U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: December 31, 1999
Commission File Number: 000-28053
INVESTMENT ASSOCIATES, INC.
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
98-0204280
(IRS Employer Identification No.)
1460 Pandosy Street
Suite 106
Kelowna, British Columbia
(Address of principal executive offices)
V1Y 1P3
(Zip Code)
(250) 868-8177
(Issuer's Telephone Number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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
__X__ No ____.
The number of shares of the registrant's only class of common stock issued and
outstanding, as of December 31, 1999, was 1,000,000 shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the three month period
ended December 31, 1999 are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with
the Company's unaudited financial statements and notes thereto included herein.
In connection with, and because it desires to take advantage of, the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
Company cautions readers regarding certain forward looking statements in the
following discussion and elsewhere in this report and in any other statement
made by, or on the behalf of the Company, whether or not in future filings with
the Securities and Exchange Commission. Forward looking statements are
statements not based on historical information and which relate to future
operations, strategies, financial results or other developments. Forward looking
statements are necessarily based upon estimates and assumptions that are
inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which, with respect to future business decisions, are subject to
change. These uncertainties and contingencies can affect actual results and
could cause actual results to differ materially from those expressed in any
forward looking statements made by, or on behalf of, the Company. The Company
disclaims any obligation to update forward looking statements.
Plan of Operation
The Company intends to seek to acquire assets or shares of an entity
actively engaged in business, in exchange for its securities. As of the date of
this report, management of the Company has had preliminary discussions with
potential merger or acquisition candidates, but there is no definitive agreement
between the Company and any third party relevant thereto. In the event the
Company does enter into an agreement with such a third party, the Board of
Directors does intend to obtain certain assurances of value of the target entity
assets prior to consummating such a transaction, with further assurances that an
audited financial statement would be provided within sixty days after closing of
such a transaction. Closing documents relative thereto will include
representations that the value of the assets conveyed to or otherwise so
transferred will not materially differ from the representations included in such
closing documents, or the transaction will be voidable.
2
<PAGE>
The Company has no full time employees. The Company's
President and Secretary have agreed to allocate a portion of their time to the
activities of the Company, without compensation. These officers anticipate that
the business plan of the Company can be implemented by their devoting
approximately 20 hours per month to the business affairs of the Company and,
consequently, conflicts of interest may arise with respect to the limited time
commitment by such officers.
Because the Company presently has nominal overhead or other
material financial obligations, management of the Company believes that the
Company's short term cash requirements can be satisfied by management injecting
whatever nominal amounts of cash into the Company to cover these incidental
expenses. There are no assurances whatsoever that any additional cash will be
made available to the Company through any means.
Liquidity and Capital Resources
The Company presently has nominal cash or cash equivalents.
Because the Company is not required to pay rent or salaries to any of its
officers or directors, management believes that the Company has sufficient funds
to continue operations through the foreseeable future.
The Company's securities are currently not liquid. There are
no market makers in the Company's securities and it is not anticipated that any
market will develop in the Company's securities until such time as the Company
successfully implements its business plan of engaging in a business opportunity,
either by merger or acquisition of assets. The Company presently has no liquid
financial resources to offer such a candidate and must rely upon an exchange of
its stock to complete such a merger or acquisition.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - NONE
ITEM 2. CHANGES IN SECURITIES - NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES - NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -
NONE.
ITEM 5. OTHER INFORMATION - NONE.
3
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits
EX-27 Financial Data Schedule
(b) Reports on Form 8-K
None.
4
<PAGE>
<TABLE>
INVESTMENT ASSOCIATES, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEET
(Unaudited)
December 31, 1999
<CAPTION>
ASSETS
<S> <C>
TOTAL ASSETS $ -
=========
LIABILITIES
Accrued liabilities $ 5,483
---------
TOTAL LIABILITIES $ 5,483
=========
SHAREHOLDERS' (DEFICIT)
Preferred stock, $.001 par value, 25,000,000 shares
authorized, -0- shares issued and
outstanding (See Note B) -
Common stock, $.001 par value, 75,000,000 shares
authorized, 1,000,000 (restated) shares issued and
outstanding (See Note B) 1,000
Additional paid-in capital 2,083
Deficit accumulated during the development stage (8,566)
---------
TOTAL SHAREHOLDERS' (DEFICIT) $ (5,483)
---------
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) $ 0
=========
See accompanying notes to condensed financial statements
</TABLE>
5
<PAGE>
<TABLE>
INVESTMENT ASSOCIATES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
July 18, 1997
Three Months Ended (inception)
------------------------ Through
December 31 December 31 December 31
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
COSTS AND EXPENSES
Legal fees $ 5,000 $ - $ 5,000
Accounting fees 2,231 - 2,231
Licenses and fees - - 335
Stock-based compensation for
organizational costs (Note B) - - 1,000
----------- ----------- -----------
LOSS FROM OPERATIONS (7,231) - (8,566)
----------- ----------- -----------
INCOME TAX BENEFIT (EXPENSE) (NOTE C)
Current tax benefit 1,377 - 1,631
Deferred tax expense (1,377) - (1,631)
----------- ----------- -----------
NET LOSS $ (7,231) $ - $ (8,566)
=========== =========== ===========
BASIC AND DILUTED
LOSS PER COMMON SHARE $ * $ * $ *
=========== =========== ===========
BASIC AND DILUTED WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING (Note D) 1,000,000 1,000,000 1,000,000
=========== =========== ===========
* Less than .01 per share
See accompanying notes to condensed financial statements
</TABLE>
6
<PAGE>
<TABLE>
INVESTMENT ASSOCIATES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
July 18, 1997
Three Months Ended (inception)
------------------------ Through
December 31 December 31 December 31
1999 1998 1999
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Loss $ (7,231) $ - $ (8,566)
Non-cash transactions:
Stock-based compensation for
organizational costs (Note B) - - 1,000
Changes in operating assets and
liabilities:
Accounts payable and
accrued liabilities 5,148 - 5,483
----------- ----------- -----------
NET CASH (USED IN)
OPERATING ACTIVITIES (2,083) - (2,083)
----------- ----------- -----------
FINANCING ACTIVITIES
Third party expenses paid by
affiliate on behalf of the
company, recorded as additional-
paid-in capital 2,083 - 2,083
----------- ----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 2,083 - 2,083
----------- ----------- -----------
NET CHANGE IN CASH
Cash, beginning of period - - -
----------- ----------- -----------
CASH, END OF PERIOD $ - $ - $ -
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the period for:
Interest $ - $ - $ -
=========== =========== ===========
Income taxes $ - $ - $ -
=========== =========== ===========
Non-cash financing activities:
1,000,000 shares common stock
issued for services $ - $ - $ 1,000
=========== =========== ===========
See accompanying notes to condensed financial statements
</TABLE>
7
<PAGE>
INVESTMENT ASSOCIATES, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: BASIS OF PRESENTATION
The condensed financial statements presented herein have been prepared by the
Company in accordance with the accounting policies in its audited financial
statements for the year ended September 30, 1999 as filed in its form 10-SB
filed November 12, 1999 and should be read in conjunction with the notes
thereto. The Company entered the development stage in accordance with Statement
of Financial Accounting Standard ("SFAS") No. 7 on July 18, 1997 and is a "blank
check" company with the purpose to evaluate, structure and complete a merger
with, or acquisition of, a privately owned corporation.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
Interim financial data presented herein are unaudited.
NOTE B: RELATED PARTY TRANSACTIONS
The Company has issued an officer 1,000,000 shares of common stock in exchange
for services related to management and organization costs of $1,000. The officer
will provide administrative and marketing services as needed. The officer may,
from time to time, advance to the Company any additional funds that the Company
needs for costs in connection with searching for or completing an acquisition or
merger.
The Company does not maintain a checking account and all expenses incurred by
the Company are paid by an affiliate. For the three months ended December 31,
1999 the Company incurred legal expense of $5,000 and accounting expense of
$2,231. The affiliate does not expect to be repaid for the expenses it pays on
behalf of the Company. Accordingly, as the expenses are paid, they are
classified as additional paid-in capital.
NOTE C: INCOME TAXES
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". The Company incurred
net operating losses during the periods shown on the condensed financial
statements resulting in a deferred tax asset, which was fully allowed for,
therefore the net benefit and expense result in $-0- income taxes.
8
<PAGE>
INVESTMENT ASSOCIATES, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE D: FORWARD STOCK SPLIT
Effective October 6, 1999, the shareholders approved a forward split of common
stock of one thousand shares for each share of common stock (1,000:1) held. The
accompanying financial statements have been retroactively restated to give
effect to the forward stock split for all periods presented.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
INVESTMENT ASSOCIATES, INC.
(Registrant)
Dated: February 22, 2000
By: s/Robert Hemmerling
----------------------------------
Robert Hemmerling,
Secretary/Treasurer
10
<PAGE>
INVESTMENT ASSOCIATES, INC.
EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED DECEMBER 31, 1999
EXHIBITS Page No.
EX-27 Financial Data Schedule.....................................12
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED DECEMBER 31,
1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 5,483
<BONDS> 0
0
0
<COMMON> 1,000
<OTHER-SE> (6,483)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,231
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7,231)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,231)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
