Nevada
|
88-0397234
|
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer
Identification
No.)
|
|
7109 Timberlake Rd., Suite 201,
Lynchburg, VA
|
24502
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Large
accelerated filer o
|
Accelerated
filer o
|
|
Non-accelerated
filer o
|
Smaller
reporting company x
|
o
|
Local
and regional ISPs and Computer Companies;
|
o
|
National
Internet Service Providers, such as, AOL, MSN (Microsoft Network) and
EarthLink;
|
o
|
Local,
regional and national broadband cable providers, such as Comcast and Cox
Communications;
|
o
|
Providers
of Web hosting, co-location and other Internet-based business
services;
|
o
|
Computer
hardware and other technology companies that provide Internet connectivity
with their own or other products, including IBM and
Microsoft;
|
o
|
National
telecommunication providers, such as Verizon, AT&T and
Qwest;
|
o
|
Regional
Bell Operating Companies (RBOCs), Competitive Local Exchange Carriers
(CLECs) and other local telephone companies;
|
o
|
Providers
of free or discount Internet service, including United Online’s and
NetZero;
|
o
|
Terrestrial
wireless and satellite providers, such as Clearwire, WildBlue and
HughesNet; and
|
o
|
Non-profit
or educational ISPs.
|
High
|
Low
|
|||||||
2008
|
||||||||
For
the quarter ended March 31, 2008
|
$
|
0.12
|
$
|
0.07
|
||||
For
the quarter ended June 30, 2008
|
$
|
0.11
|
$
|
0.11
|
||||
For
the quarter ended September 30, 2008
|
$
|
0.09
|
$
|
0.08
|
||||
For
the quarter ended December 31, 2008
|
$
|
0.09
|
$
|
0.08
|
||||
2009
|
||||||||
For
the quarter ended March 31, 2009
|
$
|
0.09
|
$
|
0.05
|
||||
For
the quarter ended June 30, 2009
|
$
|
0.07
|
$
|
0.05
|
||||
For
the quarter ended September 30, 2009
|
$
|
0.07
|
$
|
0.05
|
||||
For
the quarter ended December 31, 2009
|
$
|
0.06
|
$
|
0.04
|
Period |
Total
Number of
Shares
Purchased
|
Average
Price Paid
Per
Share ($)
|
Total
Number of
Shares
Purchased as
Part
of Publicly
Announced
Plans or
Programs
|
Maximum
Number
of
Shares That May
Yet
Be Purchased
Under
the Plans or
Programs
|
||||||||||||
Month
# 1
October
2008
|
- | - | - | 10,000,000 | ||||||||||||
Month
# 2
November
30, 2008
|
- | - | - | 10,000,000 | ||||||||||||
Month
# 3
December
31, 2008
|
19,500 | $ | 0.06 | 19,500 | 9,980,500 | |||||||||||
Total
2008
|
19,500 | $ | 0.06 | 19,500 | 9,980,500 | |||||||||||
Month
# 4
January
31, 2009
|
25,000 | 0.06 | 25,000 | 9,955,500 | ||||||||||||
Month
# 5
February
28, 2009
|
5,263,158 | 0.1121 | 5,263,158 | 4,692,342 | ||||||||||||
Month
# 6
March
31, 2009
|
34,000 | 0.051 | 34,000 | 4,658,342 | ||||||||||||
Month
# 7
April
30, 2009
|
- | - | - | 4,658,342 | ||||||||||||
Month
# 8
May
31, 2009
|
7,000 | 0.051 | 7,000 | 4,651,342 | ||||||||||||
Month
# 9
June
30, 2009
|
- | - | - | 4,651,342 | ||||||||||||
Month
# 10
July
31, 2009
|
10,000 | 0.05 | 10,000 | 4,641,342 | ||||||||||||
Month
# 11
August
31, 2009
|
- | - | - | 4,461,342 | ||||||||||||
Month
# 12
September
30, 2009
|
1,460,795 | 0.05 | 1,460,795 | 3,180,547 | ||||||||||||
Month
# 13
October
31, 2009
|
39,000 | 0.05 | 39,000 | 3,141,547 | ||||||||||||
Month
# 14
November
30, 2009
|
30,000 | 0.043 | 30,000 | 3,111,547 | ||||||||||||
Month
# 15
December
31, 2009
|
20,000 | 0.048 | 20,000 | 3,091,547 | ||||||||||||
Total
2009
|
6,888,953 | 0.097 | 6,888,953 | 3,091,547 | ||||||||||||
Totals
|
6,908,453 | 0.097 | 6,908,453 | 3,091,547 |
For
the year ended December 31, 2009
|
||||||||||||
|
Corporate
|
Internet
|
Total
|
|||||||||
Revenue
|
$
|
-
|
$
|
7,692,908
|
$
|
7,692,908
|
||||||
Cost
of revenue
|
-
|
2,945,566
|
2,945,566
|
|||||||||
Gross
profit
|
-
|
4,747,342
|
4,747,342
|
|||||||||
Operating
expenses
|
147,700
|
4,161,928
|
4,309,628
|
|||||||||
Income
(loss) from operations
|
(147,700
|
)
|
585,414
|
437,714
|
||||||||
Other
income (expense)
|
-
|
(87,127
|
)
|
(87,127
|
)
|
|||||||
Income
(loss) before income taxes
|
(147,700
|
)
|
498,287
|
350,587
|
||||||||
Income
taxes expense (benefit)
|
-
|
270,590
|
270,590
|
|||||||||
Net
income (loss)
|
$
|
(147,700
|
)
|
$
|
227,697
|
$
|
79,997
|
For
the year ended December 31, 2008
|
||||||||||||
Corporate
|
Internet
|
Total
|
||||||||||
Revenue
|
$
|
-
|
$
|
8,785,559
|
$
|
8,785,559
|
||||||
Cost
of revenue
|
-
|
3,061,563
|
3,061,563
|
|||||||||
Gross
profit
|
-
|
5,723,996
|
5,723,996
|
|||||||||
Operating
expenses
|
106,268
|
4,451,613
|
4,557,881
|
|||||||||
Income
(loss) from operations
|
(106,268
|
)
|
1,272,383
|
1,166,115
|
||||||||
Other
income (expense)
|
-
|
(128,090
|
)
|
(128,090
|
)
|
|||||||
Income
(loss) before income taxes
|
(106,268
|
)
|
1,144,293
|
1,038,025
|
||||||||
Income
taxes expense (benefit)
|
(158,734
|
)
|
-
|
(158,734
|
)
|
|||||||
Net
income (loss)
|
$
|
52,466
|
$
|
1,144,293
|
$
|
1,196,759
|
For
the year ended December 31, 2009
|
||||||||||||
|
Corporate
|
Internet
|
Total
|
|||||||||
EBITDA
|
$
|
(147,700
|
)
|
$
|
3,051,413
|
$
|
2,903,713
|
|||||
Interest
expense
|
-
|
(79,609
|
)
|
(79,609
|
)
|
|||||||
Income
tax expense
|
-
|
|
(270,590
|
) |
(270,590
|
)
|
||||||
Depreciation
|
-
|
(34,497
|
)
|
(34,497
|
)
|
|||||||
Amortization
|
-
|
(2,439,020
|
)
|
(2,439,020
|
)
|
|||||||
Net
income (loss)
|
$
|
(147,700
|
)
|
$
|
227,697
|
$
|
79,997
|
For
the year ended December 31, 2008
|
||||||||||||
|
Corporate
|
Internet
|
Total
|
|||||||||
EBITDA
|
$
|
(106,268
|
)
|
$
|
4,252,637
|
$
|
4,146,369
|
|||||
Interest
expense
|
-
|
(165,154
|
)
|
(165,154
|
)
|
|||||||
Taxes
|
158,734
|
-
|
158,734
|
|||||||||
Depreciation
|
-
|
(43,570
|
)
|
(43,570
|
)
|
|||||||
Amortization
|
-
|
(2,899,620
|
)
|
(2,899,620
|
)
|
|||||||
Net
income (loss)
|
$
|
52,466
|
$
|
1,144,293
|
$
|
1,196,759
|
2009
|
2008
|
|||||||
EBITDA
for the year ended December 31,
|
$
|
2,903,713
|
$
|
4,146,369
|
||||
Interest
expense
|
(79,609
|
)
|
(165,154
|
)
|
||||
Tax
benefits (expense)
|
(270,590
|
)
|
158,734
|
|||||
Depreciation
|
(34,497
|
)
|
(43,570
|
)
|
||||
Amortization
|
(2,439,020
|
)
|
(2,899,620
|
)
|
||||
Net
income for the year ended December 31,
|
$
|
79,997
|
$
|
1,196,759
|
2009
|
2008
|
|||||||||||||||
Current
|
$
|
347,752
|
76.0
|
%
|
$
|
55,750
|
15.0
|
%
|
||||||||
30
+
|
59,482
|
13.0
|
%
|
159,585
|
44.0
|
%
|
||||||||||
60
+
|
48,539
|
11.0
|
%
|
145,721
|
40.0
|
%
|
||||||||||
90
+
|
-
|
-
|
%
|
-
|
-
|
%
|
||||||||||
Total
|
$
|
455,773
|
100.0
|
%
|
$
|
361,056
|
100.0
|
%
|
Page
|
||||
REPORTS
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
|
21-22 | |||
FINANCIAL
STATEMENTS
|
||||
Consolidated
Balance Sheets as of December 31, 2009 and 2008
|
23-24 | |||
Consolidated
Statements of Income for the Years Ended December 31, 2009 and
2008
|
25 | |||
Consolidated
Statements of Stockholders' Equity for the Years Ended December 31, 2009
and 2008
|
26 | |||
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2009 and
2008
|
27-28 | |||
|
||||
Notes
to Consolidated Financial Statements
|
29-46 |
2009
|
2008
|
|||||||
Restated
|
||||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$
|
1,090,807
|
$
|
527,553
|
||||
Accounts
receivable, net of allowances of $14,316 and $26,764
|
455,773
|
361,056
|
||||||
Prepaid
expenses
|
1,430
|
1,227
|
||||||
Total
current assets
|
1,548,010
|
889,836
|
||||||
PROPERTY
AND EQUIPMENT, net
|
193,715
|
225,212
|
||||||
CUSTOMER
LIST, net of accumulated amortization of $10,216,778 and
$7,943,341
|
2,018,375
|
4,224,414
|
||||||
GOODWILL,
net
|
1,288,559
|
1,288,559
|
||||||
DEFERRED
TAX ASSETS
|
760,861
|
421,031
|
||||||
OTHER
ASSETS
|
496,314
|
583,637
|
||||||
TOTAL
ASSETS
|
$
|
6,305,834
|
$
|
7,632,689
|
2009
|
2008
|
|||||||
CURRENT
LIABILITIES
|
Restated
|
|||||||
Accounts
payable
|
$
|
131,598
|
$
|
80,892
|
||||
Accrued
income taxes
|
414,815
|
262,297
|
||||||
Accrued
expenses
|
29,052
|
94,882
|
||||||
Deferred
revenue
|
861,235
|
1,157,597
|
||||||
Notes
payable, current portion
|
900,615
|
569,372
|
||||||
Note
payable - stockholders, current portion
|
-
|
-
|
||||||
Total
current liabilities
|
2,337,315
|
2,165,040
|
||||||
NOTES
PAYABLE, less current portion
|
-
|
915,615
|
||||||
NOTES
PAYABLE - STOCKHOLDERS, less current portion
|
547,245
|
539,281
|
||||||
TOTAL
LIABILITIES
|
2,884,560
|
3,619,936
|
||||||
STOCKHOLDERS'
EQUITY
|
||||||||
Preferred
Stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued and
outstanding
|
-
|
-
|
||||||
Common
Stock, $0.001 par value, 300,000,000 shares authorized and 91,326,463
shares issued in 2009 and 2008, and 76,199,705 and 83,088,658 shares
outstanding in 2009 and 2008.
|
91,326
|
91,326
|
||||||
Additional
paid-in capital
|
13,880,947
|
13,880,947
|
||||||
Treasury
Stock, at cost, 15,126,758 and 8,237,805 common shares
|
(735,696
|
)
|
(64,220
|
)
|
||||
Accumulated
deficit
|
(9,815,303
|
)
|
(9,895,300
|
)
|
||||
Total
stockholders' equity
|
3,421,274
|
4,012,753
|
||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$
|
6,305,834
|
$
|
7,632,689
|
2009
|
2008
|
|||||||
Restated
|
||||||||
REVENUE
|
$
|
7,692,908
|
$
|
8,785,559
|
||||
COST
OF REVENUE
|
2,945,566
|
3,061,563
|
||||||
GROSS
PROFIT
|
4,747,342
|
5,723,996
|
||||||
OPERATING
EXPENSES
|
||||||||
Selling,
general and administrative expenses
|
4,292,032
|
4,544,239
|
||||||
Customer
list impairment
|
17,596
|
13,642
|
||||||
TOTAL
OPERATING EXPENSES
|
4,309,628
|
4,557,881
|
||||||
INCOME
FROM OPERATIONS
|
437,714
|
1,166,115
|
||||||
OTHER
INCOME (EXPENSES)
|
||||||||
Gain
(loss) on disposal of assets
|
(7,518
|
)
|
37,064
|
|||||
Interest
expense
|
(79,609
|
)
|
(165,154
|
)
|
||||
TOTAL
OTHER INCOME (EXPENSES)
|
(87,127
|
)
|
(128,090
|
)
|
||||
INCOME
BEFORE INCOME TAXES
|
350,587
|
1,038,025
|
||||||
INCOME
TAX (BENEFIT) EXPENSE
|
270,590
|
(158,734
|
)
|
|||||
NET
INCOME
|
$
|
79,997
|
$
|
1,196,759
|
||||
BASIC
AND DILUTED INCOME PER SHARE
|
$
|
0.00
|
$
|
0.01
|
||||
WEIGHTED
AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED
|
76,199,705
|
83,088,658
|
Additional
|
||||||||||||||||||||||||
Common
Stock
|
Paid-in
|
Treasury
|
Accumulated
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Stock
|
Deficit
|
Total
|
|||||||||||||||||||
Balance
at December 31, 2007, as previously reported
|
91,326,463
|
$
|
91,326
|
$
|
13,880,947
|
$
|
(63,030
|
)
|
$
|
(10,906,088
|
)
|
$
|
3,003,155
|
|||||||||||
Adjustment
|
(8,218,305)
|
(185,971
|
)
|
(185,971
|
)
|
|||||||||||||||||||
Balance
at December 31, 2007, as restated
|
83,108,158
|
$
|
91,326
|
$
|
13,880,947
|
$
|
(63,030
|
)
|
(11,092,059
|
)
|
2,817,184
|
|||||||||||||
Repurchase
of shares
|
(19,500)
|
(1,190
|
)
|
(1,190
|
)
|
|||||||||||||||||||
Net
income, as restated
|
1,196,759
|
1,196,759
|
||||||||||||||||||||||
Balance
at December 31, 2008
|
83,088,658
|
91,326
|
13,880,947
|
(64,220
|
)
|
(9,895,300
|
)
|
4,012,753
|
||||||||||||||||
Repurchase
of shares
|
(6,888,953)
|
(671,476)
|
(671,476
|
)
|
||||||||||||||||||||
Net
income
|
79,997
|
79,997
|
||||||||||||||||||||||
Balance
at December 31, 2009
|
76,199,705
|
$
|
91,326
|
$
|
13,880,947
|
$
|
(735,696
|
)
|
$
|
(9,815,303
|
)
|
$
|
3,421,274
|
2009
|
2008
|
|||||||
Restated
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income
|
$
|
79,997
|
$
|
1,196,759
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization expense
|
2,473,517
|
2,943,190
|
||||||
Allowance
for doubtful accounts
|
(35,089
|
)
|
26,765
|
|||||
(Increase)
decrease in accounts receivable
|
(161,369
|
)
|
(273,928
|
)
|
||||
(Increase)
decrease in prepaid expenses
|
(202
|
)
|
15,302
|
|||||
(Increase)
decrease in deferred income taxes
|
(339,830
|
)
|
(421,031
|
)
|
||||
Increase
(decrease) in accounts payable
|
50,706
|
2,179
|
||||||
Increase
(decrease) in accrued expenses
|
(65,829
|
)
|
711,637
|
|||||
Increase
(decrease) in deferred revenue
|
(296,362
|
)
|
(204,009
|
)
|
||||
Increase
(decrease) in accrued income taxes
|
152,518
|
(492,480
|
)
|
|||||
Net
cash provided by operating activities
|
1,858,057
|
3,504,384
|
||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases
of property and equipment
|
(3,000
|
)
|
(32,000
|
)
|
||||
Purchase
of customer list
|
(67,398
|
)
|
(1,450,065
|
)
|
||||
(Purchase)
sale of assets held for resale
|
24,479
|
296
|
||||||
Purchase
of non-competition agreements
|
(1,000
|
)
|
(100,000
|
)
|
||||
Net
cash used in investing activities
|
(46,919
|
)
|
(1,581,769
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net
proceeds from notes payable - stockholders
|
62,949
|
-
|
||||||
Net
proceeds from notes payable
|
-
|
570,803
|
||||||
Purchase
of treasury stock
|
(671,476
|
)
|
(1,190
|
)
|
||||
Repayment
of notes payable
|
(584,372
|
)
|
(2,049,518
|
)
|
||||
Repayment
of notes payable – stockholders
|
(54,984
|
)
|
(147,406
|
)
|
||||
Net
cash used in financing activities
|
(1,247,885
|
)
|
(1,627,311
|
)
|
||||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
563,254
|
295,304
|
||||||
CASH
AND CASH EQUIVALENTS - BEGINNING OF YEAR
|
527,553
|
232,249
|
||||||
CASH
AND CASH EQUIVALENTS - END OF YEAR
|
$
|
1,090,807
|
$
|
527,553
|
2009
|
2008
|
|||||||
Gross
accounts receivable
|
$
|
470,089
|
$
|
387,820
|
||||
Less
allowance for doubtful accounts
|
(14,316
|
)
|
(26,764
|
)
|
||||
$
|
455,773
|
$
|
361,056
|
2009
|
2008
|
|||||||
Net
income available to common shareholders
|
$
|
79,997
|
$
|
1,196,759
|
||||
Weighted
average number of common shares
|
76,199,705
|
83,088,658
|
||||||
Basic
and diluted income per share
|
$
|
.00
|
$
|
.01
|
Consolidated Balance Sheets
|
||||||||||||
For the Year Ended December 31, 2008
|
As Previously
Reported
|
Adjustments
|
As Restated
|
|||||||||
Accounts
receivable
|
738,824
|
(377,768
|
)
|
361,056
|
||||||||
Total
Assets
|
8,010,457
|
(377,768
|
)
|
7,632,689
|
||||||||
Accrued
Income Taxes
|
339,016
|
(76,719)
|
262,297
|
|||||||||
Total
Liabilities
|
3,696,655
|
(76,719)
|
3,619,936
|
|||||||||
Accumulated
deficit
|
(9,594,251)
|
(301,049)
|
(9,895,300)
|
|||||||||
Total
Stockholder's Equity
|
4,313,802
|
(301,067
|
)
|
4,012,735
|
||||||||
Total
Liabilities and Shareholder's Equity
|
8,010,457
|
(377,768
|
)
|
7,632,689
|
Consolidated Statements of Income
|
||||||||||||
For the Year Ended December 31, 2008
|
As Previously
Reported
|
Adjustments
|
As Restated
|
|||||||||
Revenue
|
10,227,438
|
(1,441,879)
|
8,785,559
|
|||||||||
Selling,
general and administrative expenses
|
5,794,321
|
(1,250,082
|
)
|
4,544,239
|
||||||||
Income
tax benefit
|
82,015
|
76,719
|
158,734
|
|||||||||
Net
income
|
1,311,837
|
(115,078
|
)
|
1,196,759
|
||||||||
Basic
and diluted income per share
|
.01
|
-
|
.01
|
Consolidated Statement of Cash Flows
|
||||||||||||
For the Year Ended December 31, 2008
|
As Previously
Reported
|
Adjustments
|
As Restated
|
|||||||||
Net
income
|
1,311,837
|
(115,078
|
)
|
1,196,759
|
||||||||
Accounts
receivable
|
(465,725
|
)
|
191,797
|
(273,928)
|
||||||||
Accrued
income taxes
|
(415,761
|
)
|
(76,719
|
)
|
(492,480)
|
Customer
list
|
$
|
62,223
|
||
Non-compete
agreement
|
5,000
|
|||
Accounts
receivable
|
2,343
|
|||
Deferred
revenue
|
(22,858
|
)
|
||
Purchase
price
|
$
|
46,708
|
Net
sales
|
$
|
8,785,559
|
||
Gross
profit
|
$
|
7,177,844
|
||
Selling,
general and administrative expenses
|
$
|
5,813,390
|
||
Net
income
|
$
|
1,318,379
|
||
Basic
income per share
|
$
|
0.01
|
Customer
list
|
$
|
40,512
|
||
Non-compete
agreement
|
5,000
|
|||
Accounts
receivable
|
2,328
|
|||
Equipment
|
10,000
|
|||
Deferred
revenue
|
(12,019
|
)
|
||
Purchase
price
|
$
|
45,821
|
Net
sales
|
$
|
8,785,559
|
||
Gross
profit
|
$
|
7,183,741
|
||
Selling,
general and administrative expenses
|
$
|
5,816,869
|
||
Net
income
|
$
|
1,320,580
|
||
Basic
income per share
|
$
|
0.01
|
Customer
list
|
$
|
250,000
|
||
Non-compete
agreement
|
5,000
|
|||
Deferred
revenue
|
(25,100
|
)
|
||
Purchase
price
|
$
|
229,900
|
Net
sales
|
$
|
8,785,559
|
||
Gross
profit
|
$
|
7,212,996
|
||
Selling,
general and administrative expenses
|
$
|
5,830,288
|
||
Net
income
|
$
|
1,336,633
|
||
Basic
income per share
|
$
|
0.01
|
Customer
list
|
$
|
277,965
|
||
Non-compete
agreement
|
50,000
|
|||
Deferred
revenue
|
(64,208
|
)
|
||
Purchase
price
|
$
|
263,757
|
2008
|
||||
Net
sales
|
$
|
8,785,559
|
||
Gross
profit
|
$
|
7,280,880
|
||
Selling,
general and administrative expenses
|
$
|
5,876,222
|
||
Net
income
|
$
|
1,358,583
|
||
Basic
income per share
|
$
|
0.01
|
Customer
list
|
$
|
15,428
|
||
Non-compete
agreement
|
5,000
|
|||
Accounts
receivable
|
164
|
|||
Equipment
|
2,000
|
|||
Deferred
revenue
|
(4,050
|
)
|
||
Purchase
price
|
$
|
18,542
|
Net
sales
|
$
|
8,785,559
|
||
Gross
profit
|
$
|
7,176,416
|
||
Selling,
general and administrative expenses
|
$
|
5,815,366
|
||
Net
income
|
$
|
1,314,975
|
||
Basic
income per share
|
$
|
0.01
|
Customer
list
|
$
|
380,000
|
||
Non-compete
agreement
|
10,000
|
|||
Equipment
|
20,000
|
|||
Deferred
revenue
|
(50,000
|
)
|
||
Purchase
price
|
$
|
360,000
|
Net
sales
|
$
|
8,785,559
|
||
Gross
profit
|
$
|
7,420,236
|
||
Selling,
general and administrative expenses
|
$
|
5,891,477
|
||
Net
income
|
$
|
1,482,684
|
||
Basic
income per share
|
$
|
0.01
|
Customer
list
|
$
|
530,000
|
||
Non-compete
agreement
|
20,000
|
|||
Deferred
revenue
|
(75,000
|
)
|
||
Purchase
price
|
$
|
475,000
|
Net
sales
|
$
|
8,785,559
|
||
Gross
profit
|
$
|
7,705,959
|
||
Selling,
general and administrative expenses
|
$
|
6,038,563
|
||
Net
income
|
$
|
1,593,341
|
||
Basic
income per share
|
$
|
0.02
|
Equipment
|
$
|
3,000
|
||
Customer
list
|
62,907
|
|||
Non-compete
agreement
|
1,000
|
|||
Deferred
revenue
|
(42,000
|
)
|
||
Purchase
price
|
$
|
24,907
|
Net
sales
|
$
|
7,692,908
|
||
Gross
profit
|
$
|
4,832,066
|
||
Selling,
general and administrative expenses
|
$
|
4,371,419
|
||
Net
income
|
$
|
102,930
|
||
Basic
income per share
|
$
|
0.00
|
2009
|
2008
|
|||||||
Land
|
$
|
10,000
|
$
|
10,000
|
||||
Building
|
213,366
|
213,366
|
||||||
Automobile
|
9,500
|
9,500
|
||||||
Computer
equipment
|
1,164,061
|
1,161,061
|
||||||
Furniture
and fixtures
|
59,862
|
59,862
|
||||||
1,453,789
|
1,453,789
|
|||||||
Less
accumulated depreciation
|
(1,263,074
|
)
|
(1,228,577
|
)
|
||||
$
|
193,715
|
$
|
225,212
|
2009
|
2008
|
|||||||
Non-interest
bearing amount paid on acquisition of N2 the Net payable in eleven monthly
installments of $4,046 through March 2009.
|
-
|
11,921
|
||||||
Non-interest
bearing amount paid on acquisition of Donobi payable in twelve monthly
installments of $27,083 through November 2009.
|
-
|
257,451
|
||||||
Non-interest
bearing amount due on acquisition of USA Telephone payable in thirty six
monthly installments starting January 2008.
|
900,615
|
1,215,615
|
||||||
900,615
|
1,484,987
|
|||||||
Less
current portion
|
-
|
(569,372
|
)
|
|||||
Long-term
portion
|
$
|
900,615
|
$
|
915,615
|
Year
ending December 31, 2010
|
$
|
900,615
|
||
Year
ending December 31, 2011
|
-
|
|||
Year
ending December 31, 2012
|
-
|
|||
Year
ending December 31, 2013
|
-
|
|||
Year
ending December 31, 2014
|
-
|
|||
Thereafter
|
-
|
|||
Total
|
$
|
900,615
|
2009
|
2008
|
|||||||
Note
payable to officer and stockholder on a line of credit of $750,000 at an
annual interest rate of 10% interest. The accrued interest and
principal are due on January 1, 2014.
|
$
|
424,930
|
$
|
379,711
|
||||
Note
payable to stockholder. The note is payable on January 1, 2014 and bears
interest at an annual rate of 8.0%.
|
122,315
|
104,585
|
||||||
Note
payable to stockholder. The note is payable on January 1, 2010 and bears
interest at an annual rate of 8.0%.
|
-
|
54,985
|
||||||
Less
current portion
|
-
|
-
|
||||||
Long-term
portion
|
$
|
547,245
|
$
|
539,281
|
Year
ending December 31, 2010
|
$
|
-
|
||
Year
ending December 31, 2011
|
-
|
|||
Year
ending December 31, 2012
|
-
|
|||
Year
ending December 31, 2013
|
-
|
|||
Year
ending December 31, 2014
|
547,245
|
|||
Total
|
$
|
547,245
|
Year
ended December 31,
|
||||
2010
|
$
|
64,688
|
||
2011
|
48,000
|
|||
Total
|
$
|
112,688
|
2009
|
2008
|
|||||||
Current
provision:
|
||||||||
Federal
|
$
|
518,832
|
$
|
492,800
|
||||
State
|
91,558
|
86,965
|
||||||
Deferred
provision:
|
||||||||
Federal
|
(288,856
|
)
|
(357,876
|
)
|
||||
State
|
(50,944
|
)
|
(63,155
|
)
|
||||
Valuation
allowance
|
-
|
-
|
||||||
Total
income tax provision
|
$
|
270,590
|
$
|
(158,734
|
)
|
2009
|
2008
|
|||||||
Accounts
receivable
|
$
|
14,695
|
19,762
|
|||||
Amortization
of Intangible assets
|
3,298,586
|
$
|
2,953,689
|
|||||
Less
valuation allowance
|
2,552,420
|
2,552,420
|
||||||
Deferred
tax asset
|
$
|
760,861
|
$
|
421,031
|
December
31, 2009
|
||||||||||||
Corporate
|
Internet
|
Consolidated
|
||||||||||
Revenue
|
$
|
-
|
$
|
7,692,908
|
$
|
7,692,908
|
||||||
Operating
income (loss)
|
$
|
(147,700
|
)
|
$
|
585,414
|
$
|
437,714
|
|||||
Depreciation
and amortization
|
$
|
-
|
$
|
2,473,517
|
$
|
2,473,517
|
||||||
Interest
expense
|
$
|
-
|
$
|
(79,609
|
)
|
$
|
(79,609
|
)
|
||||
Goodwill
|
$
|
-
|
$
|
1,288,559
|
$
|
1,288,559
|
||||||
Identifiable
assets
|
$
|
-
|
$
|
6,505,929
|
$
|
6,305,834
|
December
31, 2008
|
||||||||||||
Corporate
|
Internet
|
Consolidated
|
||||||||||
Revenue
|
$
|
-
|
$
|
8,785,559
|
$
|
8,785,559
|
||||||
Operating
income (loss)
|
$
|
(106,268
|
)
|
$
|
1,272,383
|
$
|
1,166,115
|
|||||
Depreciation
and amortization
|
$
|
-
|
$
|
2,943,190
|
$
|
2,943,190
|
||||||
Interest
expense
|
$
|
-
|
$
|
(165,154
|
)
|
$
|
(165,154
|
)
|
||||
Goodwill
|
$
|
-
|
$
|
1,288,559
|
$
|
1,288,559
|
||||||
Identifiable
assets
|
$
|
-
|
$
|
7,632,689
|
$
|
7,632,689
|
Name
|
Age
|
Position
|
Director
since
|
|||
Frank
R. Erhartic, Jr.
|
41
|
President,
CEO, Director
|
October
2001
|
|||
Julia
E. Erhartic
|
42
|
Secretary,
Director
|
October
2001
|
|||
Daniel
Judd
|
53
|
CFO,
Director
|
June
2004
|
Director
|
Expiration
of term
|
|
Frank
R. Erhartic, Jr.
|
December
31, 2010
|
|
Julia
Erhartic
|
December
31, 2010
|
|
Dan
Judd
|
December
31, 2010
|
Name and
Principal
Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-
Equity
Incentive
Plan
Compen-
sation ($)
|
Change in
Pension
Value and
Non-
qualified
Deferred
Compen-
sation
Earnings
($)
|
All Other
Compen-
sation ($)
|
Total ($)
|
|||||||||||||||||||||||||
Frank
R, Erhartic, Jr., Principal Executive Officer (PEO)
|
2009
|
97,885
|
97,885
|
|||||||||||||||||||||||||||||||
2008
|
97,885
|
97,885
|
||||||||||||||||||||||||||||||||
Daniel
Judd,
Principal
Financial Officer (PFO)
|
2009
|
45,200
|
45,200
|
|||||||||||||||||||||||||||||||
2008
|
45,200
|
45,200
|
||||||||||||||||||||||||||||||||
Julie
E. Erhartic, (Officer)
|
2009
|
13,000
|
13,000
|
|||||||||||||||||||||||||||||||
2008
|
13,000
|
13,000
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
|
All Other
Stock
Awards:
Number of
Shares
|
All other
Option
Awards:
Number of
Securities
Under-
|
Exercise
of Base
Price of
Option
|
|||||||||||||||||
Name
|
Grant
Date
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
Threshold
($)
|
Target
($)
|
Maximum
(#)
|
Of Stock or
Units (#)
|
Lying
Options (#)
|
Awards
($/Sh)
|
|||||||||||
PEO
|
N/A
|
||||||||||||||||||||
PFO
|
N/A
|
||||||||||||||||||||
Officer
|
N/A
|
|
Option Awards
|
Stock Awards
|
||||||||||||||||||||||||||||||||||
Name
|
Number of
securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number of
securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
of Units
of
Stock
that
have
not
vested
(#)
|
Market
Value of
Shares or
Units of
Stock that
have not
vested ($)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
other
rights that
have not
vested (#)
|
Equity
Incentive
Plan
Awards
Market
or Payout
Value of
Unearned
Shares,
Units of
other
rights
that have
not
vested
($)
|
|||||||||||||||||||||||||||
PEO
|
N/A
|
|||||||||||||||||||||||||||||||||||
PFO
|
N/A
|
|||||||||||||||||||||||||||||||||||
Officer
|
N/A
|
Name
|
Fees
Earned or
Paid in
Cash ($)
|
Stock
Awards ($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan
Compensation
($)
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings ($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||
Frank
R, Erhartic, Jr., Director
|
$
|
0.00
|
||||||||||||||||||||||||||
Daniel
Judd, Director
|
$
|
0.00
|
||||||||||||||||||||||||||
Julie
E. Erhartic, Director
|
$
|
0.00
|
Name and Address of
Beneficial Owner
|
Number of
Shares
Beneficially
Owned (1)
|
Percent
Of Class (2)
|
||||||
Frank
and Julie Erhartic
7109
Timberlake Road
Lynchburg,
VA 24502
|
24,583,980
|
32.68
|
%
|
|||||
Daniel
A. Judd
7109
Timberlake Road
Lynchburg,
VA 24502
|
133,865
|
00.17
|
%
|
|||||
All
directors and officers
As
a group (3 persons)
|
24,717,845
|
32.85
|
%
|
Exhibit
|
Description
|
Filed
|
||
3.1(i)
|
Articles
of Incorporation of the Registrant (December 17, 1992)
|
a
|
||
3.1(ii)
|
Amended
Articles of Incorporation (July 29, 1998)
|
a
|
||
3.1(iii)
|
Amended
Articles of Incorporation (October 26, 1998)
|
a
|
||
3.1(iv)
|
Amended
Articles of Incorporation (July 14, 1999)
|
a
|
||
3.1(v)
|
Amended
Articles of Incorporation (July 28, 1999)
|
a
|
||
3.2(i)
|
By-laws
of the Registrant (December 17, 1992)
|
a
|
||
4.2
|
Convertible
Debenture Purchase Agreement dated as of May 11, 2000 between the
investors named therein and the Registrant
|
c
|
||
4.3
|
12%
Convertible Debenture due May 11, 2001 made by the Registrant in favor of
New Millenium Capital Partners II, L.L.C.
|
c
|
||
4.4
|
12%
Convertible Debenture due May 11, 2001 made by the Registrant in favor of
AJW Partners, L.L.C.
|
c
|
||
4.5
|
Stock
Purchase Warrant dated as of May 11, 2000 issued by Registrant to New
Millenium Capital Partners, L.L.C.
|
c
|
||
4.6
|
Stock
Purchase Warrant dated as of May 11, 2000 issued by Registrant to AJW
Partners, L.L.C
|
c
|
||
4.7
|
Registration
Rights Agreement dated as of May 11, 2000 by and between the Registrant
and the investors named therein.
|
c
|
||
10.1
|
Lease
for Corporate Office
|
b
|
||
10.13
|
Statement
of changes in beneficial ownership of securities.
|
k
|
||
10.14
|
Definitive
Purchase Agreement to acquire certain assets of Idacomm, Inc, effective
September 16, 2005.
|
l
|
||
10.15
|
Definitive
Purchase Agreement to acquire Inc, effective January 1,
2006
|
m
|
||
10.16
|
Amendment
to report audited financial statements for Definitive Purchase Agreement
to acquire Inc.
|
n
|
||
10.17
|
Definitive
Purchase Agreement to acquire certain assets of First USA, Inc, effective
July 1, 2006.
|
o
|
||
10.18
|
Definitive
Purchase Agreement to acquire certain assets of OW Holdings, Inc,
effective February 28, 2007.
|
p
|
SCHEDULE
21. LIST OF SUBSIDIARIES
Sitestar.net,
Inc.
FRE
Enterprises, Inc.
Advanced
Internet Services, Inc.
NetRover
Inc.
|
||||
31.1
|
Certification
of Chief Executive Officer Pursuant to the Securities Exchange Act of
1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of
2002.
|
|||
31.2
|
Certification
of Chief Financial Officer Pursuant to the Securities Exchange Act of
1934, Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of
2002.
|
q
|
||
32.1
|
Certification
Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
|
q
|
Signature
|
Title
|
Date
|
||
/s/
Frank Erhartic, Jr.
|
President,
Chief Executive
|
May
17, 2010
|
||
Frank
Erhartic, Jr.
|
Officer,
Director
(Principal
Executive Officer)
|
/s/
Daniel A. Judd
|
Chief
Financial Officer
|
May
17, 2010
|
||
Daniel
A. Judd
|
(Principal
Financial Officer,
Principal
Accounting Officer)
|
/s/
Julie Erhartic
|
Secretary,
Director
|
May
17, 2010
|
||
Julie
Erhartic
|