UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For quarterly period ended June 30, 1999
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 001-14889
INTERNET FOOD COMPANY, INC.
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(exact name of registrant as specified in its charter)
Nevada 88-0390657
- ------ ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
631-A Cass Street, Suite 181
Monterey, California 93940
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (831) 647-8553
Indicate by check mark whether the registrant: (1) has filed all reports
required 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 for the
past 90 days.
Yes No X
The number of shares of the Registrant's Common Stock, $.001 par value, as of
June 30, 1999 was 17,780,695 outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
To the Board of Directors
Internet Food Company
Monterey, California
I have reviewed the accompanying balance sheet of Internet Food Company, Inc.,
as of June 30, 1999 and the related statements of Operations and Statement of
cash flows for the periods ending June 30 and 1998, and the statement of
shareholders equity for the Period ended June 30, 1999, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants. All information included in
these financial statements is the representation of the management of Internet
Food Company, Inc.
A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit 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, I do not express such as opinion.
Based on my review, I am not aware of any material modifications that should be
made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
September 16, 1999
<PAGE>
INTERNET FOOD COMPANY, INC.
BALANCE SHEET
June 30, 1999
ASSETS
------
<TABLE>
<CAPTION>
<S> <C>
Current assets
Cash and cash equivalents $ 3,096
Accounts receivable- trade 97
Accounts receivable-barter 5,546
Due from affiliate 100
Inventory 2,138
Total current assets 10,977
Equipment
Equipment 700
(Less) Accumulated depreciation (100)
600
Other assets
Trade name 6,050
Total assets $ 17,627
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable $ 389
Note payable-R.Strahl 2,650
Note payable-Monterey Ventures 9,113
State corporate tax payable 400
Total current liabilities 12,552
Shareholders' equity
Capital stock, par value $.10, 50,000,000 authorized
17,780,695 shares issued and outstanding 1,778,070
Paid in capital (1,645,670)
Common stock offering costs (6,150)
Retained earnings (121,175)
Total shareholders' equity 5,075
Total liabilities and shareholders' equity $ 17,627
See accompanying notes and accountant's review report
</TABLE>
<PAGE>
INTERNET FOOD COMPANY,INC.
STATEMENT OF OPERATIONS
For the six months ended June 30, 1999 and
from date of inception to June 30, 1998
<TABLE>
<CAPTION>
Three months ended Six months ended
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $ 2,580 $ 0 $ 13,009 $ 0
Cost of sales 1,748 0 9,028 0
Gross profit 832 0 3,981
Operating expenses
Advertising 13 45
Bank charges 32 559
Consulting fees 1,555 180 23,786 180
Depreciation 50 100
Dues and subscriptions 380 380
Equipment lease 0 2,937
License and permits 275 321
Management fees 0 182 6,500 182
Office expense 261 1,130
Postage and delivery 611 1,290
Professional fees 1,130 3,000 9,885 3,000
Rent 2,900 4,416
Travel and entertainment 1,125 1,942
Telephone 306 636
Organization costs 8,163 8,163
Total operating expenses 8,638 11,525 53,927 11,525
Loss from operations (7,806) (11,525) (49,946) (11,525)
Other income and (expense)
Loss on sale of investments 0 0 (499) 0
Interest expense (75) 0 (660) 0
(75) 0 (1,159) 0
Loss prior to income taxes (7,881) (11,525) (51,105) (11,525)
State corporate Income tax 0 800 800 800
Net loss $ (7,881) $ (12,325) $ (51,905) $ (12,325)
Loss per common share $ (0.0026) $ (0.1369) $ (0.0030) $ (0.1369)
Weighted average
of shares outstanding 17,148,222 90,000 17,441,067 90,000
</TABLE>
See accompanying notes and accountant's review report
<PAGE>
INTERNET FOOD COMPANY. INC.
STATEMENT OF CASH FLOWS - INDIRECT METHOD
For the six months ended June 30, 1999 and
from date of inception to June 30,1998
<TABLE>
<CAPTION>
Three months Six months
1998 1999 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net loss $ (7,881) $ (12,325) $ (51,905) $ (12,325)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation expense 50 100
(Increase) Decrease in current assets 3,965 3,600
Increase (Decrease)in current liabilities 1,971 8,438 (18,358) 8,438
Net cash provided by operating activities (1,895) (3,887) (66,563) (3,887)
Financing activities
Sale of common stock 5,000 67,700 5,000
Common stock offering costs (1,100) (1,100)
Cash provided by financing activities 0 3,900 67,700 3,900
Increase(Decrease)in cash and cash equivalents (1,895) 13 1,137 13
Cash and cash equivalent at end of the period 4,991 0 1,959 0
Cash and cash equivalent at end of the year $ 3,095 $ 13 $ 3,096 $ 13
Supplemental disclosure of financing activities
Interest paid $ 585
Taxes paid 1,200 1,200
</TABLE>
See accompanying notes to the financial statements
<PAGE>
INTERNET FOOD COMPANY
NOTES TO THE FINANCIAL STATEMENTS
June 30,1999
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of the business
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Internet Food Company, Inc. was formed to sell retail gourmet and specialty
cheese on the internet and at a retail location. The Company was incorporated
under the laws of the State of Nevada on April 14, 1998. The Company is
currently doing business as California Cheese Connection. Operations did not
commence until July, 1998.
Pervasiveness of estimates
- --------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and cash equivalents
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For financial statement presentation purposes, the Company considers all short
term investments with a maturity date of three months or less to be cash
equivalents.
Inventories
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Inventories are recorded at the lower of cost or market, using the first-in,
first-out method. inventories consist principally of cheeses and specialty food
items.
Bad debts and accounts receivable
- ---------------------------------
No allowance for doubtful accounts has been recorded as management believes all
amounts to be fully collectible.
Equipment
- ---------
Equipment is recorded at cost. Maintenance and repairs are expensed as incurred;
major renewals and betterments are capitalized. As the equipment on the balance
sheet was purchased at year-end, no provision for depreciation is made in the
current year.
Income taxes
- ------------
income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the recorded book basis and tax basis
of assets and liabilities for financial and income tax reporting. The defferred
tax assets and liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. Deferred taxes are also recognized for
operating losses that are available to offset future taxable income and tax
credits that are available to offset future federal income taxes.
<PAGE>
INTERNET FOOD COMPANY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 1999
NOTE 2 ACCOUNTS RECEIVABLE
Accounts receivable-Trade
- -------------------------
Accounts receivable trade consists primarily of sales to hotels and corporations
purchasing gift baskets. At June 30, 1999 the total was $97. Terms of all sales
to these are net 30 days.
Accounts receivable-Barter
- --------------------------
The Company is involved with an exchange group whereby goods and services are
bartered. The individual members of this group purchase goods from another
member and a voucher is written for payment of the goods or services provided.
The Company then has a credit to purchase goods and services from other members
of the barter group. At June 30, 1999 the balance that the Company is owed in
goods and services was $5,544. The Company uses the barter to purchase goods and
services. For the period ending June 30, 1999 the total amount recorded as sales
was $ 4,812 and #3,707 was recorded as purchase of goods and services.
NOTE 3 NOTES PAYABLE
The notes payable are from shareholders of the Company. The notes are for
working capital until the Company becomes profitable. The notes will be repaid
from operations when there is sufficient working capital. Interest is being
charged at 1% a month. Total amount of borrowings for the period ended June 30,
1999 was $9,113. The Company paid off prior year borrowings of $ 12,990.
NOTE 4 COMMON STOCK
Common Stock
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During the period ended June 30, 1999 and June 30, 1998, pursuant to an
exemption under Rule 504 of Regulation D of the Securities Act of 1933, as
amended (the act), the Company sold solely to accredited and/or sophisticated
investors, its common stock. Each share has a par value of $.10. There were
twenty different transactions to different investors raising a total of $ 67,700
during the year period ended June 30, 1999 and six different transactions
raising a total $5,000 for the period ending June 30,1998.
Paid in capital
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At incorporation the Company issued 15,385,000 shares of common stock with a
fair value of $0.1 in payment of services. This amount is shown as a negative
paid in capital amount since consideration was given in the form of services at
the time of incorporation and no amount was reflected on the Company's books for
the consideration.
<PAGE>
INTERNET FOOD COMPANY
NOTES TO THE FINANCIAL STATEMENTS
June 30, 1999
(con't)
NOTE 4 COMMON STOCK
The Company also issued 135,695 shares of common stock with a fair value of $.01
to three individuals. the shares were given to these individuals for advancing
the Company money for working capital purposes. These transactions occurred
during the prior year.
NOTE 5 RELATED PARTY TRANSACTIONS
On August 1, 1998 the Company entered into an agreement with a shareholder to
provide investment-banking services. During the period ending June 30, 1999 the
shareholder advanced the Company $9,133 for operations. There were no repayments
on the advances. There were no advances during the period ended June 30, 1998.
As previously discussed, the Company entered into agreements with some of its
shareholders to provide bridge loans for continuing operations of the Company.
Total proceeds from the borrowings were $15,490 during the prior year. The
Company repaid $ 12,990 of the loans during the six month period ending June 30,
1999. There were no transactions of this type during the period ended June 30,
1998.
Various shareholders of the company have performed consulting services for which
the Company has paid them consulting fees. For the period ending June 30, 1999
this amount paid to the shareholders amounted to $22,946. Services include
clerical support, rent, office supplies etc.
During the period ended June 30, 1998 the Company borrowed $ 2,500 from
shareholders for working capital purposes.
NOTE 6 INCOME TAXES
The benefit for income taxes from operations consisted of the following
components. Current tax benefit of $7,725 resulting from a net loss before
income taxes, and deferred tax expense $7,725 resulting from the valuation
allowance recorded against the deferred tax asset resulting from the net
operating loss. The change in the valuation allowance for the period ending
March 31, 1999 was $7,725. Net operating loss carryforward will expire 2014.
The valuation allowance will be evaluated at the end of each year, considering
positive and negative evidence about whether the asset will be realized. at the
time the allowance will either be increased or reduced;
<PAGE>
INTERNET FOOD COMPANY
NOTES TO THE FINANCIAL STATEMENTS
June 30,1999
(con't)
NOTE 6 INCOME TAXES
reduction could result in the complete elimination of the allowance if positive
evidence indicates that the value of the deferred tax asset is no longer
required. It is management's position that the deferred tax asset be recorded
when there is positive evidence it will be realized.
NOTE 7 STOCK OPTIONS
On January 1, 1999 and January 28, 1999 the Board of Directors voted to issue
stock options to various individuals. The options are to be exercised at a price
of $.01 per share. There were a total of 1,040,000 options to be exercised. All
options were exercised by the due date. The options were granted for services
rendered.
NOTE 8 MATERIAL ADJUSTMENTS
Management represents that all material adjustments to the financial statements
have been made.
NOTE 9 GOING CONCERN
As of June 30, 1999, the Company has net losses since inception, which raises
substantial doubt about its ability to continue as a going concern.
Management has subsequently been able to get its internet site up and running.
This is expected to provide additional sales. Also, management has stepped up
its efforts to increase its sales to hotels and other businesses.
The Company's ability to continue as a going concern is dependent upon
successful public offering and ultimately achieving profitable operations. There
is no assurance that the Company will be successful in its efforts to raise
additional proceeds or achieve profitable operations. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
During the Second Quarter, the Company's financial condition has minimal changes
as a result of operations for the Quarter. The Company has received revenues of
$13,009 for the year-to-date. This is an increase of $2580 from the previous
quarter ending March 31, 1999. The year to date revenues ended June 30, 1998 was
$0.00
The Company expects increasing revenues as a result of the Company's marketing
efforts and development of the web site.
There is no material deficiency in the Second Quarter.
At present, the Company's major sources of liquidity are cash ($3,096), accounts
receivable ($5,546), and inventory ($2,138).
No material commitment for capital expenditures were made during the second
quarter and none are expected in the Third Quarter. There is no research or
development underway.
Sales for the Third Quarter should increase over the Second Quarter with the
Company's continued marketing efforts.
There was an increase of $4,000 on notes payable with a decrease of $1,200 in
accounts payable. The note payable was to Monterey Ventures Inc.
The Company has not been affected by unusual events or transactions that would
have any impact on reported income or operations.
The Company increase in sales was a result of its marketing efforts.
Consumer purchases of the Company's products continue to increase. Consumer
purchases of all goods over the internet continue to increase domestically and
internationally. This will continue to have a positive effect on the Company's
revenues.
The Company knows of no events that will cause a material change in cost and
revenues.
The revenue increase for the quarter resulted from the marketing efforts of the
Company's principals.
The internet web site will increase the Company revenue by providing easier
access to the Company's products.
The Company plans to increase its market share by soliciting hotels and
businesses and educating consumers through the internet.
The Company is still a development stage and has not felt the effects of
inflation.
The primary concern of the Company would be an increase in milk price that would
have a ripple effect on wholesale cheese prices. Should an increase occur, the
Company would increase its cost of sales.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
The Company has not timely filed quarterly reports for 1999 and is in the
process of completing the filings.
Item 6. Exhibits and Reports on Form 8-K
None.
Signature Page
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.
INTERNET FOOD COMPANY, INC.
/s/ Jan Demianew
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Dated: December 29, 1999 NAME: Jan Demianew
TITLE: President
