U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1999.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from_______to_______
Commission file number _______________________
INNOVATIVE HOLDINGS AND 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 32801
- -------------------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number,( 407 ) 481 - 8900
----------- ------------- -------------
Securities to be registered under Section 12(b) of the Act: None
Title of each class Name of each exchange on which
to be so registered each class is to be registered
- --------------------------------- ---------------------------------
- --------------------------------- ---------------------------------
Securities to be registered under Section 12(g) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
Common Stock, par value $0.0001 OTC BB
- --------------------------------- ---------------------------------
- --------------------------------- ---------------------------------
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 No
--- ---
<PAGE>
PART I
Item 1. Description of Business.
(a) Forward-looking Statements. Certain statements in this Form 10SB
Registration Statement, particularly under Items 1 and 2, constitute "forward-
looking statements" with the meaning of the Private Securities Litigation Reform
Act of 1995. These forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements, expressed or implied by the
forward-looking statements.
(b) Business Development. Innovative Holdings & Technologies, Inc.
(the "Company") was incorporated under the laws of the State of Colorado on
January 7, 1987. The Company has one operating subsidiary named Xtreme Telemetry
Systems, Inc. (XTS), a Florida corporation.
(c) Business of Issuer. The company is in the business of acquiring,
creating and developing high technology companies with promising new
technologies and applications. The Company does not intend to combine with
private companies in manners which may cause it to be deemed an investment
company subject to the Investment Company Act of 1940.
In January, 1999, the Company, through its XTS subsidiary, commenced
the development of the Xtreme Telemetry System, a high technology data
acquisition and delivery system for broadcast television and Internet
applications. The XTS System incorporates exclusive sensor technologies to
gather data from biological, mechanical and environmental sources. This data is
then wirelessly transmitted from its source, by way of XTS's proprietary
software and hardware, to broadcast applications on TV or the Internet. This
broadcast information is graphically displayed on TV or Internet screens, which
also serves as a "billboard", offering unique opportunities for advertisers and
sponsors to display their messages.
In October 1999, the Company began the development of a new Internet
sports and entertainment network that will offer alternative sports information
and entertainment. The concept will incorporate the XTS System telemetry data,
along with special events, celebrity features, e-commerce, chat rooms, web cams,
virtual games and news and information.
The Company is currently in discussions with a number of sports
entities worldwide for the purpose of telemetry data acquisition (via XTS) and
broadcast delivery including soccer, football, auto racing, golf and extreme
sports.
Anticipated revenues will be generated through sponsorship,
advertising and sales of telemetry content to TV and Internet providers.
The Company will offer content and information similar to many sports
and entertainment venues on the Internet, but will be unique in offering XTS's
telemetry to a global audience. It is management's belief that there is
currently no direct competition to the Company's telemetry technology.
The Company is developing propriety software and hardware applications
which have not yet been patented or copyrighted.
Employees
The Company employed three full employees, and uses the services of
six consulting firms/individuals on an as-needed basis.
<PAGE>
Item 2. Description of Property.
The Company owns no real property. It subleases 2,778 square feet of
office space from Metcalf Limited Partnership. The premises are located at 100
South Orange Ave., Suite 300, Orlando, Florida. The lease commenced on July 1,
1999 and ends on the last effective day of the Lease, October 1, 2002, unless
terminated sooner, as set forth in the lease agreement. The monthly rent is
currently $3,472.50.
Item 3. Legal Proceedings.
The Company is not a party to any pending or threatened legal
proceedings.
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 fourth quarter of the fiscal
year covered by this report.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
(a) Market Information.
The Company's common stock trades Over-the-Counter (OTC) on the OTC
Bulletin Board under the symbol IHTL. Table 3 sets forth the high and low bid
information for each fiscal quarter within the last two years. These quotations
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not represent actual transactions.
Table 3.
Bid Information
- --------------------------------------------------------------------------------
Fiscal Quarter Ended High Low
- --------------------------------------------------------------------------------
December 31, 1999 0.22 0.12
September 30, 1999 1.02 0.16
June 30, 1999 0.84 0.375
March 31, 1999 1.22 0.325
December 31, 1998 0.78 0.27
September 30, 1998 0.79 0.30
June 30, 1998 0.75 0.08
March 31, 1998 0.17 0.09
December 31, 1997 0.28 0.01
- --------------------------------------------------------------------------------
(b) Holders.
The Company has approximately 2,234 active shareholders of its common
stock holding 23,124,884 common shares.
(c) Dividends.
No dividends have been declared or paid to date and none are expected
to be paid in the forseeable future. There are no restrictions imposed on the
Company which limit its ability to declare or pay dividends on its common stock.
<PAGE>
Item 6. Management's Discussion and Analysis or Plan of Operation.
The following discussion and analysis should be read in conjunction
with "Selected Consolidated Financial Data" and the Company's Consolidated
Financial Statements and Notes thereto included elsewhere in this document.
Overview
Since its inception in 1987, the Company's purpose is to conduct
offerings of its securities to raise capital to acquire businesses in various
industries. For the period from January 9, 1987 (inception) to September 30,
1990, the Company incurred a total net loss of $1,840,993. During this period
the Company devoted substantially all of its efforts to establish and organize a
television cablecast facility. However, by the end of 1990 the operations of the
Company ceased.
From December 1990 through October 1997, the Company did not operate
any businesses and was inactive.
In November of 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.
Results of Operations
Year Ended December 31,
1998 1998
Revenues 0.0% 0.0%
Expenses:
General and Administrative 70.2% 24.0%
Research and Development 28.9% 74.8%
Interest Expense .9% .2%
Total Expenses 100% 100%
Net Loss 100% 100%
Revenues
<PAGE>
The Company had no revenues for the years ended December 31, 1999 and
1998. Revenues are expected to commence during April, 2000.
General and Administrative
General and administrative expenses have increased from $111,641 in
1998 to $429,735 in 1999. The increase in these expenses resulted from the
purchase of Xtreme and Company's dedicated support to develop their business
operations. The reduction of general and administrative expenses in 1998 was
primarily attributable to a decrease in consulting fees.
Research and Development
Research and development expenses decreased from $348,250 in 1998 to
$177,253 in 1999. The decrease was largely due to expenditures made for
consulting services related to the development of the telemetry system in the
amount of $348,250, in 1998. 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 1998 to 1999 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 1999 and 1998, the
Company generated $616,000 and $350,000, respectively, from the issuance of its
stock. In addition, the Company received $96,700 from notes and loans, in 1998.
The Company had working capital of ($241,885) as of December 31, 1999, compared
to ($248,795) as of December 31, 1998.
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 April 2000 and the
research and development costs will cease. Until such time, the Company issued
stock in the amount of $500,000 under a subscription receivable. It is expected
that these funds will facilitate the management of the Company's cash flows
until the time it begins to generate cash flows from its operations. 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.
Net cash used in investing activities was $24,791 for 1999. These
expenditures primarily related to investments in the Company's administrative
facility. 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.
<PAGE>
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.
Impact of Year 2000
The Company understands the impact of the Year 2000 (Y2K) issue. The
Y2K issue will not affect the Company's current internal structure because its
internal computers are used for administrative purposes and they are Y2K
compliant. The Company has hired an outside consultant to develop the software,
which provides real time telemetry that will store and report on data. The
outside consultant represents and warrants that the software is Y2K compliant.
The Company cannot predict the effect of the Y2K problem on its
customers and third parties. The Company has not yet established any contingency
plans but will develop such plans as needed once it identifies the scope and
magnitude of any compliance issues with third parties and customers. There can
be no assurance that the systems of other companies on which the Company's
system rely or interface will be timely converted.
Item 7. Financial Statements.
The required financial statements are included in this document
starting at Page F-1.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
There have been no changes or disagreements with accountants on
accounting or financial disclosure during the Company's two most recent fiscal
years.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
<PAGE>
The following table sets forth the officers and directors of the Company.
Name Position Age
- -------------- ------------------- ---
Helmuth Wyzisk President, Director 43
Peter Quilty Secretary 44
(a) Identify Directors and Executive Officers.
The Company's one director is Mr. Helmuth Wyzisk. Mr. Wyzisk is the
President and Chief Executive Officer. Mr. Wyzisk has served in his present
capacities since November 1997. From 1995 through 1997 he served as the
President of Celesta Corporation. Celesta offered financial and other business
services to its customers. Prior to 1995, Mr. Wyzisk was President of ELF
Investments, a company providing contract negotiation and acquisition services
to its customers.
Mr. Peter Quilty is the Secretary and Controller. Mr. Quilty was
employed with the Company in June 1999. Prior to this employment, he was the
Controller for Sound Money Investors and Florida Running, Inc. magazines.
(b) Identify Significant Employees. The Company has no significant
employees, as that term is defined, other than its executive officers.
(c) Family Relationships. None.
(d) Involvement in Certain Legal Proceedings. None of the Company's
directors, officers, promoters or control persons, if any, during the
past five years was, to the best of the Company's knowledge:
1. A general partner or executive officer of a business that had a
bankruptcy petition filed by or against it either at the time of the
bankruptcy or within the two years before the bankruptcy;
2. Convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
3. Subject to any order, judgement, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his or her involvement in any type of business, securities or
banking activities; and
4. Found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or
commodities law, and the judgement has not been reversed, suspended or
vacated.
Item 10. Executive Compensation.
The Company has two executive officers. Mr. Wyzisk has been paid no
compensation during 1998 and 1999. Mr. Wyzisk was paid executive compensation in
the form of common stock for the years 1994 through 1997 with the issuance of
6,000,000 common shares. This compensation was valued at $300,000 or five cents
per share. The company has granted stock options to its President to acquire up
to Ten Million (10,000,000) common shares for purchase price of $500,000. The
option is exercisable commencing on June 1, 2000 and expires on March 9, 2003.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
Table 1 lists the persons who are known to the Company to be the owners
of more than five percent of the Company's equity shares according to the
stockholder list provided by the Company's transfer agent as of November 8,
1999.
<PAGE>
(a) Beneficial Ownership of more than 5%.
Table 1.
(1) (2) (3) (4)
Title of Class Name and Address Amount and Nature Percent of
Class
- -------------- --------------------- ----------------- ----------
*Common Helmuth Wyzisk 7,392,500 31.9%
Common Trinity Funding 1,666,666 7.2%
Common Bodden & Company 1,666,666 7.2%
Common Multilink Investments 1,666,668 7.2%
(b) Security Ownership of Management.
Table 2.
(1) (2) (3) (4)
Title of Class Name and Address Amount and Nature Percent of
Class
- -------------- --------------------- ----------------- ----------
*Common Helmuth Wyzisk 7,392,500 31.9%
(1) Changes in Control. Management is unaware of any facts that would
effect a change in the control of the Company as of the date of this
Form 10 SB filing.
(2)
Item 12. Certain Relationships and Related Transactions.
(a) Transactions with Management and Others.
Except as otherwise set forth in this document, no member of
management, executive officer, director, nominee for a director or security
holder who is known to the Company to own of record or beneficially more than
five percent of any class of the Company's voting securities, nor any member of
the immediate family of any of the foregoing persons, has had any direct or
indirect material interest in any transaction to which the Company was or is to
be a party.
The Company retains the services of a marketing company whose principal
owner is the controlling shareholder of the Company. During 1999, payments of
$20,000 were made to this related company.
(b) Certain Business Relationships.
During 1997 and 1998 and prior to July 1, 1999 the Company's operations
were based at the offices of a shareholder. Payments were made to this
shareholder for rent, administrative and miscellaneous services. During 1998,
50,000 shares were issued to and $53,800 was paid to this shareholder. For the
eight months ended August 31, 1999, payments in the aggregate of $60,387 were
made to this shareholder.
On March 10, 1998, the Company granted an option to purchase
10,000,000 shares of its common stock to the controlling shareholder at a price
of at $.05 per share. On March 10, 1998 the Company granted an option to
purchase 2,000,000 shares of its common stock to a shareholder at a price of
$.05 per share. On March 10, 1998, the Company granted an option to purchase
8,000,000 shares of its common stock to a consultant of the Company at a price
of $.05 per share. The options are exercisable commencing on June 1, 2000 and
expire on March 9, 2003.
(c) Indebtedness of Management.
No member of the Company's management is or has been indebted to the
Company since the beginning of the Company's last fiscal year.
<PAGE>
(d) Transactions with Promoters.
The Company's promoters have not received, directly or indirectly,
anything of value from the Company, nor are they entitled to receive anything of
value from the Company.
Item 13. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1* Articles of Incorporation and amendment filed as an exhibit to
the Company's registration statement on Form 10-SB filed on
December __, 1999 are incorporated in this annual report by
reference.
3.2* By-Laws filed as an exhibit to the Company's registration
statement on Form 10-SB filed on December 22, 1999 are
incorporated in this annual report by reference.
27 Financial data schedule
---------------
* Previously filed
(b) There were no reports on Form 8-K filed by the Company during the
quarter ending December 31, 1999.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: March 28, 2000
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC.
/s/ Helmuth Wyzisk
- -------------------
By: Helmuth Wyzisk
Title: President
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
/s/ Helmuth Wyzisk March 28, 2000
- ---------------------------
By: Helmuth Wyzisk
Title: President, Director
/s/ Peter Quilty March 28, 2000
- ---------------------------
By: Peter Quilty
Title: Secretary, Controller
<PAGE>
INNOVATIVE HOLDINGS AND TECHNOLOGIES, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
Independent Auditors' Report..................................................1
Consolidated Financial Statements
Consolidated Balance Sheets..................................................2
Consolidated Statements of Operations........................................3
Consolidated Stetements of Changes in Stockholders' Equity (Deficit).........4
Consolidated Statements of Cash Flows........................................5
.
Notes to Consolidated Financial Statements.................................6-12
<PAGE>
DiRocco Dombrow, P.A.
3601 West Commercial Blvd.
Suite 22
Fort Lauderdale, FL 33309
Tel: 954-731-8181
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Innovative Holdings & Technologies, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheets of Innovative
Holdings & Technologies, Inc. and Subsidiary (a State of Colorado corporation)
at December 31, 1999 and 1998 and the related consolidated statements of
operations, changes in stockholders' equity (deficit) and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of
material misstatement. An audit includes, examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Innovative Holdings
& Technologies, Inc. and Subsidiary at December 31, 1999 and 1998, and the
results of its operations and cash flows for the years then ended 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 14 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 15. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
March 16, 2000
DiRocco Dombrow, P.A.
1
<PAGE>
INNOVATIVE HOLDINGS AND TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
Year Ended December 31,
--------------------------------
1999 1998
----------- -----------
Current assets
Cash $ 2,011 $ 4,303
Prepaid expenses 3,681 -
Note receivable 10,250 -
----------- -----------
Total current assets 15,942 4,303
Investments - 1,000,000
Property and equipment 23,121 -
Other assets 4,263 -
----------- -----------
Total assets $ 43,326 $ 1,004,303
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued
expenses $ 25,826 $ 18,148
Withholding taxes payable 163,250 163,250
Notes payable 25,000 40,000
Due to affiliate 43,751 31,700
----------- -----------
Total current liabilities 257,827 253,098
Long-term debt
Note payable - 25,000
----------- -----------
Total liabilities 257,827 278,098
----------- -----------
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 21,254,884 issued
and outstanding, respectively 2,313 2,126
Additional paid-in capital 3,080,619 3,074,780
Stock subscriptions receivable ( 334,000) -
Deficit ( 2,963,433) ( 2,350,701)
----------- -----------
Total stockholders' equity (deficit) ( 214,501) 726,205
----------- -----------
Total liabilities and stockholders' equity $ 43,326 $ 1,004,303
=========== ===========
The accompanying notes are an integral part of these financial statements.
-2-
<PAGE>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
--------------------------------
1999 1998
----------- -----------
Expenses
General and administrative $ 429,735 $ 111,641
Research and development 177,253 348,250
Interest expense 5,744 5,654
----------- -----------
Total expenses 612,732 465,545
----------- -----------
Net loss $( 612,732) $( 465,545)
=========== ===========
Basic loss per share $( 0.033) $( 0.024)
=========== ===========
Diluted loss per share $( 0.028) $( 0.022)
=========== ===========
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Shares of Shares of Additional Stock Total
Preferred Common Paid-In Subscriptions Accumulated Equity
Stock Stock Amount Capital Receivable (Deficit) (Deficit)
----------- ----------- ------- ---------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 -- 6,254,884 $ 626 $1,248,780 $ -- $(1,885,156) $ (635,750)
Issuance of stock for
repayment of accrued expenses -- 9,450,000 945 471,555 -- -- 472,500
Issuance of convertible
preferred stock for investment 20,000,000 -- 20,000 980,000 -- -- 1,000,000
Conversion of preferred stock
to common stock (20,000,000) 4,200,000 (19,580) 19,580 -- -- --
Issuance of stock for services -- 100,000 10 4,990 -- -- 5,000
Issuance of stock in connection
with March 2, 1998 offering -- 1,000,000 100 99,900 -- -- 100,000
Issuance of stock -- 250,000 25 249,975 -- -- 250,000
Net loss for the year -- -- -- -- -- (465,545) (465,545)
----------- ----------- ------- ---------- ------------- ----------- -------------
Balance at December 31, 1998 -- 21,254,884 2,126 3,074,780 -- (2,350,701) 726,205
Cancellation of stock related
to investment -- (4,200,000) (420) (999,580) -- -- (1,000,000)
Issuance of stock for services -- 50,000 5 9,995 -- -- 10,000
Issuance of stock in connection
with January 8, 1999 offering -- 950,000 95 449,905 -- -- 450,000
Issuance of stock for repayment
of notes payable -- 70,000 7 46,019 -- -- 46,026
Issuance of stock under
subscriptions agreements -- 5,000,000 500 499,500 (334,000) -- 166,000
Net loss for the year -- -- -- -- -- (612,732) (612,732)
----------- ----------- ------- ---------- ------------- ----------- -------------
Balance at December 31, 1999 - 23,124,884 $ 2,313 $3,080,619 $ (334,000) $(2,963,433) $ (214,501)
=========== =========== ======= ========== ============= =========== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
--------------------------------
1999 1998
----------- -----------
Cash flows from operating activities:
Net loss $ ( 612,732) $ ( 465,545)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Stockholder services credited
to capital 10,000 5,000
Depreciation 1,670 -
(Increase) decrease in:
Prepaid expenses ( 3,681) -
Notes receivable ( 10,250) -
Other assets ( 4,263) -
Increase (decrease) in:
Accounts payable and accrued
expenses 13,704 18,148
----------- -----------
Net cash used by operating
activities ( 605,552) ( 442,397)
Cash flows from investing activities:
Purchases of property and equipment ( 24,791) -
----------- -----------
Net cash used by investing
activities ( 24,791) -
----------- -----------
Cash flows from financing activities:
Proceeds from notes payable - 65,000
Proceeds from affiliate 12,051 31,700
Proceeds from issuance of stock 616,000 350,000
----------- -----------
Net cash provided by financing
activities 628,051 446,700
----------- -----------
Increase (Decrease) in cash ( 2,292) 4,303
Cash at beginning of year 4,303 -
----------- -----------
Cash at end of year $ 2,011 $ 4,303
=========== ===========
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies
Organization
------------
Innovative Holdings and Technologies, Inc. (the "Company") was incorporated
in the State of Colorado in 1987 as Celesta Corporation. The Company's
purpose is to raise capital by sales of its' common stock in registered
security offerings for the acquisition of businesses. The Company's office
is located in Orlando, Florida.
Subsidiary
----------
On January 8, 1999, the Company incorporated Xtreme Telemetry Systems, Inc.
(Xtreme) in the State of Florida and is its only shareholder. The
transaction was accounted for by the purchase method of accounting for
business combinations.
The subsidiary is in the business of designing, developing, producing and
selling telemetric sensor and communication products and services. The
subsidiary is in the development stage.
Consolidation Policy
--------------------
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiary. Intercompany transactions and
balances have been eliminated in consolidation.
Property and Equipment
----------------------
Property and equipment are recorded at cost. Expenditures for maintenance
and repairs are charged to expense as incurred. Depreciation is calculated
on a straight-line basis over estimated useful lives of the related assets
as follows:
Years
-----
Furniture 7
Computers 5
Depreciation expense was $1,670 for the year ending December 31, 1999.
Loss Per Share
--------------
Basic loss per share excludes any dilutive effects of stock options. Basic
loss per share is computed using the weighted-average number of common
shares outstanding during the period. Dilutive loss per share is computed
using the weighted-average number of common shares and the effects of stock
options during the period.
-6-
<PAGE>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
1. Organization and Summary of Significant Accounting Policies (Continued)
Summary of Significant Accounting Policies (Continued)
------------------------------------------------------
Income Taxes
------------
The Company accounts for income taxes using the asset and liability method
as required by Statements of Financial Standards No. 109. Deferred income
taxes are recognized for operating losses, if available, to offset federal
income taxes. An allowance is provided if it is more likely than not that
the Company will not realize the benefits of a deferred tax asset. As of
December 31, 1999 and 1998, a valuation allowance has been provided against
the deferred tax asset. See Note 9.
Accounting Estimates
--------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
2. Concentration of Risks
The Company maintains its cash accounts in one commercial bank located in
Orlando, Florida. Accounts in the bank are guaranteed by the Federal
Deposit Insurance Corporation (FDIC) up to $100,000. At various times
throughout the year the Company maintained cash balances in the bank that
exceeded the FDIC limit.
3. Property and Equipment
December 31, 1999
-----------------
Furniture $ 7,082
Computers 17,709
--------
$ 24,791
========
4. Investment
In 1998, the Company entered into a business combination agreement whereby
it sought to acquire 100% of the issued and outstanding common stock of
BioCam Company, Inc. (BioCam) by issuing 20,000,000 shares of its preferred
stock and 200,000 shares of its restricted common stock at an agreed upon
value of $1,000,000 and a commitment to incur $350,000 in operating expenses
related to BioCam. In 1998, the Company spent $348,250 in related research
and development costs. The investment is valued at cost because the Company
does not have the ability to exercise significant influence over the
subsidiary.
-7-
<PAGE>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. Withholding Taxes Payable
The Company compensates various individuals for consulting services
rendered by issuing common stock. Back up withholding tax at a rate of 20%
is being computed for these amounts.
6. Notes Payable
Notes payable as of December 31, 1999 and 1998 consisted of the following:
December 31,1999 December 31, 1998
---------------- -----------------
Convertible notes payable
Issued to existing stockholders,
Interest accrues at 12% $ - $ 40,000
Note Payable to an
existing stockholder, interest
accrues at 12%, matures
September 26,2000 $ 25,000 $ 25,000
The convertible notes payable in the amount of $40,000 and accrued interest
in the amount of $6,026 was convertible into shares of the Company's common
stock in 1999. See Note 11.
7. Due to Affiliate
The Company received $31,700 from a related company to be used for working
capital. The related company is wholly owned by the Company's controlling
stockholder. There are no formal repayment terms.
The Company is indebted to various shareholders in the amount of $12,051.
There are no formal repayment terms.
8. Lease
The Company is subleasing office space which commenced on July 1, 1999 and
expires October 1, 2002. The Company has the right to terminate the
sublease with a 210 day notice to the tenant who is the lessor of the
premises. Rent expense for the year ended December 31, 1999 was $22,085.
Minimum required future rental payments under this lease as of December 31,
1999, are:
2000 $ 44,907
2001 48,832
2002 41,716
---------
$ 135,455
=========
-8-
<PAGE>
<TABLE>
<CAPTION>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
9. 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 600,830 93,008 693,838 (693,838) -
Changes for the year
ended December 31, 1998 150,371 23,277 173,648 34% 5.0% (173,648) -
---------- ---------- ----------- ----------- ------------
Deferred tax assets at
December 31, 1998 751,201 116,285 867,486 (867,486) -
Changes for the
year ended
December 31, 1999 194,647 30,131 224,778 34% 5.0% (224,778) -
---------- ---------- ----------- ----------- -----------
Deferred tax assets at
December 31, 1999 $ 945,848 $ 146,416 $ 1,092,264 $(1,092,264) $ -
========== ========== =========== =========== ===========
</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.
-9-
<PAGE>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
10. Loss Per Share
The following tables sets forth the computation of basic and diluted loss
per share:
Year Ended December 31,
----------------------
1999 1998
---------- ----------
Numerator:
Numerator for basic
and diluted income
per share-net loss $( 612,732) $( 465,545)
========== ==========
Denominator:
Denominator of basic
income per share-
weighted average
common shares 18,679,052 19,025,718
Effect of dilutive
securities:
Stock options based
on the treasury stock
method using average
market price 2,857,143 1,904,762
---------- -----------
Denominator of diluted
loss per share 21,536,195 20,930,480
========== ==========
Basic loss per share $( .033) $( 0.024)
========== ==========
Diluted loss per share $( .028) $( 0.022)
========== ==========
11. Common Stock Transactions
During 1998, the Company issued 9,450,000 shares of restricted common stock
for the repayment of accrued expenses in the amount of $472,500. These
accrued expenses related to services performed by stockholders of the
Company for the reorganization and reactivation of the Company. The
services were valued at fair market value based upon either the open market
closing price or a board of directors designation as of the date of each
respective transaction.
In May 1998, the Company issued 20,000,000 shares of convertible preferred
stock in connection with the business combination transaction whereby it
sought to acquire 100% of the issued and outstanding stock of BioCam
Company, Inc. (BioCam), a Florida corporation.
In July 1998, the Company converted the preferred stock for 4,200,000
shares of its restricted common stock. In July 1999, this transaction was
terminated due to the failure of BioCam's shareholders to perform their
contractual obligations. The 4,200,000 shares of common stock were
subsequently cancelled in 1999.
-10-
<PAGE>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
11. Common Stock Transactions (Continued)
The Company issued 50,000 and 100,000 shares of its restricted common stock
in 1999 and 1998, respectively, to individuals as compensation in
connection with its reorganization and reactivation of the Company. These
transactions were valued at $10,000 and $5,000, respectively, which was the
fair market value based upon either the open market closing price or a
board of directors designation as of the date of each individual's
involvement with the Company.
In 1999, the Company issued 70,000 shares of its restricted common stock
for repayment of a note payable plus accrued interest. This transaction was
valued at $46,026, which was based on the note payable balance due plus
accrued interest.
The Company issued 5,000,000 shares if unreigistered common stock in the
amount of $.10 per share for a total of $500,000. These shares were issued
under stock subscriptions agreements date November 9, 1999, in accordance
with the terms and conditions of the Offering Document dated January 8,
1999. The total collected to date is $166,000.
The Company authorized shares of unregistered common stock is, as follows:
700,000 shares issued at $.50 per share on January 8, 1999
250,000 shares issued at $.40 per share on January 8, 1999
250,000 shares issued at $1.00 per share on September 17, 1998
1,000,000 shares issued at $.10 per share on March 3, 1998
The Company's legal counsel issued an opinion stating that the above shares
are exempt from registration under Section 3(b) of the Securities Act of
1993 and 504 of Regulation D.
12. Other Related Party Transactions
The Company retains the services of a marketing company whose principal
owner is a controlling shareholder of the Company. During 1999, payments of
$20,000 were made to this related company.
During 1998 and 1999 the Company made payments to a shareholder for rent,
administrative and consulting services. During 1998, 50,000 shares were
issued to and $53,800 was paid to this shareholder. For the year ended
December 31, 1999, payments in the aggregate of $88,098 were made to this
shareholder.
On March 10, 1998, the Company granted an option to purchase 10,000,000
shares of its common stock to the controlling shareholder at a price of at
$.05 per share. The option is exercisable any time after June 1, 2000 and
will expire on March 9, 2003.
On March 10, 1998 the Company granted an option to purchase 2,000,000
shares of its common stock to a shareholder at a price of $.05 per share.
The option is exercisable any time after June 1, 2000 and will expire on
March 9, 2003.
On March 10, 1998, the Company granted an option to purchase 8,000,000
shares of its common stock to a consultant of the Company at a price of
$.05 per share. The option is exercisable any time after June 1, 2000 and
will expire on March 9, 2003.
-11-
<PAGE>
INNOVATIVE HOLDINGS & TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. Cash Flow Information
During 1998, the Company issued restricted shares of its common stock as a
repayment of accrued expenses in the amount of $472,500.
During 1999:
The Company cancelled stock related to purchase of an investment in the
amount of $1,000,000.
The Company issued restricted shares of its common stock as a repayment
of notes payable plus accrued interest in the amount of $46,026.
The Company issued stock under a subscription receivable in the amount
of $334,000.
See Note 11 for further information on the above noted transactions.
14. Going Concern
As shown in the accompanying financial statements, the Company incurred net
losses of $612,732 and $465,545 for the years ended December 31, 1999 and
1998, respectively. The Company's current liabilities exceeded its current
assets by $241,885 and, $248,795 at December 31, 1999 and 1998,
respectively. 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 anticipates the completion
of the software by the end of 1999 and expects to begin generating
significant revenues by April, 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.
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE PERIOD ENDING DECEMBER 31, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001066850
<NAME> Innovative Holdings and Technologies, Inc.
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> Dec-31-1999 Dec-31-1998
<PERIOD-START> Jan-01-1999 Jan-01-1998
<PERIOD-END> Dec-31-1999 Dec-31-1998
<EXCHANGE-RATE> 1 1
<CASH> 2,011 4,303
<SECURITIES> 0 1,000,000
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 15,942 4,303
<PP&E> 3,681 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 43,826 1,004,303
<CURRENT-LIABILITIES> 257,827 253,098
<BONDS> 25,000 25,000
0 0
0 0
<COMMON> 3,313 2,126
<OTHER-SE> 3,080,619 3,074,780
<TOTAL-LIABILITY-AND-EQUITY> 43,326 1,004,303
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 612,732 465,545
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (612,732) (465,545)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (612,732) (465,545)
<EPS-BASIC> (0.033) (0.024)
<EPS-DILUTED> (0.028) (0.022)
</TABLE>
