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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15(d) OF
THE SECURITIES ACT OF 1934
For the Quarterly Period Ended: September 30, 1999
Commission file number: 0-26233
TECHLABS, INC.
Florida 65-084398
(State of incorporation) (IRS Employer Identification No.)
3435 Galt Ocean Drive, Ft. Lauderdale, FL 33308
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (954) 630-0027
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 shorter period than 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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of September 30, 1999
Common Stock, $.001 Par Value 7,085,000
Transitional Small Business Disclosure Format (Check one): YES [ ] NO [X]
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<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
NUMBER
------
<S> <C>
ITEM I: Financial Statements
Condensed Balance Sheets as of September 30, 1999
and December 31, 1998................................................ 1
Condensed Statements of Operations for the three months ended
September 30, 1999, and the nine months ended September 30, 1999..... 2
Consolidated Statement of Changes in Stockholders' Equity.................. 3
Condensed Statements of Cash Flows for the nine months ended
September 30, 1999................................................... 4
Notes to Consolidated Financial Statements................................. 5
ITEM 2: Management's Discussion and Analysis of Financial Condition
And Results of Operations............................................. 9
PART II OTHER INFORMATION
ITEM 1: Legal Proceedings.......................................................... 14
ITEM 2: Changes in Securities...................................................... 14
ITEM 3: Defaults Upon Senior Securities............................................ 14
ITEM 4: Submissions of Matters to a Vote of Security Shareholders.................. 14
ITEM 5: Other information.......................................................... 14
ITEM 6: Exhibit and Reports on Form 8-K............................................ 14
SIGNATURES................................................................. ?
EXHIBIT 11 Financial Data Schedule.................................................... ?
</TABLE>
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TECHLABS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 1999 1998
----------- ------------
(UNAUDITED) (audited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 71,204 $ 15,000
Investment securities 3,675,000 --
----------- -----------
TOTAL CURRENT ASSETS 3,746,204 15,000
PROPERTY, PLANT & EQUIPMENT, NET 320,630 --
INTANGIBLE ASSETS
Deposits 4,364 --
Organization Costs -- 11,849
----------- -----------
TOTAL ASSETS $ 4,071,198 $ 26,849
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 319,874 $ 849
Note payable 152,941 --
Deferred taxes 221,400 --
----------- -----------
TOTAL LIABILITIES 694,215 849
STOCKHOLDERS' EQUITY
Preferred stock - special class A ($.001 par value, 12,500,000 shares
authorized, 9,000,000 and 0 shares issued and outstanding) 9,000 --
Common stock ($.001 par value, 50,000,000 shares
authorized, 7,085,000 and 1,100,000 shares issued and outstanding) 7,085 1,100
Additional paid-in capital 3,139,585 24,900
Accumulated other comprehensive income 523,600 --
Accumulated deficit (302,287) --
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 3,376,983 26,000
----------- -----------
$ 4,071,198 $ 26,849
=========== ===========
</TABLE>
SEE ACCOMPANYING UNAUDITED NOTES.
1
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TECHLABS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, 1999 September 30, 1999
------------------- -------------------
<S> <C> <C>
REVENUE
Sales $ 0 $ 0
OPERATING EXPENSES
Stock compensation, officer 0 (118,500)
Stock compensation, other 0 (37,500)
Other general and administrative (57,295) (137,438)
----------- -----------
Total operating expenses (57,295) (293,438)
----------- -----------
Loss from operations (57,295) (293,438)
Provision for income taxes 0 0
----------- -----------
Loss before cumulative effect of
change in accounting principle (57,295) (293,438)
Cumulative effect of change in accounting
principle, net of income tax effects of $3,000 0 (8,849)
----------- -----------
Net Loss $ (57,295) $ (302,287)
=========== ===========
Earnings per share:
Basic and fully diluted
Before cumulative effect of change
in accounting principle $ (0.01) $ (0.05)
=========== ===========
Net income $ (0.01) $ (0.05)
=========== ===========
Weighted shares outstanding 6,600,000 5,533,120
</TABLE>
SEE ACCOMPANYING UNAUDITED NOTES.
2
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TECHLABS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ACCUMULATED
PREFERRED STOCK COMMON STOCK ADDITIONAL OTHER
------------------- ------------------- PAID-IN ACCUMULATED COMPREHENSIVE
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT INCOME TOTAL
---------- ------- --------- ------- --------- ------------ ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1998 -0- $ -0- 1,100,000 $ 1,100 $ 24,900 $ -0- $ -0- $ 26,000
Sale of shares at par to
officers, February 1999 1,500,000 1,500 118,500 120,000
Conversion of common
stock into preferred, February
1999 9,000,000 9,000 (1,000,000) (1,000) (8,000) -0-
Issuance of common stock under
private placement offering,
March 1999 5,000,000 5,000 487,170 492,170
Issuance of common stock under
private placement offering,
April 1999 230,000 230 229,770 230,000
Issuance of restricted shares
for services, April 1999 5,000 5 37,495 37,500
Issuance of common stock pursuant
to strategic alliance agreement,
April 1999 250,000 250 2,249,750 2,250,000
Increase in net unrealized gain on
marketable equity securities,
net of tax 523,600 523,600
Net loss (302,287) (302,287)
--------- ------ --------- ------- ---------- --------- -------- ----------
Balance, September 30, 1999 9,000,000 $9,000 7,085,000 $ 7,085 $3,139,585 $(302,287) $523,600 $3,376,983
========= ====== ========= ======= ========== ========= ======== ==========
</TABLE>
SEE ACCOMPANYING UNAUDITED NOTES.
3
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TECHLABS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
OPERATING ACTIVITIES:
Net loss $(302,287)
Adjustments to reconcile net loss to
net cash used by operating activities
Cumulative effect of change in accounting principle 8,849
Non cash stock transactions 156,000
(Increase) decrease in:
Other assets (4,364)
Increase (decrease) in:
Accrued expenses 319,025
---------
Net Cash Provided by Operating Activities 177,223
INVESTING ACTIVITIES:
Purchase of marketable securities (677,000)
Purchase of property, plant & equipment (320,630)
---------
Net Cash Used by Investing Activities (997,630)
FINANCING ACTIVITIES:
Borrowings from stockholder 152,941
Proceeds from the sale of stock 723,670
---------
Net Cash Provided by Financing Activities 876,611
Increase in Cash and Cash Equivalents 56,204
Cash and Cash Equivalents, Beginning of Period 15,000
---------
Cash and Cash Equivalents, End of Period $ 71,204
=========
SEE ACCOMPANYING UNAUDITED NOTES.
4
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TECHLABS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
BUSINESS The accompanying consolidated financial statements have been prepared
by the Company in accordance with generally accepted accounting principles. In
the opinion of management, the accompanying consolidated financial statements
contain all adjustments, consisting only of those of a normal recurring nature,
necessary for a fair presentation of the Company's financial position, results
of operations and cash flows at the dates and for the periods indicated. While
the Company believes that the disclosures presented are adequate to make the
information not misleading, these consolidated financial statements should be
read in conjunction with the audited financial statements and related notes for
the year ended December 31, 1998 which are contained in the Company's Form 10
Filing. The results for the three and nine month periods ended September 30,
1999 are not necessarily indicative of the results to be expected for the full
fiscal year.
BASIS OF PRESENTATION The consolidated financial statements include the accounts
of the Company and its wholly owned subsidiary, Interplanner.com, Inc. All
material intercompany transactions have been eliminated.
INVESTMENT SECURITIES Investment securities consist of marketable equity
securities. Marketable equity securities are classified into one of three
categories: trading, available-for-sale, or held-to-maturity. Trading securities
are acquired and held principally for the purpose of selling them in the near
term. Held-to-maturity securities are those securities that the Company has the
ability and intent to hold to maturity. All other securities not included in the
trading or held-to-maturity categories are available-for-sale securities.
Management determines the appropriate classification of marketable investment
securities at the time they are acquired and evaluates the continuing
appropriateness of the classification at each balance sheet date. At September
30, 1999, the Company held only available-for-sale securities and they are
reported at aggregate fair value with unrealized gains and losses excluded from
earnings and reported as a separate component of stockholders' equity, net of
deferred taxes.
RESEARCH AND DEVELOPMENT COSTS Research and development expenditures are
expensed as incurred. Costs associated with the development of computer and
internet software (CIS) systems for sale and licensing is required to be
capitalized when its technological feasibility has been established either by
completion of a detail program design or a working model of the CIS.
Capitalization of development costs ends when the CIS is made available for
general release to consumers. Costs to be capitalized include labor, benefits,
and direct overhead. At the time the software is available for release, the
associated capitalized costs are amortized over the expected term of its
economic life in proportion to revenues. At the date of these financial
statements, the Company had capitalized approximately $320,630 in programming
and hardware costs incurred pursuant to the development of the on-line calendar
technology. The Company expects to begin amortizing the capitalized costs in
October 1999 on a straight-line basis over the expected life of five years.
STOCK BASED COMPENSATION The Company measures its equity transactions with
non-employees using the fair value based method of accounting prescribed by
Statement of Financial Accounting Standards
5
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TECHLABS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
No. 123 (SFAS 123), "ACCOUNTING FOR STOCK-BASED COMPENSATION." Under the
provisions of SFAS 123, the Company recognizes as a cost or expense, the fair
value of stock awards and options to non-employees at the date of grant.
The Company continues to use the intrinsic value approach as prescribed by APB
Opinion No. 25 (APB 25) in measuring equity transactions with employees. Under
APB 25, compensation cost for equity transactions with employees is recognized
only to the extent the fair value of the equity instrument at the award date
exceeds the exercise price the employee is required to pay.
NON-CASH EQUITY TRANSACTIONS Goods and services acquired through the issuance of
common stock are valued on the date of the transaction based on the closing bid
price for the Company's common stock.
COMPREHENSIVE INCOME On January 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 130 (SFAS 130), "REPORTING COMPREHENSIVE
INCOME." SFAS 130 establishes standards for reporting and presentation of
comprehensive income and its components in a full set of financial statements.
SFAS 130 only requires additional disclosures in financial statements and it
does not affect the Company's financial position or results of operations. At
September 30, 1999, the Company had $523,600 in accumulated other comprehensive
income net of income taxes related to unrealized gains on marketable equity
securities.
NOTE 2 - CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
Statement of Position 98-5, REPORTING ON THE COSTS OF START-UP ACTIVITIES ("SOP
98-5"), issued by the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants, is effective for the Company in 1999.
SOP 98-5 requires the Company, in 1999, to expense costs capitalized in 1998
associated with start-up activities. Adoption of SOP 98-5 also requires the
Company to report the effects of applying SOP 98-5 as a cumulative effect of a
change in accounting principles in its 1999 financial statements.
NOTE 3 - STATEMENT OF CASH FLOWS SUPPLEMENTAL DISCLOSURE
During the nine months ended September 30, 1999, the Company paid no interest or
income taxes, and the following transactions not affecting cash occurred:
(a) The Company issued 1,500,000 shares of its restricted common stock as
founders' stock, valued at $118,500, in payment of compensation to an
officer of the Company.
(b) The Company issued 5,000 shares of its restricted common stock, valued at
$37,500, for services.
(c) The Company issued 250,000 shares of its common stock valued at
$2,250,000 in connection with the acquisition of marketable equity
securities.
6
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TECHLABS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
NOTE 3 - STATEMENT OF CASH FLOWS SUPPLEMENTAL DISCLOSURE (CONTINUED)
(d) The Company recorded $523,600 in unrealized gains on available-for-sale
securities, net of income taxes
NOTE 4 - INVESTMENT SECURITIES
Investment securities at September 30, 1999 consists of common stocks in an
public internet company and a privately owned software company as follows:
Available-for-sale securities:
Marketable equity securities, at cost $ 2,927,000
Gross unrealized gains 748,000
------------
Marketable equity securities, at fair value $ 3,675,000
============
NOTE 6 - CONTINGENCY
In 1998, the Company began to identify assess, and remediate "Year 2000" issues
within each of its significant computer programs and certain equipment which
contain microprocessors. Systems which have been determined not to be Year 2000
compliant are being either replaced or reprogrammed, and thereafter tested for
Year 2000 compliance. The Company anticipates that by August, 1999, conversion,
implementation, and testing activities will be completed.
The Company is in the process of identifying and contacting critical suppliers,
whose computerized systems interface with the Company's systems, regarding their
plans and progress in addressing their Year 2000 issues. The Company has
received varying information from such third parties on the state of compliance
or expected compliance. Contingency plans are being developed in the event that
any critical supplier or customer is not compliant.
The failure to correct a material Year 2000 problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
operations, liquidity, and financial condition. Due to the general uncertainty
inherent in the Year 2000 readiness of third-party suppliers, the Company is
unable to determine at this time whether the consequences of Year 2000 failures
will have a material impact on the Company's operations, liquidity, or financial
condition.
NOTE 7 - RELATED PARTY TRANSACTIONS
Included in the balance sheet under the caption "Note Payable" is $152,941 in
demand notes payable to several stockholders.
7
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TECHLABS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
NOTE 8 - STOCKHOLDERS' EQUITY
On February 24, 1999, the Company amended its Articles of Incorporation to
reduce authorization of the Company's $.001 par value preferred voting stock
from 20,000,000 to 10,000,000 shares and provided authorization for 25,000,000
shares of $.001 par value special preferred stock. Of the 25,000,000 authorized
shares of special preferred stock, 12,500,000 shares were designated as Class A
special preferred stock.
The participation rights of the Company's preferred stock in any dividends or
liquidation proceeds are limited to one percent. Each share of preferred
stock receives one vote in stockholder voting matters. At the option of the
Company, the preferred stock may be redeemed in the Company's common shares
at an exchange rate of one share of common stock for each share of preferred
stock. At September 30, 1999, there were no shares of this class outstanding.
The Class A special preferred stock is to receive no preference in dividend
distributions or in the event of liquidation. Each share of Class A special
preferred stock receives three votes in stockholder voting matters. Dividend
and redemption features are determinable at the discretion of the board of
directors. At September 30, 1999, there were 9,000,000 shares of this class
outstanding, and no dividends have been declared.
As part of the Company's strategy to protect it from unsolicited takeover
attempts and to preserve its management team, it implemented the following
equity transactions involving founders, officers, and directors:
Issuance of 1,500,000 shares of common stock valued at $.08 per share and
subject to continuing legal restrictions to certain officers. Cash proceeds
from the issuance of these shares were $1,500 and the Company recognized
compensation expense of $118,500 for the balance.
Conversion of 1,000,000 shares of the founders common stock into 9,000,000
shares of Class A special preferred stock.
During the nine months ended September 30, 1999, the Company sold in a private
placement exempt from registration, 1,500,000 shares of common stock at $.10 per
share. Available with these shares were options to purchase an additional
3,500,000 shares also at a purchase price of $.10 per share. These options were
later exercised, resulting in aggregate proceeds to the Company from the two
blocks of $492,170. In addition, the Company sold 230,000 shares of common stock
at $1 per share in a private placement exempt from registration resulting in
proceeds of $230,000 to the Company. In late March 1999, the Company's common
shares began trading in the over-the-counter market. On April 27, 1999 when the
Company's common shares were trading at a price of $9.00 per share, it issued
250,000 shares valued at $2,250,000 in connection with the acquisition of an
investment in marketable securities of an Internet company as disclosed in note
3. The shares issued were unregistered, and because of the size of the block,
are subject to certain legal restriction on the number of shares that may be
resold at one time by the holder.
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Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion regarding the Company and
its business and operation contains "forward-looking
statements" within the meaning of Private Securities
Litigation Reform Act 1995. Such statements consist of any
statement other than a recitation of historical fact and can
be identified by the use of forward-looking terminology such
as "may," "expect," "anticipate," "estimate" or "continue" or
the negative thereof or other variations thereon or comparable
terminology. The reader is cautioned that all forward-looking
statements are necessarily speculative and there are certain
risks and uncertainties that could cause actual events or
results to differ materially from those referred to in such
forward looking statements. The Company does not have a policy
of updating or revising forward-looking statements as thus it
should not be assumed that silence by management of the
Company over time means that actual events are hearing out as
estimated in such forward-looking statements.
OVERVIEW
The Company is a developer and incubator of start-up
and emerging Internet companies and business, seeking to make
strategic alliances with such companies and further their
growth and development through a variety consulting and
financing services.
The Company was incorporated on May 26, 1998 and its
sole operating activities to date were the conception and
development of its subsidiary's Internet site,
http://www.interplanner.com, and corresponding business plan,
the hiring of employees, including programmers and designers,
and administrative staff and the negotiation of strategic
alliances with other Internet companies. As of September 30,
1999, the Company had not generated any cash revenues.
The Company has no operating history upon which an evaluation
of the Company and its prospects can be based. The Company
anticipates that advertising revenues form its Internet site
and investment income form its equity investments will
constitute substantially all of the Company's revenues, if
any, during the foreseeable future. Since the Company
anticipates that it will incur negative cash flows from
operations for the foreseeable future, the Company believes
that it success will depend upon its ability to obtain revenue
from advertising from its Internet site, which can not be
assured. The Company's ability to generate revenues is subject
to substantial uncertainty. The Company's prospects must be
considered in light of the risks, expenses and difficulties
frequently encountered by start-up companies in general, and
specifically with respect to the new and rapidly evolving
market for Internet products, content and services. To
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address these risks, the Company must, among other things,
effectively establish, develop and maintain relationships with
advertising customers, advertising agencies and other third
parties, providing original, informative, entertaining and
compelling content to Internet users, develop and upgrade its
technology, respond to competitive developments, attract new
qualified personnel and retain existing qualified personnel.
There can be no assurance that the Company will succeed in
such risks and the failure to do so would have a material
adverse effect on the Company's business, financial condition
and operating results. Additionally, the Company's lack of an
operating history makes prediction of future operating results
difficult. Accordingly, there can be no assurance that the
Company will be able to generate revenues or that the Company
will achieve, or maintain profitability or generate revenues
from operation in the future.
The Company's quarterly operating results may
fluctuate significantly as a result of variety of factors,
many of which are outside of the Company's control. Factors
that may adversely affect the Company's quarterly operating
results include the level of use of the Internet, demand for
advertising, seasonal trends in both Internet use and
advertising placements, the addition or loss of advertisers,
advertising budgeting cycles of individual advertisers, the
level of use of the Company's Internet sites, the amount and
timing of capital expenditures and other costs relating to the
development, operation and expansion of the Company's Internet
operations, the introduction of new sites and services by the
Company or its competitors, price competition or pricing
changes in the industry, technical difficulties or system
failures, general economic conditions and economic conditions
specific to the Internet and Internet media. In seeking to
effectively implement its operating strategy, the Company may
elect form time to time to make certain advertising and
marketing or acquisitions decisions that could have a material
adverse effect on the Company's business, financial condition
and operating results. The Company believes that period to
period comparisons of its operating results are not meaningful
and should not be relied upon for an indication of future
performance. Due to all of the foregoing factors, it is likely
that in some future quarters, the Company's operating results
may be below the expectations of public market analysts and
stockholders. In such event, the price of the Company's Common
stock would likely be materially adversely affected.
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RESULTS OF OPERATIONS
REVENUES
From the date of inception through September 30, 1999, the Company did not
generate any cash revenues and had no results from operations. During the three
and nine month periods ended September 30, 1999, the Company did not generate
any revenues and, the Company was not a party to any advertising or other
agreement or arrangement from which it could record deferred revenues or
reasonably expect to generate cash revenue. The sole source of funds for the
Company from the date of inception through September 30, 1999 has been through
the sale of equity.
Subsequent to the period ended September 30, 1999, the Company's wholly owned
subsidiary, Interplanner.com, exited the development stage with the initial beta
launch of its web site on November 8, 1999. Moving forward, Interplanner.com is
positioned to begin to introduce its products commercially, initiating
advertising programs from which revenues can be derived, and look to expand into
new market opportunities during the remainder of fiscal 1999. Among such new
market opportunities is the development of strategic partnerships with Internet
content and/or service providers which could potentially allow for the building
of significant traffic to the Interplanner.com web site, a substantial increase
in the number of registered site users and an expansion of its revenue base.
Subsequent to the end of the periods ended September 30, 1999 the Company
entered into preliminary discussions with several potential strategic partners,
as well as with consulting organizations possessing expertise in this regard.
However, there are no assurances that any such discussions and contacts will
result in the development of any strategic partnerships or other beneficial
relationships.
Additionally, during the nine month period ended September 30, 1999, the Company
purchased an equity interest in TheBigHub.com, Inc. (www.thebighub.com) and an
interest in a privately held on line direct marketing Company, Focalex
(www.focalex.com), a leading participant in the "PERMISSION" e-mail direct
marketing business. The Company believes that the market for the services
offered by Focalex will grow significantly as both online users and marketers
try to find ways to cut through the growing clutter of e-mail spam and
traditional banner advertising. The Company currently holds a 5% equity stake in
Focalex and is presently considering opportunities through which it may increase
it's ownership position.
Therefor, as a result of both increased revenue from existing companies, and
incremental revenues from new acquisitions and investments, the Company expects
to report future revenue growth. During the nine months ended September 30, 1999
it reported $523,600 in net unrealized gains on marketable equity securities,
net of taxes, inclusive of an unrealized loss of $1,211,297 on marketable
securities during the three months ended September 30, 1999. Such net gains are
included as accumulated other comprehensive income on the balance sheet.
COSTS OF REVENUES
Since inception and through September 30, 1999, the Company had not incurred any
cost of revenues, as the Company had not generated revenues during such period.
There can be no assurance that the Company will be able to generate sufficient
revenues, advertising or otherwise, to cover its costs of revenues. The failure
to generate sufficient cash revenues in order to cover its costs of revenues
will result in continued cash losses and will continue to have a material
adverse effect on the Company's business, financial condition and operating
results.
OPERATING EXPENSES
Organizational expenses incurred from inception to December 31, 1998 were
capitalized and recorded as organization costs. During the three and nine months
ended September 30, 1999, these costs were expensed and included in the caption
"cumulative effect of change in accounting principle" on the Statement of
Operations.
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Operating expenses totaling $57,295 and $293,438 for the three and nine months
periods ended September 30, 1999, respectively, consist primarily of
professional, consulting fees and other organization costs including non cash
compensation totaling $ 156,000 during the nine month period. No non cash
compensation was paid during the three months ended September 30, 1999. The
Company expects operating expenses to significantly increase in future periods
as a result of, among other things, the additional costs of being a public
company.
INCOME TAXES
At December 31, 1998, the Company had not recorded an income tax benefit or
provision due to the insignificance of its operations. During the three and nine
months ended September 30, 1999, the Company recorded a benefit and provision
for income taxes of $793,703 and $224,400, respectively, resulting primarily
from its unrealized gain on investment securities.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1998 and September 30, 1999, the Company's principal source of
liquidity was $15,000 and $71,204, respectively, in cash and cash equivalents
derived from private sales of the Company's equity securities. The Company has
primarily financed its operations through the private sale of equity securities.
The Company has no material commitments for capital expenditures. The Company
anticipates a substantial increase in its capital expenditures through the
remainder of fiscal 1999 consistent with its anticipated growth. The Company
currently believes that available funds, cash flows expected to be generated
from operations, if any, and the net proceeds of private placements will be
sufficient to fund its working capital and capital expenditures requirements for
the remainder of fiscal 1999. Thereafter, the Company may need to raise
additional funds. The Company's ability to grow will depend in part on the
Company's ability to expand and improve its Internet operations, expand its
advertising and marketing efforts, expand and improve its Internet user support
capabilities and develop new Internet content and applications. In connection
therewith, the Company may need to raise additional capital in the foreseeable
future from public or private equity or debt sources in order to finance such
possible growth.
There can be no assurance that we will be successful in establishing meaningful
or profitable operations in any area. Although there is great opportunity in the
Internet, there is little barrier to entry by competitors.
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YEAR 2000 RISKS
Since the Year 2000 Computer Problem was well known prior to our
incorporation, we have been able to plan our business strategies to minimize the
problem. We have been assured that the server hosting our Interplanner.com site
is Year 2000 compliant. We expect to utilize only equipment and services which
can assure us of Year 2000 compliance. Nevertheless, we may be affected by Year
2000 problems of service suppliers over which we have little control such as
electricity suppliers and telecommunications suppliers on which the Internet
depends.
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PART II OTHER INFORMATION
ITEM 1: Legal Proceedings
None.
ITEM 2: Changes in Securities
None.
ITEM 3: Defaults Upon Senior Securities
None.
ITEM 4: Submissions of Matters to a Vote of Security Shareholders
None.
ITEM 5: Other Information
None.
ITEM 6: Exhibits and Reports on Form 8-K
No reports on Form 8-K filed during period
Exhibit 27 Financial Data Schedule
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TECHLAB, INC.
-----------------------------------
(Registrant)
Date 11/22/99 /s/ Thomas J. Taule, Chairman
---------------------------- -----------------------------------
(Signature)*
Date
---------------------------- -----------------------------------
(Signature)*
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1999 AND FOR THE THREE AND NINE MONTH
PERIODS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 71,204
<SECURITIES> 3,675,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,746,204
<PP&E> 320,630
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,071,198
<CURRENT-LIABILITIES> 694,215
<BONDS> 0
0
9,000
<COMMON> 7,085
<OTHER-SE> 3,360,898
<TOTAL-LIABILITY-AND-EQUITY> 4,071,198
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 293,438
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (293,438)
<INCOME-TAX> 0
<INCOME-CONTINUING> (293,438)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (8,849)
<NET-INCOME> (302,287)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
