SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
[X] Quarterly report pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the quarterly period ended August 31, 1999
[ ] Transition report pursuant to Section 13 or 15(d) of the Exchange Act
Commission file number 0-20277
INTERNET VIP, INC.
(exact name of small business issuer as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
11-3500919
(IRS Employer Identification No.)
1155 University St., Suite 602, Montreal, Canada H3B 3A7
(Address of principal executive offices)
(514) 876-9222
(Registrant's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 of 15(d) of the Exchange Act during the past 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
As of August 31, 1999 the Registrant had 22,347,895 shares of its Common Stock
outstanding
Transitional Small Business Disclosure Format: YES [ ] NO [X]
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
INTERNET VIP, INC. AND SUBSIDIARIES
(A development stage company)
CONSOLIDATED BALANCE SHEET
AS OF AUGUST 31, 1999
(Unaudited)
(U.S. $)
ASSETS
CURRENT ASSETS
Cash and equivalents $ 30,510
Other current assets 63,230
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Total current assets 93,740
PROPERTY AND EQUIPMENT 250,440
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TOTAL ASSETS $ 344,180
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 43,850
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Total current liabilities 43,850
STOCKHOLDERS' EQUITY
Common Stocks, $0.0001 par value; 50,000,000 shares
authorized; 22,347,895 shares issued and outstanding 2,234
Additional paid-in capital 1,234,490
Deferred compensation (50,000)
Accumulated deficit (886,394)
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Total Stockholders' equity 300,330
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 344,180
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS BALANCE SHEET
<PAGE>
INTERNET VIP, INC. AND SUBSIDIARIES
(A development stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 1999
AND FOR THE PERIOD FROM
INCEPTION (NOVEMBER 13, 1998) TO AUGUST 31, 1999
(Unaudited)
(U.S. $)
<TABLE>
<S> <C> <C> <C>
For the
For the Three For the Six Period from
Months ended Months ended Inception to
Aug. 31, 1999 Aug. 31,1999 Aug. 31,1999
Operating Expenses
Management salaries and fee related expenses $ 22,000 $ 58,040 $ 72,707
Marketing and advertising expenses 53,200 89,100 94,330
Travel 74,613 102,941 198,388
Professional fees 185,465 310,454 394,790
Amortization of deferred compensation 25,000 50,000 50,000
Other 22,330 56,849 76,179
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TOTAL OPERATING EXPENSES 382,608 667,384 886,394
------- --------- ------------
Net loss for the period $ (382,608) $ (667,384) $ (886,394)
========= ========= =========
BASIC AND DILUTED NET LOSS PER SHARE (0.02) (0.03)
====== ======
WEIGHTED AVERAGE COMMON STOCK
OUTSTANDING - Basic and diluted 22,210,394 21,872,355
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
<PAGE>
INTERNET VIP, INC. AND SUBSIDIARIES
(A development stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED AUGUST 31, 1999
AND FOR THE PERIOD
FROM INCEPTION (NOVEMBER 13, 1998) TO AUGUST 31, 1999
(Unaudited)
(U.S. $)
<TABLE>
<S> <C> <C>
For the
For the Six Period from
Months ended Inception to
Aug. 31, 1999 Aug. 31,1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (667,384) $ (886,394)
Adjustments to reconcile net loss to net cash
used in operating activities
Amortization of deferred compensation 50,000 50,000
Noncash consulting fees 237,500 237,500
Changes in operating assets and liabilities
Other current assets (62,429) (63,230)
Accrued expenses (24,408) 43,850
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Net cash used in operating activities (466,721) (618,274)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (225,440) (250,440)
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Net cash used in investing activities (225,440) (250,440)
CASH FLOWS FROM FINANCING ACTIVITIES
Stockholders' capital contribution, net 499,047 899,224
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Net cash provided by financing activities 499,047 899,224
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Net increase (decrease) in cash and cash equivalents (193,114) 30,510
CASH AND CASH EQUIVALENTS, beginning of period 223,624 0
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CASH AND CASH EQUIVALENTS, end of period $ 30,510 $ 30,510
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NONCASH FINANCING ACTIVITIES:
Common stock issued for consulting services $ 237,500 $ 337,500
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS
<PAGE>
INTERNET VIP, INC. and SUBSIDIARIES
(a development stage company)
NOTES TO CONSLIDATED FINANCIAL STATEMENTS
AS OF AUGUST 31, 1999
(unaudited)
(U.S. $)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the unaudited interim
financial statements furnished herein include all adjustments necessary for a
fair representation of the Company's financial position at August 31, 1999 and
the results of its operations for the three and six months period ended August
31, 1999, and its cash flows for the six-month period ended August 31, 1999. All
such adjustments are of a normal recurring nature. Interim financial statements
are prepared on a basis consistent with the Company' annual financial
statements. Results of operations for the three and six months period ended
August 31, 1999 are not necessarily indicative of the operating results that may
be expected for the year ending February 29, 2000.
For further information, refer to the consolidated financial statements
for the fiscal year ended February 28, 1999 and notes thereto included in the
Company's Form 10-SB file with the Securities and Exchange Commission.
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 disclosures of
contingent assets and liabilities at the dates of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
<PAGE>
Item 2. Plan of operations
The following discussion should be read in conjunction with the financial
statements and related notes that are included under Item 1. Statements made
below which are not historical facts are forward-looking statements.
Forward-looking statements involve a number of risks and uncertainties
including, but not limited to, general economic conditions, our ability to
complete development and then market our services, competitive factors and other
risk factors as stated in other of our public filings with the Securities and
Exchange Commission.
Whereas this report is for the three and six month period ended August 31, 1999
and was due October 15, 1999, it is first being filed on or about May 26, 2000.
You are directed to the Company's filing on May 26, 2000 of Amendment No. 3 to
Form 10-SB for more information about the Company. Accordingly, this section
will primarily discuss the Company's position as of the filing date, as opposed
to the due date.
<PAGE>
During the three and six months period ending August 31,
1999, the Company had incurred an operating loss of $382,608 and 667,384,
respectively, and has accumulated deficit at August 31, 1999 of $886,394.
The expenditures in this quarter were primarily on travel to further business
development in Russia, open an office in Moscow, and consulting services
related to future financing activities.
During the quarter, IVIP commenced the Russian segment of its
business. This division will operate through IVIP's 80% owned subsidiary
Intertel XXI. IVIP leased space to house its switching center in Moscow and a
sales and marketing office. The rent for this space is approximately $4,700 per
month. The Company also expended approximately $52,000 to develop a marketing
and advertising plan for the promotion of the Company's services in Russia.
The monthly financial requirements for the Company, not
including the cost of the leases for fibre-optic lines, and not including
management and senior consultant salaries and fees, for both the Montreal and
Moscow offices are estimated to be $27,000. Management and senior consultant
salaries and fees are currently $20,000 per month. However, from October 1, 1999
until May 1, 2000, management agreed to postpone receiving their salaries.
The Company has installed its equipment and built the network
required for the first phase of its business objectives, its network centers.
The Company has begun the process of signing up users and anticipates revenues
to begin in May 2000.
During 1999 the Company completed private offerings in which
it netted approximately $1,200,000. The bulk of the proceeds were used to
purchase and install equipment for our facilities in Moscow and Montreal,
Canada, to finance trips to develop the Company's business in Russia, and
network leasing costs.
The Company does not expect to conduct any product research
and development and we have purchased all the equipment we need to install in
our current facilities. The Company intends to retain marketing and public
relations consultants as necessary, and to hire additional staff if warranted by
its sales volume on an as needed basis.
The Company intends to expand its operations into St.
Petersburg once the Moscow facility is operational using cash flows generated by
the Moscow facility and additional financing. We have issued a purchase order
for the necessary equipment and anticipate installation to commence in the
summer of 2000. While the Company will not have to pay for the equipment for six
months and believes it will be able to pay for the equipment out of then
existing cash flows, the Company anticipates requiring approximately $125,000 to
finance startup costs for the new facility.
Beginning on March 16, 2000, the Company commenced a new
private placement of up to $1,500,000. As of May 25, 2000, $613,500 had been
raised. Total costs for each new facility including equipment, installation,
marketing and office personnel is currently estimated at $300,000. The
balance of this funding, if successful will be utilized for advertising and
marketing to address the retail prepaid phone card market. To date, the
Company has not spent any funds on any additional facilities.
The Company's business plan currently calls for expansion into
other markets, such as Mexico, Cuba, India and Vietnam, if and when
opportunities present themselves and as funding permits. During the next twelve
months, the Company intends to use the same formula for financing any
expansions, i.e., external funding for startup costs and internal financing for
operations. Other than as described, the Company does not currently anticipate
funding its growth with additional public financings, except in the event an
unexpected and unusual opportunity is presented.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
During the quarter, the Company sold 150,000 shares of
restricted common stock priced at $0.50 per share. These shares were issued
pursuant to the exemption from registration contained in Regulation S of the
Act.
During the quarter, the Company issued 275,000 shares of
restricted common stock to 2745-2515 QUEBEC INC., as payment for public
relations services. These shares were issued pursuant to the exemption from
registration contained in Section 4(2) of the Act.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter for which
this report is being filed.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the 1934 Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereto duly
authorized.
INTERNET VIP, INC.
By: /s/Ilya Gerol
Ilya Gerol, Chairman of the Board
May 25, 2000
