FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended: February 28, 1999
Or
[ ] 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: 0-253335
EL GRANDE.COM, INC.
(Exact name of registrant as specified in its charter)
NEVADA 88-0409024
(State of incorporation) (IRS Employer ID No.)
1040 Hamilton Street, Suite 308
Vancouver, B.C., CANADA V6B 2R9
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (604) 689 0808
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 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
As of April 15, 1999, the Registrant had 10,818,800 shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format (check one); Yes No [X]
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN THE GENERAL INSTRUCTIONS AND IS
THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.
<PAGE>
PART I FINANCIAL INFORMATION
ELGRANDE.COM INC.
BALANCE SHEET
(UNAUDITED)
See Notes to Financials
3 Mos Ending
Feb 28
1999
- --------------------------------------------------------------------------
ASSETS
Current Assets
Cash $ 137,331
---------------
PROPERTY AND EQUIPMENT
Computer Hardware 181,730
Furniture and fixtures 26,204
Database and software 300,947
---------------
508,881
Less: Accumulated depreciation -2,160
---------------
506,721
---------------
OTHER ASSETS
Deposits 21,969
---------------
$ 666,021
- --------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 113,312
Accrued interest 529
Short term loans payable 62,000
---------------
175,841
---------------
Long Term Liabilities
Note Payable 39,543
---------------
Stockholders' Equity
Common stock - $.001 par value
200,000,000 shares authorized
10,793,800 shares issued 10,813
Additional paid in capital 1,046,762
Subscriptions receivable -38,600
Accumulated deficit during the development stage -568,338
---------------
Total Stockholders' Equity 450,637
---------------
$ 666,021
- --------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
ELGRANDE.COM INC.
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
(UNAUDITED)
See Notes to Financials
3 Mos Ending
Feb 28
1999
- --------------------------------------------------------------------------------
INCOME $ -
--------------
EXPENSES
Consulting and Professional fees 351,329
Marketing and public relations 114,432
Rent 21,830
Communication and internet fees 35,083
Office and administration 24,786
Travel and entertainment 12,904
Interest 529
Depreciation and amortization 7,445
--------------
568,338
--------------
NET LOSS -568,338
ACCUMULATED DEFICIT, BEGINNING BALANCE -
--------------
ACCUMULATED DEFICIT, ENDING BALANCE $ -568,338
==============
NET LOSS PER COMMON SHARE $ (0.053)
==============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 9,436,725
==============
<PAGE>
ELGRANDE.COM INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
February 28, 1999
See Notes to Financials
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Elgrande.com Inc., formerly Intellicom Internet Corp (hereinafter "the Company")
was incorporated in April 1998 under the laws of the State of Nevada primarily
for the purpose of developing and marketing internet applications, specifically
for books, software, audio and video media and computer games. The name change
to Elgrande. com Inc was effective on September 19, 1998. The Company maintains
an office in Vancouver, British Columbia. The head office and registered office
of the Company is Las Vegas Nevada.
The Company is in development stage, and as of November 30, 1998 had not
realized any significant revenues from its planned operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Elgrande.com Inc is presented
to assist in understanding the Company's financial statements. The financial
statements and notes are representations of the Company's management which is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been consistently
applied in the preparation of the financial statements. The interim Financial
Statement include all adjustments which in the opinion of management are
necessary to make the Financial Statements not misleading.
3. Development Stage Activities
The Company has been in development stage since its formation on April 8, 1998.
It is primarily engaged in developing and marketing internet applications.
Going Concern
- -------------
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.
As shown in the accompanying financial statements, the Company incurred a net
loss of $568,338 for the period ending February 28, 1999. At February 28, 1999,
current liabilities exceed current assets by $38,510. The Company, being a
development stage enterprise, is currently putting technology in place which
will, if successful, mitigate these factors which raise substantial doubt about
the Company's ability to continue as a going concern. The financial statements
do not include any adjustments relating to the recoverability and classification
of recorded assets, or the amounts and classification of liabilities that might
be necessary in the event the Company cannot continue in existence.
Management has established plans designed to increase sales of the Company's
products. Management intends to seek new capital from new equity securities
issuances that will provide funds needed to increase liquidity, fund internal
growth and fully implement its business plan.
Accounting Method
- -----------------
The Company's financial statements are prepared using the accrual method of
accounting.
Loss Per Share
- --------------
Loss per share was computed by dividing the net loss by the weighted average
number of shares outstanding during the period. The weighted average number of
shares was calculated by taking the number of shares outstanding and weighing
them by the amount of time they were outstanding.
<PAGE>
Provision for Taxes
- -------------------
At February 28, 1999, the Company had net operating loss of approximately
$568,338. No provision for taxes or tax benefit has been reported in the
financial statements, as there is not a measurable means of assessing future
profits or losses.
Use of Estimates
- ----------------
The process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
regarding certain types of assets, liabilities, revenues, and expenses. Such
estimates primarily relate to unsettled transactions and events as of the date
of the financial statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
3. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization are
provided using the straight line method over the estimated useful lives of the
assets. The useful lives of property, plant and equipment for purposes of
computing depreciation and amortization are five and seven years. The following
is a summary of property, equipment and accumulated depreciation and
amortization.
Cost Accumulated Depreciation
Or Amortization
- --------------------------------------------------------------------------------
Computer Hardware 181,730 1,915
Furniture and fixtures 26,204 245
Database and software 300,947 -
------- -------
508,881 2,160
======= =====
The database is expected to be completed in April, 1999, and amortization will
begin at that time.
4. INTANGIBLE ASSETS
During the period ending February 28, 1999, the Company incurred organizational
costs of $106,000 which in accordance with current accounting policy, have been
fully expensed.
<PAGE>
5. COMMON STOCK
Upon incorporation, 4,000,000 shares of common stock were distributed at $0.001
per share to the board of directors for $4,000. The second share issuance was
for 5,000,000 common shares at $0.01 per share for $50,000. Under Regulation D,
Rule 504, 943,800 shares of common stock were issued at $1.00 per share for cash
and subscriptions. At February 28, 1999, $38,600 in stock subscriptions were
receivable and paid in March '99.
In September 1998, the Company adopted the Elgrande.com Inc 1998 Directors and
Officers Stock Option Plan, a non-qualified plan. This plan allows the Company
to distribute up to 1,000,000 shares of common stock to officers, directors,
employees and consultants through authorization of the Company's Board of
Directors. As of February 28, 1999, no options have been issued.
In the period ending February 28, 1999, the Company issued 850,000 common shares
of stock to consultants for a value of $50,000. These shares are restricted and
will begin to vest in April, 1999 with 20% of shares vesting every six months
until the consultants are fully vested in their shares.
6. RELATED PARTIES
Certain consultants which received common stock as part of the 850,000 issued to
consultants, are related to the Company's directors and stockholders. A total of
187,500 common shares were issued to family members who provided services to the
Company.
7. COMMITMENTS AND CONTINGENCIES
Lease Commitments
- -----------------
The Company leases office space in Vancouver, B.C. Canada from Yaletown Centre
Investment Ltd for $2,347.50 per month. The lease is effective from September 1,
1998 to August 31, 2001. The terms of the lease required the Company to give the
lessor a $3,600 refundable security deposit. Future minimum rental commitments
under the operating lease are as follows;
Year Ending November 30, 1999 28,170
Year Ending November 30, 2001 28,170
Year Ending November 30, 2001 21,128
------
77,468
======
Database Development
- --------------------
The Company's purchase commitment for services to develop a database totaled
$247,000 plus expenses. The balance owing at February 28, 1999 amounted to
$57,000 and the vendor has agreed to defer payment until June 1999. This will be
paid either in cash or in common stock.
<PAGE>
8. TRANSLATION OF FOREIGN CURRENCY
The Company has adopted Financial Accounting Standard No 52. The Canadian
foreign exchange rate has remained approximately the same since inception
therefore, there are no material exchange rate transaction gains or losses. In
the future, the Company will record such transactions in the Statement of
Stockholders' Equity.
9. CONCENTRATION OF CREDIT RISK FOR CASH HELD AT BANKS
The Company maintains cash balances at two banks. Accounts at each institution
are insured by Federal Deposit Insurance Corp up to $100,000. No institution is
currently holding cash in excess of insurance coverage.
10. LONG-TERM DEBT
The Company's long-term debt consists of a note secured by furniture and
computers for $47,000. The terms of this agreement call for a balloon payment of
all principle on November 30, 2000. The Company's management expects to pay this
amount by the due date of the loan, which does not contain a stipulated rate of
interest. Upon origination the estimated current value of this debt was $39,543.
Imputed interest accrued at 8% per annum from September 15, 1998 to November 30,
1998 was $529. This was not adjusted for February 28, 1999.
<PAGE>
ELGRANDE.COM INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
See Notes to Financials
3 Mos Ending
Feb 28
1999
- --------------------------------------------------------------------------
CASH FLOWS PROVIDED (USED) IN OPERATIONS
Net Income (loss) $ -568,338
Depreciation and amortization 7,445
Increase in:
Accounts and loans payable 147,570
Loans payable 62,000
Accrued interest 529
----------------
Net cash used in operating activities -350,794
----------------
Cash Flows from investing activities:
Purchase of property and equipment -508,881
Deposit on leased property and other -21,969
----------------
-530,850
----------------
Cash flows from financing activities
Issuance of stock 1,018,975
----------------
Net Increase in cash 137,331
Cash, beginning of period -
----------------
Cash, end of period $ 137,331
================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest $ -
Income taxes $ -
NON-CASH INVESTING ACTIVITIES
Note issued for purchase of property and equipment $ 39,543
Consulting fees paid for in common stock 50,000
----------------
$ 89,543
===============
<PAGE>
<TABLE>
<CAPTION>
ELGRANDE.COM INC.
STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
February 28, 1999
3 Mos Ending
Feb 28
1998
- --------------------------------------------------------------------------------------------------------------------
Additional Total
Common Stock Paid - In Accumulated Stockholders
Shares Amount Capital Deficit Equity
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock in April, 1998:
For cash at $0.01 per share 4,000,000 4,000 $ - $ - $ 4,000
For cash at $0.01 per share 5,000,000 5,000 45,000 - 50,000
Issuance of common stock in Sept.98
For services at $0.06 per share 850,000 850 49,150 - 50,000
Issuance of common stock in Nov '98
For cash and subscription at $1.00
per share, less expense of $9,010 943,800 963 952,612 953,575
Subscriptions receivable -38,600
Loss for period to Feb 28, 1999 -568,338 -568,338
-----------------------------------------------------------------------
10,793,800 10,813 1,046,762 -568,338 450,637
========================================================================
</TABLE>
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following analysis of the results of operations and financial condition of
the company should be read in conjunction with the consolidated financial
statements, including the notes thereto, of the company contained elsewhere in
the form 10-qsb.
Overview
Elgrande.com Inc. (the "Company") is in the final stages of development of an
Internet application that will enable consumers to locate and purchase goods
sold directly by producers and manufacturers, thus avoiding the distribution and
retail costs of acquiring merchandise.
In August, 1998, the Company commenced the creation of a web based contact
management system which will enable the Company to manage contacts, clients, and
customers located anywhere in the world through the use of the Internet. This
included the development and deployment of a central data base system which will
allow the Company to display on its site descriptive web pages of products
available through its distributor, Baker & Taylor.
The Company has not as yet activated its website but fully expects to be in
operation by April 30, 1999.
The Company maintains an operational office in Vancouver, B.C. where its team of
employees and consultants is developing the website and distribution channels.
Results Of Operations
There are no revenues as of February 28, 1999 as the Company has not as yet
activated its website. The Company expects to go live with its site by the end
of April, 1999 and the revenue stream will commence at that time.
A summary of expenses to February 28, 1999 is as follows:
Consulting and Professional fees 351,329
Marketing and public relations 114,432
Communication and internet fees 35,083
Other 67,494
-------
568,338
=======
The Company established a budget in order to have sufficient funds to develop
the web based contact management system, and the central data base which holds
product data. To date, costs have been within the established budget and the
company has sufficient funds to proceed to activation of its website.
<PAGE>
The contract with McDonald & Harris for the customization of the data base is
now complete and McDonald & Harris have agreed to settlement of the balance of
their contract in June, 1999 either by payment of cash or the equivalent in
common shares. While the initial data base construction is complete, it is in
reality an ongoing project.
The Company currently employees 12 people and has 9 consultants under contract
who carry out various provide various services.
Liquidity And Capital Resources
To date, the Company has financed its development stage by the sale of common
stock. At February 28, 1999, the Company had 10,793,800 shares outstanding and
had raised slightly in excess of $1,000,000. These funds were used to acquire
fixed assets including computer equipment and the data base and software. This
used approximately one-half of the funds raised with the balance being used to
finance the losses to date. Revenues are expected in the month of May, 1999. The
Company has $137,000 on hand at February 28, 1999 and is in the final stages of
completion of a private placement of 300,000 common shares at $3.00 per share.
This private placement is being done with a single accredited investor located
in London England. This is expected to close by April 30, 1999. This will
provide the Company with an additional $900,000 in working capital and increase
its cash on hand to $1,037,000.
The Company maintains cash equivalents with a large Canadian financial
institution and a large U.S. financial institution. Excess cash will be invested
in highly liquid investments that are readily convertible into cash.
The Company has sufficient cash to finance its operations. While staff
requirements will continue to grow, the Company does not anticipate any problems
in the financing of this growth.
The inventory data base developed to date is in excess of 2,500,000 products,
being books, music, video and software titles. It is the intention of management
to increase this product list substantially.
In the next 12 months the Company intends to acquire additional data base
servers , web servers and routers. This equipment will be acquired as financing
or cash on hand is available. This is not expected to exceed $500,000 and would
be acquired over the next 12 months.
Year 2000 Computer Software Conversion
All computer equipment owned by the Company has been acquired in the past 12
months. Because this equipment is not considered to be a problem for Year 2000
concerns the same assurance cannot be given for third party equipment for which
the Company has no control.
<PAGE>
While the Company is confident that its systems will be compatible, no assurance
can be given that this will not impact the Company's results of operations.
Part II - Other Information
Item 1 - Legal Proceedings: There are no proceedings to report.
Item 2. - Changes in Securities: None
Item 3. - Default Upon Senior Securities: There are no defaults to report.
Item 4. - Submission of Matters to a Vote of Security Holders: None
Item 5. - Other Information: None
Item 6. - Exhibits and Reports on Form 8-K: None
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
EL GRANDE.COM, INC.
Dated: April 15, 1999
/s/ JAMES WEST
James West, President
/s/ CARLTON J. PARFITT
Carlton J. Parfitt, Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001073362
<NAME> Elgrande.com, Inc.
<CURRENCY> $CN
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1998
<PERIOD-END> FEB-28-1999
<EXCHANGE-RATE> 1.54
<CASH> 137,331
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 137,331
<PP&E> 508,881
<DEPRECIATION> 2,160
<TOTAL-ASSETS> 666,021
<CURRENT-LIABILITIES> 175,841
<BONDS> 39,543
0
0
<COMMON> 10,793,800
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 666,021
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 568,338
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 529
<INCOME-PRETAX> (568,338)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (568,338)
<EPS-PRIMARY> (0.053)
<EPS-DILUTED> (0.053)
</TABLE>
