8-K 1 slp43a.txt EONNET MEDIA, INC. FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) April 9, 2001 -------------- EONNET MEDIA, INC., formerly known as DOCTORSURF.COM, INC. (Exact name of registrant as specified in its charter) STATE OF FLORIDA 0-28097 59-3569844 ---------------- --------- ---------- (State or other jurisdiction of (File Number) (I.R.S. Employer incorporation) identification No.) 6925 112th Circle North, Suite 101, Largo, Florida 33773 -------------------------------------------------- ----- (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code 727-546-6473 ------------- ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS Effective April 9, 2001, Eonnet Media, Inc., formerly known as Doctorsurf.com, Inc. (the "Company"), a Florida corporation, pursuant to an Agreement and Plan of Merger dated as of January 15, 2001 (the "Agreement"), acquired all of the issued and outstanding stock of Eonnet Technologies, Inc., a Pennsylvania corporation ("ETI") in exchange for 1 million shares of Company common stock (on a post-split basis). On January 27, 2001, the Company completed a 1 for 18 reverse stock split. Thus, 1 million shares of Company common stock issued to former ETI shareholders constitute approximately one-third of the Company's issued and outstanding common stock. Under the terms of the Agreement, the transaction is to be accounted for utilizing the purchase method of accounting. ETI is an information technology company that provides strategic consulting, designing, development, and implementation of networking and web technology solutions. The combination of ETI and the Company seeks to be a leading-edge technology solutions and healthcare information provider for the electronic health marketplace as well as other markets. Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of the Business Acquired: Audited Financial Statements of Eonnet Technologies, Inc. are attached hereto. (b) Pro Forma Financial Information: December 31, 2000 Pro Forma Consolidated Financial Statements (Unaudited) of Eonnet Media, Inc. are attached hereto. (c) Exhibits - 2.1 Agreement and Plan of Merger dated January 15, 2001 between Eonnet Technologies, Inc., Eonnet Acquisition, Inc. and Eonnet Media, Inc. (f/k/a DoctorSurf.com, Inc.) (without schedules or exhibits). The Company agrees to supplementally furnish a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned here unto duly authorized. EONNET MEDIA, INC. By: /s/ Vikrant Sharma ------------------------------------- Date: May 22, 2001 Vikrant Sharma, Chief Executive Officer ------------ AUDITED FINANCIAL STATEMENTS OF EONNET TECHNOLOGIES, INC. Report of Brimmer, Burek & Keelan LLP, Independent Auditors Balance Sheets as of December 31, 2000 and 1999 Statements of Operations for the years ended December 31, 2000 and 1999 Statements of Shareholders' Equity (Deficit) for the years Ended December 31, 2000 and 1999 Statements of Cash Flows for the years ended December 31, 2000 and 1999 Notes to Financial Statements UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2000 Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2000 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders Eonnet Technologies, Inc. Pittsburgh, Pennsylvania We have audited the accompanying balance sheets of Eonnet Technologies, Inc. as of December 31, 2000 and 1999 and the related statements of operations, changes in stockholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the management of Eonnet Technologies, Inc. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. 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 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 Eonnet Technologies, Inc. as of December 31, 2000 and 1999 and the results of its operations and cash flows for the years then ended in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency, which raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. BRIMMER, BUREK & KEELAN LLP Certified Public Accountants March 9, 2001 Except for Note 14 as to which the date is April 10, 2001 EONNET TECHNOLOGIES, INC. BALANCE SHEETS DECEMBER 31, 2000 AND 1999 ASSETS 2000 1999 ------------ ------------- Current assets Cash $ - $ 3,279 Accounts receivable, net (including related 80,433 213,089 party receivables of $26,500 and $0) Inventory 37,366 24,927 ------------ ------------- Total current assets 117,799 241,295 Property and equipment, net 135,371 86,853 Intangible assets, net 64,060 79,596 ------------ ------------- Total assets $ 317,230 $ 407,744 ============ ============= Please read accompanying notes.

Please read accompanying notes. 2

Please read accompanying notes. 4

5 EONNET TECHNOLOGIES, INC. STATEMENTS OF CASH FLOWS (Continued) FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999 Supplemental Cash Flow Disclosure The statements of cash flows is supplemented by the following non-cash transactions: 2000 1999 --------------- ------------ Financing and investing activities Assets purchased $ 70,618 $ 205,759 Obligations incurred 31,850 150,142 --------------- ------------ Net cash paid for property and equipment $ 38,768 55,617 =============== ============ Cash paid for: Interest expense $ 17,490 $ 8,901 =============== ============ Income taxes $ - $ - =============== ============ EONNET TECHNOLOGIES, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 NOTE 1 - GENERAL Business Activity EONNET Technologies, Inc., a Pennsylvania corporation, was incorporated in December 1998 and began operations in January 1999. The Company provides network, web and application solutions to companies in Pittsburgh, Pennsylvania and the surrounding area. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue Recognition - The Company recognizes revenue when the service is complete. Inventory - Inventories are stated at the lower of cost determined by averaging the cost of the inventory on hand or market. Inventory consists of purchased finished goods, primarily computer and printer repair parts. Prepaid and Other Assets - Expense items of a nature that will benefit future periods are charged to prepaid and other assets and are amortized over the respective periods. Property and Equipment - Depreciation is provided for using the straight-line method, in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives (ranging from three to seven years). Leasehold improvements and equipment under capital leases are amortized over the lives of the respective leases, inclusive of bargain renewal options, or the service lives of the assets, whichever is shorter. Accelerated methods are used for tax depreciation. Intangible Assets - The Company has an intangible asset of goodwill from the acquisition of PTI (Note 8). It is being amortized over a 5-year period using the straight-line method. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of expenses during the reported period. Actual results could differ from those estimates. Costs of Start-Up Activities - The American Institute of Certified Public Accountants issued Statement of Position ("SOP") No. 98-5, Reporting on the Costs of Start-Up Activities. The standard provides guidance on the financial reporting costs for start-up costs and organization costs. This standard requires cost of start-up and organization costs to be expensed as incurred, and is effective for fiscal years beginning after December 15, 1998. The Company accounts for start-up costs and organization costs in accordance with SOP No. 98-5. Basis of Presentation - The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplates continuation of the Company as a going concern. However, as shown in the financial statements, the Company incurred a net loss of $487,173 and $144,018 for 2000 and 1999. At December 31, 2000 and 1999, current liabilities exceeded current assets by $632,268 and $287,534, and total liabilities exceed total assets by $467,191 and $144,018, respectively. In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financing requirements, and the success of its future operations. Management believes that actions presently being taken to revise the Company's operating and financial requirements provide the opportunity for the Company to continue as a going concern. Cash and Cash Equivalents - The Company considers all highly liquid investments with a maturity at time of purchase of three months or less to be cash equivalents. Income Taxes - The Company has adopted Statement of Financial Accounting Standards No. 109 ("SFAS No. 109"), Accounting for Income Taxes. Under SFAS No. 109, the Company uses the asset and liability method which recognizes the amount of current and deferred taxes payable or refundable at the date of the financial statements as a result of all events that have been recognized in the financial statements and as measured by provisions of enacted tax laws. The Company has a gross deferred tax asset as of December 31, 2000 and 1999 of approximately $115,000 and $27,000, respectively. This asset is comprised of the potential future tax benefit of its operating losses to date. Management has evaluated the available evidence regarding the future taxable income and other possible sources of realization of deferred tax assets. A 100 percent valuation allowance has been established by management against the gross deferred tax asset, as it is more likely than not that the deferred tax asset will not be realized. Earning (Loss) Per Common Share - Basic earnings per share is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per share is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period, adjusted for the dilutive effect of common stock equivalents, using the treasury stock method. There were no common stock equivalents, so basic and diluted earnings per share are the same. Fair Value of Financial Instruments - The estimated fair value of amounts reported in the financial statements has been determined by using available market information and appropriate valuation methodologies. The carrying value of all current assets and current liabilities approximates fair value because of their short-term nature. The fair value of long-term obligations approximates the carrying value, based on current market price. NOTE 3 - ACCOUNTS RECEIVABLE Accounts receivable consisted of the following: 2000 1999 Accounts receivable - trade $111,286 $213,549 Allowance for doubtful accounts (11,585) (460) -------- -------- Total accounts receivable $ 99,701 $213,089 ======== ======== Bad debt expense was $11,565 and $51,238 for 2000 and 1999, respectively. NOTE 4 - PROPERTY AND EQUIPMENT Property and equipment consisted of the following: 2000 1999 ----------- ----------- Equipment $ 112,313 $ 83,892 Furniture and fixtures 28,043 2,889 Leasehold improvements 26,027 8,978 ----------- ----------- 166,383 95,759 Accumulated depreciation (31,012) (8,906) ----------- ----------- Total property and equipment, net $ 135,371 $ 86,853 ========== ========== Depreciation expense was $22,100 and $8,906 in 2000 and 1999, respectively. NOTE 5 - INTANGIBLE ASSETS Intangible assets consisted of the following: 2000 1999 ---- ---- Goodwill $ 95,382 $ 91,842 Less accumulated amortization (31,322) (12,246) -------- ------- Total intangible assets, net $ 64,060 $ 79,596 ======== ======== Amortization expense was $19,076 and $12,246 for 2000 and 1999, respectively. NOTE 6 - CUSTOMER DEPOSITS The Company sells services on an hourly basis in advance at a discounted hourly rate under its SafeNet and SafeWeb service. The payments are recorded as a liability when received and are recognized as revenue after the service has been performed. NOTE 7 - LONG-TERM DEBT Long-term debt consisted of the following: 2000 1999 ------------ ------------ Installment note to bank due July 2004, with monthly payments of $309 including interest at 8.9%, secured by a vehicle. $ 11,301 $ 13,855 Installment note to bank due July 2004, with monthly payments of $317 including interest at 8.9%, secured by a vehicle. 11,632 14,262 ---------- ---------- 22,933 28,117 Less current portion of long-term debt (5,673) (5,184) ------------ ------------ Total long-term debt $ 17,260 $ 22,933 ========== ========== Following are maturities of long-term debt for each of the next four years: 2001 $5,673 2002 6,209 2003 6,795 2004 4,256 ----- Total $ 22,933 ======== NOTE 8 - ACQUISITIONS In May 1999, the Company entered into an Asset Purchase Agreement (Agreement) with Preventive Technologies, Inc. (PTI). PTI, a Pennsylvania corporation, providers network and computer hardware solutions. The acquisition was accounted for using the purchase method of accounting. The Agreement provides for the Company to purchase certain fixed assets, inventory items and the customer list. The acquisition cost was $129,342. The purchase was comprised of a cash payment of $5,000 and the assumption of the liability obligation to perform services under active contracts in the amount of $120,000 and related costs. The results of operations of PTI are included in the accompanying financial statements since the date of acquisition. The total cost of the acquisition, $129,342, exceeded the fair value of the net assets acquired by the cost of goodwill in the amount of $ 91,842 which is being amortized on a straight-line basis over five years. Contemporaneously, the Company entered into a Consulting Services Agreement with the PTI majority shareholder. The Consulting Service Agreement provides for combined salary and non-compete payments in the approximate amount of $221,000 over two years. The Company ceased payments in January 2000 based on perceived violations of the non-compete agreement. At the time, the Company had paid approximately $65,000 of the contract amount. In 2001, the Company agreed to pay approximately $40,000 in settlement and termination of the agreement. Obligation under the Consulting Service Agreement was adjusted as of December 31, 2000 to reflect the settled amount. NOTE 9 - CONCENTRATION OF CREDIT RISK - MAJOR CUSTOMERS Revenues from major customers were approximately $379,000 and $599,466 or 21% and 42% of total revenues during 2000 and 1999, respectively. Major customers are defined as those customers which represent 10% or greater of total revenue of the Company. Should the Company lose these major customers, it could cause a significant decrease in revenue. NOTE 10 - COMMITMENTS AND CONTINGENT LIABILITIES In 2000, the Company ceased payments on the non-compete agreement related to the PTI Merger (Note 8) for alleged violations of the agreement. The unpaid balance of the non-compete was approximately $80,000 at the time the Company ceased payment. The other party to the non-compete threatened litigation to recover the unpaid balance. The dispute was settled in February 2001 for approximately $40,000. The balance due was recorded in 2000. The Company has a right of first refusal to purchase shares of its common stock owned by certain employees. As of December 31, 2000, no liability exists under this agreement. NOTE 11 - LEASES Capital Leases In 2000, the Company leased furniture and equipment under two capital leases that expire in 2003. The assets and liabilities under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the assets. The Company has included the cost of the furniture and equipment in property and equipment, net. The depreciation of the assets under capital lease is included in depreciation expense. Interest rates on the capitalized leases vary from 19% to 21%. Minimum future lease payments under capital leases as of December 31, 2000 for each of the next three years and in aggregate are: 2001 $13,468 2002 13,468 2003 6,617 ------- Total minimum lease payments 33,553 Less: Amount representing interest (7,583) -------- Present value of net minimum lease payment $25,970 ======= Operating leases The Company leases certain equipment under operating leases expiring in various years through 2003. The lease expense for the years ended December 31, 2000 and 1999 was approximately $32,000 and $17,000, respectively. The future minimum lease payments under these operating leases are as follows: 2001 $27,500 2002 18,432 2003 10,032 ------- Total $55,964 ======= NOTE 12 - PROFIT SHARING PLAN The Company has a Savings Incentive Match Plan for Employees (SIMPLE), which covers all eligible employees. Participation in the plan is voluntary for all employees and allows for salary reduction. The plan provides for the Company to make contributions in the amount of 3% of the employee's voluntary contribution subject to compensation. For the years ended December 31, 2000, and 1999, the Company's contributions charged to operations amount to $15,000 and $5,000, respectively. NOTE 13 - RELATED PARTY TRANSACTIONS The Company had various transactions with the majority shareholder's parents' company, Sherman International Corporation (SIC), which provides iron and steel equipment to manufacturing plants. The Company provided SIC $29,300 and $174,000 worth of services during 2000 and 1999. The Company had receivables of $26,000 and $-0- from SIC as of December 31, 2000 and 1999. The Company owed SIC $28,600 as of December 31, 2000 which is included in accounts payable for unpaid rent. The Company also has received cash advances from SIC. The balance of the advances was $70,650 and $74,970 at December 31, 2000 and 1999. The advances accrue interest at 14.25% and are due on demand. The Company rents its office, approximately 2500 and 1900 square feet in 2000 and 1999, from SIC on a month to month basis. The rent expense was $18,600 and $15,000 for 2000 and 1999, respectively. In 2000, the Company provided services to Geek Securities (GS), a securities dealer, which is owned by the majority shareholder's brother-in-law. The Company sold GS a $5,000 SafeNet time block of which $3,400 has been used. The remaining $1,600 is included in customer deposits. The Company also has a receivable of $500 from GS as of December 31, 2000. NOTE 14 - SUBSEQUENT EVENTS In January 2001, the Company entered into a merger agreement with Eonnet Acquisition, Inc. (EAI), a Pennsylvania corporation. The merger was completed April 9, 2001. EAI is a wholly owned subsidiary of DoctorSurf, Inc. (DoctorSurf), a Florida corporation. Simultaneously with the merger, DoctorSurf changed its name to Eonnet Media, Inc. (Media). The shareholders of the Company were to be given one share of Media common stock for every share of common stock held of the Company. In addition, the majority shareholder of the Company will sign an employment agreement to serve as Media's Chief Executive Officer for a term of three years, with annual compensation equal to $120,000 per year. The Company had sales of approximately $19,000 with affiliates of Media for the year 2000. At December 31, 2000, the Company had receivables of approximately $500 from the same affiliates. EONNET MEDIA, INC AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma condensed consolidated financial statements is included in order to give effect to the transactions described below: On January 27, 2001, Eonnet Media completed a 1 for 18 reverse stock split. On April 9, 2001, Eonnet Media acquired all the issued and outstanding stock of Eonnet Technologies, Inc. for 1,000,000 shares of Eonnet Media common stock. The acquisition is accounted for as a purchase. The pro forma information is based on the following historical financial statements after giving effect to the transactions using the purchase method of accounting and the assumptions and adjustments in the accompanying notes to the pro forma condensed consolidated financial statements. The audited consolidated financial statements of Eonnet Media for the year ended December 31, 2000 and for the period from May 14, 1999 (inception) to December 31,1999, (as filed on April 17, 2001, with Eonnet Media's Form 10-KSB) The audited financial statements of Eonnet Technologies for the year ended December 31, 1999 and 2000 (included herein). The pro forma adjustments are based on estimates, available information and certain assumptions that management deems appropriate. The pro forma financial data does not purport to represent what the financial position or results of operations would actually have been if such transactions had occurred on those dates and are not necessarily representative of the financial position or results of operations for any future period. The pro forma financial statements should be read in conjunction with the historical financial statements and notes thereto included elsewhere in the prospectus. See "Risk Factors" included elsewhere herein.

Please read accompanying notes. EONNET MEDIA, INC AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DECEMBER 31, 2000 The unaudited pro forma condensed consolidated balance sheet gives effect to the reverse stock split as if this transaction had occurred on December 31, 2000. Adjustments reflect the following: (a) Elimination of Eonnet Technologies equity in consolidation. (b) Adjust the historical financial statements for Eonnet Media's acquisition of Eonnet Technologies Inc. at an assumed price of $.017 per share (pre split).

Please read accompanying notes. EONNET MEDIA, INC AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 The unaudited pro forma condensed consolidated statement of operations gives effect to the reverse stock split as if this transaction had occurred on January 1, 2000. Adjustments reflect the following: (a) Amortize goodwill in connection with the acquisition of Eonnet Technologies Inc. over its assumed life of three years. EONNET MEDIA, INC. Exhibit Index to Current Report on Form 8-K Dated April 9, 2001 Exhibit Number Description (2.1) Agreement and Plan of Merger dated January 15, 2001 between Eonnet Technologies, Inc., Eonnet Acquisition, Inc. and Eonnet Media, Inc. (f/k/a DoctorSurf.com, Inc.)

DOCTORSURF COM INC 8-K