<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For Quarter Ended: MARCH 31, 2000
Commission File Number: 0-26415
INTERNATIONAL INTERNET, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 13-3876100
(State of Incorporation) (IRS Employer ID No)
6413 CONGRESS AVENUE, SUITE 240, BOCA RATON, FL 33487
(Address of principal executive office)
(561) 988-0819
(Issuer's telephone number)
Check whether the issuer (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 X No .
--- ---
The number of shares outstanding of registrant's common stock, par value $.00001
per share, as of March 31, 2000 was 767,446,187.
Transitional Small Business Disclosure Format (Check one): Yes No X .
--- ---
<PAGE> 2
INTERNATIONAL INTERNET, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
No.
---
<S> <C>
Part I. Financial Information
Item 1. Condensed Consolidated:
Balance Sheet - March 31, 2000 and December 31, 1999 3
Statement of Operations - 4
Three Months Ended March 31, 2000 and 1999
Statement of Stockholders' Equity - 5
Three Months Ended March 31, 2000
Statements of Cash Flows - 6-7
Three Months Ended March 31, 2000 and 1999
Notes to Financial Statements - 8-12
Three Months Ended March 31, 2000 and 1999
Item 2. Managements Discussion and Analysis of Financial Condition 13-14
and Results of Operations
Part II. Other Information 15
</TABLE>
2
<PAGE> 3
INTERNATIONAL INTERNET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $1,105,111 $2,737,537
Restricted cash 2,237,345 -
Accounts receivable 52,068 34,098
Marketable equity securities 2,173,192 836,294
Inventory 146,981 97,934
Due from sale of 80% of subsidiary 500,000 -
Notes receivable 21,350 26,350
Prepaid expenses 35,999 4,136
Assets of discontinued operation - 447,665
---------- ----------
Total current assets 6,272,046 4,184,014
Property and equipment, net 139,886 97,209
Investments in partially-owned equity affiliates 76,291 -
Goodwill, less accumulated amortization of $2,740 and $1,917 46,500 47,323
Other assets 10,197 10,882
---------- ----------
$6,544,920 $4,339,428
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $1,945,517 $ -
Accounts payable 246,713 131,754
Accrued expenses 3,649 5,244
Liabilities of discontinued operation - 590,110
Stockholder loans 16,348 18,000
Income taxes payable 33,618 30,318
Deferred income taxes 465,508 284,508
---------- ----------
Total current liabilities 2,711,353 1,059,934
Deferred income taxes 8,050 6,650
STOCKHOLDERS' EQUITY
Common stock, $.00001 par value. Authorized 1,000,000,000 shares; issued and 7,674 7,674
outstanding 767,446,187 shares
Paid-in capital 2,658,741 2,658,741
Retained earnings 1,159,102 606,429
---------- ----------
Total stockholders' equity 3,825,517 3,272,844
---------- ----------
$6,544,920 $4,339,428
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
INTERNATIONAL INTERNET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 1999
<S> <C> <C>
SALES AND REVENUES $ 499,225 $ 51,304
COST OF SALES 395,061 41,713
------------- -------------
GROSS PROFIT 104,164 9,591
OTHER INCOME (EXPENSE):
Selling, general and administrative expense (344,724) (137,407)
Interest expense (26,796) -
Sale of marketable equity securities 598,587 -
Other income 29,393 87
Unrealized gain on marketable equity securities 481,056 5,974,020
------------- -------------
Total other income (expense) 737,516 5,836,700
------------- -------------
EARNINGS BEFORE INCOME TAXES 841,680 5,846,291
INCOME TAX EXPENSE 318,100 1,810,091
------------- -------------
INCOME FROM CONTINUING OPERATIONS 523,580 4,036,200
INCOME FROM DISCONTINUED OPERATIONS 29,093 -
------------- -------------
NET EARNINGS $ 552,673 $ 4,036,200
============= =============
NET EARNINGS PER SHARE
BASIC $ 0.001 $ 0.005
============= =============
DILUTED $ 0.001 $ 0.005
============= =============
DISCONTINUED OPERATIONS $ - $ -
============= =============
WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC 767,446,187 740,998,322
============= =============
DILUTED 768,989,044 740,998,322
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
INTERNATIONAL INTERNET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Paid-in Retained
Shares Par Value Capital Earnings Total
------ --------- ------- -------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1999 767,446,187 $ 7,674 $2,658,741 $ 606,429 $3,272,844
Net income 552,673 552,673
=========== ======== ========== ========== ==========
BALANCE, March 31, 2000 767,446,187 $ 7,674 $2,658,741 $1,159,102 $3,825,517
=========== ======== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
INTERNATIONAL INTERNET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 552,673 $ 4,036,200
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 9,860 6,905
Gain from discontinued operations (29,093) -
Gain on marketable investment securities (598,587) -
Unrealized gain on marketable investment securities (481,056) (5,974,020)
Proceeds from sale of marketable investment securities 628,578
Purchase of marketable investment securities (23,333) (20,000)
Deferred income taxes 182,400 1,810,091
Change in assets and liabilities:
Accounts receivable (17,969) 12,000
Inventory (49,047) (35,000)
Other assets (31,865) -
Notes receivable 5,000 -
Accounts payable (77,272) -
Accrued expenses (1,595) 740
Income taxes payable 3,300 -
----------- -----------
Net cash provided by (used in) operating activities 71,994 (163,084)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (51,029) (6,867)
Purchase of marketable investment securities (862,500) (25,000)
Net advances to discontinued operation (497,412)
----------- -----------
Net cash used in investing activities (1,410,941) (31,867)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock for cash - 247,825
Loan proceeds 1,945,517 -
Due to shareholders (1,652) -
----------- -----------
Net cash provided by financing activities 1,943,865 247,825
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 604,918 52,874
CASH AND CASH EQUIVALENTS, beginning of period 2,737,538 116,965
=========== ===========
CASH AND CASH EQUIVALENTS, end of period $ 3,342,456 $ 169,839
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Continued
6
<PAGE> 7
INTERNATIONAL INTERNET, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest and income taxes are as follows:
Interest $ 26,796 $ -
Income taxes $150,000 $ -
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Sale of 80% of subsidiary for receivable $500,000 $ -
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE> 8
INTERNATIONAL INTERNET, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
A ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
International Internet, Inc. (the "Company" or "IINN"), is a
diversified holding company that develops and operates Internet and
direct retail marketing companies and computer service providers on the
Internet. The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, American Computer
Systems, Inc. ("ACS") and StogiesOnline.com, Inc. ("Stogies")
(www.stogiesonline.com), and its majority owned subsidiaries,
TheBroadcastWeb.com, Inc. ("Broadcast") (www.thebroadcastweb.com) and
Mr. Cigar, Inc. ("Cigar").
IINN, through its Venture group, owns an equity interest in several
Internet companies, some of which are classified as trading securities
and some of which are classified as available-for-sale securities.
Stogies became an online distributor and retailer of brand name premium
cigars within the United States on November 18, 1998. Stogies' products
consist of premium cigars, factory brand name seconds and mass market
cigars, which are distributed online to retail and wholesale customers.
IINN is also a party to a joint venture, Stogiesauction.com
(www.stogiesauction.com), with AuctionAnything.com, Inc.
ACS was acquired effective September 30, 1999 and is a full service
provider of computer systems and services to the federal government.
ACS focuses on all phases of hardware implementation, including system
engineering, product design, software integration and networking
communications. In November 1997, ACS was awarded its first General
Services Administration schedule contract for computer systems and
peripherals. This contract was extended for five additional years. IINN
completed the sale of 80% of their interest in ACS for $500,000 as of
the end of March 2000.
Broadcast is an aggregator and broadcaster of streaming media
programming on the Web with the network infrastructure to deliver or
"stream" live and on-demand audio programs over the Internet. Broadcast
and its representative sites (BluesBoyMusic.com, SoulManMusic.com and
JazzManMusic.com) rely primarily on providers of streaming media
products to license encoders to it in order to broadcast its content
and to distribute player software in order to create a broad base of
users.
In April 1999, IINN entered into a joint venture agreement with
AuctionAnything.com, Inc. to launch a cigar auction site,
StogiesAuction.com, which offers its members the ability to bid on
popular cigars, rare cigars and other hard to find cigar related items.
The site offers a company-to-person trading platform as well as a
public, person-to-person trading platform, offering sellers a vehicle
for listing their own items for sale. Buyers are able to browse for
items arranged by topic and bid through an online service.
StogiesAuction.com is in direct competition with other Internet
companies, such as eBay, Inc., Excite Auction, Yahoo Auction and Amazon
Auction.
The financial statements included in this report have been prepared by
the Company pursuant to the rules and regulations of the Securities and
Exchange Commission for interim reporting and include all adjustments
(consisting only of normal recurring adjustments) that are, in the
opinion
8
<PAGE> 9
of management, necessary for a fair presentation. These financial
statements have not been audited.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations for interim reporting. The Company believes that
the disclosures contained herein are adequate to make the information
presented not misleading. However, these financial statements should be
read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report for the year ended December 31,
1999, which is included in the Company's Form 10-KSB for the year ended
December 31, 1999. The financial data for the interim periods presented
may not necessarily reflect the results to be anticipated for the
complete year. Certain reclassifications of the amounts presented for
the comparative period have been made to conform to the current
presentation.
B. MARKETABLE INVESTMENT SECURITIES
TRADING SECURITIES - At March 31, 2000, the Company has an investment
in US corporate equity securities, which are classified as trading
securities. As of March 31, 2000, the estimated value of $1,251,838
exceeded the cost by $1,237,123.
During the three months ended March 31, 2000, the Company received
proceeds from the sale of equity investment securities in the amount of
$628,578 and recognized a gain in the amount of $598,587. The Company
had no sales during the three months ended March 31, 1999.
During the three-month periods ended March 31, 2000 and 1999, the
Company recognized unrealized gains in the amount of $481,056 and
$5,974,020, respectively.
AVAILABLE FOR SALE SECURITIES - At March 31, 2000 the Company held a
security interest in four companies with a cost and approximate fair
market value of $921,354.
C. NOTES PAYABLE AND COMPENSATING BALANCES
The Company has a credit facility with Merrill Lynch for $3,400,000
that bears interest at the 30-day Dealer Commercial Paper Rate plus
2.3%. At March 31, 2000, $1,945,517 had been drawn against this line.
This facility is subject to normal banking terms and conditions and
requires compensating balances not less than 115% of the line of
credit drawn.
Restricted cash in the amount of $2,237,345 has been recorded in the
financial statements as a result of the compensating balance
requirements of the credit facility.
9
<PAGE> 10
D. INCOME TAXES
Income tax expense for continuing operations for the three months ended
March 31, 2000 and 1999 consists of:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Current tax expense:
Federal $ 115,900 $ -
State 19,800 -
------- ---------
135,700 -
Deferred tax expense 182,400 1,810,091
------- ---------
Total income tax expense $ 318,100 $ 1,810,091
======= =========
</TABLE>
Actual income tax expense applicable to earnings, from continuing
operations, before income taxes is reconciled with the "normally
expected" federal income tax expense as follows for the three months
ended March 31, 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
"Normally expected" income tax expense $ 286,171 $ 1,987,739
Increase (decrease) in taxes resulting from:
State income taxes, net of Federal income 30,553 212,220
tax benefit
Change in valuation allowance - (389,868)
Nondeductible meals and other 1,376 -
--------- -----------
$ 318,100 $ 1,810,091
========= ===========
</TABLE>
The deferred income tax liabilities at March 31, 2000 are comprised of
the following:
<TABLE>
<CAPTION>
CURRENT NONCURRENT
<S> <C> <C>
Marketable securities unrealized gain $ 465,508 $ -
Asset basis - 8,050
--------- ---------
Net deferred income tax liabilities $ 465,508 $ 8,050
========= =========
</TABLE>
E. STOCK OPTIONS
On September 30, 1999, as part of an employment agreement, the Company
granted an option to purchase 2,000,000 shares of its common stock at
an exercise price of $.10 per share. The option vests and becomes
exercisable on September 30, 2000 and expires on September 30, 2004.
F. COMMON STOCK
On March 15, 2000, the Company entered into an agreement with Avenel
Financial Group ("AFG") to structure and fund an investment in the
Company in an amount of up to $11,250,000. The Company plans to issue
and sell to investors restricted shares of the Company's common
stock at a purchase price of $.375 per share and including one warrant
for every five shares purchased. The warrant shall entitle the owner to
purchase one share of common stock at an exercise price of $1.50 per
share. AFG will be paid a fee of 3% of the gross amount funded to the
Company.
10
<PAGE> 11
On April 3, 2000, the Company issued 11,000,000 shares of its common
stock and 2,200,000 of its warrants, with an exercise price of $1.50
per share for net proceeds of $4,001,250.
G. DIVESTITURES
In December 1999, the Company decided to sell its wholly owned
subsidiary ACS. In March 2000, the Company completed the agreement for
sale of 80% of its interest in ACS to an ACS officer for $500,000. The
Company received the full payment on April 5, 2000.
The ACS segment is accounted for as a discontinued operation, and
accordingly, amounts in the financial statements and related notes
since the acquisition of ACS effective September 30, 1999, have been
shown as discontinued operations. The assets of discontinued operations
at March 31, 2000 consist of:
<TABLE>
<S> <C>
Cash $ 106,481
Accounts receivable 86,864
Property and equipment, net 26,825
Other assets 162,287
----------
Total assets 382,457
Liabilities 729,957
----------
Net assets of discontinued operations $ (347,500)
===========
</TABLE>
Operating results of the discontinued segment during the three months
ended March 31, 2000, including expenses associated with the
divestiture, are as follows:
<TABLE>
<S> <C>
Net sales $ 43,830
===========
Loss from operations before income taxes $ (148,141)
Income tax benefit 55,800
-----------
Net loss from discontinued operations (92,341)
-----------
Gain on sale 194,834
Income taxes (73,400)
-----------
Net gain on sale 121,434
-----------
Net earnings from discontinued operations $ 29,093
===========
Net earnings per common share:
Basic $ 0.00
===========
Diluted $ 0.00
===========
</TABLE>
11
<PAGE> 12
H. SEGMENT INFORMATION
The Company operates in the following segments, none of which have
intersegment revenues:
<TABLE>
<CAPTION>
Ventures Stogies Broadcast Corporate Consolidated
<S> <C> <C> <C> <C> <C>
Revenues $ - 499,050 175 - 499,225
Operating loss (74,226) (65,918) (42,391) (58,025) (240,560)
Other income 1,079,643 - - 29,393 1,109,036
Income from
continuing
operations 625,616 (41,018) (26,591) (34,427) 523,580
Discontinued
Operations 29,093
----------
Net earnings $ 552,673
==========
Assets $2,249,483 292,618 93,031 3,909,788 6,544,920
========== ======= ====== ========= ==========
</TABLE>
The Venture segment owns an equity interest in several companies,
mainly with Internet operations, and derives its revenues from the net
gains and losses recognized when the investments are sold. In addition,
the Venture segment recognizes income or loss from the unrealized gains
or losses associated with their trading securities.
The Stogies segment is an online distributor and retailer of brand name
premium cigars within the United States, from which it derives all of
its revenues.
The Broadcast segment is an aggregator and broadcaster of streaming
media programming on the Web with the network infrastructure to deliver
or "stream" live and on-demand audio programs over the Internet.
Broadcast will derive its revenues from advertising sales.
Corporate assets consist of the majority of the cash and certain notes
receivable. Interest expense will be allocated to the other segments to
the extent it exceeds interest income.
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
From time to time, the Company may publish forward-looking statements
relative to such matters as anticipated financial performance, business
prospects, technological developments and similar matters. The Private
Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. All statements other than statements of
historical fact included in this section or elsewhere in this report
are, or may be deemed to be, forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of
the Exchange Act of 1934. Important factors that could cause actual
results to differ materially from those discussed in such
forward-looking statements include: 1. General economic factors
including, but not limited to, changes in interest rates, trends in
disposable income; 2. Information and technological advances; 3. Cost
of products sold; 4. Competition; and 5. Success of marketing,
advertising and promotional campaigns.
The Company's continuing operations consist of two Internet based
businesses. Stogies is an online distributor and retailer of brand name
premium cigars within the United States and Canada. Broadcast is an
aggregator and broadcaster of streaming media programming on the Web
with the network infrastructure to deliver or "stream" live and
on-demand audio programs over the Internet and Intranets.
Stogies became operational in November 1998 and it accounts for
substantially all of the sales revenue. Broadcast is still completing
development of their infrastructure and expanding their base of
listeners, and does not expect to commence advertising revenues, other
than nominal amounts, until the end of the year 2000.
A. LIQUIDITY AND CAPITAL RESOURCES
The Company increased its working capital from $3,124,080 at December
31, 1999 to $3,560,693 at March 31, 2000. The major components of the
increase in the amount of $436,613 includes increases in cash in the
amount of $604,919, increases in marketable equity securities in the
amount of $1,336,898 and less an increase in notes payable in the
amount of $1,945,517.
The Company had $71,994 in cash flow provided by operations during the
three months ended March 31, 2000 as compared to $163,084 in cash used
by operations in the year earlier period.
On March 15, 2000, the Company entered into an agreement with Avenel
Financial Group ("AFG") to structure and fund an investment in the
Company in an amount of up to $11,250,000. The Company will issue and
sell to investors restricted shares of the Company's common stock at a
purchase price of $.375 per share and including one warrant for every
five shares purchased. The warrant shall entitle the owner to purchase
one share of common stock at an exercise price of $1.50 per share. AFG
will be paid a fee of 3% of the gross amount funded to the Company.
On April 3, 2000, the Company issued 11,000,000 shares of its common
stock and 2,200,000 of its warrants, with an exercise price of $1.50
per share for net proceeds of $4,001,250.
The Company has budgeted capital expenditures in the amount of
$100,000, primarily for Broadcast, for the year 2000 and will utilize
cash reserves to meet its requirements. As of March 31, 2000 the
Company had acquired $51,029 of the $100,000 budget in capital
expenditures for cash.
13
<PAGE> 14
The Company has a line of credit agreement with Merrill Lynch in the
maximum amount of $3,400,000. The agreement requires annual renewal,
expires initially on January 31, 2001 and includes variable interest at
a per annum rate equal to the sum of 2.3% plus the 30-day Dealer
Commercial Paper Rate. The annual fee is $34,000 and the collateral
consists of a first security interest upon the Company's Merrill Lynch
securities account containing securities having an aggregate value of
not less than 115% of the maximum line of credit. At March 31, 2000,
the Company had received advances from the line of credit in the amount
of $1,945,517 and has restricted $2,237,345 in cash to meet the
compensating balance requirements.
B. RESULTS OF OPERATIONS
SALES AND COST OF SALES - During the three months ended March 31, 2000,
sales increased to $499,225 from the year earlier amount of $51,304.
The 1999 quarter was the first full quarter of operations for the
operations of Stogies, the Company's online distributor and retailer of
brand name premium cigars. The Company expects Stogies' sales to
continue at this level.
Broadcast entered into an advertising agency agreement with Music
Vision of New York in April 2000, to sell advertising on its network of
music sites and expects revenues to commence during the next quarter.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE - Selling, general and
administrative expenses increased $207,317 (151%) to $344,724 in the
quarter ended March 31, 2000 as compared to the same year earlier
quarter. Components of the increase include payroll in the amount of
$87,952, advertising - $16,858, freight - $12,724, insurance - $13,349,
credit card processing fees - $12,743, other costs - $21,126 and
Broadcast's costs in the amount of $42,566. The increase is consistent
with the higher operational level of Stogies and the new costs
associated with Broadcast.
INTEREST EXPENSE - The Company incurred interest expense in the amount
of $26,796 on their credit facility with Merrill Lynch during the
quarter ended March 31, 2000. The Company did not have any debt during
the prior year quarter.
MARKETABLE INVESTMENT SECURITIES - The Company sold trading equity
securities during the quarter ended March 31, 2000 and realized profits
in the amount of $598,587. The Company had no sales during the prior
year quarter.
The Company recognized unrealized gains in the amount of $481,056 and
$5,974,020 during the quarters ended March 31, 2000 and 1999,
respectively.
OTHER INCOME - The Company had income of $29,393 and $87 from interest
and dividends in the quarters ended March 31, 2000 and 1999,
respectively. The higher year 2000 income is the result of the higher
cash balances currently available.
INCOME TAXES - The Company's effective tax rate during the three months
ended March 31, 2000 was approximately 38% as compared to 31% in the
year earlier quarter. During the 1999 quarter, the Company recognized
the tax benefit of net operating losses and other carryforwards that
had previously been reserved.
DISCONTINUED OPERATIONS - The Company sold 80% of their investment in
ACS as of the end of March 2000. The net earnings from discontinued
operation consisted of a loss of $92,341 from operations (net of tax
benefit in the amount of $55,800) and a gain on the sale in the amount
of $121,434 (net of taxes in the amount of $73,400).
14
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - Not applicable
(b) Reports on Form 8-K - None during the current quarter.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
INTERNATIONAL INTERNET, INC.
Date: May 12, 2000 By: /s/ Gary Schultheis
-------------------------------
Gary Schultheis, President and
Principal Accounting Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from (a)
Financial Statements as of March 31, 2000 and for the three months then ended
and is qualified in its entirety by reference to such (b) Form 10-QSB for the
three months ended March 31, 2000.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,342,456
<SECURITIES> 2,173,192
<RECEIVABLES> 52,068
<ALLOWANCES> 0
<INVENTORY> 146,981
<CURRENT-ASSETS> 6,272,046
<PP&E> 174,428
<DEPRECIATION> 34,542
<TOTAL-ASSETS> 6,544,920
<CURRENT-LIABILITIES> 2,711,353
<BONDS> 0
0
0
<COMMON> 7,674
<OTHER-SE> 3,817,843
<TOTAL-LIABILITY-AND-EQUITY> 6,544,920
<SALES> 499,225
<TOTAL-REVENUES> 499,225
<CGS> 395,061
<TOTAL-COSTS> 395,061
<OTHER-EXPENSES> 344,724
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,796
<INCOME-PRETAX> 841,680
<INCOME-TAX> 318,100
<INCOME-CONTINUING> 523,580
<DISCONTINUED> 29,093
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 552,673
<EPS-BASIC> 0.001
<EPS-DILUTED> 0.001
</TABLE>
