FORM 10-QSB-A
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(MarkOne)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the three month 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>
ELGRANDE.COM INC.
( A Development Stage Company)
FINANCIAL STATEMENTS
Unaudited - See Notes to Financial Statements
FEBRUARY 28,1999
<PAGE>
- --------------------------------------------------------------------------------
ELGRANDE.COM INC.
BALANCE SHEET
See Notes to Financials
(unaudited)
3 Mos Ending Period ending
Feb 28 November 30
1999 1998
- --------------------------------------------------------------------------------
ASSETS
Current Assets
Cash $ 137,331 236,350
---------------------------------
PROPERTY AND EQUIPMENT
Computer Hardware 56,464 38,407
Furniture and fixtures 26,204 20,878
Database and software 426,213 296,408
---------------------------------
508,881 355,693
Less: Accumulated depreciation -2,160 -2,160
---------------------------------
506,721 353,533
---------------------------------
OTHER ASSETS
Deposits 21,969 3,600
Organization costs, net of amortization - 100,715
---------------------------------
21,969 104,315
---------------------------------
TOTAL ASSETS $ 666,021 694,198
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 113,312 234,189
Accrued interest 529 529
Short term loans payable 62,000 90,000
---------------------------------
175,841 324,718
---------------------------------
Long Term Liabilities
Note Payable 39,543 39,543
---------------------------------
TOTAL LIABILITIES 215,384 364,261
---------------------------------
Stockholders' Equity
Common stock - $.001 par value
200,000,000 shares authorized
10,793,800 shares issued 10,813 10,794
Additional paid in capital 1,046,762 1,027,996
Subscriptions receivable -38,600 -538,050
Accumulated deficit during the
development -568,338 -170,803
---------------------------------
Total Stockholders' Equity 450,637 329,937
---------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 666,021 694,198
================================================================================
See accompanying notes to financial statements
<PAGE>
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ELGRANDE.COM INC.
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
See Notes to Financials
(Unaudited)
3 Mos Ending Period Ending
Feb 28 November 30
1999 1998
- --------------------------------------------------------------------------------
INCOME $ - -
---------------------------------
EXPENSES
Consulting and Professional fees 249,586 107,028
Marketing and public relations 96,152 18,217
Rent 11,865 9,965
Communication and internet fees 23,605 14,237
Office and administration 13,206 8,403
Travel and entertainment 7,680 5,224
Interest 0 529
Depreciation and amortization -5,285 7,200
---------------------------------
396,809 170,803
---------------------------------
NET LOSS -396,809 -170,803
ACCUMULATED DEFICIT, BEGINNING BALANCE -170,803
Adjustment to opening deficit -726 -
---------------------------------
ACCUMULATED DEFICIT, ENDING BALANCE $ -568,338 -170,803
=================================
NET LOSS PER COMMON SHARE $ (0.053) (0.0181)
=================================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 9,436,725 9,436,725
=================================
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
ELGRANDE.COM INC.
STATEMENT OF CASH FLOWS
See Notes to Financials
(unaudited)
3 Mos Ending Period Ending
Feb 28 November 30
1999 1998
- --------------------------------------------------------------------------------
CASH FLOWS PROVIDED (USED) IN OPERATIONS
Net Income (loss) $ -396,809 -170,803
Depreciation and amortization 0 7,445
Increase in:
Accounts and loans payable -126,889 59,989
Loans payable -28,000 90,000
Accrued interest 0 529
---------------------------------
Net cash used in operating activities -551,698 -12,840
---------------------------------
Cash Flows from investing activities:
Purchase of property and equipment -153,188 -141,950
Deposit on leased property and other -18,369 -3,600
Writeoff, (payment) on organizational costs 106,000 -106,000
---------------------------------
-65,557 -251,550
---------------------------------
Cash flows from financing activities
Issuance of stock 518,236 500,740
---------------------------------
Net Increase (decrease) in cash -99,019 236,350
Cash, beginning of period 236,350 -
---------------------------------
Cash, end of period $ 137,331 236,350
=================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest $ - -
Income taxes $ - -
NON-CASH INVESTING ACTIVITIES
Note issued for purchase of property
and$equipmen 0 39,543
Purchase commitment for database 57,000 174,200
---------------------------------
$ 57,000 213,743
=================================
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
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ELGRANDE.COM INC.
STATEMENT OF STOCKHOLDERS' EQUITY
February 28, 1999
(unaudited)
<TABLE>
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 #.010. 943,8000. 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>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements
<PAGE>
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ELGRANDE.COM INC.
NOTES TO THE FINANCIAL STATEMENTS
February 28, 1999
See Notes to Financials
(unaudited)
- --------------------------------------------------------------------------------
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 operations 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 February 28, 1999 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 theCompany'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. This statement is the results for the first quarter ending
February 28, 1999. The company intends to change its fiscal year end to May
31, in order to reflect its business cycle. These statements include all
adjustments which in the opinion of management are necessary in order that
the financial statements not be misleading.
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>
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ELGRANDE.COM INC.
NOTES TO THE FINANCIAL STATEMENTS
February 28, 1999
See Notes to Financials
(unaudited)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Provision for Taxes
----------------------------
At February 28, 1999, the Company had net operating loss of approximately
$396,809. 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.
Accumulated Depreciation
Cost or Amortization
------------ -------------------------
Computer Hardware $ 56,464 $ 1,915
Furniture and fixtures 26,204 245
Database and software 426,213 -
------------ ---------
$ 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 November 30, 1998, the Company incurred
organizational costs of $106,000. Since that date, policy regarding the
capitalization of organization costs have changed, and the balance has been
written off in the period ending February 28, 1999.
<PAGE>
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ELGRANDE.COM INC.
NOTES TO THE FINANCIAL STATEMENTS
February 28, 1999
(unaudited)
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 shares
vesting 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, 2000 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>
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ELGRANDE.COM INC.
NOTES TO THE FINANCIAL STATEMENTS
February 28, 1999
(unaudited)
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>
- --------------------------------------------------------------------------------
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's website became fully activated on June 2, 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 had not yet
activated its website. The Company expects the revenue stream will commence in
June, 1999.
A summary of expenses to February 28, 1999 is as follows:
Consulting and Professional fees 249,586
Marketing and public relations 96,152
Communication and internet fees 11,865
Other 39,206
---------
396,809
The Company budgeted funds on hand in order 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 through activation of its website.
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 13 people and has 9 consultants under contract
who carry out various provide various services.
LIQUIDITY AND CAPITAL RESOURCES
<PAGE>
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 June, 1999.
The Company has $137,000 on hand at February 28, 1999. On April 30, 1999, the
Company completed a private placement of 300,000 Units of securities at $3.00
per Unit with a single accredited investor. This provides the Company with an
additional $900,000 in working capital.
On April 27, 1999 the Company entered into a preliminary agreement with an
accredited investor for a proposed investment agreement whereby the investor
will be obligated to purchase common stock at the Company's exercise of its Put
option in amounts and at prices based upon the market price and trading volume
at the time of the Company's exercise of its put option. The proposed commitment
is for the right to put up to $100,000,000 of common stock to the investor over
a thirty-six month period from the date the definitive investment agreement is
executed. The Company expects to execute this agreement on or before June 30,
1999. While the Company does not expect that this investment agreement to
provide any additional or substantial liquidity prior to October 31, 1999, it
does believe that it will provide such liquidity thereafter.
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.
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:
On April 30, 1999, the Company completed a private placement of 300,000 Units of
securities at $3.00 per Unit with a single accredited investor in London,
England. Each Unit consisted of one share of common stock and three warrants to
acquire an additional share of common stock at $7.50, $15.00 and $25.00 before
expiring on May 31, 2006. The Company relied upon the exemption from the
registration requirements of the Securities Act of 1933 set forth in Section
4(2) thereof for the sale of the Units.
In May, 1999, the Company granted a warrant to acquire 490,000 shares of common
stock at a price equal $2.50 per share or after six months and for every six
month period thereafter, equal to the lesser of $2.50 per share or the lowest
Closing Bid Price of the Company's common stock for the five trading days ending
on the six month anniversary date. The warrant was granted to a single
accredited investor in connection with a proposed investment agreement whereby
the investor will be obligated to purchase common stock at the Company's option
in amounts and at prices based upon the market price and trading volume at the
time of the Company's exercise of its put option. The Company relied upon the
exemption from the registration requirements of the Securities Act of 1933 set
forth in Section 4(2) thereof for the sale of the warrant.
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: June 9, 1999
/s/ RANDAL PALACH
- ------------------------
Randal Palach, President, Chief Executive Officer
/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> 450,637
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 666,021
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 396,809
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (396,809)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (396,809)
<EPS-BASIC> (0.053)
<EPS-DILUTED> (0.053)
</TABLE>
