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 November 30, 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 November 30, 1999 the Registrant had 22,925,555 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 NOVEMBER 30, 1999
(Unaudited)
(U.S. $)
ASSETS
CURRENT ASSETS
Cash and equivalents $ 111,629
Other current assets 78,257
-------------
Total current assets 189,886
PROPERTY AND EQUIPMENT 287,160
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TOTAL ASSETS $ 477,046
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 36,130
Loans payable 27,604
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Total current liabilities 63,734
STOCKHOLDERS' EQUITY
Common Stocks, $0.0001 par value; 50,000,000 shares
authorized; 22,925,555 shares issued and outstanding 2,293
Additional paid-in capital 1,523,262
Deferred compensation (25,000)
Accumulated deficit (1,087,243)
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Total Stockholders' equity 413,312
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 477,046
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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 STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED NOVEMBER 30, 1999
AND FOR THE PERIOD FROM
INCEPTION (NOVEMBER 13, 1998) TO NOVEMBER 30, 1999
(Unaudited)
(U.S. $)
<TABLE>
<S> <C> <C> <C>
For the
For the Three For the Nine Period from
Months ended Months ended Inception to
Nov. 30, 1999 Nov. 30,1999 Nov. 30,1999
Operating Expenses
Management salaries and fee related expenses $ 2,500 $ 60,540 $ 75,207
Marketing and advertising expenses 0 89,100 94,330
Travel 52,871 155,812 251,259
Professional fees 31,560 342,014 426,350
Amortization of deferred compensation 25,000 75,000 75,000
Other 80,585 137,434 156,764
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Total operating expenses 192,516 859,900 1,078,910
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Operating loss for the period (192,516) (859,900) (1,078,910)
Interest expenses 8,333 8,333 8,333
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Net loss for the period $ (200,849) $ (868,233) $ (1,087,243)
========= ========= ===========
BASIC AND DILUTED NET LOSS PER SHARE $ (0.01) $ (0.04)
====== ======
WEIGHTED AVERAGE COMMON STOCK
OUTSTANDING - Basic and diluted 22,451,788 22,065,499
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
<PAGE>
INTERNET VIP, INC. AND SUBSIDIARIES
(A development stage company)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED NOVEMBER 30, 1999
AND FOR THE PERIOD
FROM INCEPTION (NOVEMBER 13, 1998) TO NOVEMBER 30, 1999
(Unaudited)
(U.S. $)
<TABLE>
<S> <C> <C>
For the
For the Nine Period from
Months ended Inception to
Nov. 30, 1999 Nov. 30,1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (868,233) $(1,087,243)
Adjustments to reconcile net loss to net cash
used in operating activities
Amortization of deferred compensation 75,000 75,000
Non-cash consulting fees 252,500 252,500
Non-cash interest 8,333 8,333
Changes in operating assets and liabilities
Other current assets (60,789) (61,590)
Current liabilities (29,524) 38,734
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Net cash used in operating activities (622,713) (774,266)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (262,160) (287,160)
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Net cash used in investing activities (262,160) (287,160)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Stockholders' capital contribution, net 747,878 1,148,055
Short-term borrowings 25,000 25,000
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Net cash provided by financing activities 772,878 1,173,055
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Net increase (decrease) in cash and cash equivalents (111,995) 111,629
CASH AND CASH EQUIVALENTS, beginning of period 223,624 0
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CASH AND CASH EQUIVALENTS, end of period $ 111,629 $ 111,629
========== ==========
NONCASH FINANCING ACTIVITIES:
Common stock issued for non-cash consideration $ 277,500 $ 377,500
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT
<PAGE>
INTERNET VIP, INC. and SUBSIDIARIES
(a development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF NOVEMBER 30, 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 November 30, 1999 and
the results of its operations for the three and nine months period ended
November 30, 1999, and its cash flows for the nine month period ended November
30, 1999. All such adjustments are of a normal recurring nature. Interim
financial statements are prepared on a basis consistent with the Company's
annual financial statements. Results of operations for the three and nine months
period ended November 30, 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 filed 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.
2. Loan payable
On October 1, 1999, the Company entered into a $25,000 loan agreement
with a non-affiliated party. Pursuant to the agreement the Company issued the
lender 50,000 shares of common stock in lieu of interest. The fair value of
these shares of $25,000 was recorded as prepaid interest and will be amortized
over the six months term of the loan.
<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 nine month period
ended November 30, 1999 and was due January 15, 2000, it is first being filed on
or about June 30, 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.
Internet VIP, Inc. (hereafter, the "Company" or "IVIP") was
formed in November, 1998, to sell long distance international telephone services
using the new technology, Voice over Internet Protocol ("VoIP"). From its
controlling Switching Center in Montreal, Canada, calls are to be routed from
anywhere in North America to anywhere in the world using VoIP technology. The
first phase of operations plans to encompass calls, primarily, from North
America to St. Petersburg and/or Moscow, and vice versa.
The Company during the quarter was still a development stage
company and as yet had no revenues. Revenues, on a small scale, commenced during
April 2000. At this stage in the Company's development, IVIP is still mostly
dependent on external financing.
IVIP established its business presence in Montreal, with the
opening of an office at 1155 University Avenue Suite 602 in February, 1999. The
Montreal office has become the Company's worldwide headquarters and the hub of
its telecommunications network.
During the three and nine months period ending November 30,
1999, the Company incurred an operating loss of $200,849 and $868,233,
respectively, for an accumulated deficit, since inception of $1,087,243. The
expenditures in this quarter were primarily for travel to further business
development in Russia, to oversee the installation of switching equipment in
Moscow, and consulting services related to future financing activities.
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 its facilities in Moscow and Montreal,
Canada, to finance trips to develop the Company's business in Russia, and
network leasing costs.
Also, during this quarter the Company borrowed $25,000 for
six months, from a non-affiliated party. Interest on this loan is to be paid in
the form of 50,000 common shares.
<PAGE>
The Company has installed its equipment and built the network
required for the first phase of its business objectives. The Company has begun
the process of signing up users and revenues began in April 2000.
In the quarter, IVIP sales personnel, both Canadian and
Russian, continued to visit with potential customers in Russia, primarily in the
government and industrial sectors, in ongoing efforts to obtain letters of
interest or letters of intent in anticipation of the network becoming
operational.
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. The Company at the quarter end had
approximately $112,000 cash and cash equivalents.
Management and senior consultant salaries and fees are
currently $20,000 per month. However, effective October 1, 1999, and until May
1, 2000, management had agreed to postpone receiving their salaries. To further
reduce overhead costs, management will seek to reduce rent and related expenses
for the office in Montreal.
Monthly payment for network lines began upon successful
installation of our equipment and operating of the two centers. This occurred
around December 31, 1999. From that time onward IVIP is required to pay out
approximately $60,000 per month for dedicated line leases. The commencement of
utilization of leased lines will require additional capital, which the Company
will seek to obtain through private placements. There is no assurance that IVIP
will obtain any of this financing.
IVIP has no plans to conduct any research and development nor
to expend any additional funds on plant and equipment in the near term, except
as indicated above. As well, the Company does not anticipate realizing any
income from the sale of any plant or significant equipment.
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 June 25, 2000, $618,500 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.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
<PAGE>
Item 2. Changes in Securities
During the quarter, the Company sold 497,660 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 and Regulation D of the Act.
Also, during the quarter, the Company agreed to issue 50,000 shares of
restricted common stock to Avic Technologies as interest payment for a loan made
to the Company, These shares were issued pursuant to the exemption from
registration contained in Section 4(2) of the Act.
Also, during the quarter, the Company agreed to issue 30,000 shares of
restricted common stock to various individuals, in lieu of monies owed to them
for consulting services rendered to the Company. 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.
A financial data schedule is filed herewith as an exhibit.
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.
(registrant)
By: /s/ Ilya Gerol, Chairman of the Board
(signature & title)
June 30, 2000
(date)
