U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ending March 31, 2000
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
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Commission file number 0-28607
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INNOVATIVE HOLDINGS & TECHNOLOGIES, INC.
- ---------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
COLORADO 74-2929034
- --------------------------------- --------------------------------
(State of Incorporation) (IRS Employer Identification No.)
100 South Orange Ave., Ste. 100,Orlando, FL 78247
- ---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number,( 407 ) 481 - 8900
----------- ------------- -------------
Former Name, former address and former fiscal year if changed since last report
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
--- ---
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes No
--- ---
Applicable on to corporate issuers
State the number of shares outstanding of each of the issuer's class of
common equity, as of the latest practicable date:
Transitional Small Business Disclosure Format
(Check One)
Yes No
<PAGE>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC.
FORM 10-QSB
INDEX
Page No.
--------
Part I - Financial Information
Item 1 - Financial Statements (unaudited) Balance Sheets -
March 31, 2000 and December 31, 1999 2
Statement of Operations -
Three Months ended March 31, 2000 and 1999 3
Statement of Cash Flows - 4
Three Months ended March 31, 2000 and 1999
Notes to Financial Statements 5
Item 2- Management's Discussion and Analysis or Plan of
Operation 8
Part II - Other Information 11
Item 1 - Legal Proceedings 11
Item 2 - Changes in Securities and Use of Proceeds 11
Item 3 - Defaults Upon Senior Securities 11
Item 4 - Submission of Matters to a Vote of Security Holders 11
Item 5 - Other Information 11
Item 6 - Exhibits and Reports on Form 8-K 11
Signature 12
<PAGE>
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements. (Unaudited)
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
WITH ACCOUNTANTS' REPORT
FOR THE THREE MONTHS ENDED
MARCH 31, 2000
<PAGE>
TABLE OF CONTENTS
Page
Accountants' Review Report................................................. 1
Condensed Consolidated Financial Statements
Balance Sheets............................................................ 2
Statements of Operations.................................................. 3
Statements of Cash Flows.................................................. 4
Notes to Condensed Consolidated
Financial Statements...................................................... 5
<PAGE>
DIROCCO & DOMBROW, P.A.
3601 W. COMMERCIAL BLVD, SUITE #22
FT. LAUDERDALE, FL 33309
(954) 731-8181
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
------------------------------------------------------------
Board of Directors
Innovative Holdings & Technologies, Inc. and Subsidiary
Orlando, Florida
We have reviewed the accompanying condensed consolidated balance sheet of
Innovative Holdings & Technologies, Inc. and Subsidiary as of March 31, 2000 and
the related condensed consolidated statements of operations and cash flows for
the three months ended March 31, 2000 and 1999, included in the accompanying
Securities and Exchange Commission Form 10-Q for the period ended March 31,
2000. These condensed consolidated financial statements are the responsibility
of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modification that should
be made to the accompanying condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 4 to the
consolidated financial statements, the Company's significant operating losses
raise substantial doubt about its ability to continue as a going concern.
Management's plans regarding those matters also are described in Note 4. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheets as of December 31, 1999 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended (not presented herein). In our report dated March 16, 2000,
we expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying balance sheet as of March
31, 2000, is fairly stated in all material respects in relation to the balance
sheet from which it has been derived.
May 11, 2000
-1-
<PAGE>
<TABLE>
<CAPTION>
INNOVATIVE HOLDINGS AND TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
2000 1999
--------------- ----------------
<S> <C> <C>
Current assets
Cash $ 616 $ 2,011
Prepaid expenses 3,681 3,681
Note receivable 10,250 10,250
--------------- ----------------
Total current assets 14,547 15,942
Property and equipment 20,795 23,121
Other assets 5,581 4,263
--------------- ----------------
Total assets $ 40,923 $ 43,326
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued
expenses $ 11,373 $ 25,826
Withholding taxes payable 163,250 163,250
Notes payable 125,000 25,000
Due to affiliate 46,169 43,751
--------------- ----------------
Total current liabilities 345,791 257,827
Stockholders' equity (deficit)
Preferred stock, $.001 par value,
50,000,000 shares authorized,
no shares issued and
outstanding, respectively - -
Common stock, $.0001 par value,
450,000,000 shares authorized,
23,124,884 and 23,124,884 issued
and outstanding, respectively 2,313 2,313
Additional paid-in capital 3,080,619 3,080,619
Stock subscriptions receivable ( 334,000 ) ( 334,000 )
Deficit ( 3,053,801 ) ( 2,963,433 )
--------------- ----------------
Total stockholders' equity (deficit) ( 304,869 ) ( 214,501 )
--------------- ----------------
Total liabilities and stockholders' equity (deficit) $ 40,923 $ 43,326
=============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31,
-------------------------------------------
2000 1999
--------------- ----------------
<S> <C> <C>
Expenses
General and administrative $ 89,610 $ 82,722
Research and development - 1,781
Interest expense 758 -
--------------- ----------------
Total expenses 90,368 84,503
--------------- ----------------
Net loss $ ( 90,368 ) $ ( 84,503 )
=============== ================
Basic loss per share $ ( 0.0039 ) $ ( 0.0037 )
=============== ================
Diluted loss per share $ ( 0.0039 ) $ ( 0.0037 )
=============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
2000 1999
--------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ ( 90,368 ) $ ( 84,503 )
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation 2,326 143
(Increase) decrease in:
Other assets ( 1,318 ) ( 43,660 )
Increase (decrease) in:
Accounts payable and accrued ( 14,453 ) 18,148
--------------- ----------------
expenses
Net cash used by operating
activities ( 103,813 ) ( 109,872 )
--------------- ----------------
Cash flows from investing activities:
Purchases of property and equipment ( - ) ( 1,713 )
--------------- ----------------
Net cash used by investing
activities ( - ) ( 1,713 )
--------------- ----------------
Cash flows from financing activities:
Payments of notes payable - ( 15,000 )
Proceeds from affiliate 2,418 ( 204,950 )
Proceeds from issuance of stock - 460,000
Borrowings on notes payable 100,000 -
Net cash provided by financing
activities 102,418 240,050
--------------- ----------------
Increase (Decrease) in cash ( 1,395 ) 128,465
Cash at beginning of period 2,011 4,303
--------------- ----------------
Cash at end of period $ 616 $ 132,768
=============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Presentation of Interim Information
In the opinion of the management of Innovative Holdings & Technologies, Inc. and
Subsidiary, Inc. (the Company), the accompanying unaudited condensed
consolidated financial statements include all normal adjustments considered
necessary to present fairly the financial position as of March 31, 2000, and the
results of its operations and cash flows for the three months ended March 31,
2000 and 1999. Interim results are not necessarily indicative of results for a
full year.
The condensed consolidated financial statements and notes are presented as
permitted by Form 10-Q, and do not contain certain information included in the
Company's audited consolidated financial statements and notes for the year ended
December 31, 1999.
2. Financial Statements
The condensed consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary. All significant intercompany balances,
transactions and stockholdings have been eliminated.
3. Supplemental Disclosures of Cash Flow Information
Three months ended March 31,
----------------------------
2000 1999
---- ----
Operating Activities:
Interest paid $758 $ -
=== ===
4. Going Concern
As shown in the accompanying financial statements, the Company incurred net
losses of $90,368 for the three months ended March 31, 2000. The Company's
current liabilities exceeded its current assets by $331,244 at March 31, 2000.
The ability of the Company to continue as a going concern is dependent on the
development and marketing of products to be offered by its subsidiary. In
September 1999, the Company contracted a software developer to design and
develop the software. The Company has completed the software and expects to
begin generating significant revenues by July, 2000. The expected costs to
complete the software, purchase of hardware and marketing will be approximately
$500,000. These costs will be funded by the issuance of its common stock in the
amount of $500,000 under a subscription agreement dated November 9, 1999. Of the
subscribed amount, $166,000 was collected to date. The Company feels that the
amount from the offering will be sufficient to fund the completion of the
project. The Company will offer additional shares of its common stock to raise
capital on an as needed basis.
-5-
<PAGE>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5. Legal Proceedings
On April 25, 2000, BCR Media, Inc. filed a complaint against the
Company alleging that it owns 500,000 common shares of the Company and
the Company refused to transfer the shares in accordance with BCR
Media, Inc.'s request. BCR Media, Inc. is seeking damages from its
inability to sell the shares and has requested damage based on the face
value of the shares plus interest, costs and attorneys fees.
-6-
<PAGE>
<TABLE>
<CAPTION>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Income Taxes
The total deferred tax assets are as follows:
Net Operating Loss Carryforwards Applicable Tax Rate
---------------------------------------------------------------
Valuation Amount Per
Federal State Total Federal State Allowance Balance Sheet
---------- ---------- ------------ --------- ------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Deferred tax assets at
December 31, 1997
Changes for the year
ended December 31, 1998
---------- ---------- ------------ ------------- --------------
Deferred tax assets at
December 31, 1998
Changes for the
year ended
December 31, 1999
---------- ---------- ------------ ------------- --------------
Deferred tax assets at
December 31, 1999 $ $ $ $ $ -
========== ========== ============ ============= ==============
</TABLE>
At December 31, 1999, the Company has net operating loss carryforwards of
$2,928,322. These losses will begin expiring in 2002.
A valuation allowance has been provided against the deferred tax assets at
December 31, 1999 and 1998 since it is likely that the Company will not
realize the benefits of the deferred tax assets.
-7-
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
SAFE HARBOR STATEMENT
Certain statements in this Form 10-QSB, including information set forth
under Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 (the Act). The Company
desires to avail itself of certain "safe harbor" provisions of the Act and is
therefore including this special note to enable the Company to do so. Forward-
looking statements in this Form 10-QSB or hereafter included in other publicly
available documents filed with the Securities and Exchange Commission, reports
to the Company's stockholders and other publicly available statements issued or
released by the Company involve known and unknown risks, uncertainties and other
factors which could cause the Company's actual results, performance (financial
or operating) or achievements to differ from the future results, performance
(financial or operating) or achievements expressed or implied by such forward-
looking statements. Such future results are based upon management's best
estimates based upon current conditions and the most recent results of
operations.
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with
"Selected Condensed Consolidated Financial Data" and the Company's Condensed
Consolidated Financial Statements and Notes thereto included elsewhere in this
document.
From December 1990 through October 1997, the Company did not operate any
businesses and was inactive.
In November 1997, the Company changed its name to Innovative Holdings &
Technologies, Inc. The Company considers its role to be an incubator of high
technology companies and began its search for suitable business acquisitions. In
the second quarter of 1998, the Company signed an agreement to acquire BioCam
Company, Inc. (BioCam), a developer of telemetry technology in the amount of
$1,000,000. This was paid for by issuance of convertible preferred stock and
restricted common stock. The Company began supporting the operations of BioCam
financially and funded approximately $350,000, in 1998. By the end of 1998, the
principals of BioCam rescinded on their agreement with the Company and the
relationship was terminated.
On January 8, 1999, the Company incorporated Xtreme Telemetry Systems, Inc.
(Xtreme) and is its soles stockholder. Xtreme is continuing the development of a
product on the cutting edge of communications technology. Xtreme is finalizing
the development of a real time telemetric monitoring device, which will be
marketed initially in the sports and entertainment industries. The device will
monitor performance and transmit the data by broadcast or over the internet. In
September, 1999, the Company secured the services of specialists in computer
software development. The alpha-beta testing of the software commenced in the
fourth quarter, 1999. The products under development were completed in January,
2000.
Marketing efforts commenced in January, 2000. Revenues are anticipated through
the sale of advertising at Xtreme's web site and through the promotion of
sponsorships by organizations and other related to the sports and entertainment
industries.
Results of operations
The following table sets forth, for the periods indicated, certain items from
the Company's Consolidated Statements of Operations, expressed as a percentage
of total expenses.
-8-
<PAGE>
Results of Operations, continued
The three months ended March 31,
---------------------------------
2000 1999
------------- -------------
Revenues 0.0% 0.0%
Expenses:
General and Administrative 99.2% 97.9%
Research and Development - 2.1%
Interest Expense .8 -
-
Total Expenses 100% 100%
Net Loss 100% 100%
============= =============
Revenues
- --------
The Company had no revenues for the three months ended March 31, 2000 and 1999.
Revenues are expected to commence during July, 2000.
General and Administrative
- --------------------------
General and administrative expenses have increased from $82,722 in 1999 to
$89,610 in 2000. The increase in these expenses resulted from the purchase of
Xtreme and Company's dedicated support to develop their business operations.
Research and Development
- ------------------------
Research and development expenses decreased from $1,781 in 1999 to $0 in 2000.
Research and development expenses are not recurring expenses, estimated research
and development costs through the completion of the telemetry system in April
2000 will be approximately $200,000.
Interest Expense
- ----------------
Interest expense is due from personal loans made to the company. The amounts
from 1999 to 2000 have not varied considerably.
Liquidity and Capital Resources
The Company requires capital principally for the financing of operations and the
development of their wholly owned subsidiary, Xtreme Telemetry Systems, Inc. To
date, the company has financed its operations primarily through the sale its of
equity securities. During the three month period ended March 31, 1999, the
Company generated $460,000, from the issuance of its stock.
-9-
<PAGE>
Liquidity and Capital Resources, continued
The Company had negative working capital as of March 31, 2000 of $331,244,
compared to $241,885 as of December 31, 1999.
As stated in the Company's Consolidated Financial Statements, the Company's
ability to continue as a going concern is dependent upon issuance of stock and
attaining profitable operations. The deficiency in operating cash flows is
expected to continue until such time that the Company will begin to generate
cash flows from the telemetry data in the form of advertisement and sponsorship
sales. Operations are expected to begin in July 2000 and the research and
development costs will cease. Until such time, the company will rely on the
private non-public sale of common stock or debt financing, or a combination of
both, to generate cash flows necessary to meet the company's operational
requirements. There can be no assurance the additional financing will be
attained or that the operations will be profitable. Such inability would have a
material adverse effect on the Company's business, operating results and
financial condition.
The Company currently has no specific commitments with regard to capital
expenditures with the exceptions of purchasing computer equipment and sensors.
The Company's future capital requirements will, depend on its ability to acquire
complementary business ventures, products or technologies.
The Company believes that its current cash balances will not provide the
liquidity necessary to satisfy the Company's working capital needs.
Inflation
Inflation has not had a significant impact on the Company since its inception
nor is it expected to have a significant impact in the foreseeable future.
Recent Accounting Pronouncements
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1 "Accounting for Costs of Computer Software Developed
or Obtained for Internal Use." SOP 98-1 is effective for financial statements
for years beginning after December 15, 1998. SOP 98-1 provides guidance over
accounting for computer software developed or obtained for internal use,
including the requirement to capitalize and amortize specific costs. The
adoption of this standard did not have a material effect on its capitalization
policy.
-10-
<PAGE>
PART II- OTHER INFORMATION
Item 1. Legal Proceedings.
On April 25, 2000, BCR Media, Inc., the plaintiff, filed a complaint
naming the Company as defendant. The complaint was filed in the Ninth Judicial
Circuit Court for Orange County, Florida. BCR Media, Inc. alleges: (1) it owns
500,000 common shares of the Company's common stock, (2) it presented the shares
to the Company's transfer agent for transfer, and (3) the Company refused to
transfer the shares in accordance with BCR Media's request. BCR Media is seeking
damages from its inability to sell the shares and has requested damages based on
the face value of the shares, plus pre-judgement interest, costs and attorneys
fees.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of the security holders, through the
solicitation of proxies or otherwise, during the first quarter of the fiscal
year covered by this report.
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit Number Description
*3.1 Articles of Incorporation and Amendments filed as
exhibits to the Company's Form 10-SB Registration
Statement filed December 22, 1999.
*3.2 3.2 By-Laws filed as exhibits to the Company's Form
10-SB Registration Statement filed December 22, 1999.
(27) Financial Data Schedule
*Previously filed.
-11-
<PAGE>
(b) Reports on Form 8-K. No reports were filed on Form 8-K during this
quarter.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: May 18, 2000
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC.
By: /s/ Helmuth Wyzisk
- -------------------------
Helmuth Wyzisk
Title: President
-12-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> Innovative Holdings & Technologies, Inc.
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<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
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