SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 2000
-------------------------
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from ____________________ to ________________________.
Commission File Number: 000-30397
--------------------------
IVP TECHNOLOGY CORPORATION
--------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 65-6998896
- -------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
54 Village Centre, Suite 300, Mississauga, Ontario L4Z 1V9 Canada
----------------------------------------------------------------------------
(Address of principal executive offices)
9053069343
------------------------------------
(Registrant's telephone number, including area code)
--------------------------------------------------------------------
(Former name, former address and former fiscal year if
changed since last report)
Check whether the registrant (1) has 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 |_|
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 37,140,848 shares of Common Stock,
$.001 par value, were outstanding as of May 19, 2000.
Transitional Small Business Disclosure Forms (check one):
Yes |_| No |X|
<PAGE>
PART I - FINANCIAL INFORMATION:
ITEM 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
At March 31, 1999 and March 31, 2000 F-1
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1999 F-2
For the Three Months Ended March 31, 2000
CONSOLIDATEDSTATEMENTS OF CASH FLOWS F-3
For the Three Months Ended March 31, 1999
For the Three Months Ended March 31, 2000
For the Period January 1, 1998 (Inception of development
stage) to March 31, 2000
NOTES TO FINANCIAL STATEMENTS F-4- F-5
2
<PAGE>
IVP TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31 December 31
2000 1999
---- ----
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT
Cash $ 263,214 $ 281
LICENSE AGREEMENT - NET 47,816 114,000
OTHER ASSETS 872 872
------------ -----------
$ 311,902 $ 115.153
============ ===========
LIABILITIES
CURRENT
Accounts payable and accrued liabilities $ 236,588 $ 233,412
Management fees payable (note 5) 450,000 450,000
------------ -----------
686,588 683,412
------------ -----------
SHAREHOLDERS' DEFICIENCY
COMMON STOCK (note 4)
Common stock, $.001 par value 50,000,000 authorized,
32,340,848 and 27,490,848 issued and outstanding at
March 31, 2000 and December 31, 1999 respectively 32,341 27,491
Additional paid-in capital 10,093,266 9,423,115
------------ -----------
10,125,607 9,450,606
ACCUMULATED DEFICIT (accumulated in development stage
$9,524,127 and $8,906,349 in the three months ended
March 31, 2000 and the year ended December 31, 1999
respectively) (10,500,293) (9,882,515)
------------ -----------
(374,686) (431,909)
Less subscriptions receivable - (136,350)
------------ -----------
(374,686) (568,259)
------------ -----------
$ 311,902 $ 115,153
============ ===========
</TABLE>
SEE ACCOMPANYING NOTES
F-1
<PAGE>
IVP TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31
(Unaudited)
2000 1999 Cumulative from
---- ---- January 1,1998
(Inception of
development stage) to
March 31,2000
<S> <C> <C> <C>
REVENUE $ - $ - $ -
------------ ----------- -------------
OPERATING EXPENSES
Amortization 66,184 - 172,184
Bad debts - - 25,000
Bank charges 23 - 450
Foreign exchange (gain) 2,582 - (460)
Interest - - 27,461
Legal and accounting 93,653 - 304,333
Management fees 2,000 - 452,000
Office and general 150 - 45,312
Development fees and software support 12,609 - 72,914
Consulting fees 435,000 - 3,656,378
Travelling and promotion 5,577 - 36,385
------------ ----------- -------------
617,778 - 4,791.957
------------ ----------- -------------
LOSS FROM OPERATIONS (617,778) - (4,791,957)
WRITE DOWN OF GOODWILL - - (4,000,000)
------------ ----------- -------------
LOSS BEFORE EXTRAORDINARY ITEM (617,778) - (8,791,957)
EXTRAORDINARY ITEM:
LOSS ON EXTINGUISHMENT OF DEBT - - (732,170)
NET LOSS $ (617,778) $ - $ (9,524,127)
============ ========== ============
NET LOSS PER SHARE-BASIC AND DILUTED $ (0.02) $ - $ (0.47)
============ ========== ============
WEIGHTED AVERAGE NUMBER OF
OUTSTANDING COMMON SHARES-
BASIC AND DILUTED 28,658,980 16,353,848 20,385,485
============ ========== ============
</TABLE>
SEE ACCOMPANYING NOTES
F-2
<PAGE>
IVP TECHNOLOGY CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31
(Unaudited)
2000 1999 Cumulative from
---- ---- January 1, 1998
(Inception of
development stage) to
March 31,2000
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(617,778) $ -- $ (9,524,127)
--------- ------- ------------
Adjustments to reconcile net loss to net cash (used in)
operating activities:
Amortization 66,184 -- 172,184
Loss on extinguishment of debt -- -- 732,170
Write-off of goodwill and other costs -- -- 4,000,000
Stock issued for services -- -- 3,010,000
Changes in operating assets and liabilities:
Increase (decrease)
Accounts payable and accrued expenses 3,176 -- 165,460
Management fees payable -- -- 450,000
--------- ------- ------------
Total adjustments 69,360 -- 8,529,814
--------- ------- ------------
Net cash used in operating activities (548,418) -- (994,313)
--------- ------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Minority interest -- -- 400
Other -- -- 400
--------- ------- ------------
Net cash used in investing activities -- -- 800
--------- ------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock and
collected subscriptions 811,351 -- 1,235,321
Proceeds from loans -- -- 14,335
Proceeds from stockholders -- -- 6,618
--------- ------- ------------
Net cash provided by financing activities 811,351 -- 1,256,274
--------- ------- ------------
Net increase in cash 262,933 -- 262,761
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 281 -- 453
--------- ------- ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 263,214 $ -- $ 263,214
========= ======= ============
</TABLE>
SEE ACCOMPANYING NOTES
F-3
<PAGE>
IVP TECHNOLOGY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and
the rules and regulations of the securities and exchange commission for
interim financial information. Accordingly, they do not include all the
information and footnotes necessary for a comprehensive presentation of
financial position and results of operation.
It is management's opinion, however, that all material adjustments
(consisting of normal recurring adjustments) have been made which are
necessary for a fair financial statement presentation. The results for the
interim period are not necessarily indicative of the results to be
expected for the year.
For further information, refer to the consolidated financial statements
and footnotes in the Company's audited financial statements for the year
ended December 31, 1999 included in the Form 8-K filed on April 17, 2000.
2. GOING CONCERN
The company's consolidated financial statements have been prepared on the
accounting principles applicable to a going concern, which contemplates
that the company will continue its operations for the foreseeable future
and be able to realize its assets and discharge its liabilities in the
normal course of business.
The company has an urgent need for equity capital and financing for
working capital requirements. No agreements with lenders or investors have
been reached and there is no assurance that such will take place. Because
of the operating losses of the past two years and the working capital
deficiency as at March 31, 2000, the company's continuance as a going
concern is dependent upon its ability to obtain adequate financing and to
reach profitable levels of operation. It is not possible to predict
whether financing efforts will be successful or if the company will attain
profitable levels of operation.
3. ACQUISITION AND CONSULTING AGREEMENT
The Company entered into an agreement with the principal stockholder of
Erebus Corporation whereby the principal stockholder will provide certain
stipulated services with regard to the Company becoming a United States
SEC reporting company. The consideration to the stockholder was $200,000.
The Company acquired all of the issued and outstanding capital stock of
Erebus Corporation, an inactive reporting shell for the issuance of
350,000 common shares. The transaction was accounted for as a
recapitalization of the company with a par value of $350 charged to
additional paid-in capital.
F-4
<PAGE>
IVP TECHNOLOGY CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
4. CAPITAL STOCK
The balance at the beginning of the year of the common stock account is
27,490,848 shares amounting to $9,450,606. During the year the company
issued 4,850,000 shares for $675,000. The balance as March 31, 2000 is
32,340,848 shares amounting to $10,125,607. The subscription receivable at
December 31, 1999 of $136,350 was collected during the period
5. SUBSEQUENT EVENT
The company issued, subsequent to March 31, 2000, 600,000 common shares in
satisfaction of the $450,000 management fees payable at period end to
three former officers of the company
F-5
<PAGE>
Item 2. Plan of Operation.
The following is a discussion of our plan of operation and should be read
together with our financial statements and notes included in this 10-Q.
The following discussion contains certain forward-looking statements that
involve risks and uncertainties. Our actual future results could differ
materially from those foreseen in this discussion.
Overview.
We were incorporated in the State of Nevada on February 11, 1994 under the
name Mountain Chief, Inc. On November 16, 1994, the corporation changed its name
to IVP Technology Corporation (which may be referred to herein as "we," "us,"
"IVP" or the "Company") for the purpose of identifying and acquiring private
companies and/or their technologies in the high technology field. On March 30,
1999, we entered into a fourteen-month software distribution agreement with
Orchestral Corporation whereby Orchestral granted to us the exclusive right to
market and distribute Orchestral's PowerAudit software in the United States. In
September 1999, the distribution agreement was amended to include the European
Economic Community.
PowerAudit is a software product designed to provide a platform for remote
data collection and market survey purposes. PowerAudit operates on handheld
computers that run on Microsoft's Windows CE operating system and allows field
employees to collect specific data and transmit that data via the Internet to a
server located at the employee's main office or other location. PowerAudit was
designed for use by organizations that market and distribute many products,
including entities such as consumer goods distributors and pharmaceutical and
healthcare companies.
PowerAudit will benefit any organization that requires immediate and
qualified data from the field, including companies involved in surveying sales
reporting and merchandising, retail and industrial auditing, pharmaceutical
research and agriculture. The information collected in the field is available to
decision makers immediately for analysis. Supervisors or other decision makers
can add to or revise the survey or develop a different survey to elicit other
information depending upon the information received in the initial survey,
transmit the revised survey on a wireless basis to the field employee via the
Internet and have the employee conduct a new survey. Current marketing strategy
can be revised or new marketing strategy can be implemented based upon the
results garnered from field surveys. When integrated into a client's overall
strategy, accurate, relevant and timely information can provide a powerful
decision-making tool.
Management has been advised by Orchestral, the developer of PowerAudit,
that the software is ready for commercial distribution and that PowerAudit
currently is being used by two large Canadian corporations that report that the
software operates within the designed parameters.
3
<PAGE>
We presently are initiating marketing operations in the United States and
Europe and will target HPC original equipment manufacturers, computer systems
integrators, data base management and service providers and potential end-users
of the software. At such time as funds become available, if ever, we intend to
engage marketing personnel and implement our marketing plan.
We have not generated any revenues from operations to date. At March 31,
2000, we had a working capital deficiency of ($374,686), a cumulative
stockholder deficiency of $10,500,293 (the period January 1, 1998 through March
31, 2000) and a net operating loss of $9,524,127 attributable to our PowerAudit
operations (the period January 1, 1998 through March 31, 2000). We have not been
profitable since inception and we expect to incur operating losses through at
least the end of 2000. Other than in connection with a verbal agreement between
us and Orchestral, whereby we have agreed to pay to said entity the sum of
$162,500 in payment of the first year's royalties under the Software
Distribution Agreement, as described below, we have no cash obligations at this
time.
Plan of Operation.
We require substantial additional funds to implement our business plan,
including the full range of marketing programs and plans for future growth. We
require funds for the following purposes:
o to implement our marketing strategy;
o to develop and implement a customer service department to assist
end-users of PowerAudit with problems;
o to develop future products;
o to take advantage of unanticipated opportunities, such as major
strategic alliances or other special marketing opportunities and
acquisitions of complementary businesses or assets.
We will seek to obtain additional funds through sales of equity and/or
debt securities, or other external financing in order to fund its current
operations and to achieve our business plan. We cannot give any assurances that
additional capital resources will be available, or, if available, on acceptable
terms. Any additional equity financing will dilute the equity interests of
existing security holders. If adequate funds are not available or are not
available on acceptable terms, our ability to execute our business plan and out
business could be materially and adversely affected.
We must meet our obligation to Orchestral under the Software Distribution
Agreement. The Software Distribution Agreement provides that if we achieve a
minimum of one million dollars ($1,000,000) of gross revenues attributable to
sales of PowerAudit within the term of the agreement, then the agreement shall
be automatically extended for a further period of one (1) year. Thereafter, the
Software Distribution
4
<PAGE>
Agreement shall be terminable on six (6) months notice by either party. As of
the date hereof, we have not commenced sales of PowerAudit nor paid any
royalties to Orchestral, which would result in the loss of the license.
Orchestral has agreed orally to accept from us a payment equal to the minimum
royalty for the first year of the agreement, equal to $162,500, which is due by
May 30, 2000, to extend the Distribution Agreement for a one-year period. We are
seeking to secure funds to make said payment but can provide no assurances that
we will obtain the funds prior to the expiration of the Distribution Agreement.
At such time as we make payment to Orchestral, we will seek to negotiate a
longer term of the Software Distribution Agreement.
In the event that the Software Distribution Agreement is terminated for
any reason or is not renewed by Orchestral, we would be required to license a
substitute remote data collection software application that runs on the
Microsoft CE operating system, which could be less desirable and could be costly
in terms of cash and other resources and which may not be available on terms and
conditions acceptable to us, if at all. In the alternative, we could develop our
own remote data collection software application, which would take considerable
time, resources and expense, and would divert management's attention from
day-to-day business activities. Moreover, any interruption in the service
component of the distribution agreement could cause users to of PowerAudit to
abandon the software and sue us for damages. Any failure to maintain the
software distribution agreement with Orchestral would have a material adverse
effect on our business and results of operations.
Management intends to focus on the following issues for the balance of
2000:
>> To obtain a listing of its common stock on the Nasdaq SmallCap
Market;
>> To complete a financing which will allow us to:
o Secure the services of three additional employees,
including a Chief Technology Officer, a US marketing
manager and a European marketing manager;
o Implement our marketing plan; and
o Identify, evaluate and, where appropriate, acquire the
rights additional software products.
We recognize that the Windows CE operating system for HPC's is not as
widely distributed as the Palm operating system for HPC's. The trend over the
last two years indicates that HPC's employing the Palm operating system are
increasing as a percentage of the total market for HPC's. We believe that HPC's
employing the Palm operating system are being used primarily for personal use
and not by businesses or in a business context. We further believe that as
businesses are made aware of the utility of software such as PowerAudit that
many such operations could begin to offer HPC's running on the
5
<PAGE>
Window CE platform to their employees in an effort to increase productivity. We
will seek to extol the advantages PowerAudit software offers to businesses to
overcome the current trend.
PART II -- OTHER INFORMATION.
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item. 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
On March 6, 2000, we completed an offering of 4,500,000 Shares of Common
Stock at an offering price of $.15 per share common stock pursuant to Rule 504
promulgated under the Securities Act of 1933. Of the 4,500,000 shares offered,
we sold, 3,000,000 were sold for cash, aggregating $450,000 and we sold
1,500,000 shares for services rendered valued at $225,000.
We applied the cash proceeds from the offering as follows:
o $200,000 in connection with affecting the business combination with
Erebus Corporation;
o $75, 000 for legal and accounting services provided to us in
connection with the business combination with Erebus Corporation and
completion of the financing completed pursuant to Rule 504;
o $12,600 to Orchestral Corporation in consideration for three months
of maintenance and first and second level support on PowerAudit
software, and
o $162,400 for working capital and general corporate purposes.
6
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
See Form 8-K filed on April 20, 2000.
Item 27. Financial Data Schedule.
Filed herewith.
7
<PAGE>
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 thereunto duly authorized.
Dated: May 22, 2000
------------------
IVP TECHNOLOGY CORPORATION
----------------------------------------
(Registrant)
/s/ John Maxwell
--------------------------------------
President
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from IVP
Technology Corporation's balance sheet as of March 31, 2000 and statement of
operations for the three months ended March 31, 2000, and is qualified in its
entirety by reference to such financial statements.
IVP Technology Corporation
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-START> Jan-01-2000
<PERIOD-END> Mar-31-2000
<CASH> 263,214
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 263,214
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 311,902
<CURRENT-LIABILITIES> 686,588
<BONDS> 0
0
0
<COMMON> 10,125,607
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 311,902
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 617,778
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (617,778)
<INCOME-TAX> 0
<INCOME-CONTINUING> (617,778)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (617,778)
<EPS-BASIC> (.02)
<EPS-DILUTED> (.02)
</TABLE>
