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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-KSB
AMENDMENT 1
[] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2000
or
[] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 000-26951 INTELILABS.COM, INC.
(Name of small business issuer as specified in its charter)
DELAWARE 65-0830670
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Water Gardens 1620 26th Street, 3rd Floor Santa Monica CA 90404
(Address of principal executive offices) (Zip code)
310-255-8893
(Issuer's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
(None)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
(None)
Check whether Registrant (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ] No [x]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
the Form 10-KSB. [ ]
Registrant had no revenues for its fiscal year ended December 31, 1999. As of
November 7, 2000, Registrant had 24,400,000 shares of its $.0001 par value
Common Stock issued and outstanding with an aggregate market value of the common
stock held by non-affiliates of $12,320,000. 18,300,000 of the Registrant's
issued and outstanding shares are treasury shares held by the Registrant and
have no voting powers. This calculation is based upon the closing sales price of
$11 per share on November 7, 2000.
Transitional Small Business Disclosure Format (check one). Yes [x] No [ ]
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TABLE OF CONTENTS AND CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
PART I PAGE
<S> <C> <C>
Item 1 Description of Business 1
Item 2 Description of Property 5
Item 3 Legal Proceedings 6
Item 4 Submission of Matters to a Vote of Security Holders 6
PART II
Item 5 Market for Common Equity and Related Stockholder
Matters 6
Item 6 Management's Discussion and Analysis 6
Item 7 Financial Statements 7
Item 8 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 7
PART III
Item 9 Directors, Executive Officers, Promoters and
Control Persons; Compliance with
Section 16(a) of the Exchange Act 7
Item 10 Executive Compensation 9
Item 11 Security Ownership of Certain Beneficial Owners and
Management 10
Item 12 Certain Relationships and Related Transactions 13
Item 13 Exhibits and Reports on Form 8-K 14
</TABLE>
<PAGE>
PART I
ITEM 1 - DESCRIPTION OF BUSINESS
A. BUSINESS DEVELOPMENT
1. FORM AND YEAR OF ORGANIZATION
Intelilabs.com, Inc.. ("Intelilabs" or the "Company") was incorporated as
Quentin Road Productions, Inc. on April 20, 1998. The principal offices of the
company are located at Water Gardens 1620 26th Street, 3rd Floor Santa Monica CA
90404.
2. ANY BANKRUPTCY, RECEIVERSHIP OR SIMILAR PROCEEDING
Not Applicable.
3. ANY MATERIAL RECLASSIFICATION, MERGER, CONSOLIDATION,
OR PURCHASE OR SALE OF A SIGNIFICANT AMOUNT OF ASSETS
NOT IN THE ORDINARY COURSE OF BUSINESS
Not Applicable.
B. BUSINESS OF ISSUER
The Company's activities since its inception was centered around the
evaluation of possible business opportunities and development of business model.
Significant inroads were made in this regards in June of 2000. The previous
management of the Company resigned and a fresh team took over the management
with the appointment of a new Board of Directors by the shareholders of the
Company. The business plan developed by the new management team is as follows.
1. Principal Products and Services and their Market.
a. The Market
1. INCUBATION SERVICE
Intelilabs.com plans to serve as an incubator for new Internet companies.
It plans to achieve this by building strategic alliances with service providers
that will complement Intelilab's software development capability to provide
all-round service to its clients. As an incubator, Intelilabs.com plan's to
assist in the development of new Internet companies.
The management of Intelilabs.com believes that incubation services are
currently in demand. The number of incubators have increased drastically in last
couple of years. According to the National Business Incubation Association,
almost four for profit incubators open per week across America.
As any other aspect of the economy these days, the greatest increase is in
the Internet-related business incubation. Why the sudden rush? As per a report
issued by US Department of Commerce & International Trade Administration, US
Industry & Trade Outlook 2000, worldwide population of Internet users will reach
507.1 million by year 2003. These users are predicted to generate revenues in
the tune of 1,268.84 billion dollars.
In order to compete for these anticipated revenues, new Internet companies
are being launched on a daily basis. However, according to a recent survey
published by THE STANDARD, entitled "State of the Startup 2000," only 10% of the
start-ups belong to an incubation company. Currently, a substantial gap exists
between the number of
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potential customers for incubation services and the number of actual customers
Therefore, the management of the Company believes that there is a great deal of
potential for growth in the incubation services sector.
2. OFFSHORE DEVELOPMENT FOR SMALL & MEDIUM SIZE COMPANIES
Intelilabs.com also intends to provide web development services to small
and medium size companies by utilizing offshore development facilities. In
today's increasingly competitive business environment, companies have become
dependent on the Internet not only for marketing of their product and services,
but also to increase efficiency in day-to-day operations, as a strategic tool
for re-engineering business processes, restructuring organizations and for
reacting quickly to competitive, regulatory and technological changes. For these
reasons, a company's web presence has increasingly become critical for the
survival of the business and its ability to continue to generate profits for its
shareholders.
As businesses have become more dependent on the Internet, corporate
budgets dedicated to web development have grown dramatically. According to
International Data Corporation, total web spending by Small Businesses would
reach 199 Billion dollars by the year 2003. This represents an increase of 131%
since 1999. Spending on Software development will be the largest piece of this
pie with a predicted spending of in excess of $40 billion.
Simultaneously with this significant increase in demand for internet
related services, the supply of qualified Information Technology ("IT") IT
professionals has decreased in most developed countries, particularly the United
States. This has resulted in drastic increase in the compensation structure of
these professionals. According to the US Department of Commerce, the average
annual increase in wages for IT professionals between 1990 to 1997 was 40% as
opposed to 28% for all-private industry workers. This increase in wages for IT
professionals has consequently increased the cost of IT services for the end
user. A survey conducted by Gartner Group predicts that the cost of building
e-commerce site will increase 25% annually during the next two years.
This increase in the cost of IT services represents a significant hurdle
to small and medium size companies in the implementation of their Internet
strategies. However, recent advances in telecommunications and the growing
acceptance of telecommuting, have led to the globalization of the market for IT
services. It is now well accepted that remote offshore software development and
maintenance is possible if the offshore facilities leverage world-class physical
and technological infrastructure, quality processes, project management
methodologies, and data communications infrastructure. By outsourcing software
development and maintenance projects to offshore IT service providers, companies
have been able to access skilled IT professionals in lower cost environments
which results in significant cost reductions related to these developments.
Intelilabs is in a position to develop such an off-shore IT development
infrastructure, by establishing an overseas facilities in Pakistan and by
entering into joint ventures with foreign partners. This will enable Intelilabs
to provide quality service cheaper then its competitors. This will enable us to
compete aggressively in the target market of Medium and Small size businesses.
b. The Products and Services
Intelilabs plans to offer the following products and services to its
customers:
1. E-Commerce Solutions.
2. B2B Solutions.
3. Turnkey Solutions.
4. Infrastructure Development.
5. Web Designing.
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In addition to these products, the Company plans to offer the following
services :
1. Incubation Service.
2. HR Outsourcing.
3. E-Commerce Strategy Consultancy.
c. Business Strategy
In the hopes of receiving a sizeable market share of the Internet services
market, the management of Intelilabs.com has developed the following strategy.
OFFSHORE DEVELOPMENT CENTER STRATEGY
Intelilabs.com plans to develop a world-class Internet development center
in Pakistan, equipped with a state-of-the-art technological and data
communications infrastructure having an ability to provide video conferencing,
Internet/E-mail connectivity and remote computer access.
INCUBATION SERVICES
Intelilabs.com will position itself as a Virtual Incubator. The idea here
is to promote Intelilabs as an incubator that exists in virtual space. All of
the companies that it incubates would need to source their own space and office
equipment, however, Intelilabs will provide them support in following areas:
- Software Development
- Financing
- Marketing Assistance
- Management Consulting.
Intelilabs.com plans to provide the software development services by
developing its own in-house development team. Software development encompasses
web development as well as any customization and changes required in launching a
web site. In addition, Intelilabs would also provide the initial marketing
material such as CD's, flash sites, etc., within the same budget. Intelilabs.com
plans to give customers the ability to receive the software development services
at flat rates in order to ensure that they stay within their budgets.
Unlike most incubators, Intelilabs.com does not intend to offer financing
to its customers. Instead, Intelilabs plans to build alliances with the
investment/finance community. The idea behind Intelilab's incubation service is
to build partnerships and alliances with companies offering varied core
competencies. This way the Company will be able to gather pool of resources who
are best in their class for all future companies, which the Company decides to
incubate.
Intelilabs plans to establish similar alliances with web-based marketing
firms. If Intelilabs is successful in building these alliances, customers would
have the ability to choose between several different marketing firms in order to
best fill their needs.
Intelilabs plans to provide management consulting to its customers by
establishing a board of advisors that would be available to provide advice to
these companies. The management of Intelilabs envisions this board of advisors
as consisting of individuals with proven track records in their areas of
expertise. Individuals serving on this board would be required to sign an
agreement to commit a certain amount of time to Intelilabs. These advisors would
be available to serve on the boards of directors of companies that Intelilabs is
incubating. In exchange for their services, these advisors would receive stock
options for Intelilabs stock.
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The establishment of alliances with other companies would benefit
Intelilabs in multiple ways. First, it will allow Intelilabs to promote itself
as an incubator. Second, forming business alliances may provide Intelilabs with
referrals for new customers. According to a report by Forrester Research,
affiliate marketing drives about 13% of on-line sales, although there is no
guarantee that Intelilabs will achieve this level of success. Third, the
existence of alliances would enhance the credibility of Intelilabs in the eyes
of perspective customers.
2. Marketing and Sales.
Intelilabs' products and services will be marketed primarily through the
Company's office in Southern California and through the Company's web site,
www.intelilabs.com on the Internet. The Company plans to start establishing a
sales team over the course of its next fiscal year.
3. Status of any Publicly Announced New Product or Service.
Intelilabs presently has the ability to provide software development and
management consulting services. However the Company has not yet established the
alliances it would need to provide them with assistance in marketing and
finance.
4. Competition.
The traditional model for Internet incubators is to provide office space to
customers with high bandwidth access to Internet. These incubators provide an
infant company with the office space, computers, and all the other tools that
are necessary for the development of the company. In return for these services,
incubators often demand to receive significant equity positions in their
customer companies.
The management of Intelilabs believes that incubator's compete on the basis
of cost and of the quality of services provided. Because most of Intelilab's
competitors provide office space and equipment and Intelilabs does not provide
these items, the management of Intelilabs believes that the Company can
successfully compete with these other incubators by providing services at a
lower cost. Additionally, the Company believes that it can keep costs down by
using inexpensive offshore IT professionals. Although other companies are also
utilizing offshore IT professionals, most of these companies are targeting large
corporations whereas Intelilabs is targeting small and medium size businesses.
If Intelilabs is successful in establishing business alliances, Intelilabs may
also be in a position to provide it's customers with the same level of services
as these other incubators.
5. Sources and Availability of Information and Principal Suppliers.
Not Applicable
6. Dependence on One or a Few Major Customers.
Not applicable.
7. Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements
and/or Labor Contracts.
Intelilabs has registered the Intelilabs.com domain name.
8. Government Approval.
No government approval is currently required for any of our current
products or services.
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9. Effect of any Existing or Proposed Government Regulations.
Intelilabs is not currently subject to direct regulation by any domestic or
foreign governmental agency, other than regulations applicable to businesses
generally, and laws or regulations directly applicable to access to online
commerce. However, due to the increasing popularity and use of the Internet and
other online services, it is possible that a number of laws and regulations may
be adopted with respect to the Internet or other online services covering issues
such as user privacy, pricing, content, copyrights, distribution and
characteristics and quality of products and services. The adoption of any
additional laws or regulations may decrease the growth of the Internet or other
online services, which could, in turn, decrease the demand for Company products
and services and increase the Company's cost of doing business, or otherwise
have a material adverse effect on our business, prospects, financial condition
and results of operations. Moreover, the applicability to the Internet and other
online services of existing laws in various jurisdictions governing issues such
as property ownership, sales and other taxes, libel and personal privacy is
uncertain and may take years to resolve. Any such new legislation or regulation,
the application of laws and regulations from jurisdictions whose laws do not
currently apply to the Company's business, or the application of existing laws
and regulations to the Internet and other online services could have a material
adverse effect on our business, prospects, financial condition and results of
operations.
Permits or licenses may be required from federal, state or local government
authorities to operate on the Internet. No assurances can be made that such
permits or licenses will be obtainable. The Company may be required to comply
with future national and/or international legislation and statutes regarding
conducting commerce on the Internet in all or specific countries throughout the
world.
10. Research and Development Costs
Research and development expenses consist primarily of personnel and
equipment costs required to develop the Intelilabs web site. As of June 30,
2000, the Company had spent approximately $25,000 in developing our web site.
The Company expects to incur an additional $50,000 to $100,000 in additional
development costs over the next two years. Software development costs are
expended as incurred.
11. Cost and Effects of Compliance with Environmental Laws and Regulations
The Company is not involved in a business which involves the use of
materials in a manufacturing stage where such materials are likely to result in
the violation of any existing environmental rules and/or regulations. Further,
the Company does not own any real property that would lead to liability as a
land owner. Therefore, the Company does not anticipate that there will be any
costs associated with the compliance of environmental laws and regulations.
12. Employees
As of June 30, 2000, the Company employed 5 full-time employees and no
part-time employees. The Company hires independent contractors on an "as needed"
basis only. The Company has no collective bargaining agreements with its
employees. The Company believes that its employee relationships are
satisfactory. The Company will attempt to hire additional employees as needed
based on its growth rate.
ITEM 2 - PROPERTIES
The Company's offices are located at Water Gardens 1620 26th Street, 3rd
Floor Santa Monica CA 90404. The Company pay $300 per month to receive
conference facilities and secretarial services at this location pursuant to an
oral agreement. Additionally, the Company has a sublease for 743 square feet of
office space at Suite 620, at 3415 S Sepulveda Blvd., Los Angeles, CA 90034, for
$1,448.85 per month. This sublease commenced June 26, 2000 and terminates on
January 31, 2001.
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ITEM 3 - LEGAL PROCEEDINGS
To the knowledge of management, there is no material litigation pending
or threatened against the Company.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders, through the solicitation
of proxies or otherwise.
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) MARKET INFORMATION
Our common stock has traded on the Over-the-Counter Bulletin Board
since February 14, 2000. Our trading symbol is ITEB. Prior to June 26, 2000, our
trading symbol was QRPI.
The following table sets forth the high and low bid prices for the
Company's common stock since its inception as reported in the over-the-counter
market. The prices below also reflect inter-dealer quotations, without retail
mark-up, mark-down or commissions and may not represent actual transactions:
<TABLE>
<CAPTION>
High Low High
Quarter ended Ask Bid Bid
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<S> <C> <C> <C>
3/31/00 0 9/64 0 3/64 0 13/64
6/30/00 6 9/32 0 3/4 6 9/32
</TABLE>
(b) STOCKHOLDERS
As of November 7, 2000, the Company had approximately 14 holders of
Company Common Stock. 68,000 shares were registered in the name of Cede and Co.
(C) DIVIDENDS
The Company has not paid cash dividends on its Common Stock in the
past and does not anticipate doing so in the foreseeable future. The Company
currently intends to retain future earnings, if any, to fund the development and
growth of its business.
ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion contains figures relating to plans,
expectations, future results, performance, events or other matters that are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended. When used in the Plan of Operations (see section
below), words such as "estimate", "project", "intend", "expect", "anticipate"
and similar expressions are intended to identify forward-looking statements.
Such forward-looking statements involve numerous risks and uncertainties
pertaining to technology, development of the Company's products, and markets for
such products, timing and level of customer orders, competitive products and
pricing, changes in economic conditions and markets for the Company's products
and other risks and uncertainties. Actual results, performance and events are
likely to differ and may differ materially and adversely. Investors are
cautioned not to place undue reliance on these forward-looking statements which
speak
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only as to the date of the Plan of Operations, being June 30, 2000, the date of
the Company's last-completed fiscal year. The Company undertakes no obligation
to release or deliver to investors revisions to these forward-looking statements
to reflect events or circumstances after the date of the Plan of Operations, the
occurrence of unanticipated events or other matters.
PLAN OF OPERATION
On April 12, 2000, the Company purchased 18,300,000 shares of its
common stock from its shareholders. See Note 12 of the Financial Statements. In
June of this year, following the establishment of the Company's new management,
Intelilabs.com entered into the Mandiff Service Agreement with Knightrider
Investments, of Nassau, Bahamas. This agreement provides for Intelilabs to
receive $300,000 for providing Mandiff consulting services to Knightrider
Investments. As required by this agreement Knightrider Investments paid the
Company $200,000 on the effective date of the agreement. This $200,000 was the
primary source of revenue for Intelilabs for the year 2000. The Company did not
receive any revenue for the fiscal year ending June 30, 1999.
As can be seen from the Financials presented earlier, $ 151,438.00 is
still available for year 2000. The Company expects to receive the remaining $
100,000 by the end of first quarter of the fiscal year 2001. In addition to
receiving this revenue, the Company is also planning to raise funds through a
private placement of shares to accredited investors. The Company hopes to raise
$1,000,000 in this private placement, but there is no guarantee that the Company
will be able to raise this money.
The Company expects its capital needs for operating its Southern
California office to be approximately $10,000 per month for the first quarter of
fiscal year 2001. The Company expects its capital needs for its offshore
operations to also be in the range of $10,000 per month.
The Company does not believe that inflation has had a significant
impact on its operations since inception of the Company.
PART II - OTHER INFORMATION
ITEM 7. FINANCIAL STATEMENTS
The Consolidated Financial Statements that constitute Item 7 are
included at the end of this report beginning on Page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company does not have any disagreements with our independent
accountants and have not made any changes to their financial statements.
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
(a) DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of the current
directors and executive officers of the Company, the principal offices and
positions with the Company held by each person and the date such person became
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a director or executive officer of the Company. The executive officers of the
Company are elected annually by the Board of Directors. Each year the
stockholders elect the board of directors. The executive officers serve terms of
one year or until their death, resignation or removal by the Board of Directors.
There was no arrangement or understanding between any executive officer and any
other person pursuant to which any person was elected as an executive officer.
The directors and executive officers of the Company are as follows:
<TABLE>
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NAME AGE POSITION
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NAME AGE OFFICE
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<S> <C> <C>
Zain Effendi 30 President, Chief Executive Officer, Chairman
of the Board of Directors
Marvi E. Khan* 28 Chief Financial Officer, Director
Fahad U. Khan* 25 Chief Operating Officer, Director
Saquib Latif 32 Chief Technology Officer, Secretary
Sajjad Hyder Zaidi 64 Director
</TABLE>
* Mr. and Ms. Khan are husband and wife.
Zain Effendi--PRESIDENT, CHIEF EXECUTIVE OFFICER, CHAIRMAN OF THE BOARD OF
DIRECTORS. Mr. Effendi became the Company's President, Chief Executive Officer
and Chairman of the Board on June 27, 2000. Mr. Effendi is also the Chairman and
Managing Director of Compact Information Systems, a Pakistani software and web
site development company, and is a director of Sindh Abadgar Sugar Mills Ltd., a
public company listed on Pakistani stock exchanges. Mr. Effendi is also a member
of the Board of Directors of Sindh Madressah Board, a trust institution that
operates eighteen schools and colleges in Pakistan. Mr. Effendi received a BA in
Management and Information Systems from the American College of London.
Marvi E. Khan--CHIEF FINANCIAL OFFICER, DIRECTOR. Ms. Khan has served as the
Company's Chief Financial Officer and as a Director since June 27, 2000. Ms.
Khan is also a member of the Board of Directors of Sindh Abadgars Sugar Mills
Ltd., a public company listed on Pakistani stock exchanges. Ms. Khan has also
served as Deputy Chief Executive for Aacars.com.pk in Pakistan since January
1999. From May 1998 to December 1999, Ms. Khan worked as a Management
Consultant for National Investment Trust in Pakistan. From August 1995 to
August 1996, Ms. Khan was the Manager of Finance for Sindh Abadgar Sugar
Mills Ltd., a public company listed on Pakistani stock exchanges. Ms. Khan
received a BA in International Management from Franklin College in
Switzerland and a MA in Management Science from Boston University in London.
Fahad Ullah Khan--CHIEF OPERATING OFFICER, DIRECTOR. Mr. Khan has served as the
Company's Chief Operating Officer and as a Director since June 27, 2000. Mr.
Khan has also served as the Chief Executive Officer, Aacars.com.pk, a Pakistani
company, since January 1999 where he is responsible for business development,
marketing, operations, administration, and management of the company. From June
1998 to December 1998 Mr. Khan was Marketing Officer for National Investment
Trust in Pakistan. Mr. Khan received his BS in Economics from James Madison
University in Virginia.
Saquib Abdul Latif--CHIEF TECHNOLOGY OFFICER, SECRETARY. Mr. Latif has served as
the Company's Chief Technology Officer and Secretary since June 27, 2000. Mr.
Latif is also the Company's Business Development Manager. From June 1994 to
January 2000, Mr. Latif worked for Citibank in Karachi, Pakistan and Istanbul,
Turkey in a variety of capacities, including Operations Manager of the main
Karachi branch, Project Manager, and Development Manager. Mr. Latif received a
BS in Electrical and Computer Engineering and a MA in Economics from Ohio
University.
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Sajjad Hyder Zaidi--DIRECTOR. Mr. Zaidi has served the company as a director
since June 27, 2000. Mr. Zaidi has had variety of positions with many companies
throughout his career which started in 1957. Some of the companies that he
worked with during his career are Burmashell (Pak) Ltd., Pakistan, Al-Ghousbi
Group, Saudi Arabia, Aramco Oil Company, Saudi Arabia, Wicks BMTC, Saudi Arabia,
Habib Group, Pakistan. He has served these companies in different capacities in
the fields of Marketing and management. Mr. Zaidi has received his education in
Allahabad, India.
(b) COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF
1934
To the knowledge of the Company, Athenaeum Consultants, Ltd.,
Bergen Ltd., Lefcount International Investments, Ltd., and MCFI Trading Ltd.
have not yet filed Form 5 for the fiscal year ended June 30, 2000..
ITEM 10-EXECUTIVE COMPENSATION
(a) SUMMARY COMPENSATION AND OPTIONS
Currently, the Company is not compensating any of its officers or
directors, other than reimbursing expenses incurred.
The following table and attached notes sets forth the compensation of
the Company's executive officers during each of the last three fiscal years. The
remuneration described in the table does not include the cost to the Company of
benefits furnished to the named executive officers, including premiums for
health insurance, reimbursement of expense, and other benefits provided to such
individual that are extended in connection with the ordinary conduct of our
business. The value of such benefits cannot be precisely determined, but the
executive officers named below did not receive other compensation in excess of
the lesser of $25,000 or 10% of such officer's cash compensation. The Company
has no annuity, pension or retirement benefits proposed to be paid to officers,
directors or employees in the event of retirement at normal retirement date
pursuant to any presently existing plan provided or contributed by the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
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Long Term Compensation
Annual Compensation Awards Payouts
Name and Principal Other Restricted All other
Position annual Stock Options LTIP Compen-
Year Salary Bonus Compen- Awards SARs Payouts sation
satio
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Zain Effendi 2000 -0- -0- -0- -0- -0- -0- -0-
President, Chief 1999 -0- -0- -0- -0- -0- -0- -0-
Executive Officer 1998 -0- -0- -0- -0- -0- -0- -0-
-0-
Marvi E. Khan 2000 -0- -0- -0- -0- -0- -0- -0-
Chief Financial Officer 1999 -0- -0- -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
-0- -0-
Fahad U. Khan 2000 -0- -0- -0- -0- -0- -0- -0-
Chief Operating Officer 1999 -0- -0- -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
Saquib Latif 2000 -0- -0- -0- -0- -0- -0- -0-
Chief Technology Officer 1999 -0- -0- -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
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</TABLE>
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
The Company did not grant any stock options during our fiscal year
ending June 30, 2000.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
NAME NUMBER OF PERCENT OF TOTAL EXERCISE OR EXPIRATION
SECURITIES OPTIONS/SARS BASE PRICE DATE
UNDERLYING GRANTED TO ($/SH)
OPTIONS/SARS EMPLOYEES IN
GRANTED(#) FISCAL YEAR
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Zain Effendi -0- N/A N/A N/A
--------------------------------------------------------------------------------
Marvi E. Khan -0- N/A N/A N/A
--------------------------------------------------------------------------------
Fahad U. Khan -0- N/A N/A N/A
--------------------------------------------------------------------------------
Saquib Latif -0- N/A N/A N/A
--------------------------------------------------------------------------------
</TABLE>
(b) EMPLOYMENT CONTRACTS
The Company currently does not have employment agreements with any of
its employees although contract negotiations are under way and the Company
expects to enter into written employment agreements with its officers in the
fall of 2000.
(c) COMPENSATION OF DIRECTORS
Directors of the Company do not receive any cash compensation, but are
entitled to reimbursement of their reasonable expenses incurred in attending
directors' meetings.
ITEM 11- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock, as of November 7, 2000, by
(i) each person who is known to the Company to own beneficially more than 5% of
the Company's voting outstanding Common Stock, (ii) each of the Company's
directors and officers, and (iii) all officers and directors as a group:
10
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE
NAME NUMBER OF SHARES(1) BENEFICIALLY OWNED(2)
---------------------------------------------------------------------------------------------
<S> <C> <C>
Aberforth Investments Ltd. 785,000 7.8
Suite 2B Mansion House
143 Main Street
Gibralter
Anthenaeum Consultants, Ltd. 800,000 13.1
Rovert House
Market Street North
Box N-529
Nassau, Bahamas
Atlas Equity Group 400,000 6.6
701 Brickell Ave., Ste. 3120
Miami, FL 33131
Bergen Ltd.(2) 1,600,000 26.2
Ste 1-3 16th Flr, Kinwick Center
32 Hollywood Rd.,
Hong Kong, China
First Southeast Enterprises, Ltd. 377,500 6.2
PO Box 3152
Road Town, Tortola
British Virgin Islands
Lefcount International Investments, Ltd 980,000 16.2
PO Box 3471
Road Town, Tortola
British Virgin Islands
MCFI Trading Ltd. 815,000 13.4
First Floor, Victory House
99-1-1 Regent Street
London, W1R7HB
United Kingdom
Zain Effendi(3) -0- *
Marvi E. Khan(3) -0- *
Fahad U. Khan(3) -0- *
Saquib Latif(3) -0- *
Sajjad Hyder Zaidi(3) -0- *
All officers and directors
as a group (5 persons) -0- *
</TABLE>
----------
11
<PAGE>
(1) Except as otherwise indicated, we believe that the beneficial owners of
Common Stock listed above, based on information furnished by such
owners, have sole investment and voting power with respect to such
shares, subject to community property laws where applicable. Beneficial
ownership is determined in accordance with the rules of the Securities
and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock subject to
options or warrants currently exercisable, or exercisable within 60
days, are deemed outstanding for purposes of computing the percentage
of the person or group holding such options or warrants, but are not
deemed outstanding for purposes of computing the percentage of any
other person or group.
(2) 18,300,000 shares of Common Stock are held by Intelilabs as treasury
stock. These shares have no voting rights under Delaware law and are
not counted in calculating the percentages held by the beneficial
owners presented in this chart.
(3) c/o Company's address: Water Gardens 1620 26th Street, 3rd Floor Santa
Monica CA 90404.
* Less than one percent.
12
<PAGE>
ITEM 12-CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
13
<PAGE>
ITEM 13 - EXHIBITS AND REPORTS
(a) EXHIBITS
EXHIBIT NO. DOCUMENT DESCRIPTION
10.1 Mandiff Service Agreement, dated June 10, 2000*
10.2 Sub-Lease Agreement, dated June 26, 2000*
10.3 Web Site Development Agreement, dated June 10, 2000*
23.1 Consent of Kabani & Company, Inc., CPAs
23.2 Consent of Berenfeld Spritzer Shechter & Sheer, CPAs
27.1 Financial Data Schedule
* Filed previously on Form 10-KSB filed with the SEC on September 28,
2000 and incorporated herein by reference.
(b) REPORTS ON FORM 8-K
During the last quarter of Intelilabs' fiscal year ending June 30,
2000, Intelilabs filed two reports on Form 8-K. On July 13, 2000, the Company
reported the resignation of Ms. Rebecca Brock and Ms. Michelle Brock as officers
and directors and the appointment of the current management team. On August 30,
2000, the Company reported changing its certifying independent accountant from
Berenfeld, Spritzer, Schecter & Sheer in Florida to Kabani & Company, Inc. in
California.
14
<PAGE>
In accordance with Section 12 of the Securities Exchange Act of 1934, as
amended, the Registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
November 16, 2000 INTELILABS.COM, INC.
/s/ Zain Effendi
------------------------------------------
By: Zain Effendi
Its: President and Chief Executive Officer
In accordance with the Exchange Act, this report has been signedbelow by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Zain Effendi
---------------------------- President and Chief Executive Officer November 16, 2000
Zain Effendi and Chairman
/s/ Marvi E. Khan
---------------------------- Chief Financial Officer and November 16, 2000
Marvi E. Khan Director
/s/ Fahad U. Khan
----------------------------- Chief Operating Officer and November 16, 2000
Fahad U. Khan Director
/s/ Saquib Latif
----------------------------- Chief Technology Officer and November 16, 2000
Saquib Latif Secretary
/s/ Sajjad Hyder Zaidi
----------------------------- Director November 16, 2000
Sajjad Hyder Zaidi
</TABLE>
15
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Intelilabs.com, Inc.:
We have audited the accompanying balance sheet of Intelilabs.com, Inc. (a
Delaware corporation) (the "Company") as of June 30, 2000, and the related
statements of operations, stockholders' deficit and cash flows for the twelve
month period then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements as of June 30,
1999 and for the year then ended, were audited by other auditors whose report
dated August 31, 1999, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Intelilabs.com, Inc. as of June
30, 2000, and the results of its operations and its cash flows for the twelve
month period then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company has incurred net losses from inception to June 30, 2000 of $131,777
including net losses of $94,531 and $37,246 during the year ended June 30, 2000
and 1999, respectively. The company's total liabilities exceed its total assets
by $97,077 at June 30, 2000. These factors, among others, as discussed in Note 3
to the financial statements, raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
F-1
<PAGE>
As discussed in Note 13 to the financial statements, an error resulting in
exclusion of Treasury stock held by the Company as of June 30, 2000, were
discovered by management of the Company. Accordingly, the financial statements
have been restated and an adjustment has been made to the Stockholders' deficit
in the Balance sheet and Statement of Stockholders' deficit as on June 30, 2000,
to correct the error.
KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS
Fountain Valley, California
September 9, 2000 except for Note 13 as to which the date is October 27, 2000
F-2
<PAGE>
INTELILABS.COM,INC.
(FORMERLY KNOWN AS QUENTIN ROAD PRODUCTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 2000
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Interest Receivable $ 833
Due from CIS 151,438
-------------
Total current assets 152,271
PROPERTY AND EQUIPMENT, NET 6,119
-------------
$ 158,390
=============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accrued expenses $ 37,167
Note payable 18,300
Advances 200,000
-------------
Total current liabilities 255,467
COMMITMENTS
STOCKHOLDERS' DEFICIT
Preferred stock, $.0001 par value, 1,000,000 shares authorized,
no shares issued or outstanding
Common stock, $.0001 par value; 50,000,000 shares authorized,
24,400,000 shares issued and outstanding 2,440
Additional paid in capital 50,560
Deficit accumulated during the development stage (131,777)
-------------
(78,777)
Treasury Stock,18,300,000 common stock (at cost) (18,300)
-------------
Total stockholders' deficit (97,077)
-------------
$ 158,390
=============
</TABLE>
See accompanying independent auditors' report and notes to financial
statements
F-3
<PAGE>
INTELILABS.COM, INC.
(FORMERLY KNOWN AS QUENTIN ROAD PRODUCTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
YEAR ENDED JUNE 30, 2000 & 1999 AND THE PERIOD FROM
APRIL 20, 1998 (INCEPTION) TO JUNE 30, 2000
<TABLE>
<CAPTION>
PERIOD FROM APRIL 20,
1998 (INCEPTION)
JUNE 30, JUNE 30, THROUGH JUNE 30,
2000 1999 2000
------------- ------------ -----------------
<S> <C> <C> <C>
Development stage revenue $ 200 $ - $ 200
Development stage expenses: 76,347 37,246 113,593
Gain on disposal of assets and liabilities 17,584 - 17,584
------------- ------------ -----------
Deficit accumulated during the development stage before
provision of income tax (93,731) (37,246) (130,977)
Provision of Income Tax 800 - 800
------------- ------------ -----------
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE $ (94,531) $ (37,246) $ (131,777)
============= ============ ============
BASIC & DILUTED WEIGHTED AVERAGE NUMBER OF
COMMON STOCK OUTSTANDING 24,400,000 24,400,000 24,400,000
============= ============ ============
BASIC AND DILUTED NET LOSS PER SHARE $ (0.004) $ (0.002) $ (0.005)
============= ============ ============
</TABLE>
The basic net loss per share has been restated to retroactively effect a forward
stock split in the ratio of eight shares for one share.
See accompanying independent auditors' report and notes to financial
statements
F-4
<PAGE>
INTELILABS.COM, INC.
(FORMERLY KNOWN AS QUENTIN ROAD PRODUCTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
YEAR ENDED JUNE 30, 2000 & 1999 AND THE PERIOD FROM
APRIL 20, 1998 (INCEPTION) TO JUNE 30, 2000
<TABLE>
<CAPTION>
PERIOD FROM
PRIL 20, 1998
FOR THE YEAR ENDED FOR THE YEAR ENDED INCEPTION) TO
JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 2000
------------------ ------------------ -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Deficit accumulated during the development stage $ (94,531) $(37,246) $(131,777)
Adjustments to reconcile deficit accumulated during the
development stage to cash used in operating activities
OPERATING ACTIVITIES:
Depreciation and amortization 106 -- 106
Gain on disposal of assets & liabilities (17,584) (17,584)
Issuance of shares for consulting & other services -- 3,000 3,000
(Increase) / decrease in current assets:
Prepaid expenses & other assets 458 (1,200) (742)
Interest Receivable (833) -- (833)
Increase / (decrease) in current liabilities:
Accounts payable 11,464 886 12,350
Accrued expenses 29,917 13,000 42,917
--------- -------- ---------
Net cash used in operating activities (71,003) (21,560) (92,563)
--------- -------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in investments (200) (5,000) (5,200)
Acquisition of property & equipment (9,741) (850) (10,591)
--------- -------- ---------
Net cash used in investing activities (9,941) (5,850) (15,791)
--------- -------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from Advances 209,692 -- 209,692
Payment on account to a related party (151,438) 100 (151,338)
Proceeds from sale of common stock 0 50,000 50,000
--------- -------- ---------
Net cash provided by financing activities 58,254 50,100 108,354
--------- -------- ---------
NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENT (22,690) 22,690 --
CASH & CASH EQUIVALENT, BEGINNING BALANCE 22,690 -- --
--------- -------- ---------
CASH & CASH EQUIVALENT, ENDING BALANCE $ -- $ 22,690 $ --
========= ======== =========
SUPPLEMENTAL INFORMATION:
CASH PAID FOR INTEREST $ 92 $ -- $ 92
========= ======== =========
CASH PAID FOR INCOME TAXES $ -- $ -- $ --
========= ======== =========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITY
</TABLE>
(1) The company issued common stock for consulting and legal services of
$3,000
(2) The cashflow statement for 2000 does not include the effect of transfer
of certain assets and liabilities to the old management and purchase of
treasury stock for a note payable of $18,300
F-5
<PAGE>
INTELILABS.COM, INC.
(FORMERLY KNOWN AS QUENTIN ROAD PRODUCTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE PERIOD APRIL 20, 1998 (INCEPTION) TO JUNE 30, 2000
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
NUMBER OF PAID-IN TREASURY UMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL STOCK DEFICIT EQUITY (DEFICIT)
--------- ------------ ---------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Issuance of Shares to related parties for
consulting fees in period ended June 1998 2,500,000 $ 250 $ 2,250 $ -- $ -- $ 2,500
Net loss from inception through June 30, 1998 -- -- -- -- -- --
---------- ------------ ---------- ---------- ---------- -------------
Balance, June 30, 1998 2,500,000 250 2,250 -- -- 2,500
Issuance of Shares to third parties 500,000 50 49,950 -- -- 50,000
Issuance of Shares for legal services 50,000 5 495 -- -- 500
Net loss for the year ended June 30, 1999 -- -- -- -- 37,246) (37,246)
---------- ------------ ---------- ---------- ---------- -------------
Balance, June 30, 1999 3,050,000 305 52,695 -- (37,246) 15,754
Forward stock split 21,350,000 2,135 (2,135) -- -- --
Purchase of 18,300,000 Shares of Treasury
Stock (at cost) -- -- -- (18,300) -- (18,300)
Net loss for the year ended June 30, 2000 -- -- -- -- (94,531) (94,531)
---------- ------------ ---------- ---------- ---------- -------------
Balance, June 30, 2000 24,400,000 $2,440 $ 50,560 $(18,300) $(131,777) $(97,077)
========== ============ ========== ========== ========== =============
</TABLE>
See accompanying independent auditors' report and notes to financial
statements
F-6
<PAGE>
INTELILABS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 & 1999
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Intelilabs.com, Inc. (formerly known as Quentin Road Productions,
Inc.) ("The Company"), was incorporated on April 20, 1998 under the law of the
state of Delaware. The Company's activities from inception until June 30, 2000
consisted primarily of reviewing possible business opportunities and developing
the business model. The Company had no revenue for the year ended June 30, 2000
and 1999.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all liquid investments with a maturity of
three months or less from the date of purchase that are readily convertible into
cash to be cash equivalents.
USE OF ESTIMATES
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 liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
PROPERTY & EQUIPMENT
Property and equipment are recorded at cost. Depreciation and
amortization of property and equipment are computed using the straight-line
method over the estimated useful lives of the assets. Expenditures for
maintenance and repairs are charged to expense as incurred.
INCOME TAXES
Deferred income tax assets and liabilities are computed annually
for differences between the financial statements and tax basis of assets and
liabilities that will result in taxable or deductible amounts in the future
based on enacted laws and rates applicable to the periods in which the
differences are expected to affect taxable income (loss). Valuation allowance is
established when necessary to reduce deferred tax assets to the amount expected
to be realized.
F-7
<PAGE>
INTELILABS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 & 1999
BASIC AND DILUTED NET LOSS PER SHARE
Net loss per share is calculated in accordance with the Statement
of financial accounting standards No. 128 (SFAS No. 128), "Earnings per share".
SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net
loss per share for all periods presented has been restated to reflect the
adoption of SFAS No. 128. Basic net loss per share is based upon the weighted
average number of common shares outstanding. Diluted net loss per share is based
on the assumption that all dilutive convertible shares and stock options were
converted or exercised. Dilution is computed by applying the treasury stock
method. Under this method, options and warrants are assumed to be exercised at
the beginning of the period (or at the time of issuance, if later), and as if
funds obtained thereby were used to purchase common stock at the average market
price during the period.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of financial accounting standard No. 107, Disclosures
about fair value of financial instruments, requires that the Company disclose
estimated fair values of financial instruments. The carrying amounts reported in
the statements of financial position for current assets and current liabilities
qualifying as financial instruments are a reasonable estimate of fair value.
COMPREHENSIVE INCOME
Statement of financial accounting standards No. 130, Reporting
comprehensive income (SFAS No. 130), establishes standards for reporting and
display of comprehensive income, its components and accumulated balances.
Comprehensive Income is defined to include all changes in equity, except those
resulting from investments by owners and distributions to owners. Among other
disclosures, SFAS No. 130 requires that all items that are required to be
recognized under current accounting standards as components of comprehensive
income be reported in financial statements that are displayed with the same
prominence as other financial statements. The implementation of this standard
did not have a material impact on its financial statements.
ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL
USE
In March 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants (ASEC of AICPA) issued
Statement of position (SOP) No. 98-1, "Accounting for the costs of computer
software developed or obtained for internal use", effective for fiscal years
beginning after December 15, 1998. SOP N0. 98-1 requires that certain costs of
computer software developed or obtained for internal use be capitalized and
amortized over the useful life of the related software. The implementation of
this standard did not have a material impact on its financial statements.
F-8
<PAGE>
INTELILABS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 & 1999
COSTS OF START-UP ACTIVITIES
In April 1998, the ASEC of AICPA issued SOP No. 98-5, "Reporting
on the costs of start-up activities", effective for fiscal years beginning after
December 15, 1998. SOP 98-5 requires the costs of start-up activities and
organization costs to be expensed as incurred. The Company adopted this standard
in fiscal 1999 and the implementation of this standard did not have a material
impact on its financial statements.
ACCOUNTING DEVELOPMENTS
In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition," which outlines the
basic criteria that must be met to recognize revenue and provides guidance for
presentation of revenue and for disclosure related to revenue recognition
policies in financial statements filed with the Securities and Exchange
Commission. The effective date of this pronouncement is the fourth quarter of
the fiscal year beginning after December 15, 1999. The Company believes that
adopting SAB 101 will not have a material impact on its financial position and
results of operations.
In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN
44") "Accounting for Certain Transactions involving Stock Compensation, an
interpretation of APB Opinion No. 25". FIN 44 clarifies the application of
Opinion 25 for (a) the definition of employee for purposes of applying Opinion
25, (b) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (c) the accounting consequence for various modifications
to the terms of a previously fixed stock option or award, and (d) the accounting
for an exchange of stock compensation awards in a business combination. FIN 44
is effective July 1, 2000, but certain provisions cover specific events that
occur after either December 15, 1998,or January 12, 2000. The adoption of
certain other provisions of FIN 44 prior to March 31, 2000 did not have a
material effect on the financial statements. The Company does not expect that
the adoption of the remaining provisions will have a material effect on the
financial statements.
3. DEVELOPMENT STAGE OPERATIONS AND GOING CONCERN UNCERTAINTY
The Company's initial activities have been devoted to developing a
business plan, negotiating contracts and raising capital for future operations
and administrative functions. The accompanying financial statements have been
prepared in conformity with generally accepted accounting principles, which
contemplate continuation of the Company as a going concern. However, the Company
has incurred net losses from inception to June 30, 2000 of $131,777 including
net losses of $94,531 and $37,246 during the year ended June 30, 2000 and 1999,
respectively. The company's
F-9
<PAGE>
INTELILABS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 & 1999
total liabilities exceed its total assets by $97,077 at June 30, 2000. The
continuing losses have adversely affected the liquidity of the Company. Losses
are expected to continue for the immediate future. The Company faces continuing
significant business risks, including but not limited to, its ability to
maintain vendor and supplier relationships by making timely payments when due.
In view of the matters described in the preceding paragraph,
recoverability of a major portion of the recorded asset amounts shown in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to raise
additional capital, obtain financing and to succeed in its future operations.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
Management has taken the following steps to revise its operating
and financial requirements, which it believes are sufficient to provide the
Company with the ability to continue as a going concern. The Company has
embarked on new marketing methods. The management has put together a sales team
to implement its marketing policies. In addition, the Company is actively
pursuing potential merger or acquisition candidates and strategic partners,
which would enhance stockholders' investment. Management believes that the above
actions will allow the Company to continue operations through the next fiscal
year.
4. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
JUNE 30, 2000
-------------
<S> <C>
Furniture & fixtures & Office equipment $3,106
Computer equipment 3,119
------
Less:Accumulated Depreciation 6,225
106
------
$6,119
======
</TABLE>
5. ACCRUED EXPENSES
Accrued expenses as of June 30, 2000 consist of the following:
<TABLE>
<CAPTION>
<S> <C>
Website development expenses $25,000
Professional fees 11,367
Income Tax 800
-------
$37,167
=======
</TABLE>
F-10
<PAGE>
6. INCOME TAXES
Since the Company has not generated taxable income since
inception, no provision for income taxes has been provided (other than minimum
franchise taxes paid to the State of California). Differences between income tax
benefits computed at the federal and state statutory rate and reported income
taxes for the year ended June 30, 2000 and 1999 are primarily attributable to
the valuation allowance for net operating losses (NOL) and other permanent
differences. The net deferred tax (benefit) due to NOL carried forward, as June
30, 2000 consisted of the following:
<TABLE>
<CAPTION>
JUNE 30, 2000
-------------
<S> <C>
Deferred tax asset $ 28,676
Deferred tax asset valuation
allowance (28,676)
-------------
Balance $ --
=============
</TABLE>
A summary of Net operating losses carried forward and their
expiration date is as follows:
<TABLE>
<CAPTION>
YEAR OF EXPIRATION NET OPERATING LOSSES
------------------ --------------------
<S> <C>
2014 $ 94,531
</TABLE>
The availability of the Company's net operating loss carryforwards are subject
to limitation if there is a 50% or more positive change in the ownership of the
Company. Therefore, the availability of the Company's net operating loss
carryforwards is limited. The provision for income taxes consists of the
California State minimum taxes imposed on corporations.
7. STOCKHOLDERS' EQUITY
The Company issued 500,000 common shares upon incorporation to
Rebecca J. Brock (former president), in consideration for management services
valued at $500, in the year ended June 30, 1999. In addition, it issued
2,000,000 common shares to Atlas Equity Group, Inc., an affiliated Company, in
exchange for consulting services valued at $2,000, in the year ended June 30,
1998. These investors are deemed to be founders and affiliates of the Company.
In March 1999, the Company entered into a private offering of
securities pursuant to Regulation D, Rule 504, promulgated under the Securities
Act 1933. Common Shares were offered to non-accredited investors for cash
consideration of $.10 per share. 500,000 shares were issued to 21 unaffiliated
shareholders. The offering is now closed.
F-11
<PAGE>
INTELILABS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 & 1999
In June 1999, the Company engaged legal counsel for services
relating to SEC filings and related documentation. 50,000 shares of common
stock, valued at $500, were issued in consideration of the services rendered.
In April 2000, the Company authorized an eight-for-one split of
its common stock, effected in the form of a stock dividend, which was paid to
stockholders of record. All of the per share data in these financial statements
have been retroactively adjusted to reflect the stock split.
8. RELATED PARTY TRANSACTIONS
The Company paid $50,000 in the year ended June 30, 2000, for
website development expense to a Company owned by the President of the company.
The Company deposited $200,000 with CIS, an entity owned by the
president of the Company. CIS has been deducting management and other expenses
paid on behalf of the Company, from the deposit. The Company has a balance with
CIS of $151,438 at June 30, 2000. Subsequent to the year end, CIS refunded the
remaining amount, after deducting various expenses paid on behalf of the
Company.
9. TRANSFER OF ASSETS AND LIABILITIES:
The Company transferred all the existing assets and liabilities as
on May 23, 2000, at the time of change in the Company's management, to the old
management. The Company transferred following:
<TABLE>
<S> <C>
Assets transferred $10,308
Liabilities transferred 27,892
-------
Net gain on transfer $17,584
=======
</TABLE>
10. COMMITMENTS
The Company has entered into an agreement to lease an office
space. This lease is treated as an operating lease. Under the lease agreement,
the Company is required to pay $1,448 per month, including tax, through January
2001. At June 30, 2000, the future minimum lease payments for next twelve months
approximated $10,136.
F-12
<PAGE>
INTELILABS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 & 1999
11. RECLASSIFICATION
Certain amounts in the accompanying 1999 financial statements have
been reclassified to conform to the presentation for 2000.
12. SUBSEQUENT EVENTS
Subsequent to the year-end, on August 16, 2000, the company
established a 100% owned subsidiary in United Kingdom, "Intelilabs.com, limited,
UK". On August 26, 2000, the company established a 100% owned subsidiary in
Pakistan, "Intelilabs.com, (private) limited".
13. CORRECTION OF ERROR
The Company made an error in previously issued financial statement
by excluding 18,300,000 treasury stock acquired at $.001 per share on April 24,
2000 and held by the Company in treasury at June 30, 2000. The financial
statements have been corrected to reflect common stock held by the Company at
cost of $18,300, as of June 30, 2000. The treasury stock were acquired through a
note payable on demand, unsecured and non-interest bearing. The treasury stock
has been recorded at cost basis in the financial statements
F-13
