<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-KSB
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
September 25, 2000, Registrant had 24,400,000 shares of its $.001 par value
Common Stock issued and outstanding with an aggregate market value of the
common stock held by non-affiliates of $12,880,000. 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 $11.50 per share on September 22, 2000.
Transitional Small Business Disclosure Format (check one). Yes [x] No [ ]
<PAGE>
TABLE OF CONTENTS AND CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
<S> <C>
PART I PAGE
------ ----
Item 1 Description of Business
Item 2 Description of Property
Item 3 Legal Proceedings
Item 4 Submission of Matters to a Vote of Security Holders
PART II
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Item 5 Market for Common Equity and Related Stockholder
Matters
Item 6 Management's Discussion and Analysis
Item 7 Financial Statements
Item 8 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
PART III
--------
Item 9 Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Item 10 Executive Compensation
Item 11 Security Ownership of Certain Beneficial Owners and
Management
Item 12 Certain Relationships and Related Transactions
Item 13 Exhibits and Reports on Form 8-K
</TABLE>
2
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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.
In addition to these products, the Company plans to offer the
following services:
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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.
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
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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.
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
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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.
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.
7
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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
-------------------------------------------------------------------
<S> <C> <C> <C>
3/31/00 0 9/64 0 3/64 0 13/64
6/30/00 6 9/32 03/4 6 9/32
</TABLE>
(B) STOCKHOLDERS
As of September 25, 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 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
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
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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. However, the Company
may launch a marketing campaign in the fall of 2000 that could increase its
capital needs per month to $70,000.
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 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>
<CAPTION>
<S> <C> <C>
NAME AGE POSITION
---- --- --------
NAME AGE OFFICE
---- --- ------
Zain Effendi 30 President, Chief Executive Officer,
Chairman of the Board of Directors
</TABLE>
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<TABLE>
<S> <C> <C>
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 Madressah Board, a
trust institution that operates eighteen schools and colleges in Pakistan.
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.
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 has not yet filed Form 5 for the
fiscal year ended June 30, 2000:
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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 $25,000 or 10% of such officer's cash compensation. The Company
has no annuity, pension or retirement benefits proposed to be paid to officers,
directors or employees in the event of retirement at normal retirement date
pursuant to any presently existing plan provided or contributed by the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------------------------
Long Term Compensation
Annual Compensation Awards Payouts
Name and Principal Other Restricted
Position annual Stock Options LTIP All other
Year Salary Bonus Compensation Awards SARs Payouts Compensation
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Zain Effendi 2000 -0- -0- -0- -0- -0- -0- -0-
President, Chief 1999 -0- -0- -0- -0- -0- -0- -0-
Executive Officer 1998 -0- -0- -0- -0- -0- -0- -0-
Marvi E. Khan 2000 -0- -0- -0- -0- -0- -0- -0-
Chief Financial Officer 1999 -0- -0- -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
Fahad U. Khan 2000 -0- -0- -0- -0- -0- -0- -0-
Chief Operating Officer 1999 -0- -0- -0- -0- -0- -0- -0-
1998 -0- -0- -0- -0- -0- -0- -0-
Saquib Latif 2000 -0- -0- -0- -0- -0- -0- -0-
Chief Technology 1999 -0- -0- -0- -0- -0- -0- -0-
Officer 1998 -0- -0- -0- -0- -0- -0- -0-
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
11
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OPTION/SAR GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
The Company did not grant any stock options during our fiscal year
ending June 30, 2000.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
NAME NUMBER OF PERCENT OF TOTAL EXERCISE OR EXPIRATION DATE
SECURITIES OPTIONS/SARS BASE PRICE
UNDERLYING GRANTED TO ($/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 September 25, 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:
<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(2) -0- *
Marvi E. Khan(2) -0- *
Fahad U. Khan(2) -0- *
Saquib Latif(2) -0- *
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C>
Sajjad Hyder Zaidi(2) -0- *
All officers and directors
as a group (5 persons) -0- *
</TABLE>
---------------
(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 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.
13
<PAGE>
ITEM 13 - EXHIBITS AND REPORTS
(a) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT DESCRIPTION
----------- --------------------
<S> <C>
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
21.1 Consent of Kabani & Company, Inc., CPAs
21.2 Consent of Berenfeld Spritzer Shechter & Sheer, CPAs
27.1 Financial Data Schedule
</TABLE>
(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.
INTELILABS.COM, INC.
By: Zain Effendi
Its: President and Chief Executive Officer
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Zain Effendi
--------------------------------- President and Chief Executive Officer September 27, 2000
Zain Effendi and Chairman
/s/ Marvi E. Khan
--------------------------------- Chief Financial Officer and September 27, 2000
Marvi E. Khan Director
/s/ Fahad U. Khan
--------------------------------- Chief Operating Officer and September 27, 2000
Fahad U. Khan Director
/s/ Saquib Latif
--------------------------------- Chief Technology Officer and September 27, 2000
Saquib Latif Secretary
/s/ Sajjad Hyder Zaidi
--------------------------------- Director September 27, 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 $78,777 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.
KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS
Fountain Valley, California
September 9, 2000
<PAGE>
INTELILABS.COM,INC.
(FORMERLY KNOWN AS QUENTIN ROAD PRODUCTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 2000
<TABLE>
<CAPTION>
ASSETS
<S> <C>
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
Advances 200,000
----------
Total current liabilities 237,167
COMMITMENTS
STOCKHOLDERS' DEFICIT
Preferred stock, $.0001 par value, 1,000,000
shares authorised, no shares issued or
outstanding
Common stock, $.0001 par value; 50,000,000
shares authorised, 24,400,000 shares
issued and outstanding 2,440
Additional paid in capital 50,560
Deficit accumulated during the development stage (131,777)
----------
Total stockholders' deficit (78,777)
----------
158,390
==========
</TABLE>
See accompanying independent auditors' report and notes to financial statements
F-1
<PAGE>
INTELILABS.COM, INC.
(FORMERLY KNOWN AS QUENTIN ROAD PRODUCTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2000 & 1999
<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 2,000,000 24,400,000
============== ============== =============
BASIC AND DILUTED NET LOSS PER SHARE $ (0.004) $ (0.019) $ (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-2
<PAGE>
INTELILABS.COM, INC.
(FORMERLY KNOWN AS QUENTIN ROAD PRODUCTIONS, INC.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
NUMBER OF PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT DEFICIT
-------------- ----------- ----------- --------------- ----------------
<S> <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 0 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) - -
Net loss for the year ended June 30, 2000 - - - (94,531) (94,531)
-------------- ----------- ----------- --------------- ----------------
Balance, June 30, 2000 24,400,000 $ 2,440 $ 50,560 $ (131,777) $ (78,777)
============== =========== =========== =============== ================
</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 CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 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 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
--------------- --------------- ---------------
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)
--------------- --------------- ---------------
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 $ -- $ -- $ --
=============== =============== ===============
</TABLE>
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITY
(1) The company issued common stock for consulting and legal services of
$3,000
(2) The cash flow statement for 2000 does not include the effect of transfer
of certain assets and liabilities to the old management
F-4
<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-5
<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-6
<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 total
liabilities exceed its total assets by $78,777 at June 30, 2000.
F-7
<PAGE>
INTELILABS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 & 1999
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
-------------
6,225
Less Accumulated Depreciation 106
-------------
$ 6,119
=============
</TABLE>
5. ACCRUED EXPENSES
Accrued expenses as of June 30, 2000 consist of the following:
<TABLE>
<S> <C>
Website development expenses $ 25,000
Professional fees 11,367
Income Tax 800
-------------
$ 37,167
=============
</TABLE>
F-8
<PAGE>
INTELILABS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 & 1999
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.
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.
F-9
<PAGE>
INTELILABS.COM, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 & 1999
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.
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.
11. RECLASSIFICATION
Certain amounts in the accompanying 1999 financial
statements have been reclassified to conform to the presentation for 2000.
F-10
