development costs will be amortized on a
straight-line basis over a period of four years.
Amortization will begin when the products are
available for general release to the public, which is
anticipated to be January 2002.
Research and Development Costs
Research and development costs include personnel
costs, engineering, consulting, and contract labor
and are expensed as incurred.
Income Taxes
Through June 13, 2001, the Company's results of
operations were included in the consolidated tax
return of Riverview Financial Corporation, its
primary shareholder. The Company was required to pay
income taxes to Riverview based upon an inter-company
tax sharing agreement when a tax cost was incurred.
Income taxes are calculated and accrued as if the
Company filed tax returns based solely upon its
operations.
The Company accounts for income taxes under the
provision of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. This
method requires the recognition of deferred tax
liabilities and assets for the expected future tax
consequences of temporary differences between tax
bases and financial reporting bases of other assets
and liabilities.
--------------------------------------------------------------------------------
F-13
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
1. Summary of Earnings Per Share
Significant The computation of basic (loss) earnings per common
Accounting share is based on the weighted average number of
Policies shares outstanding during each year. The computation
Continued of diluted earnings per common share is based on the
weighted average number of shares outstanding during
the year, plus the common stock equivalents that
would arise from the exercise of stock options and
warrants outstanding, using the treasury stock method
and the average market price per share during the
year. Options and warrants to purchase 1,011,073
shares of common stock at prices ranging from $.27 to
$1.44 per share were outstanding at June 30, 2001,
but were not included in the diluted loss per share
calculation because the effect would have been
antidilutive.
The shares used in the computation of the Company's
basic and diluted earnings per common share are
reconciled as follows:
December 31,
June 30, -----------------------------
2001 2000 1999
-------------------------------------------
Weighted average common
shares outstanding 113,345,000 109,624,000 109,624,000
Dilutive effect of options
and warrants - - -
-------------------------------------------
Weighted average shares
outstanding, assuming dilution 113,345,000 109,624,000 109,624,000
===========================================
Estimates
The preparation of financial statements in conformity
with accounting principles generally accepted in the
United States of America, requires management to make
estimates and assumptions that affect certain
reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Fair Value of Financial Instruments
The Company's financial instruments consist of cash,
receivables, payables, accruals and notes payable.
The carrying amount of cash, receivables, payables
and accruals approximates fair value due to the
short-term nature of these items. The notes payable
also approximate fair value based on evaluations of
market interest rates.
--------------------------------------------------------------------------------
F-14
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
1. Summary of Unaudited Financial Information
Significant The accompanying consolidated financial statements of
Accounting the Company for the six months ended June 30, 2000
Policies have been prepared without audit. In the opinion of
Continued management, the accompanying unaudited consolidated
financial statements include all adjustments,
consisting of normal recurring accruals, necessary
for a fair presentation of the financial position and
results of operations for the periods presented.
Financial Results and Liquidity
For the six months ended June 30, 2001, the Company
incurred a net loss, experienced a net cash outflow
from operations, and had current liabilities in
excess of current assets.
As a result of the reverse acquisition between PCG
and FTI, the fiscal year end of PCG, the operating
company, was changed from December 31 to June 30,
2001. This change in fiscal year-end affected the
results of operations because of the cyclical nature
of PCG's revenues. In general, the Company's revenues
are generated at times conducive to its retail
customer's abilities to allocate time to implement
new systems, or make upgrades to current systems.
Additionally, as current and potential customers have
anticipated the general release of the Company's
major revisions of its Action Manager, Fresh Market
Manager, and 4x operating platform, new license
purchases have declined. The associated consulting
revenues related to new license installations have
also decreased. Subsequent to June 30, 2001,
communications with and commitments from the
Company's current customers and potential customers
indicate sales of the revised products will increase
significantly.
The Company believes that cash flow from increased
sales, as well as the ability and commitment of its
majority shareholder to contribute funds necessary
for the Company to continue to operate, will allow
the Company to fund its currently anticipated working
capital, capital spending, and debt service
requirements during the fiscal year ended June 30,
2002. The financial statements do not reflect any
adjustments should the Company's anticipated changes
in the operations not be achieved.
--------------------------------------------------------------------------------
F-15
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
1. Summary of Reclassifications
Significant Certain reclassifications have been made to the
Accounting December 31, 2000 and 1999 financial statements to
Policies conform to the June 30, 2001 financial statement
Continued presentation.
2. Receivables Trade accounts receivable consist of the following:
June 30, December 31,
2001 2000
------------------------------
Trade accounts receivable $ 580,175 $ 432,895
Allowance for doubtful accounts (46,000) (160,758)
------------------------------
$ 534,175 $ 272,137
==============================
3. Property and Property and equipment are stated at cost and are
Equipment summarized by major classifications as follows:
June 30, December 31,
2001 2000
------------------------------
Computer equipment $ 1,198,230 $ 868,586
Furniture and equipment 172,486 172,486
Equipment under capital leases 23,258 171,304
Leasehold improvements 85,795 85,795
------------------------------
1,479,769 1,298,171
Less accumulated depreciation
and amortization (1,259,841) (1,120,674)
------------------------------
$ 219,928 $ 177,497
==============================
Depreciation and amortization expense for the periods
ended June 30, 2001, December 31, 2000 and 1999 was
$74,080, $183,437 and $255,920, respectively.
--------------------------------------------------------------------------------
F-16
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
4. Intangible Intangible asset consists of the following:
Asset
June 30, December 31,
2001 2000
------------------------------
Capitalized software costs $ 654,957 $ -
Less accumulated amortization - -
------------------------------
$ 654,957 $ -
==============================
5. Accrued Accrued liabilities consist of the following:
Liabilities
June 30, December 31,
2001 2000
------------------------------
Accrued vacation $ 149,757 $ 148,475
Other payroll liabilities 105,639 50,281
Other accrued liabilities 139,593 183,024
------------------------------
$ 394,989 $ 381,780
==============================
6. Notes The Company has the following short-term notes
Payable payable at:
June 30, December 31,
2001 2000
------------------------------
Note payable to a partnering
company with an interest rate of
5.51%, due in May 2000 (in
default) and unsecured (see note 20) $ 250,000 $ 250,000
Line of credit payable to a bank
with an interest rate of the
bank's prime lending rate of 7%,
total available of $250,000, due
in March 2002 and secured by the
Company's cash, securities,
financial assets and other
investment property 250,000 -
Line-of-credit payable to a bank
at an interest rate of 8% (the
bank's prime lending rate plus
1%), total available of $500,000,
due November 2001, and secured by
a personal guarantee of the
Company's major shareholder 105,000 150,000
-----------------------------
$ 605,000 $ 400,000
=============================
--------------------------------------------------------------------------------
F-17
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
6. Notes Financial statement presentation is as follows:
Payable
Continued
June 30, December 31,
2001 2000
------------------------------
Line of credit $ 355,000 $ 150,000
Note payable 250,000 250,000
------------------------------
$ 605,000 $ 400,000
==============================
7. Related Party The Company had the following related party notes
Notes payable:
Payable
June 30, December 31,
2001 2000
------------------------------
Notes payable to a stockholder at
an interest rate of 10% due in
December 2002 and unsecured $3,260,714 $ 2,150,000
==============================
8. Long-Term The Company has the following notes payable at:
Debt
June 30, December 31,
2001 2000
------------------------------
Note payable to a former owner at
an interest rate of 10%, due
through December 2002 and secured
by Company stock, a condominium
owned by an officer and major
shareholder of the Company, and
guarantees by Riverview (former
parent and beneficially owned by
the Company's major stockholder)
and an officer and the major
shareholder of the Company $2,750,000 $ -
Capital leases (note 13) 9,599 39,935
------------------------------
2,759,599 39,935
Less current portion (1,505,594) (33,293)
------------------------------
$1,254,005 $ 6,642
==============================
--------------------------------------------------------------------------------
F-18
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
8. Long-Term Maturities of long-term debt at June 30, 2001 are as
Debt follows:
Continued
Year Amount
---- --------------
2002 $ 1,505,594
2003 1,254,005
-------------
$ 2,759,599
============
9. Deferred Deferred revenue consisted of the following as of:
Revenue
June 30, December 31,
2001 2000
------------------------------
Software licenses $ 837,900 $ 478,000
Maintenance and support 667,842 743,573
Consulting and other 30,000 73,200
------------------------------
$ 1,535,742 $ 1,294,773
==============================
Periodically the Company enters into arrangements
with customers that involve significant additional
development and enhancements to the existing software
that will meet the customers individual
specifications. These types of revenue have been
separately classified in the financial statements.
With respect to this type of activity, the Company
entered into an agreement in 1997 with a retail
grocery customer with approximately 140 store
locations. The contract provided for extensive core
development, customization, product tailoring and
implementation. The customer was to create a
laboratory environment and the end result had to be
operational at the store level. The terms of the
agreement provided for payment of the following:
License fees $ 762,000
Product enhancements 300,000
Customizations 250,000
Tailoring and implementation 250,000
------------
$ 1,562,000
============
The Company received the $1,562,000 in 1997. The
software was substantially developed and completed in
2000.
--------------------------------------------------------------------------------
F-19
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
10. Income Taxes The Company provides for deferred income taxes on
temporary differences which represent tax effects of
transactions reported for tax purposes in periods
different than for book purposes.
The provisions for income taxes differ from the
amount computed at statutory rates as follows:
Period Ended
--------------------------------------------
December 31,
June 30, ----------------------------
2001 2000 1999
--------------------------------------------
Income tax benefit (provision) at
statutory rates $ 284,000 $ (931,000) $ (254,000)
Change in valuation allowance (274,000) - -
Other (10,000) (60,935) (70,699)
--------------------------------------------
$ - $ (991,935) $ (324,699)
============================================
Period Ended
--------------------------------------------
December 31,
June 30, ----------------------------
2001 2000 1999
--------------------------------------------
Current income tax expense $ - $ 51,935 $ 14,699
Deferred income tax expense - 940,000 310,000
--------------------------------------------
$ - $ 991,935 $ 324,699
============================================
The deferred income tax benefit (liability) for the
periods ended June 30, 2001 and December 31, 2000 is
as follows:
June 30, December 31,
2001 2000
------------------------------
Short-term:
Allowance for bad debts $ 63,000 $ 63,000
Accrued vacation 58,000 58,000
Other 5,000 (1,000)
-----------------------------
Deferred tax asset $ 126,000 $ 120,000
=============================
--------------------------------------------------------------------------------
F-20
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
10. Income Taxes June 30, December 31,
Continued 2001 2000
------------------------------
Long-term:
Depreciation $ 43,000 $ 44,000
Net operating loss
carryforward 3,909,000 3,640,000
Valuation allowance (2,678,000) (2,404,000)
------------------------------
Deferred tax asset $ 1,274,000 $ 1,280,000
==============================
As of June 30, 2001, the Company had available net
operating losses (NOL) for federal and state tax
purposes of approximately $10,024,000. The NOL
carryforward is limited to use against future taxable
income due to changes in ownership and control. If a
substantial change in the Company's ownership should
occur, there would be an annual limitation of the
amount of the NOL carryforward which could be
utilized. The following schedule summarizes the net
operating losses available to the Company with the
corresponding expiration periods:
Period of Loss Amount Expiration Year
-------------- ------ ---------------
1992 $ 1,505,000 2007
1995 920,000 2010
1997 5,825,000 2012
1998 1,082,000 2013
2001 692,000 2021
-----------
$10,024,000
===========
11. Supplemental Interest paid during the periods ended June 30, 2001,
Disclosure of December 31, 2000 and 1999 was $238,373, $94,784 and
Cash Flow $25,063, respectively.
Information
Income taxes paid during the periods ended June 30,
2001, December 31, 2000 and 1999 was $0, $1,731 and
$2,323, respectively.
--------------------------------------------------------------------------------
F-21
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
11. Supplemental Non-Cash Transactions
Disclosure of
Cash Flow 2001
Information During the period ended June 30, 2001, the Company
Continued acquired the assets and liabilities of FMM (note 1),
a company owned by a shareholder and another
individual for debt. The net assets purchased
consisted of the following:
Accounts receivable $ 308,449
Prepaid expenses 954
Property and equipment 100,215
Line of credit (250,000)
Accounts payable (713,401)
Accrued liabilities (32,184)
Deferred revenue (70,000)
Debt (3,478,799)
--------------
Net liabilities acquired (4,134,766)
Amount of refinanced debt 3,860,714
Gain on refinancing of debt 278,295
--------------
Net cash received in acquisition $ 4,243
==============
During the period ended June 30, 2001, the Company
acquired assets and liabilities of a company in a
reverse acquisition for stock. The net assets
purchased consisted of the following:
Accounts receivable $ 350,000
Subscriptions receivable 206,800
Accounts payable (87,411)
--------------
469,389
Net assets purchased (294,392)
--------------
Net cash received in acquisition $ 174,997
==============
Subsequent to June 30, 2001, the Company received
$206,800 in relation to subscription receivables.
Accordingly, this amount has been reclassified from
equity to current assets.
During the period ended June 30, 2001, the Company
issued stock as payment of debt in the amount of
$134,118.
2000
In 2000, the Company entered into a capital lease
obligation for the acquisition of equipment with a
cost of $16,350.
--------------------------------------------------------------------------------
F-22
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
11. Supplemental 1999
Disclosure of In 1999, long-term debt to a bank in the amount of
Cash Flow $1,675,000 was assumed by the parent company in
Information exchange for an equivalent note payable to the parent
Continued corporation.
In 1999, the Company sold equipment with a cost of
$68,000 to a related party. The related party paid
cash of $50,000 and assumed the remaining liability
on the equipment in the amount of $18,000.
In 1999, several capital leases were renegotiated and
combined into a new lease obligation for $186,000
which, also, included additional equipment purchased
with a cost of $29,128.
12. Commitments Capital Leases
and As of June 30, 2001, the Company leases equipment
Contingencies with an original cost of $25,985 under the terms of
several capital lease arrangements. The monthly
payments total $813 including imputed interest of
8.62%. The leases mature between November 2001 and
February 2003.
The following is a schedule of future minimum lease
payments:
June 30, December 31,
Period Ending 2001 2000
---------------------------------
2001 $ - $ 35,686
2002 7,209 6,654
2003 3,840 554
--------------------------------
Total minimum lease payments 11,049 42,894
Less: amount representing interest (1,450) (2,959)
--------------------------------
Present value of net minimum
lease payments 9,599 39,935
Less: current portion (5,594) (33,293)
--------------------------------
Capital lease obligation, net
of current portion $ 4,005 $ 6,642
================================
--------------------------------------------------------------------------------
F-23
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
12. Commitments Asserted Claims
and On October 1, 2001 and October 2, 2001, we received
Contingencies "demand letters" from two shareholders threatening
Continued litigation unless their prior investments in our
stock are rescinded.
The first demand letter was issued on October 1, 2001
by The Yankee Companies, Inc. ("Yankee Group"), an
"investor relations" firm. The Yankee Group has
threatened to initiate "derivative and class action
lawsuits, as well as other judicial and regulatory
actions" if we refuse to seek rescission of our
acquisition of Park City Group, Inc., and the entire
private placement related thereto (totaling
approximately $2,040,000 consisting of cash collected
and subscriptions receivable. The Yankee Group has
asserted that Park City Group, Inc., made material
misrepresentations and omissions to Fields
Technologies, Inc. (then operating as AmeriNet
Group.com, Inc.) in connection with that acquisition
and related private placement.
The second "demand letter" was issued on October 2,
2001 by shareholder, Debra Elenson ("Elenson").
Elenson alleges that she purchased 750,000 of the
Company's common stock for a total of $127,500, based
on material misrepresentations concerning the our
financial position.
Both the Yankee Group, and Elenson, have primarily
alleged various deficiencies in our audited financial
statements for the year ended December 31, 2000, as
well as in our unaudited, pro-forma financial
statements for the period ended March 31, 2001.
Presently, we are investigating this matter. We
believe that the allegations made by the Yankee Group
and Elenson are meritless, and we intend to
vigorously defend any lawsuit brought by these
parties. We also believe that we have appropriate
defenses and counter-claims to raise against the
Yankee Group, and their affiliates, based on fraud,
unjust enrichment, breach of contract, tortuous
interference, as well as other legal and equitable
claims.
However, because no lawsuits have actually been
initiated by either of these parties, we are unable
to reasonably predict the ultimate resolution of
these claims or our liability, if any, in connection
therewith. Should a derivative or class action
lawsuit be filed against us by the Yankee Group
and/or Elenson, we would have to expend substantial
resources to defend such actions, which could have a
materially adverse affect on our operations and
financial condition. In addition, if we were to lose
such a lawsuit, and if we were required to rescind
the Park City Group, Inc., acquisition and/or the
related private placement, the impact of such an
outcome could also have a materially negative impact
on our operations and financial condition.
--------------------------------------------------------------------------------
F-24
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
12. Commitments Capital Leases - Continued
and Amortization expense related to capitalized leases is
Contingencies included in depreciation expense and was $0, $56,647
Continued and $51,651 for the periods ended June 30, 2001 and
December 31, 2000 and 1999, respectively. Accumulated
amortization was $7,721 and $109,076 as of June 30,
2001 and December 31, 2000, respectively.
Performance Shares of Common Stock
Pursuant to the reverse acquisition agreement, the
Company has reserved Performance Shares of common
stock for potential future issuance to the Company's
shareholders equal to 35% of the common stock
outstanding as of the date the Performance shares are
earned. Based on outstanding shares of common stock
of 149,276,564 at June 30, 2001, approximately
52,250,000 Performance Shares of common stock could
be issued. The Performance Shares are issuable in
annual installments as follows:
o For the twelve months ended December 31,
2001, an amount equal to one half of the
total Performance Shares if the Company has
earned net income before income taxes of at
least $3,000,000.
o For the twelve months ended December 31,
2002, an amount equal to one half of the
total Performance Shares if the Company has
earned net income before income taxes of at
least $4,200,000.
o If net income before income taxes is less
than 33% of the required threshold during
the period, then the Performance Shares will
be forfeited.
o If net income before income taxes is between
33% and 80% of the required threshold during
the period, then the Performance Shares for
the period and the required threshold will
be carried over to the next year, increasing
both the aggregate threshold and the
aggregate shares attainable for the period.
--------------------------------------------------------------------------------
F-25
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
12. Commitments o If net income before income taxes is between
and 80% and 100% of the required threshold
Contingencies during the period, then the Performance
Continued Shares for the period will be prorated and
the remaining Performance Shares for the
period will be carried over to the next
year, increasing the aggregate shares
attainable for the period.
o In the event of a carry forward into 2003,
the required threshold will equal
$4,200,000. There will be no carry forwards
beyond 2003.
Operating Leases
In September 1998, the Company entered into a lease
agreement for office space. Under the terms of the
lease agreement, the Company was required to pay
$16,723 per month with a 4% annual increase in the
base rent through December 2000. The lease agreement
was renewed in February 2001, and under the terms of
the new agreement, the Company must pay $18,482 per
month with a 4% annual increase in base rent until
December 31, 2003. Total rent expense under this
agreement for the period ended June 30, 2001 was
$112,069. Total rent expense under this agreement,
net of reimbursed rent expense of $51,000 which was
paid by a related party for shared office space, was
$166,306 for 2000. Total rent expense, net of
reimbursed rent expense of $34,000 paid by a related
party, was $157,715 for 1999.
The Company incurred equipment rent expense of
$7,934, $2,240 and $2,240 in the periods ended June
30, 2001, December 31, 2000 and 1999, respectively.
Future minimum lease payments for office space and
equipment subsequent to June 30, 2001 are as follows:
Year Amount
2002 $ 240,255
2003 237,127
2004 120,763
----------
Total $ 598,145
==========
--------------------------------------------------------------------------------
F-26
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
13. Employee The Company offers an employee benefit plan under
Benefit Plan Section 401(k) of the Internal Revenue Code.
Employees who have attained the age of 21 and have
completed twelve months of service with the Company
are eligible to participate. The Company matches 50%
of the first 4% of each employee's contributions. The
expense related to the plan for the periods ended
June 30, 2001, December 31, 2000 and 1999 was
$28,257, $38,907 and $42,194, respectively.
14. Stock Employee Stock Compensation
Compensation In October 2000, the Company entered into an
Plans incentive stock option plan indenture. Officers and
employees of the Company are eligible to participate
in the plan. Eligibility for participation expires on
the ninetieth day following the end of the
participants association with the Company. The
maximum aggregate number of shares that may be
optioned and sold is 200,000. The plan is
administered by a Committee. The exercise price for
each share of common stock purchasable under any
incentive stock option granted under this plan shall
be not less than 100% of the fair market value of the
common stock, as determined by the stock exchange on
which the common stock trades on the date of grant.
If the incentive stock option is granted to a
shareholder who possesses more than 10% of the
Company's voting power, then the exercise price shall
be not less than 110% of the fair market value on the
date of grant. All incentive stock options expire
after 10 years. If the incentive stock option is held
by a shareholder who possesses more than 10% of the
Company's voting power, then the incentive stock
option expires after five years. If the option holder
is terminated, then the incentive stock options
granted to such holder expire no later than three
months after the date of termination. The reverse
acquisition transacted in June 2001 qualifies as a
termination for all option holders under this plan.
For option holders granted incentive stock options
exercisable for the first time during any calendar
year and in excess of $100,000 (determined by the
fair market value of the shares of common stock as of
the grant date), the excess shares of common stock
shall not be deemed to be purchased pursuant to
incentive stock options.
--------------------------------------------------------------------------------
F-27
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
14. Stock Officers and Directors Stock Compensation
Compensation In January 2001, the Company entered into an
Plans Officer's and Director's Option Plan. This plan
Continued authorizes the grant of non-qualified stock options
and incentive stock options. Officers and directors
of the Company who are not provided other
compensation by the Company and who are not serving
as designees of other persons are eligible to
participate in the plan. Only those who are Officers
and Directors who are also employees may be awarded
incentive stock options. The maximum aggregate number
of shares that may be optioned and sold is 1,000,000.
The plan is administered by a Committee. Members of
the Company's Board of Directors during the calendar
year starting on January 1, 2001 who are not provided
other compensation by the Company and who are not
serving as designees of other persons shall be
compensated for their services during the period from
January 1, 2001 as follows: (i) For basic service as
a Director, each Director shall be granted an option
to purchase 15,000 shares of common stock at an
exercise price based on the last reported transaction
price reported on the OTC Bulleting Board on December
22, 2000. These options will vest at a rate of 1,000
per month, with all unvested options vesting on
December 31, 2001. (ii) For service on a permanent
committee, the option will be increased by an
additional 10,000 shares that will vest at a rate of
800 per month, with all unvested options vesting on
December 31, 2001. (iii) For service as the chair of
a permanent committee, the option will be increased
by an additional 5,000 shares that will vest at a
rate of 400 shares per month, with all unvested
options vesting on December 31, 2001. The Committee
shall establish the exercise price at the time any
option is granted. However, the exercise price for
each share of common stock purchasable under any
incentive stock option granted under this plan shall
be not less than 100% of the fair market value of the
common stock, as determined by the stock exchange on
which the common stock trades on the date of grant.
If the incentive stock option is granted to a
shareholder who possesses more than 10% of the
Company's voting power, then the exercise price shall
be not less than 110% of the fair market value on the
date of grant. All incentive stock options expire
after 10 years. If the incentive stock option is held
by a shareholder who possesses more than 10% of the
Company's voting power, then the incentive stock
option expires after five years. If the option holder
is terminated, then the incentive stock options
granted to such holder expire no later than three
months after the date of termination. The reverse
acquisition transacted in June 2001 qualifies as a
termination for all option holders under this plan.
--------------------------------------------------------------------------------
F-28
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
14. Stock For options holders granted incentive stock options
Compensation exercisable for the first time during any calendar
Plans year and in excess of $100,000 (determined by the
Continued fair market value of the shares of common stock as of
the grant date), the excess shares of common stock
shall not be deemed to be purchased pursuant to
incentive stock options.
Officers, Key Employees, Consultants and Directors
Stock Compensation
In January 2000, the Company entered into a
non-qualified stock option & stock incentive plan.
Officers, key employees, consultants and directors of
the Company are eligible to participate. The maximum
aggregate number of shares which may be granted under
this plan was originally 1,000,000 and was
subsequently amended to 2,000,000 on March 8, 2000.
The plan is administered by a Committee. The exercise
price for each share of common stock purchasable
under any incentive stock option granted under this
plan shall be not less than 100% of the fair market
value of the common stock, as determined by the stock
exchange on which the common stock trades on the date
of grant. If the incentive stock option is granted to
a shareholder who possesses more than 10% of the
Company's voting power, then the exercise price shall
be not less than 110% of the fair market value on the
date of grant. Each option shall be exercisable in
whole or in installments as determined by the
Committee at the time of the grant of such options.
All incentive stock options expire after 10 years. If
the incentive stock option is held by a shareholder
who possesses more than 10% of the Company's voting
power, then the incentive stock option expires after
five years. If the option holder is terminated, then
the incentive stock options granted to such holder
expire no later than three months after the date of
termination. For options holders granted incentive
stock options exercisable for the first time during
any fiscal year and in excess of $100,000 (determined
by the fair market value of the shares of common
stock as of the grant date), the excess shares of
common stock shall not be deemed to be purchased
pursuant to incentive stock options.
--------------------------------------------------------------------------------
F-29
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
14. Stock A schedule of the options and warrants at June 30,
Compensation 2001 is as follows:
Plans
Continued
Number of
----------------------------- Price per
Options Warrants Share
--------------------------------------------------
Outstanding at:
January 1, 1999 1,492,997 - $ 0.04 - 0.95
Granted - - -
Exercised (9,722) - 0.04
Expired (85,200) - 0.94
--------------------------------------------------
Outstanding at:
December 31, 1999 1,398,075 - 0.04 - 0.95
Granted - - -
Exercised - - -
Expired (141,250) - 0.95
--------------------------------------------------
Outstanding at:
December 31, 2000 1,256,825 - 0.04 - 0.95
Assumed in
reverse acquisition 297,800 713,273 0.27 - 1.44
Exercised - - -
Canceled (1,256,825) - 0.04 - 0.95
--------------------------------------------------
Outstanding at:
June 30, 2001 297,800 713,273 $ 0.27 - 1.44
==================================================
Warrants
Prior to the reverse acquisition FTI issued 713,273
warrants. Of the warrants, 315,000 were issued to
officers of the Company as a condition of employment,
and 398,273 were issued to individuals in relation to
certain transactions prior to the reverse acquisition
and in relation to the reverse acquisition.
--------------------------------------------------------------------------------
F-30
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
15. Stock-Based The Financial Accounting Standards Board issued
Compensation Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" (FAS 123)
which established financial accounting and reporting
standards for stock-based compensation. The new
standard defines a fair value method of accounting
for an employee stock option or similar equity
instrument. This statement gives entities the choice
between adopting the fair value method or continuing
to use the intrinsic value method under Accounting
Principles Board (APB) Opinion No. 25 with footnote
disclosures of the pro forma effects if the fair
value method had been adopted. The Company has opted
for the latter approach. All options outstanding were
assumed as a result of the reverse acquisition
transaction. The Company did not issue options during
the period after the reverse acquisition.
Accordingly, no compensation expense has been
recognized for the stock option plans.
The following table summarizes information about
fixed stock options and warrants outstanding at June
30, 2001:
Options and Warrants Outstanding Options Exercisable
----------------------------------------------------------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices at 6/30/01 Life (Years) Price at 6/30/01 Price
-------------------------------------------------------------------------------------
$0.27 - 1.44 1,011,073 2.34 $ 0.85 1,011,073 $ 0.85
======================================================================================
16. Related Party Fresh Market Manager, LLC (Formerly Known as Cooper
Transactions Fields, LLC) In May 1999, PCG transferred to
Riverview Financial Corporation (Riverview) (its
majority shareholder) all of its rights, title and
interest in a certain application software program
known and marketed as "Fresh Market Manager"
including all related documentation, copyrights,
patents, intellectual property and other materials.
The agreement specifically excluded all of PCG's
other software programs and applications. PCG also
retained the rights to the "Fresh Market Manager"
software solely necessary to perform PCG's
obligations relating to the development and software
enhancement contract that PCG had with a retail
customer (see note 10).
--------------------------------------------------------------------------------
F-31
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
16. Related Party Fresh Market Manager, LLC (Formerly Known as Cooper
Transactions Fields, LLC) - Continued
Continued The chief executive of Riverview, who is also the
chief executive of PCG then assigned the "Fresh
Market Manager" software to Cooper Fields, LLC (CF),
a Utah limited liability company which had been
formed in April 1999 with the chief executive as
managing member. CF acquired the intellectual
property rights for $4,750,000 by a cash payment of
$2,750,000 to Riverview and execution of a note
payable in the amount of $2,000,000.
As part of the CF organizational and operational
documents, the members agreed to an "Overhead Sharing
and Referral Agreement" whereby CF would pay to PCG
its allocable share of direct costs and expense. CF
was to pay PCG the allocated cost in twelve monthly
payments for one year with annual renewal terms. The
amount was to cover the shared costs of facilities,
personnel and operating costs. PCG recorded the
reimbursed costs as a reduction to operating costs.
Accordingly, shared cost reimbursements were $99,342
for the period from January 1, 2001 to April 5, 2001
(Date of Acquisition), $620,232 in 2000 and $413,488
in 1999. The agreement also provided for a referral
fee to be paid to either company for the introduction
of prospective customers. PCG received $82,326 in the
year 2000 for a customer referral.
As of December 31, 2000, PCG had a receivable of
$492,837 which was comprised of $371,355 for the
overhead sharing costs, $26,350 for interest on the
unpaid amount and $95,152, net, for shared
development costs. As of December 31, 1999, PCG had a
receivable of $76,594 which was comprised of $78,613
for the overhead sharing costs, $3,145 for interest
on the unpaid amount and an offset of $5,164, net,
for shared development costs.
Riverview Financial Corporation (Former Parent
Company of PCG) PCG has a note payable with Riverview
(see note 7). PCG, also, has a receivable from
Riverview for certain expenses paid by PCG in 2000.
The balance due PCG was $36,632 and $19,411 as of
June 30, 2001 and December 31, 2000, respectively.
Note Payable PCG has a note payable in the amount of
$2,750,000 at June 30, 2001 (see note 8).
--------------------------------------------------------------------------------
F-32
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
16. Related Party Chief Executive Officer
Transactions The Company has a receivable from its chief executive
Continued officer for certain non-business expenses paid by the
Company. The balance due the Company was $48,990,
$46,396 and $10,836 as of June 30, 2001, December 31,
2000 and 1999, respectively.
17. Fresh Market On April 5, 2001, PCG, Riverview, and the members of
Manager, LLC FMM, entered into an agreement whereby the Company
Acquisition acquired the member interests in CF for $3,750,000
(see note 1).
The agreement contains numerous covenants which
provide certain limitations on compensation
increases, dividends, related party transactions,
borrowings and the creation of liens.
PCG's Chief Executive, who was the other member of
CF, assigned his interest to the Company which makes
the Company the sole owner of FMM. PCG's Chief
Executive was elected as the sole manager of FMM.
18. AmeriNet PCG entered into a reorganization agreement with
Group.com, AmeriNet Group.com, Inc. (AmeriNet) on June 13, 2001.
Inc. Merger AmeriNet had previously reported its operations to
Transaction March 31, 2001 on form 10QSB. AmeriNet had several
transactions subsequent to March 31, 2001 and prior
to the reverse acquisition with Park City Group.
AmeriNet had sold off or closed all AmeriNet
operations, assets and liabilities prior to the
reverse acquisition with Park City Group.
19. Subsequent Subsequent to June 30, 2001, the Company's default on
Events the $250,000 note payable to a partnering company
(see note 6) entered litigation for collection by the
partnering company. Management anticipates paying the
principal and interest due, incurring no further
damages.
--------------------------------------------------------------------------------
F-33
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
20. Recent SFAS No, 140, Accounting for Transfers and Servicing
Accounting of Financial Assets and Extinguishments of
Pronounce- Liabilities, was issued in September 2000. SFAS No.
ments 140 is a replacement of SFAS No 125, Accounting for
Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. Most of the
Provisions of SFAS No. 125 were carried forward to
SFAS No. 140 without reconsideration by the Financial
Accounting Standard Board (FASB), and some were
changed only in minor ways. In issuing SFAS No. 140,
the FASB included issues and decisions that had been
addressed and determined since the original
publication of SFAS No. 125. SFAS No. 140 is
effective for transfers after March 31, 2001.
Management does not expect the adoption of SFAS No.
140 to have a significant impact on the financial
position or results of operations of the Company.
--------------------------------------------------------------------------------
F-34
FIELDS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Continued
--------------------------------------------------------------------------------
20. Recent In June 2001, the Financial Accounting Standards
Accounting Board issued Statement of Financial Accounting
Pronounce- Standards No. 141, Business Combinations, and No.
ments 142, Goodwill and Other Intangible Assets,
Continued collectively, the Statements. These Statements change
the accounting for business combinations, goodwill
and intangible assets. Statement 141 eliminates the
pooling-of-interests method of accounting for
business combinations except for qualifying business
combinations that were initiated prior to July 1,
2001. Statement 141 also changes the criteria to
recognize intangible assets apart from goodwill.
Under Statement 142, goodwill and indefinite lived
intangible assets are no longer amortized but are
reviewed annually for impairment, or more frequently
if impairment indicators arise. Separable intangible
assets that have finite lives will continue to be
amortized over their useful lives. The amortization
provisions of Statement 142 apply to goodwill and
intangible assets acquired after June 30, 2001. With
respect to goodwill and intangible assets acquired
prior to July 1, 2001, the amortization provisions of
Statement 142 are effective upon adoption of
Statement 142. Pre-existing goodwill and intangibles
will be amortized during the transition period until
adoption. Companies are required to adopt Statement
142 in their fiscal year beginning after December 15,
2001. Early adoption is permitted for companies with
fiscal years beginning after March 15, 2001. The
Company plans to adopt Statement 142 effective July
1, 2002. Goodwill will be tested for impairment at
least annually using a two-step process that will
start with an estimation of the fair value. The first
step will screen for potential impairment, and the
second step will measure the amount of impairment, if
any. Management does not expect the adoption of SFAS
Nos. 141 and 142 to have a significant impact on the
financial position or results of operations of the
Company.
In June 2001, the Financial Accounting Standards
Board issued Statement of Financial Accounting
Standards No. 143, Accounting for Asset Retirement
Obligations. This Statement requires that the fair
value of a liability for an asset retirement
obligation be recognized in the period in which it is
incurred if a reasonable estimate of fair value can
be made. The associated asset retirement costs are
capitalized as part of the carrying amount of the
long-lived asset. Management does not expect the
adoption of SFAS No. 143 to have a significant impact
on the financial position or results of operations of
the Company.
--------------------------------------------------------------------------------
F-35