UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________________ To ________________________
Commission file number 0-27739
-------
MENTOR ON CALL, INC.
--------------------
(Exact name of small business issuer as specified in its charter)
NEVADA 77-0517966
------------------------------------ ---------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
40 King St. West, Suite 4900, Toronto, Ontario, Canada M5H 4A2
--------------------------------------------------------------
(Address of principal executive offices)
(416) 777-6714
---------------
(Issuer's telephone number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date: September 30, 2000 13,850,000
-----------------------------------
Transitional Small Business Disclosure Format (check one). Yes ; No X
---- ---
<PAGE>
PART I
Item 1. Financial Statements
INDEPENDENT ACCOUNTANT'S REPORT
Mentor On Call, Inc.
(A Development Stage Company)
We have reviewed the accompanying balance sheets of Mentor On Call, Inc. (a
development stage company) as of September 30, 2000 and December 31, 1999, and
the related statements of operations for the three and nine months, and cash
flows for the nine month periods ended September 30, 2000 and 1999. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statement taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
Respectfully submitted
/s/ ROBISON, HILL & CO.
Certified Public Accountants
Salt Lake City, Utah
November 8, 2000
<PAGE>
MENTOR ON CALL, INC.
(A Development Stage Company)
BALANCE SHEETS
September 30, December 31,
ASSETS .............................................. 2000 1999
---------- ----------
Current Assets:
Cash & Cash Equivalents .............................. $ -- $ --
---------- ----------
Total Current Assets ............................ -- --
Fixed Assets:
Equipment ............................................ 123,464 --
Less Accumulated Depreciation ........................ (8,907) --
---------- ----------
Total Fixed Assets .............................. 114,557 --
Other Assets:
Intangible Assets .................................... 5,000 --
Less Accumulated Amortization ........................ (209) --
---------- ----------
Total Other Assets .............................. 4,791 --
---------- ----------
Total Assets .................................... $ 119,348 $ --
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable & Accrued Expenses .................. $ 678,454 $ 4,813
Bank Overdraft ....................................... 6,519 --
Shareholder Loans .................................... 766,072 --
---------- ----------
Total Liabilities ............................... 1,451,045 4,813
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 13,850,000 and 4,500,000
Shares at September 30, 2000 and December 31, 1999 13,850 4,500
Paid-In Capital .................................... 3,163,635 --
Currency Translation Adjustments ................... (12,389) --
Retained Deficit ................................... (1,200) (3,215)
Deficit Accumulated During the
Development Stage ................................ (4,495,593) (6,098)
---------- ----------
Total Stockholders' Equity ...................... (1,331,697) (4,813)
---------- ----------
Total Liabilities and
Stockholders' Equity .......................... $ 119,348 $ --
========== ==========
See accompanying notes and accountants' report.
<PAGE>
MENTOR ON CALL, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Cumulative
since
inception
For the three months ended For the nine months ended of
September 30, September 30, development
------------------- ---------------------- -------------
2000 1999 2000 1999 stage
---------- ------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
Revenues: .................... $ -- $ -- $ -- $ -- $ --
Expenses:
Research & Development ..... 260,533 -- 3,432,365 -- 3,432,365
General & Administrative ... 312,515 -- 1,027,968 -- 1,034,066
--------- ------- ----------- --------- -----------
Net Operating Loss ...... (573,048) -- (4,460,333) -- (4,466,431)
Other Income (Expense)
Interest, Net .............. (16,952) -- (29,163) -- (29,163)
Net Loss ................ $(590,000) $ -- $(4,489,496) $ -- $(4,495,594)
========= ======= =========== ========= ===========
Basic & Diluted loss per share $ (0.04) $ -- $ (0.32) $ --
========= ======= ============ =========
</TABLE>
See accompanying notes and accountants' report.
<PAGE>
MENTOR ON CALL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
Since
Inception
For the nine months ended of
September 30, Development
------------------------ -----------
2000 1999 Stage
------------- -------- -----------
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C> <C>
Net Loss .................................... $ (4,489,496) $ -- $(4,495,594)
Adjustments to reconcile net loss to net cash
Provided by operating activities
Depreciation & Amortization ............... 9,116 -- 9,116
Accrued Interest on Shareholder Loans ..... 29,567 29,567
Currency Translation Adjustment ........... (12,389) -- (12,389)
Stock issued for Research & Development ... 2,995,000 -- 2,995,000
Compensation Expense on Stock Options .... 175,000 -- 175,000
Increase (Decrease) in:
Accounts Payable & Accrued Expenses ....... 673,940 -- 678,553
------------- -------- -----------
Net Cash Used in operating activities ..... (619,262) -- (620,747)
------------- -------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of Fixed Assets .................... (123,464) -- (123,464)
------------- -------- -----------
Net cash provided by
investing activities ...................... (123,464) -- (123,464)
------------- -------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Capital contributed by shareholder .......... -- -- 1,485
Bank Overdraft .............................. 6,221 -- 6,221
Proceeds from Shareholder Loans ............. 736,505 -- 736,505
------------- -------- -----------
Net Cash Provided by
Financing Activities ...................... 742,726 -- 744,211
------------- -------- -----------
Net (Decrease) Increase in
Cash and Cash Equivalents ................. -- -- --
Cash and Cash Equivalents
at Beginning of Period .................... -- -- --
------------- -------- -----------
Cash and Cash Equivalents
at End of Period .......................... $ -- $ -- $ --
============= ======== ===========
</TABLE>
<PAGE>
MENTOR ON CALL, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Continued)
<TABLE>
<CAPTION>
Cumulative
Since
Inception
For the nine months ended of
September 30, Development
--------------------
2000 1999 Stage
--------- -------- ------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
<S> <C> <C> <C>
Interest ................................................ $ -- $ -- $ --
Franchise and income taxes .............................. $ -- $ -- $ 250
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Common Stock exchanged for Intangible Assets .............. $ 5,000 $ -- $5,000
</TABLE>
See accompanying notes and accountants' report.
<PAGE>
MENTOR ON CALL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Mentor On Call, Inc. is presented
to assist in understanding the Company's financial statements. The accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
The unaudited financial statements as of September 30, 2000 and for the
nine months then ended reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to fairly state the
financial position and results of operations for the nine months. Operating
results for interim periods are not necessarily indicative of the results which
can be expected for full years.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of Nevada on
October 22, 1996 under the name PSM Corp. The Company ceased all operating
activities during the period from October 22, 1996 to July 9, 1999 and was
considered dormant. On July 9, 1999, the Company obtained a Certificate of
renewal from the State of Nevada. On January 11, 2000, the company changed its
name to Mentor On Call, Inc. Since July 9, 1999, the Company is in the
development stage, and has not commenced planned principal operations.
Nature of Business
The company has no products or services as of December 31, 1999. The
Company was organized as a vehicle to seek merger or acquisition candidates. On
January 15, 2000, the Board of Directors approved the proposed Asset Acquisition
Agreement (the "Agreement") with Mentor On Call Holdings, Inc., a Barbadian
International Business Corporation.
The Company is in business to provide managed distance learning systems,
corporate training, professional continuing education and infomercial
marketplaces.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
<PAGE>
MENTOR ON CALL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Depreciation
Equipment is stated at cost. Depreciation is computed using the
straight-line method over the estimated economic useful lives of the related
assets as follows:
Equipment 5 - 7 years
Maintenance and repairs are charged to operations; betterments are
capitalized. The cost of property sold or otherwise disposed of and the
accumulated depreciation thereon are eliminated from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.
Amortization
Intangible assets consist of patents and trademarks. Amortization is
computed using straight- line method over the estimated useful lives of the
related assets as follows:
Patents and Trademarks 17 years
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required 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.
Concentrations of Credit Risk
The Company has no significant off-balance-sheet concentrations of credit
risk such as foreign exchange contracts, options contracts or other foreign
hedging arrangements.
<PAGE>
MENTOR ON CALL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Loss per Share
The reconciliations of the numerators and denominators of the basic loss
per share computations are as follows:
Per-Share
Income Shares Amount
------ ------ ------
(Numerator) (Denominator)
For the three months ended September 30, 2000
Basic Loss per Share
Loss to common shareholders $ (590,000) 13,850,000 $ (0.04)
=============== ============== ===============
For the nine months ended September 30, 2000
Basic Loss per Share
Loss to common shareholders $ (4,489,496) 13,850,000 $ (0.32)
=============== ============== ===============
For the three months ended September 30, 1999
Basic Loss per Share
Loss to common shareholders $ -- 9,000,000 $ --
=============== ============== ===============
For the nine months ended September 30, 1999
Basic Loss per Share
Loss to common shareholders $ -- 9,000,000 $ --
=============== ============== ===============
The effect of outstanding common stock equivalents are anti-dilutive for
September 30, 2000 and 1999 and are thus not considered.
NOTE 2 - INCOME TAXES
As of September 30, 2000, the Company had a net operating loss
carryforward for income tax reporting purposes of approximately $1,034,000 that
may be offset against future taxable income through 2011. Current tax laws limit
the amount of loss available to be offset against future taxable income when a
substantial change in ownership occurs. Therefore, the amount available to
offset future taxable income may be limited. No tax benefit has been reported in
the financial statements,
<PAGE>
MENTOR ON CALL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(Continued)
NOTE 2 - INCOME TAXES (Continued)
because the Company believes there is a 50% or greater chance the carry-forwards
will expire unused. Accordingly, the potential tax benefits of the loss
carry-forwards are offset by a valuation allowance of the same amount.
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
NOTE 4 - RENT EXPENSE
The Company occupies certain executive offices in Toronto, Ontario, Canada
under a noncancellable leases. This lease is for office space and expires
November 2000. The current lease requires rental payments of approximately
$1,207 ($1,750 Canadian Dollars) per month.
On April 1, 2000, the Company signed a one year noncancellable lease on
development center offices in Toronto, Ontario, Canada. This lease expires March
2001. The current lease requires rental payments of approximately $1,076 ($1,560
Canadian Dollars) per month.
On July 10, 2000, the Company signed a lease on additional development
office space in Toronto, Ontario, Canada. This lease expires March 31, 2001. The
lease requires rental payments of approximately $914 ($1,325 Canadian Dollars)
per month.
It is expected that in the normal course of business, leases that expire
will be renewed or replaced by leases on other properties.
The minimum future lease payments under these leases for the next five
years are:
Year Ended December 31,
---------------------------------------
2000 $ 5,928
2001 5,970
2002 -
2003 -
2004 -
Thereafter -
-------------------
Total minimum future lease payments $ 11,898
===================
<PAGE>
MENTOR ON CALL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(Continued)
NOTE 5 - STOCK SPLIT
On May 6, 1999 the Board of Directors authorized 1,000 to 1 stock split,
changed the authorized number of shares to 100,000,000 shares and the par value
to $.001 for the Company's common stock. As a result of the split, 999,000
shares were issued. All references in the accompanying financial statements to
the number of common shares and per-share amounts for 1999 have been restated to
reflect the stock split.
On January 15, 2000, the Board of Directors authorized 9 to 1 stock split.
As a result of the split, 4,000,000 shares were issued. All references in the
accompanying financial statements to the number of common shares and per-share
amounts for 1999 have been restated to reflect the stock split.
NOTE 6 - STOCK OPTIONS AND WARRANTS
On March 16, 2000 the Board of Directors authorized and issued stock
options to a Director for purchase 50,000 shares of the Company's restricted
common stock at a price of $2.00 per share. The options expire March 2002. As of
September 30, 2000, no options have been exercised. Compensation in the amount
of $175,000 has been recorded in the accompanying financial statements as a
result of the issuance of these options
NOTE 7 - RELATED PARTY TRANSACTIONS
During 2000, shareholders of the Company have loaned $736,505 to the
Company by way of cash advances, provision of office facilities, and payment of
services. The services provided are subject to further review and may be subject
to reduction during the next quarter. The loans are payable on demand and accrue
interest at 10% beginning April 1, 2000.
<PAGE>
MENTOR ON CALL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(Continued)
NOTE 8 - EMPLOYMENT CONTRACTS
The Company signed employment contracts with Messrs. Rodgers, Austin,
Pritchard and Figueroa as follows:
Annual Deferred
Name Remuneration Amount
------------------------ -------------------- --------------------
Rodgers $ 250,000 $ 75,000
Austin $ 180,000 $ 60,000
Pritchard $ 120,000 $ 25,000
Figueroa $ 100,000 $ 15,000
Deferred Salaries vest when the Company retains earnings of $750,000 in one
quarter and are then payable in equal monthly amounts over the ensuing six month
period.
Benefits are in a packaged value at a minimum of ten percent of salary and
a maximum of fifteen percent of salary. Fully paid vacation of four weeks per
annum each.
Automobile allowance available when the Company is earning a profit of a
minimum of $750,000 in any one quarter as follows: Rodgers $450 per month,
Austin $375 per month, Prichard $300 per month, and Figueroa $300 per month.
A Project Completion Bonus of $125,000 for each of Rodgers, Austin,
Pritchard and Figueroa is available and payable on the completion and acceptance
of the Learning Management System by the Chief Executive Officer of the Company
and by outside clients and conditional upon receipt of a minimum of $1,500,000
from licences.
Each of Rodgers, Austin, Pritchard and Figueroa will be granted stock
options of 250,000 to each with a strike price of $2.00 per share exercisable
for a period of five years upon payment of the project completion bonus.
<PAGE>
MENTOR ON CALL, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(Continued)
NOTE 9 - ASSET ACQUISITION
The Board of Directors has approved the proposed Asset Acquisition
Agreement (the "Agreement") with Mentor On Call Holdings, Inc. (Formerly Mentor
On Call, Inc.), a Barbadian International Business Corporation ("Holdings"). The
name of the Company has been changed to Mentor On Call, Inc. to reflect the
Company's new direction, and, effective January 15, 2000, the Company declared a
nine-for-one forward stock split of its common stock.
The assets acquired include the Mentor On Call Managed E-Learning System
which is a proprietary and web-enabled managed distance and e-learning system
with patents pending and priority dates set in eighty-nine countries. The Mentor
On Call system operates on Windows 95, 98 and NT platforms, on Novell and
Intranet and will support industry standard web servers and browsers. The system
is SQL compliant. The assets also include the Trademark and domain name "Mentor
On Call".
The Company hopes to provide the best managed distance learning system in
the world, and intends to grow and achieve an above-average financial return by
maintaining a large share of the public school distance and e-learning market,
as well as the corporate training, professional continuing education and
infomercial marketplaces.
Under the terms of the Agreement, signed on January 17, 2000, the Company
issued 9,350,000 post-split restricted shares of the Company as consideration
for the assets, resulting in a total of 13,850,000 issued and outstanding shares
of the Company, of which Holdings controls approximately 67.5%. Holdings
management has stepped in and taken over all day-to-day operations of the
Company. James N. Rodgers has agreed to assume the position of President, Chief
Executive Officer and Chairman of the Board of Directors, and Edwin W. Austin
has agreed to step in as Chief Financial Officer, Chief Operating Officer and
Director.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
General
The Company is in business to provide quality managed distance learning systems,
and intends to grow and achieve an above-average financial return by maintaining
a significant share of the international public school distance and e-learning
market, as well as the corporate training, professional continuing education and
infomercial marketplaces.
On January 15, 2000 the Company acquired the Mentor On Call Managed E-Learning
System which is a proprietary and web-enabled managed distance and e-learning
system with patents pending and priority dates set in 105 countries. The assets
also include the Trademark and domain name "Mentor On Call". The Mentor On Call
system operates on Windows 95, 98 and NT platforms, on Novell and Intranet and
will support industry standard web servers and browsers. The system is SQL
compliant.
Under the terms of the asset acquisition agreement, the Company issued 9,350,000
restricted shares as consideration for the acquired assets. The Company may
incur significant post-acquisition registration costs in the event management
wishes to register a portion of these shares for subsequent sale.
The Company will not have sufficient funds (unless it is able to raise funds in
a private placement) to undertake any significant development, marketing and
manufacturing of the products acquired. Accordingly, following the acquisition,
the Company will, in all likelihood, be required to either seek debt or equity
financing or obtain funding from third parties, in exchange for which the
Company may be required to give up a substantial portion of its interest in the
acquired product. There is no assurance that the Company will be able either to
obtain additional financing or interest third parties in providing funding for
the further development, marketing and manufacturing of any products acquired.
Plan of Operation
The company has executed a Letter of Agreement for a Private Equity Line of
Common Stock pursuant to Regulation D and in the amount of $35 million and is
for 36 months from the Registration Date. Final Agreements were executed on
September 8, 2000.
The plan calls for the Company to follow up on Drake International testing of
the Mentor On Call proprietary E-learning System.
The company shall allocate $300,000 to perfection of patent pending numbers in
105 countries pursuant to the Paris Convention, from proceeds of Private
Placement.
The company is continuing the customization of its E-learning System to meet the
specific needs of subscribers with prime emphasis targeted to the requirements
of Application System Service Providers. An amount of $1,300,000 is allocated
towards this goal pursuant to our business plan.
<PAGE>
The company, in conjunction with the system refinements, shall migrate the
Mentor On Call E- learning System to industry standard building tools. The
company has allocated $100,000 to this project.
Mentor On Call, Inc. shall allocate the balance of Private Placement when fully
subscribed to complete business contemplated pursuant to executed Letters of
Intent and to market the product worldwide and for general working capital
purposes.
Competition
The Company is an insignificant participant among firms which engage in managed
distance learning systems, corporate training, professional continuing education
and infomercial marketplaces. There are other established companies in these
industries which have significantly greater financial and personnel resources,
technical expertise and experience than the Company. In view of the Company's
limited financial resources and management availability, the Company will
continue to be at a significant competitive disadvantage vis-a-vis the Company's
competitors.
Employees
At September 30, 2000, the Company had 13 full-time individual contractors and
employees.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not engaged in any legal proceedings other than the
ordinary routine litigation incidental to its business operations, which the
Company does not believe, in the aggregate, will have a material adverse effect
on the Company, or its operations.
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
<PAGE>
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are included as part of this report:
Exhibit
Number Exhibit
3.1 Articles of Incorporation (1)
3.2 Amended Articles of Incorporation (1)
3.3 Bylaws (1)
10.1 Asset Acquisition Agreement(2)
10.2 Unanimous Shareholders Agreement(2)
10.3 Executive Employment Contract with James N. Rodgers(2)
10.4 Executive Employment Contract with Edwin W. Austin(2)
10.5 Executive Employment Contract with John J. Pritchard(2)
10.6 Executive Employment Contract with Jason R. Figueroa(2)
10.7 Escrow Agreement(2)
27.1 Financial Data Schedule
(1) Incorporated by reference to the Registrant's registration statement on
Form 10-SB filed on October 20, 1999.
(2) Incorporated by reference to the Registrant's quarterly report on Form
10-QSB filed on May 8, 2000.
(b) The Company has not filed a Form 8-K during the period ended September
30, 2000.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
MENTOR ON CALL, INC.
(Registrant)
Date: November 13, 2000 By: /s/ James N. Rodgers
James N. Rodgers,
President, CEO and Chairman
Date: November 13, 2000 By: /s/ Edwin W. Austin
Edwin W. Austin,
CFO, COO and Director
