U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 For
the transition period from _________ to __________
INTERNET INFINITY, INC.
(Exact name of registrant as specified in its charter)
Commission File No. 0-27633
State of Incorporation: Delaware
IRS Employer I.D. Number: 95-4679342
3303 Harbor Boulevard, K-5
Costa Mesa, California 92626
Telephone 714-434-0433
-------------------------------------------------------
(Address and telephone number of registrant's principal
executive offices and principal place of business)
Indicate by check mark 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 twelve 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[ ]
As of June 30, 2000, there were 10,373,196 shares of the Registrant's
Common Stock, par value $0.001 per share, outstanding.
Transitional Small Business Disclosure Format (check one): Yes[ ] No[X]
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
2
<PAGE>
INTERNET INFINITY, INC. AND SUBSIDIARIES
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(UNAUDITED)
ASSETS
<TABLE>
CURRENT ASSETS
<S> <C>
Cash $ 6,404
Accounts receivable, net of allowance for
doubtful accounts of $6,500 109,694
Inventory 39,039
Note receivable - related companies - current 37,500
Prepaid expense 2,907
Net current deferred tax asset 28,577
-------------
Total Current Assets 224,121
-------------
PROPERTY AND EQUIPMENT, AT COST --
OTHER ASSETS
Note receivable - related company 210,343
Programming costs, net of amortization 6,665
-------------
Total Other Assets 217,008
-------------
Total Assets $ 441,129
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 93,917
Accounts payable and accrued expenses 57,922
Accounts payable - related company 56,935
Due to officer - current 36,000
-------------
Total Current Liabilities 244,774
-------------
LONG-TERM LIABILITIES
Due to officer - non-current 113,793
-------------
Total Liabilities 358,567
-------------
STOCKHOLDERS' EQUITY
Preferred stock, par value $.001; authorized
1,000,000 shares; issued and outstanding 0 shares --
Common stock, par value $.001; authorized
20,000,000 shares; issued and outstanding
10,373,196 shares 10,373
Paid-in capital 997,546
Retained earnings (deficit) (425,534)
Unpaid stock subscription (499,823)
-------------
Total Stockholders' Equity 82,562
-------------
Total Liabilities and Stockholders' $ 441,129
=============
</TABLE>
See Accompanying Selected Information to
Unaudited Consolidated Financial Statements
3
<PAGE>
INTERNET INFINITY, INC. AND SUBSIDIARIES
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended
June 30,
--------------------------
2000 1999
------------ ------------
<S> <C> <C>
REVENUE (NET) $ 320,776 $ 278,193
COST OF SALES 250,747 206,452
---------- ----------
Gross Profit 70,029 71,741
OPERATING EXPENSES 66,260 35,962
---------- ----------
Net Income Before Other Income (Expense)
and Provision for Taxes 3,769 35,779
OTHER INCOME (EXPENSE)
Interest income 3,683 --
Interest expense (4,037) (3,200)
---------- ----------
Net Income Before Income Taxes 3,415 32,579
(PROVISION) BENEFIT FOR INCOME TAXES -- (6,500)
---------- ----------
Net Income $ 3,415 $ 26,079
========== ==========
BASIC NET INCOME PER SHARE:
Basic $ .00 $ .00
========== ==========
Diluted $ .00 $ .00
========== ==========
WEIGHTED-AVERAGE COMMON SHARES
Basic (Note 4) 10,373,196 10,010,196
========== ==========
Diluted 10,767,196 14,210,196
========== ==========
</TABLE>
See Accompanying Selected Information to
Unaudited Consolidated Financial Statements
4
<PAGE>
INTERNET INFINITY, INC. AND SUBSIDIARIES
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
-------- --------
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 3,415 $ 26,079
Adjustments to reconcile net (loss) to net cash
Amortization and depreciation 952 1,493
Royalty expense used against unpaid stock 728 --
(Increase) decrease in accounts receivable 7,086 (1,679)
Increase in current liabilities and accrued expenses 1,615 685
(Decrease) in trade accounts payable - related (27,754) --
(Increase) decrease in interest payable 4,037 (3,190)
(Increase) in interest income receivable (3,683) --
(Increase) in prepaid expense (1,391) --
Decrease in deferred tax asset -- 6,500
------- -------
Net Cash Flows Provided (Used) by Operating (14,995) 29,888
------- -------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
(Increase) decrease in note receivable - related 2,900 (56,045)
------- -------
Net Cash Flows Provided (Used) by Investing 2,900 (56,045)
------- -------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Increase in note payable -- 730
(Decrease) in due to related party (2,000) (1,500)
Proceeds from officer's loan 3,450 --
Payment of loan due to officer (3,000) (10,955)
------- -------
Net Cash Flows (Used) by Financing Activities (1,550) (11,725)
------- -------
NET (DECREASE) IN CASH (13,645) (37,882)
CASH AT THE BEGINNING OF THE YEAR 20,049 64,458
------- -------
CASH AT THE END OF THE YEAR $ 6,404 $ 26,576
======= =======
ADDITIONAL DISCLOSURES:
Interest paid $ -- $ 3,190
======= =======
Income taxes paid $ -- $ 800
======= =======
</TABLE>
See Accompanying Selected Information to
Unaudited Consolidated Financial Statements
5
<PAGE>
INTERNET INFINITY, INC. AND SUBSIDIARIES
SELECTED INFORMATION
Substantially All Disclosures Required By Generally Accepted
Accounting Principles are Not Included
JUNE 30, 2000
(UNAUDITED)
NOTE 1 - MANAGEMENT'S STATEMENT
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (all of which are normal and recurring in
nature) necessary to present fairly the financial position of Internet Infinity,
Inc. and Subsidiaries (the Company) at June 30, 2000, and the results of
operations and the cash flows for the three months ended June 30, 2000 and 1999.
The notes to the Condensed Consolidated Financial Statements which are
incorporated by reference into Form 10-SK, for the year ended March 31, 2000,
should be read in conjunction with these Condensed Consolidated Financial
Statements
NOTE 2 - RECLASSIFICATION
Certain prior year balances have been reclassified to conform to the current
year presentation.
NOTE 3 - STOCKHOLDERS' EQUITY
The following is an analysis of activities in the Stockholders' Equity for the
three months ended June 30, 2000:
<TABLE>
<CAPTION>
Unpaid
Additional Stock
Preferred Common Stock Paid-In Sub- Retained
Shares Amount Shares Amount Capital scription (Deficit) Balance
------ ------ ---------- -------- ---------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at 3/31/00 -- -- 10,373,196 $ 10,373 $ 997,546 $ (500,551) $ (428,949) $ 78,419
June 30, 2000
Royalty earned -- -- -- -- -- 728 -- 728
Net -- -- -- -- -- -- 3,415 3,415
---- ---- ---------- ------- -------- --------- --------- -------
Balance at 6/30/00 -- $ -- 10,373,196 $ 10,373 $ 997,546 $ (499,823) $ (425,534) $ 82,562
==== ==== ========== ======= ======== ========= ========= =======
</TABLE>
NOTE 4 - CORRECTION OF ERROR
Basic weighted-average common shares outstanding for the three months ended June
30, 1999 were incorrectly reported as 11,010,196 shares in the 10Q, which was
previously filed. The correct basic weighted-average common shares outstanding
for the three months ended June 30, 1999 were 10,010,196. The basic net income
per share for the three months ended June 30, 1999 still remains as $0.00.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis should be read in conjunction with
the financial statements and the accompanying notes thereto and is qualified in
its entirety by the foregoing and by more detailed financial information
appearing elsewhere. See "Item 1. Financial Statements."
Results of Operations - First Quarter of 2000 Compared to First Quarter of 1999
Sales
Internet Infinity revenues for Q1 2001 were $320,776, a 15.3% increase
in revenues over Q1 2000 of $278,193. The increase in sales was attributable to
an increased effort by the Internet Infinity sales force with existing customers
and orders from new network marketing industry customers.
Cost of Sales
Our cost of sales increased to $250,747 for Q1 2001, or 78.2% of sales,
over $206,542 for Q1 2000, or 74.1% of sales. This increase in the cost of sales
is due primarily to an increase in the sales of lower margin duplication sales
over pre-recorded video program sales.
Gross Margin
The company's gross margin decreased to $70,029 for Q1 2001, or 21.8% of
sales, from $71,741 for Q1 2000, or 25.8% of sales. This decrease is
attributable to the increased sales of lower margin services in the period as
noted above.
Operating Expenses
Operating expenses for Q1 2001 increased to $66,200, or 20.7% of sales,
over $35,962, or 12.9% of sales, for Q1 2000. This large increase in operating
expenses is primarily due to a $9,264 increase in sales person compensation,
$12,407 for insurance premiums and $5,170 for legal and accounting fees.
Net Income (Loss)
The company had a net income of $3,415 in Q1 2001, or 1.1% of sales, as
compared with a net income of $26,079 in Q1 2000, or 9.4% of sales. The decrease
in net income of $22,664 is discussed in the previous sections.
7
<PAGE>
Balance Sheet Items
Our cash position decreased from $26,576 at June 30, 1999 (Q1 2000) by
$20,172 to $6,404 at June 30, 2000 (Q1 2001). Accounts receivable from
non-affiliates decreased from $131,216 at June 30, 1999 (Q1 2000) by $21,252 to
$109,694 at June 30, 2000 (Q1 2001), and the inventory decreased from $59,918 at
June 30, 1999 (Q1 2000) by $22,418 to $37,500 at June 30, 2000 (Q1 2001).
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Forms 8-K
None
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the Registrant
has caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Dated: August 17, 2000 INTERNET INFINITY, INC.
By /s/ George Morris
----------------------------------
George Morris, President and Chief
Executive Officer
8
