SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 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
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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
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(Address of principal executive offices)
(905) 306-9343
-----------------------------------------
(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: 33,780,522 shares of Common Stock,
$.001 par value, were outstanding as of November 13, 2000.
Transitional Small Business Disclosure Forms (check one):
Yes |_| No |X|
<PAGE>
PART I - FINANCIAL INFORMATION:
Item 1 - Financial Statements
CONSOLIDATED BALANCE SHEET
At September 30, 2000 unaudited and December 31, 1999. F-1
CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED F-2
For the Three Months Ended September 30, 2000
For the Three Months Ended September 30, 1999
For the Six Months Ended September 30, 2000
For the Six Months Ended September 30, 1999
Cumulative from January 1, 1998 (inception of development
stage) through September 30, 2000
CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED F-3
For the Nine Months Ended September 30, 2000
For the Nine Months Ended September 30, 1999
Cumulative from January 1, 1998 (inception of development
stage) to September 30, 2000
NOTES TO FINANCIAL STATEMENTS F-4- F-5
1
<PAGE>
IVP TECHNOLOGY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
<PAGE>
IVP TECHNOLOGY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
SEPTEMBER 30, 2000
CONTENTS
Page
FINANCIAL STATEMENTS
Consolidated Balance Sheets 1
Consolidated Statements of Operations 2
Consolidated Statements of Cash Flows 3
Notes to Consolidated Financial Statements 4 - 6
<PAGE>
IVP TECHNOLOGY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30 December 31
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 3,768 $ 281
Accounts receivable (note 3) 80,520 --
------------ ------------
TOTAL CURRENT ASSETS 84,288 281
------------ ------------
OTHER ASSETS
License agreement -net -- 114,000
Other 872 872
------------ ------------
TOTAL ASSETS $ 85,160 $ 115,153
============ ============
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 288,112 $ 233,412
Management fees payable -- 450,000
Deferred revenue (note 3) 94,418 --
------------ ------------
TOTAL CURRENT LIABILITIES 382,530 683,412
------------ ------------
STOCKHOLDERS' DEFICIENCY
COMMON STOCK (note 6)
Common stock, $.001 par value 50,000,000 authorized,
34,410,848 and 27,490,848 issued and outstanding at
September 30, 2000 and December 31, 1999 respectively 34,411 27,491
Additional paid-in capital 11,459,855 9,423,115
------------ ------------
11,494,266 9,450,606
ACCUMULATED DEFICIT (accumulated in development
stage $10,815,470 and $8,906,349 in the nine months
ended September 30, 2000 and the year ended
December 31, 1999 respectively) (11,791,636) (9,882,515)
------------ ------------
(297,370) (431,909)
Less subscriptions receivable -- (136,350)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIENCY (297,370) (568,259)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 85,160 $ 115,153
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
1.
<PAGE>
IVP TECHNOLOGY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative from
Three Months Ended Nine Months Ended January 1, 1998
September 30 September 30 (Inception of
(Unaudited) (Unaudited) development stage) to
2000 1999 2000 1999 September 30, 2000
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
REVENUE $ 12,942 $ -- $ 12,942 $ -- $ 12,942
------------ ------------ ------------ ------------ ------------
OPERATING EXPENSES
Amortization -- 30,636 114,000 43,494 220,000
Bad debts -- -- -- -- 25,000
Bank charges 282 46 394 350 821
Foreign exchange (gain) (341) -- (23,312) (8,207) (26,354)
Interest -- -- -- 13,126 27,461
Legal and accounting 25,199 63,950 161,030 127,900 371,710
Management fees 3,841 150,000 308,841 300,000 758,841
Office and general 1,035 18,404 5,463 19,684 50,625
Development fees and
software support 12,600 19,200 40,009 54,200 100,314
Consulting fees 669,922 98,700 1,186,044 198,700 4,407,422
Traveling and promotion 64,771 9,940 129,594 19,913 160,402
------------ ------------ ------------ ------------ ------------
TOTAL OPERATING
EXPENSES 777,309 390,876 1,922,063 769,160 6,096,242
------------ ------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (764,367) (390,876) (1,909,121) (769,160) (6,083,300)
OTHER EXPENSE
WRITE DOWN
OF GOODWILL -- -- -- -- (4,000,000)
------------ ------------ ------------ ------------ ------------
LOSS BEFORE EXTRA-
ORDINARY ITEM (764,367) (390,876) (1,909,121) (769,160) (10,083,300)
EXTRAORDINARY ITEM:
LOSS ON EXTINGUISHMENT
OF DEBT -- -- -- (732,170) (732,170)
------------ ------------ ------------ ------------ ------------
NET LOSS $ (764,367) $ (390,876) $ (1,909,121) $ (1,501,330) $(10,815,470)
============ ============ ============ ============ ============
NET LOSS PER SHARE-
BASIC AND DILUTED:
Loss before extra-
ordinary item (0.02) (0.02) (0.06) (0.04) (0.45)
Extraordinary loss 0.00 0.00 0.00 (0.03) (0.03)
------------ ------------ ------------ ------------ ------------
NET LOSS (0.02) (0.02) (0.06) (0.07) (0.48)
============ ============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
OUTSTANDING COMMON SHARES-
BASIC AND DILUTED 33,780,522 25,990,848 31,882,454 20,994,749 22,645,381
============ ============ ============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
2.
<PAGE>
IVP TECHNOLOGY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative from
Nine Months Ended January 1, 1998
September 30 (Inception of
(Unaudited) development stage) to
2000 1999 September 30, 2000
---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,909,121) $ (1,501,330) $(10,815,470)
------------ ------------ ------------
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Amortization 114,000 43,494 220,000
Loss on extinguishment of debt -- 732,170 732,170
Write-off of goodwill and other costs -- -- 4,000,000
Stock issued for services 918,660 10,000 4,378,660
Changes in operating assets and liabilities:
Increase (decrease)
Accounts receivable (80,520) -- (80,520)
Accounts payable and accrued expenses 54,700 344,520 216,984
Deferred revenue 94,418 -- 94,418
------------ ------------ ------------
Total adjustments 1,101,258 1,130,184 9,561,712
------------ ------------ ------------
Net cash used in operating activities (807,863) (371,146) (1,253,758)
------------ ------------ ------------
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 811,350 384,360 1,235,320
Proceeds from loans -- -- 14,335
Proceeds from stockholders -- -- 6,618
------------ ------------ ------------
Net cash provided by financing activities 811,350 384,360 1,256,273
------------ ------------ ------------
Net increase in cash 3,487 13,214 3,315
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 281 -- 453
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 3,768 $ 13,214 $ 3,768
============ ============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
3.
<PAGE>
IVP TECHNOLOGY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 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. ACCOUNTING POLICIES
Revenue Recognition
The company records revenues associated with the sale of software licenses
on a pro-rata basis over the license term.
3. ACCOUNTS RECEIVABLE AND DEFERRED REVENUE
During August 2000, the company entered into a contract to sell a software
license. The contract is for $107,360. As of September 30, 2000 the
company has recognized $12,942 of revenue and $94,418 of deferred revenue.
Additionally, as of September 30, 2000 the company has recorded $80,520 of
accounts receivable related to this transaction.
4. DEVELOPMENT STAGE COMPANY
The company is considered to be in the development stage as defined in the
Statement of Financial Accounting Standards No. 7. There have been no
significant operations since incorporation. Activities from inception of
the development stage include raising of capital and negotiating and
acquisition of software distribution licenses.
4.
<PAGE>
IVP TECHNOLOGY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2000
5. 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.
6. SHAREHOLDERS' EQUITY
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 3 month period ended
March 31,2000 the Company issued 4,850,000 shares for $675,000. During the
3 month period ended June 30, 2000 the Company issued 600,000 common
shares in satisfaction of the legal obligation of $450,000 arising out of
a legal settlement reached with three former officers of the Company.
Additionally 400,000 common shares were issued to two officers of the
Company for past services. The stock was valued on the same basis for an
aggregate management fee expense of $300,000. During the 3 month period
ended September 30, 2000 the company issued, 1,070,000 shares for
$618,660. The balance as of September 30, 2000 is 34,410,848 shares
amounting to $11,494,266. The subscription receivable at December 31, 1999
of $136,350 was collected during the first quarter.
7. 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 incurred a net loss of $1,909,121
and negative cash flows from operating activities of $807,863 during the
nine months ended September 30, 2000, and had an accumulated deficit of
$11,791,636 at September 30, 2000.
The Company has an urgent need for equity capital and financing for
working capital requirements. No agreements with lenders or investors have
been reached except as indicated in Note 6 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 September 30, 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.
5.
<PAGE>
IVP TECHNOLOGY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2000
8. SUBSEQUENT EVENTS
In October, 2000 the Company issued 800,000 common shares under an
extended consulting agreement. The term of the agreement is for six months
and there is an option for the company to extend the agreement an
additional six months. The consultant agrees to assist the Company in
marketing services primarily in Europe and perform other consulting
services. The 800,000 common shares will be valued at $ 0.585 a share with
a fair market value of $468,000 based on the quoted share price at the
agreement date. The $468,000 will be recognized as a consulting expense
over the service period.
In October, 2000 the Company entered into a director's agreement with a
director of the Company for management services. Currently the term of the
agreement is indefinite. The consideration for these services was 200,000
common shares of the capital stock of the corporation. The 200,000 common
shares will be valued at $ 0.72 a share with a fair market value of
$144,000 based on the quoted share price at the agreement date. The
$144,000 will be recognized as consulting expense over the service period.
In October 2000, the Company signed a letter of intent for $1,250,000 of
equity financing. Accordingly, 1.25 million units, each consisting of one
share of IVP Technology Corporations common stock and one common stock
purchase warrant will be issued at an offering price of $0.35 per unit. As
of the date of this report this equity financing has not taken place.
6.
<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-QSB.
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 Chef, 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. In May 2000, the Software Distribution Agreement was further
amended, among other things, to extend the term of the agreement and expand the
territory and provide for additional consideration to Orchestral.
PowerAudit is 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.
2
<PAGE>
Management has been advised by Orchestral that PowerAudit currently is
being used by two large Canadian corporations that report that the software
operates within the designed parameters.
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.
On August 17, 2000, we entered into an agreement to license one server and
forty client licenses (for use on the handheld devices) to Strategic Merchandise
Partners, Inc. ("SMP"). Pursuant to this agreement, SMP would pay an aggregate
of $107,360 to IVP, of which $88,000 would be attributable to the license of the
software and $19,360 would be attributable to maintenance of the software. The
first payment of $26,840 was made on August 18, 2000, and the balance ($80,520)
is payable in twelve equal installments of $6,710 on the first of each month
after the effective date of the agreement. During the quarter ended September
30, 2000, we recognized $12,942 of revenue and $94,418 of deferred revenue from
said agreement.
On September 28, 2000, we entered into a Service Bureau Arrangement
Agreement with E-Responses.Com. ("E-Responses"), whereby E-Responses would
market PowerAudit to certain business sectors, as more fully described in Part
II, Item 5, below.
For the three months ended September 30, 2000, we had generated revenues
of $12,942 from operations, representing all of the revenues we have generated
from our PowerAudit operations, to date. At September 30, 2000, we had a
cumulative working capital deficiency of $298,242, a cumulative stockholder
deficiency of $297,370 and a cumulative net operating loss of $1,922,063
attributable to our PowerAudit operations. We have not been profitable since
inception and we expect to incur operating losses through at least the end of
2000. Except as described in the Software Distribution Agreement, 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;
3
<PAGE>
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 our 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 our
business could be materially and adversely affected.
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
to 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
4
<PAGE>
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 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 September 28, 2000, we entered into a Service Bureau Arrangement
Agreement with E-Responses.Com. ("E-Responses"), whereby E-Responses would
market PowerAudit to certain business sectors, as more fully described below.
Specifically, the agreement provides that we will:
(i) grant to E-Responses a non-exclusive right to act as a service bureau
for PowerAudit software for distribution to end-users within the automotive and
real estate/mortgage business sectors;
(ii) provide E-Responses with a copy of PowerAudit, both the server
software and client software, for installation on its central server and provide
E-Responses with updates to the software as same become available;
(iii) provide E-Responses with sales and technical training with respect
to PowerAudit;
(iv) permit E-Responses to use our trademarks;
5
<PAGE>
(v) grant to E-Responses a right to match the terms and arrangements of
any future agreements made by us with potential third party distributors of
PowerAudit within the automotive and real estate/mortgage business sectors; and
(vi) grant E-Responses the right to add other business sectors to its
distribution market.
E-Responses has agreed to
(i) make PowerAudit software available from its centrally located server
on a service bureau basis to end-users for a monthly fee;
(ii) use its best efforts to market PowerAudit;
(iii) provide maintenance, support and training services to end-users; and
(iv) the right to distribute (by sale or lease) hand-held devices on which
PowerAudit would be resident.
E-Responses will charge end-users a $300 monthly fee for client software
license and $500 for each server software. E-Responses will pay to us a sum
equal to 20% of gross revenues generated in respect of server software licenses
placed with end-users and 15% of gross revenues generated in respect of client
software licenses placed with end-users.
E-Responses is a distributor of bundled software packages that allows
users to consolidate all of their communication devices, i.e., telephones, fax
machines, multiple websites and pagers. The bundled software package allows
users to access information wherever they might be and redirect this information
as they see fit, so that, for example a user can redirect a fax transmission to
the user's telephone, or the user's telephone messages to e-mail.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Service Bureau Arrangement Agreement dated September 28, 2000.
(b) Reports on Form 8-K.
None
Item 27. Financial Data Schedule
Attached.
6
