EINI files 10-12G with SEC on 11/17/99:
A few exerpts:
Use of the Castnet.com(TM) fictitious name has been alleged to have
resulted in trademark infringement, which is being investigated by the Company.
As of the date of this submission, based on the Company's records and
reports from the Company's stock transfer agent, Alpha Tech Stock Transfer,
there were 152 shareholders holding a total of 31,505,170 shares of the
Company's common stock. There were 40 shareholders holding a total of 5,400
shares of the Company's preferred stock. There were 67 persons or entities in
the aggregate holding warrants or options to purchase shares of the Company's
common stock; and 4 persons or entities holding promissory notes convertible to
shares of the Company's common stock.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company incurred a net loss of $2,241,508 and its current liabilities exceed
its current assets by $3,377,272. Further, certain of its debts were in defaults
as of December 31, 1998. These factors, among others, as discussed in Note 1 to
the financial statements, raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Merdinger, Fruchter, Rosen & Corso, P.C.
Certified Public Accountants
Merdinger, Fruchter, Rosen & Corso, P.C.
Certified Public Accountants
New York, New York
May 11, 1999
NOTE 1- DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Management's plans in regards to this matter are as follows:
* In February 1999, the Company acquired an operating subsidiary, which
also had a going concern paragraph in its auditors' report.
* The Company has raised approximately $2,000,000, in the aggregate
through Regulation D 504 and 506 Private Placements (See Notes 5 and
7).
* The Private placement proceeds were used to satisfy debt of the
subsidiary and fund the subsidiary's operations.
* The Company is working to raise additional capital and debt financing
to fund operations, increase revenues, and reduce operating costs of
its newly acquired subsidiary.
N0TE 5 - STOCKHOLDERS' EQUITY
In conjunction with the 1998 Private Placement, the Company issued, as a
finder's fee, warrants to purchase 124,286 and 33,333 shares of the
Company's Common Stock. The warrants expire in September and November of
2001, respectively, and are exercisable at $0.175 and $0.15 per share,
respectively. The Company valued the warrants at $375,415, which was the
fair market value as of the issuance date, and recorded the fair value as
offering costs, which offsets the proceeds from the Private Placement.
Liquidity and Capital Resources
EINI financed its operations primarily through the sale of its securities and
issuance of debt instruments. In this regard, the Company finalized two
significant financing agreements (ongoing debt transactions) in July, 1999, as
follows:
The Company entered into promissory note and finance agreements with Windsor
Capital Fund VI and Packard Capital, Ltd. which provide for receipt of funds by
The Entertainment Internet, Inc. in exchange for interest bearing obligations
(at 6%) interest, convertible to stock at a rate equivalent to a forty percent
(40%) discount from the lowest trading rate of the company's openly traded stock
(redeemable by the Company at any time during a one-year period upon payment of
principal and interest); the discount rate is applied to compensate for the
restricted nature of the stock, issued pursuant to Rule 144.
The Company also obtained a line of credit for future expansion and growth (see
press release); the line of credit is restricted and may not be used for
liquidation of prior-incurred debt or resolution of creditor claims. |
