SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
Amendment No. 1
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For Quarter Ended: May 31, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File No. 0-29019
Interactive Marketing Technology, Inc.
(Exact name of registrant as specified in its charter)
Nevada 22-3617931
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3575 Cahuenga Boulevard West, Suite 390
Hollywood, California 90068
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (323) 874-4484
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 [ ]
As of July 5, 2000, the Registrant had a total of 13,832,000 shares of
common stock issued and outstanding.
<PAGE>
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements............................................3
Item 2: Management's Discussion and Analysis or Plan of Operations......18
PART II: OTHER INFORMATION
Item 2: Changes in Securities and Use of Proceeds........................21
Item 5: Other Information................................................21
Item 6: Exhibits and Reports filed on Form 8-K .........................22
Signatures...............................................................23
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERACTIVE MARKETING TECHNOLOGY, INC.
_____________________________________________________________________________
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
_____________________________________________________________________________
Independent Accountant's Review Report...................................F-1
Consolidated Balance Sheet as of May 31, 2000 [Unaudited]................F-2
Consolidated Statements of Operations for the three months
ended May 31, 2000 and 1999 [Unaudited].................................F-3
Consolidated Statements of Stockholders' Equity for the three
months ended May 31, 2000 [Unaudited] and the fiscal year
ended February 29, 2000 [Audited]......................................F-4
Consolidated Statements of Cash Flows for the three months
ended May 31, 2000 and 1999 [Unaudited]................................F-5
Notes to Consolidated Statements.........................................F-6
<PAGE> 3
INDEPENDENT ACCOUNTANT'S REVIEW REPORT
To the Board of Directors and Stockholders
Interactive Marketing Technology, Inc.
We have reviewed the accompanying consolidated balance sheet of Interactive
Marketing Technology, Inc. as of May 31, 2000, and the related consolidated
statement of stockholders' equity for the three months then ended, and the
related consolidated statements of operations, and cash flows for the three
months ended May 31, 2000 and 1999. These consolidated 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
statements 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 consolidated financial statements in order
for them to be in conformity with generally accepted accounting principles.
/s/ Moore Stephens, P.C.
MOORE STEPHENS, P. C.
Certified Public Accountants.
Cranford, New Jersey
July 10, 2000
F-1
<PAGE> 4
INTERACTIVE MARKETING TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEET AS OF MAY 31, 2000.
[UNAUDITED]
Assets:
Current Assets:
Cash $ 20,892
Accounts Receivable - [Net of Allowance of $75,000] 2,137,554
Inventory 233,048
Prepaid Expenses 23,000
Other Current Assets 106,811
------------
Total Current Assets 2,521,305
------------
Fixed Assets -At Cost [Net of Accumulated Depreciation of $13,835] 124,603
------------
Other Assets:
Master Recording Rights - Music Catalogues 600,000
Customer List [Net of Accumulated Amortization of $22,800] 113,760
Infomercial Costs [Net of Accumulated Amortization of $79,000] 115,416
Licensing Fees [Net of Accumulated Amortization of $3,300] 16,710
Patents [Net of Accumulated Amortization of $2,500] 12,500
Deposits and Other Assets 75,113
Receivable - Related Party 49,980
------------
Total Other Assets 983,479
------------
Total Assets $ 3,629,387
============
Liabilities and Stockholders' Equity:
Current Liabilities:
Promotional and Return Allowances $ 501,000
Accounts Payable and Accrued Liabilities 1,153,340
Accrued Royalties 540,000
Due to Stockholders 176,000
------------
Total Current Liabilities 2,370,340
------------
Long-Term Liabilities:
Note Payable - Stockholder 55,450
------------
Commitments and Contingencies -
------------
Minority Interest [3A] -
------------
Stockholders' Equity:
Common Stock, Par $.001, 60,000,000 Shares Authorized,
13,832,000 Shares Issued and Outstanding 13,832
Paid-in Capital 2,019,708
Accumulated Deficit (829,943)
------------
Total Stockholders' Equity 1,203,597
------------
Total Liabilities and Stockholders' Equity $ 3,629,387
============
See Notes to Consolidated Financial Statements.
F-2
<PAGE> 5
INTERACTIVE MARKETING TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]
Three months ended
May 31,
2000 1999
------------- -------------
Net Revenues $ 2,786,942 $ -
Cost of Good Sold 1,467,561 -
------------- -------------
Gross Profit 1,319,381 -
------------- -------------
Costs and Expenses:
Payroll and Related Costs 118,610 47,415
General and Administrative Costs 81,844 64,961
Advertising and Media Buys 111,340 42,697
Royalties 480,000 -
Bad Debt Expense 75,000 -
Selling Expenses 10,653 -
Consulting Fees - Related Party - 16,666
Travel and Entertainment 51,369 63,765
Professional Fees 55,403 24,577
Depreciation and Amortization 37,596 -
Research and Development Costs 3,595 -
Interest Expense - Related Party 1,250 -
Debt Financing Costs 75,000 -
Non-Cash Financing Cost -Warrants 50,000 -
------------- -------------
Total Costs and Expenses 1,151,660 260,081
------------- -------------
Net Income [Loss] $ 167,721 $ (260,081)
============= =============
Basic Earnings [Loss] Per Share $ .01 $ (.01)
============= =============
Weighted Average Number of Shares 13,832,000 18,606,000
Diluted Earnings [Loss] Per Share:
Incremental Shares from Assumed Conversion of
Options and Warrants 8,675,000 -
============= =============
Weighted Average Number of Shares Assuming Dilution 22,507,000 18,606,000
============= =============
Diluted Earnings [Loss] Per Share $ .01 $ (.01)
============= =============
See Notes to Consolidated Financial Statements.
F-3
<PAGE> 6
INTERACTIVE MARKETING TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY [UNAUDITED]
<TABLE>
<CAPTION>
Total
Common Stock Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
------------- ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance at February 29, 2000 13,832,000 $ 13,832 $ 1,969,708 $ (997,664) $ 985,876
Warrants Issued in Connection
with Private Placement of
Convertible Debentures - - 50,000 - 50,000
Net Income for the period
March 1, 2000 through
May 31, 2000 - - - 167,721 167,721
------------- ------------ ------------ ------------ -------------
Balance at May 31, 2000
[Unaudited] 13,832,000 $ 13,832 $ 2,019,708 $ (829,943) $ 1,203,597
============= ============ ============ ============ =============
See Notes to Consolidated Financial Statements.
F-4
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
INTERACTIVE MARKETING TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]
Three months ended
May 31,
2000 1999
------------- -------------
<S> <C> <C>
Operating Activities:
Net Income [Loss] $ 167,721 $ (260,081)
------------- -------------
Adjustments to Reconcile Net Income [Loss]
to Net Cash [Used for] Operating Activities:
Depreciation and Amortization 37,596 -
Fair Value of Warrants Issued 50,000 -
Changes in Assets and Liabilities:
[Increase] Decrease in:
Accounts Receivable - Net (2,131,308) (196,780)
Inventory (68,824) (11,399)
Prepaid Expenses and Other Current Assets (43,849) (5,399)
Deposits and Other Assets 29,084 -
Increase [Decrease] in:
Accounts Payable and Accrued Liabilities 1,101,916 61,041
Accrued Royalties 465,000 -
Accrued Interest - Stockholder 1,250 -
Accrued Returns 126,000 -
------------- -------------
Total Adjustments (433,135) (152,537)
------------- -------------
Net Cash - Operating Activities (265,414) (412,618)
------------- -------------
Investing Activities:
Fixed Assets (58,960) (25,654)
------------- -------------
Financing Activities:
Net Proceeds from Common Stock - 1,064,961
Loans from Stockholders 176,000 (5,000)
Net Proceeds from Convertible Debentures 517,000 -
Repayment of Convertible Debentures (600,000) -
------------- -------------
Net Cash - Financing Activities 93,000 1,059,961
------------- -------------
Net [Decrease] Increase in Cash (231,374) 621,689
Cash - Beginning of Periods 252,266 5,250
------------- -------------
Cash - End of Periods $ 20,892 $ 626,939
============= =============
See Notes to Consolidated Financial Statements.
F-5
</TABLE>
<PAGE> 8
INTERACTIVE MARKETING TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[UNAUDITED]
[1] Nature of Operations
Interactive Marketing Technology, Inc. ["Interactive" and the "Company"] was
formed on April 21, 1998. On April 7, 1999, the Company restated and amended
its bylaws under the State of Nevada. The Company's wholly-owned subsidiary
is Interactive's Plumber, Inc., which was formed February 4, 1999. Since
inception, the Company's principal business activity has been primarily to
produce, market, and sell a licensed product called the Plumbers Secret [the
"product"]. The subsidiary commenced selling the product in August 1999. The
Company intends on introducing new products in fiscal 2000 in a direct
response and retail sales environment. The Company continues to be involved
in negotiations to obtain licensing agreements for new products [See Note 3].
The Company was considered a development stage company for the year ended
February 28, 1999, however, since total net revenues of approximately $921,000
have been realized between August 1999 and February 2000, the Company is no
longer a development stage entity.
[2] Summary of Significant Accounting Policies
Principles of Consolidation - The accompanying consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiary, Interactive's Plumber, Inc. and include the consolidation of its
50.01% members' interest in the Plumbers Secret, LLC. Intercompany
transactions and balances have been eliminated in consolidation.
Basis of Presentation - In the opinion of management, the accompanying
unaudited condensed consolidated financial statements include all adjustments,
consisting only of normal recurring accruals which are necessary in order to
make the financial statements not misleading. Although the Company believes
that the disclosures in these financial statements are adequate to make the
information presented not misleading, certain information and footnote
information normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission. Results of operations for the period ended May 31, 2000 are not
necessarily indicative of results to be expected for the full year. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's Form 10-KSB for the year ended
February 29, 2000.
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.
Cash and Cash Equivalents - The Company considers all highly liquid
investments, with a maturity of three months or less when purchased, to be
cash equivalents. At May 31, 2000, the Company did not have any cash
equivalents.
Research and Development Costs - The Company expenses research and development
costs as incurred. For the three months ended May 31, 2000 and 1999, research
and development costs totaled $3,595 and $-0-, respectively, for new products.
F-6
<PAGE> 9
INTERACTIVE MARKETING TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #2
[UNAUDITED]
[2] Summary of Significant Accounting Policies [Continued]
Net [Loss] Per Share - Net [loss] per share is based on the weighted average
number of shares outstanding, reflecting the shares issued in the transaction
[See Note 6B] and the shares reacquired and canceled [See Note 6D]. FASB
issued SFAS No. 128, "Earnings Per Share," in February 1997. SFAS No. 128
simplifies the earnings per share ["EPS"] calculations required by Accounting
Principles Board ["APB"] Opinion No. 15, and related interpretations, by
replacing the presentation of primary EPS with a presentation of basic EPS.
SFAS No. 128 requires dual presentation of basic and diluted EPS by entities
with complex capital structures. Basic EPS includes no dilution and is
computed by dividing income available to common stockholders by the
weightedaverage number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution of securities that could share in the
earnings of an entity, similar to the fully diluted EPS of APB Opinion No. 15.
SFAS No. 128 is effective for financial statements issued for periods ending
after December 15, 1997, including interim periods; earlier application is not
permitted. The Company adopted SFAS No. 128. Basic EPS is based on average
common shares outstanding and diluted EPS include the effects of potential
common stock, such as, options and warrants, if dilutive. As of May 31, 2000,
the Company had warrants for 8,675,000 shares of common stock that are
included in the computation of diluted earnings per share. Such dilutive
securities if issued could dilute EPS in future years. [See Notes 6G and 6H]
Investment in Joint Ventures - Joint ventures, in which the Company has a 50%
or less interest, are accounted for under the equity method.
Intangible Assets - Intangible assets include licensing fees, patents and
customer lists which are amortized over five years using the straight-line
method. Amortization commenced in August of 1999 when the Company commenced
selling the licensed product. Amortization expense for the three months ended
May 31, 2000 was approximately $8,550.
Fixed Assets - Fixed assets include office furniture and equipment.
Depreciation began in August of 1999 under the straight-line method over an
estimated useful live of five years. Depreciation expense for the three
months ended May 31, 2000 was approximately $5,100.
Infomercial Costs - These costs include the filming, editing and other film
producing costs for various product infomercials which are used for cable
network viewing audiences. These costs are of a direct response nature and
are therefore capitalized and amortized over the period during which benefits
are expected to be received, which is estimated to be two years. The
amortization expense for the three months ended May 31, 2000 was $24,000.
Advertising Costs - Advertising costs, except for costs associated with
direct-response advertising, are charged to operations when the advertising
first takes place. Advertising costs inclusive of media buys, amounted to
approximately $111,340 and $42,697 for the three months ended May 31, 2000 and
1999, respectively.
Revenue Recognition - Revenues from products are recognized at the time goods
are shipped to the customer from the fulfillment facility with an appropriate
provision for returns.
The Company's return policy for non retail customers is a full refund money
back guarantee in thirty days. Retail customers return policy is for
defective merchandise only.
The Company has accrued a liability of approximately $126,000 based upon June
2000 returns for non retail sales prior to June 2000. There was no defective
merchandise returns for retail customers for the sales prior to May 31, 2000.
F-7
<PAGE> 10
INTERACTIVE MARKETING TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #3
[UNAUDITED]
[2] Summary of Significant Accounting Policies [Continued]
Promotional Allowances - Based on a discretionary policy, management grants to
certain major retail customers promotional allowances to successfully market
the Company's products. Promotional allowances are primarily targeted to the
cost of displays, advertising and other promotional incentives. The cost of
promotional allowances are accrued based upon the Company's estimate of the
reserve allowance using certain assumptions and based on the Company's
experience. Promotional allowances of $375,000 were included as a reduction
of net revenues for the year ended February 29, 2000 and are classified as a
current liability as of February 29, 2000 and May 31, 2000.
Inventory - Inventory is stated at the lower of cost or market. Cost is
determined by the first-in first-out method. The breakdown of the inventory
as of May 31, 2000 is as follows:
Supplies $ 36,715
Finished Goods 196,333
-------------
Total $ 233,048
=============
Impairment - Certain long-term assets of the Company are reviewed when changes
in circumstances require as to whether their carrying value has become
impaired, pursuant to guidance established in Statement of Financial
Accounting Standards ["SFAS"] No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." Management
considers assets to be impaired if the carrying value exceeds the future
projected cash flows from related operations [undiscounted and without
interest charges]. If impairment is deemed to exist, the assets will be
written down to fair value. Management also reevaluates the periods of
amortization to determine whether subsequent events and circumstances warrant
revised estimates of useful lives. As of May 31, 2000, management expects
these assets to be fully recoverable.
[3] Commitments and Contingencies
[A] Operating Agreement for The Plumber's Secret, LLC - Interactive 's
subsidiary, Interactive's Plumber, Inc., entered into an operating agreement
in February of 1999 whereby it acquired a 50.01% interest in the Plumber's
Secret, LLC and all day-to-day management decisions of the operating entity
are made by Interactive. Interactive shall be entitled to 10% of "net cash
flow" as defined as a management fee. Interactive, as licensor, has assigned
to the limited liability company a licensing agreement with A2000 USA, Inc.
The other limited liability partner had the right to abandon its interest if
sales from the product are less than $2,000,000 subsequent to the first year
that the infomercial airs on the product, which was July 1999. Net sales
generated from this product since inception [August 1999] has exceeded this
threshold.
F-8
<PAGE> 11
INTERACTIVE MARKETING TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #4
[UNAUDITED]
[3] Commitments and Contingencies [Continued]
[A] Operating Agreement for The Plumber's Secret, LLC [Continued] - On March
16, 1999, Interactive entered into an amendment of the operating agreement for
the limited liability company. The initial capital contribution by both
members was approximately $100,000 each. Interactive committed to lending the
limited liability company up to $150,000. As of February 29, 2000, $415,135
was owed by Plumber's Secret, LLC to Interactive. Interactive is entitled to
receive a preferred return on its capital contribution. Under a service
agreement, $100,000 was to be paid to the other limited liability member [Vila
Enterprises, LLC] for advertising and promoting the product in an infomercial.
In lieu of being paid $100,000 for the services rendered, the initial capital
contribution of $99,980 was satisfied by the performance of promotional
services rendered by the minority member valued at $100,000. As of February
29, 2000, the Plumber's Secret, LLC incurred a net loss from operations of
approximately $475,000 and for the three months ended May 31, 2000 incurred a
profit from operations of approximately $460,000. Pursuant to the agreement,
the first $100,000 in losses from the limited liability company has been
allocated for tax purposes to Vila Enterprises and then the remainder will be
allocated to the members according to the terms of the first agreement.
Future profits are to be distributed 50/50 after the accumulated losses are
offset. As a result, the accumulated net loss through May 31, 2000 is
approximately $(15,000) and accordingly there is no minority interest members'
share of the accumulated earnings. Although the minority interest portion of
the February 29, 2000 loss is approximately $237,000, only the initial
contribution of the minority member of $99,980, has been allocated to the
minority partner for financial statement purposes, as there is no obligation
of the minority member to make good for such losses as defined under the
operating agreement. Therefore, as of February 29, 2000, there is no minority
interest on the balance sheet as the initial capitalization has been absorbed
by the allocated minority member's loss of $99,980. During the year ended
February 29, 2000, the Company advanced $49,980 to a shareholder in the
limited liability company.
[B] Licensing Agreement Plumber's Secret - In June 1998, the Company entered
into a licensing agreement for the exclusive right to manufacture and or
produce, advertise, promote, market or sell worldwide the product for a
royalty per unit for a period of one year. Upon execution of agreement,
$20,000 was paid to the licensor. The Company is to pay a royalty fee of
$3.00 per each unit sold to the licensor. The Company paid $66,000 as of
February 29, 2000 and has accrued an additional $75,000 in royalties on this
obligation as of February 29, 2000 [See Note 12].
[C] Operating Lease - In September 1999, the Company commenced leasing office
space under an operating lease which expires September 2004 for a monthly
minimum lease payment of approximately $5,400. This lease contains a renewal
option. In addition, the lease contains an escalation clause as defined and a
three percent automatic increase to the minimum monthly rent at the end of
each year. Total rent expense for the space for the three months ended May
31, 2000 was approximately $16,200 and is classified as general and
administrative costs. Approximate aggregate future minimum rental payments
under this noncancellable operating lease is as follows:
February 28,
------------
2001 $ 66,000
2002 68,000
2003 70,000
2004 72,000
2005 39,000
--------------
Total $ 315,000
==============
F-9
<PAGE> 12
INTERACTIVE MARKETING TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #5
[UNAUDITED]
[3] Commitments and Contingencies [Continued]
[D] Telemarketing and Fulfillment Services Agreement - The Company entered
into a one year agreement on June 24, 1999 to telemarket the Plumber's Secret,
LLC throughout the world with PDS. PDS processes all orders received for bank
authorization and payment before shipping the products. PDS has acquired a
security interest in the Plumber's Secret products. PDS stores the inventory
and related materials as necessary to fulfill orders, subject to timely
receipt of product and materials from manufacturing centers. Total expense
during the three months ended May 31, 2000 were approximately $178,000 and is
classified as cost of goods sold in the statement of operations.
[E] Nonexclusive and Nontransferable License - On November 30, 1999, the
Company granted QVC a license to use the Plumber's Secret promotional video to
promote and sell the product on the televised shopping program through
December 31, 2001. The first promotional program is slated for the first
quarter of fiscal year 2001.
[F] Letter of Intent - Power-Ti-Pod - On July 14, 1999 entered into an
agreement for Interactive to sell the Power-Ti-Pod internationally and split
the profits 50/50 with a joint venture partner. This agreement was terminated
in April 2000.
[G] Letter of Intent - Tour-One Putter - On July 14, 1999 entered into an
agreement for Interactive to sell the Tour-One-Putter internationally first,
and back into a supply and demand, domestically. If an international market
is established Interactive will pay for telemarketing, media, fulfillment
costs, and product costs to generate a net profit split of 50/50 with a joint
venture partner. There were no sales as of February 29, 2000. This agreement
was terminated in April 2000.
[H] Marketing Agreement - Putter Ball - The Company agreed on November 11,
1999 to develop a marketing plan for the sale of the Putter Ball with a joint
venture partner and for the joint venture partner to pay for the production
infomercial to market the product both domestically and internationally and
the manufacturing costs used for the Putter Ball. The profit split would be
50/50. The Company accounts for this joint venture under the equity method as
it has a 50% or less interest in the venture. This agreement was terminated
in April 2000.
[I] Letter of Intent - EFL Product Line - On November 12, 1999, the Company
received a license to manufacture and market the fishing line product that is
called the EFL Product Line. Interactive will be responsible for developing
the product and the infomercial and for fulfilling orders. Interactive will
pay a 15% royalty of the net sales as defined under the agreement. There were
no sales of this product as of May 31, 2000, however, approximately $35,300
has been incurred for a future infomercial to be produced and is classified as
part of other assets on the balance sheet.
[J] Universal Wrench - On January 5, 2000, the Company entered into a Sales
and Distribution Agreement with Lacrex SA of Switzerland ["Lacrex"] to solely
and exclusively market in North America the Lacrex Universal Wrench. The
Company is granted first right of refusal for worldwide direct response rights
on a country to country basis. In the event, the Company decides to move
forward with the marketing of the Universal Wrench, Interactive has committed
to purchase from Lacrex a minimum of 300,000 units of the product at a
purchase price of $5.00 per unit FOB China within one year and additional
purchases are required in subsequent years to renew this agreement. There
were no sales of this product as of May 31, 2000. There is a $20,000 deposit
on the future infomercial that will be produced for this product and is
classified as part of other assets on the balance sheet.
[K] Personal Service Agreement - In 1998, Interactive received the exclusive
rights for product marketing whereby Interactive is to pay a 15% of royalty.
Commencing April 1999, the Company paid $3,000 a month as a draw against the
profit split on Tom House tapes, kits, and products. No sales have been
recorded, therefore, these payments of $39,000 as of May 31, 2000 have been
recorded as part of other assets on the balance sheet.
F-10
<PAGE> 13
INTERACTIVE MARKETING TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #6
[UNAUDITED]
[3] Commitments and Contingencies [Continued]
[L] Royalty Payment - "The Rake" - The Company has not finalized negotiations
related to a royalty arrangement for The Rake. There were no sales or costs
for The Rake as of May 31, 2000.
[M] Noncompete Agreement - "Specialized Collapsible Ladder" - In December of
1999, the Company entered into a noncompete agreement to market the ladder
with a profit split as defined under certain specifications. There were no
sales or cost for the ladder as of May 31, 2000.
[N] Sales Agreement - Life Mask - On November 17, 1999, the Company entered
into an agreement whereby Interactive will pay all costs of the products and
another individual will receive 12% of all income worldwide from the sales of
the product. There were no sales or costs for the Life Mask as of May 31,
2000.
[O] Employment Agreement - On June 30, 1999, the Company entered into a 2 year
employment agreement for an employee of the Company for an annual salary of
$135,000 plus reimbursable business expenses.
[P] Sales Price Guarantee - The Company has included a price guarantee on
sales orders for certain retail customers during first quarter of fiscal 2000.
The price guarantee provides that the Company will not sell its product to a
competitor at a lower price up until the shipment date.
[4] Related Party Transactions
[A] Stockholder/Former Officer - Legal fees totaling $14,680 and research and
development costs of $18,000 were incurred between October 1, 1997 and June
30, 1998 in connection with the formation of the business, the licensing
agreements, and applications for patents and trademarks for the product.
Total licensing fees for the product, "Plumbers Secret", of $20,000 were paid
in June and July of 1998. These costs were paid by a stockholder of the
Company and were therefore treated as a capital contribution. The stockholder
of the Company also remitted his acquisition of the title and interest in the
mailing list of past, current, and future names whereby his basis of $136,560
was treated as a capital contribution. Therefore, the Company expensed
$40,680 and credited paid-in capital $189,240 for the period ended February
28, 1999 on these related party transactions.
During the year ended February 29, 2000, the Company paid an entity, which is
controlled by this stockholder consulting fees of approximately $33,000 and
paid the stockholder payroll costs of approximately $18,000. Total expense to
the related entity for the year ended February 29, 2000 was $51,000. There
was no expense recorded for the three months ended May 31, 2000.
[5] Income Taxes
At February 29, 2000, the Company had a net operating loss carryforward of
approximately $538,000 resulting in a long-term deferred asset of
approximately $183,000. The operating loss carryforward of $538,000 will
expire February 2020. The Company has provided a valuation allowance of
approximately $183,000 due to the uncertainty that the Company will be able to
generate sufficient taxable income in the future necessary to utilize this
asset. There are no material temporary differences that would result in a
deferred tax asset or liability at February 29, 2000.
[6] Equity and Debt Transactions
[A] Formation - Interactive Marketing Technology, Inc. was authorized to issue
2,500 shares of common stock at no par value. At February 28, 1999, there
were 2,500 shares of common stock issued and outstanding to the founders and
there were no options or warrants outstanding. The 2,500 shares were
exchanged for 12,404,000 shares of common stock of Shur De Cor pursuant to the
Share Exchange Agreement dated March 15, 1999 [See Note 6B].
F-11
<PAGE> 14
INTERACTIVE MARKETING TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #7
[UNAUDITED]
[6] Equity and Debt Transactions [Continued]
[B] Share Exchange Agreement - On March 15, 1999, Interactive entered into a
share exchange agreement with Shur De Cor, Inc. whereby 100% of the common
stock, or 2,500 shares of Interactive, were exchanged for 12,404,000 shares of
common stock of Shur De Cor, Inc. For accounting purposes, the acquisition
was treated as an issuance of shares for cash by Interactive, with Interactive
as the acquirer. The accounting is identical to that resulting from a reverse
acquisition, except that no goodwill or other intangible is recorded.
Historical information prior to March 24, 1999 is that of Interactive. Shares
of 12,404,000 issued in the acquisition are shown as outstanding for all
periods presented in these financial statements in the same manner as for a
stock split. Pro forma information on this transaction is not presented as,
at the date of this transaction, Shur De Cor, Inc. was considered a public
shell and accordingly, the transaction was not considered a business
combination. On March 24, 1999, Shur De Cor, Inc. changed its name to
Interactive Marketing Technology, Inc. and increased its authorized capital
stock from 20,000,000 to 60,000,000 common shares.
[C] Equity Financing - In April 1999, the Company received total proceeds of
$949,050 from the sale of 285,000 shares of common stock from two foreign
investors. In November of 1999, the Company received proceeds of $245,000 for
the issuance of 295,000 shares of the Company's common stock.
[D] Treasury Stock - In November 1999 and January 2000, two of the Company's
officers and directors returned and the Company canceled a total of 7,354,000
shares of the Company's common stock for no compensation in an attempt to
provide additional shares to the Company for future financing.
[E] Note Payable - Stockholder - In April 1999, the Company received note
proceeds of $50,000 from a stockholder. The note is due April 2001 with
interest at 10% per annum. Unpaid interest expense for the year ended
February 29, 2000 was $4,200. The total unpaid liability of $54,200 is
classified as a long-term liability.
[F] Acquisition of Rights for Master Recordings - During November 1999, the
Company purchased the non-exclusive rights to 5,000 master audio recordings
[the "Library"] for various types of music from an unrelated entity in
exchange for the issuance of 2,000,000 shares of the Company's common stock.
The value of $600,000 was assigned to these rights based upon an independent
valuation received, which included estimated revenue projections used by
management to assess the recoverability from its future revenue stream.
Under the agreement, the Company has the right to use the Library to record
music on its own label. However, the agreement does not permit the relicense,
sublicense or the assignment of rights in the Library to a third party.
The Company will commence amortization of this asset over five years. As of
May 31, 2000, the Company has not realized any revenue stream from the
marketing compilations of these recordings. Therefore, the Company has not
commenced amortization for this asset through May 31, 2000. Management
intends to market various compilations of these recordings in fiscal year
2000.
F-12
<PAGE> 15
INTERACTIVE MARKETING TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #8
[UNAUDITED]
[6] Equity and Debt Transactions [Continued]
[G] Private Placement Memorandum ["PPM"] - On March 23, 2000, the Company
engaged a placement agent for an offering to sell up to 6 units, each unit
consisting of one $100,000 convertible secured promissory 12% note and 50,000
warrants to purchase 50,000 shares of common stock at a price of $1.25 per
share. The offering price was $100,000 per unit and the net proceeds to the
Company was approximately $517,000. The promissory notes would mature on the
earlier of (a) 6 months from the closing, (b) certain change of control
events, (c) the closing of $2,000,000 of bridge financing or $5,000,000 of
equity financing, or (d) the receipt and collection by the Company of $600,000
in accounts receivable. The promissory notes were secured by the assets of
the Company. The placement agent was entitled to a 10% commission for all
units sold, a 22% non-accountable expense allowance and warrants for 10,000
shares of common stock exercisable at $1.25 for a period of five years. Total
fair value of the equity instruments of approximately $50,000 were charged to
operations in the three months ended May 31, 2000 as a non-cash financing
cost. The Company has repaid as of May 31, 2000 the convertible promissory
notes of $600,000 and recording financing costs of approximately $75,000.
[H] Stock Option Plan - On March 28, 2000, the Company's Board of Directors
adopted the 2000 Stock Option Plan whereby it reserved for incentive rewards
10,000,000 shares of common stock for directors, employees, and consultants.
The Company granted stock options under this plan for 8,365,000 shares of the
Company's common stock at an exercise price of $1.00, which approximated the
fair market value at the date of grant.
[I] Officers' Loans - The Company received debt financing from two officers of
approximately $176,000 in the three month period ended May 31, 2000 for 90
days at 10%.
[7] Significant Risks and Uncertainties
Concentrations of Credit Risk - Cash - Financial instruments which potentially
subject the Company to concentrations of credit risk consists of cash.
The Company places its cash with high credit quality institutions and is
subject to credit risk to the extent it exceeds federally insured limits. At
May 31, 2000, the Company has approximately $100,000 of cash subject to such
risk. The Company does not require collateral or other security to support
financial instruments subject to credit risk.
[8] Major Customer
For the three months ended May 31, 2000, the Company had sales to one resale
customer amounting to approximately $1,925,000 of net revenues or 69% of net
sales.
[9] Going Concern
The February 29, 2000 financial statements were prepared in conformity with
generally accepted accounting principles, which contemplates continuation of
the Company as a going concern and realization of assets and settlement of
liabilities and commitments in the normal course of business.
The Company suffered a net loss of $1,056,964 and utilized $753,650 in cash
for operations for the year ended February 29, 2000. The inability of the
Company to generate cash from operations, considering currently available
funds, creates an uncertainty about the Company's ability to continue as a
going concern. The financial statements did not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
The Company completed a private placement memorandum and upon receipt of the
estimated net proceeds of $517,000 believes it will be able to complete
anticipated sales orders, including the introduction of new products, with the
infusion of additional working capital and sustain operations for twelve
months. In addition, the Company will also pursue debt financing to
supplement the equity financing if needed [See Notes 6G and 6I]. The
continuation of the Company as a going concern is dependent upon the success
of these plans.
F-13
<PAGE> 16
INTERACTIVE MARKETING TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Sheet #9
[UNAUDITED]
[9] Going Concern [Continued]
There can be no assurances that management's plans to reduce operating losses
and to obtain additional financing to fund operations will be successful. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary in the event the Company
cannot continue in existence.
[10] Fair Value of Financial Instruments
The carrying amount of cash, accounts receivable, other current assets as well
as accounts payable and other current liabilities approximates fair value as a
result of their short maturities. The carrying amount of due to stockholder
included in non-current liabilities approximates its fair value because it
bears interest at a rate that approximates the Company's cost of capital.
[11] New Authoritative Accounting Pronouncements
The Financial Accounting Standard Board ["FASB"] has issued Statement of
Financial Accounting Standards No. 133 ["SFAS No. 133"], "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts and for hedging
activities. SFAS No. 133 requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and
measure those instruments at fair value. The accounting for changes in the
fair value of a derivative depends on the intended use of the derivative and
how it its designated, for example, gain or losses related to changes in the
fair value of a derivative not designated as a hedging instrument is
recognized in earnings in the period of the change, while certain types of
hedges may be initially reported as a component of other comprehensive income
[outside earnings] until the consummation of the underlying transaction.
SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000. Initial application of SFAS No. 133 should be as of the
beginning of a fiscal quarter; on that date, hedging relationships must be
designated anew and documented pursuant to the provisions of SFAS No. 133.
Earlier application of all of the provisions of SFAS No. 133 is encouraged,
but it is permitted only as of the beginning of any fiscal quarter. SFAS No.
133 is not to be applied retroactively to financial statements of prior
periods.
The Company does not currently have any derivative instruments and is not
currently engaged in any hedging activities.
In March 2000, the FASB issued Interpretation No. 44 "Accounting for Certain
Transactions Involving Stock Compensation." Among other issues, this
Interpretations clarifies (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 of 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. The Company has adopted this pronouncement.
[12] Subsequent Events
In July of 2000, the Company is negotiating an amendment to the royalty
agreement that is expected to be finalized within 90 days [See Note 3B].
F-14
<PAGE> 17
References in this quarterly report to "Interactive Marketing" "we,"
"us," and "our" refer to Interactive Marketing Technology, Inc.
This Form 10Q-SB contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. For this
purpose any statements contained in this Form 10Q-SB that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Interactive Marketing's control. These factors include but are not limited to
economic conditions generally and in the industries in which Interactive
Marketing may participate; competition within Interactive Marketing's chosen
industry, including competition from much larger competitors; technological
advances and failure by Interactive Marketing to successfully develop business
relationship.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Interactive Marketing provides comprehensive marketing services for
proprietary consumer products in both the United States and worldwide. We
began operations in August of 1999 and have primarily relied on one product,
The Plumbers Secret, for our revenues. We have had a short operating history
and a history of operating losses, however, management believes we are in the
later stages of developing additional product lines to enhance our current
revenue stream. Currently management plans to introduce at least four
additional products during fiscal year 2001.
Our fiscal year ends February 28 (or February 29) and the following
discussions are based on the consolidated financial statements of Interactive
Marketing and its wholly-owned subsidiary IMT's Plumber, Inc. and include the
consolidation of IMT's Plumbers, Inc.'s 50.01% members' interest in the
Plumbers Secret, LLC.
Results of Operations
The following table summarizes our operations for the first quarter ended
March 31, 2000 and 1999.
Three month period ended
May 31, 1999 May 31, 2000
-------------- -------------
Net Revenues - 2,786,942
Costs of Sales - 1,467,561
Gross profit - 1,319,381
Total Costs and Expenses 260,081 1,151,660
Operating Income (Loss) (260,081) 167,721
<PAGE> 18
First Quarter 2001 Compared to First Quarter 2000
-------------------------------------------------
We did not have any revenues in the first quarter of 2000 because we did
not begin the promotion and sale of our products until July of 1999. Net
revenues for the fiscal year ended February 29, 2000 were $891,381 and net
revenues increased to $2,786,942 for the first quarter of 2001. The revenues
for the first 2001 quarter were primarily the result of sales of The Plumbers
Secret by Wal-Mart Corporation. Cost of the goods, which includes the cost of
the product and shipping of the product, were 52.6% of revenues which resulted
in a gross profit of $1,319,381 for the first 2001 quarter.
The costs and expenses increased from $260,081 for the first 2000 quarter
to $1,151,660 for the first 2001 quarter. Total costs and expenses were 41.3%
of revenues for the 2001 quarter. For the first 2000 quarter $112,376, or
9.7% of the total costs and expenses, were allocated to payroll and general
and administrative costs compared to $200,454, or 17.4% of the total costs and
expenses, for the 2001 quarter. These costs for the 2000 quarter reflect only
one month of payroll costs because we did not establish a payroll until April
of 1999, the last month of the 2000 quarter. Accordingly, the increase in
payroll for the 2001 quarter is primarily the result of three months of
payroll costs.
Advertising and media buys, selling expenses and royalties accounted for
$601,993, or 52.3% of our total costs and expenses, for the 2001 quarter. We
did not record royalties or selling expenses for the 2000 quarter, but
recorded $42,697, or 16.4% of total costs and expenses, for advertising and
media buys. For the 2001 quarter we also recorded $75,000 in bad debt expense
for a $2,212,554 receivable. We recorded $75,000 of financing costs related
to debt financing used for increased production of product due to increase of
sales. We also recorded $50,000 non-cash financing costs related to the
310,000 warrants issued in a private placement in March of 2000.
Depreciation and amortization expenses of $37,596 included amortized
costs of $139,416 for filming, editing and producing infomercials for our
products. These costs are being amortized over a two year period, the
estimated useful like of the infomercials.
We recorded $167,721 income from operations for the first 2001 quarter
compared to a $260,081 loss from operations for the first 2000 quarter.
Other than the introduction of new product lines, we are unaware of any
known trends, events or uncertainties that are reasonably likely to impact
revenues from operations. However, we may experience significant fluctuations
in operating results in future periods due to a variety of factors, including
but not limited to, the following factors:
* We may need additional financing in order to carry out our
business plan and management cannot assure that we will be
successful in obtaining such financing. Failure to obtain
necessary financing could have a material adverse impact on our
operations.
* Sales from some of our products are yet to be tested in the retail
environment.
* We must continue to obtain new products and customers at
reasonable costs, retain customers and encourage repeat purchases.
* We need to develop our customer base for each product through
multiple marketing channels, which include the following: (i)
Development of an aggressive marketing campaign using a
combination of online and traditional marketing; (ii) by entering
into linking arrangements with other web sites; and (iii) using
direct marketing techniques to target new and existing customers
with personalized communications.
Liquidity and Capital Resources
We have funded our cash requirements primarily through short term loans
from two officers and net proceeds from private placements of convertible
promissory notes of approximately $517,000. We did not post revenues for the
2000 fiscal year and have an accumulated deficit of $829,943 through May 31,
2000. For the fiscal year ended February 29, 2000, we recorded $252,266 in
cash with $508,698 total current assets and $584,424 total
<PAGE> 19
current liabilities; compared to $20,892 in cash, $2,521,305 total current
assets and $2,370,340 total current liabilities for the first quarter of 2001.
We recorded a basic earning per share of $.01 for the 2001 first quarter.
For the first quarter of 2001 we used $265,414 in cash for operating
activities compared to $412,618 of cash in the first 2000 quarter.
Net cash provided by financing activities for the first quarter of 2001
was $93,000 compared to $1,059,961 for the 2000 first quarter. In April and
May of 2000 we received a total of $176,000 in loans from two officers. Mr.
Haehn loaned us $100,000 and Mr. Lang loaned us $76,000. We repaid
approximately $134,000 of these loans as of July 19, 2000. Sale of our common
stock in the 2000 quarter provided net proceeds of $949,050 from the sale of
285,000 shares to two accredited investors in April of 1999.
We conducted a private placement offering for an aggregate offering price
of $600,000 starting in March of 2000 and realized net proceeds of $517,000.
However, pursuant to the terms of the private placement, the notes matured on
May 31, 2000 and we repaid the $600,000 obligation.
On June 6, 2000 we terminated the Stock Acquisition and Exchange
Agreement with E-Pawn.com, Inc., dated April 15, 2000. This agreement was
terminated due to lack of performance by E-Pawn. As a result, we did not
receive $5 million in capital funding we anticipated from this agreement.
We have no plans to purchase significant equipment or make other capital
expenditures within the next twelve months. We have monthly lease commitments
for our office space of approximately $5,400. IMT's Plumber is committed to
lend The Plumber's Secret L.L.C. up to $150,000 as an initial capital
contribution. According to the terms of our marketing agreements we will be
obligated to share profits and/or pay royalties on any products we sell.
Further, if we decide to market the Universal Wrench, the terms of that
agreement require us to purchase 300,000 units at an anticipated cost of $1.5
million during the first year of marketing. We also expect to employ two to
three additional employees based upon anticipated growth which will increase
our payroll costs by approximately $150,000.
Financing
---------
During our last quarter, we received short term loans from our officers
which allowed us to complete sales orders, however, we currently do not
anticipate seeking additional loans from these individuals within the next
twelve months. As of July 14, 2000, we have approximately $900,000 from
collection of our accounts receivable in our cash account and we anticipate
additional proceeds from the remaining accounts receivable.
For the 2001 fiscal year, we expect revenues to be the primary source of
funding for operations. We anticipate that revenues will increase as a result
of continued sales of our current products and anticipated sales from our new
products. These revenues will be offset by such expenses as production costs,
royalties and fulfillment costs. We hope to finalize an investment by an
unrelated third party of roughly $900,000 in the EFL Fishing Lure product.
Management believes this investment will allow us to introduce this product
within the 2000 calendar year. We are also in the process of developing
marketing programs for at least four new products which we hope to introduce
within the next fiscal year. Our management is reviewing various product cost
bids and is discussing with major retailers the selling of these new products.
In the event revenues are insufficient to fund our operations, management
contemplates that additional capital will be provided by private placements of
our common stock or debt financing. We intend to complete any private
placements pursuant to exemptions provided by federal and state securities
laws. The purchasers and manner of issuance will be determined according to
our financial needs and the available exemptions. We do not currently intend
to make a public offering of our stock. However, our common stock listing has
been removed from the OTC Bulletin Board and listed on the National Quotation
Bureau Pink Sheets. Our trading market and our ability to raise capital
through equity may be adversely affected by this change. We also note that if
we issue more shares of our common stock our shareholders may experience
dilution in the value per share of their common stock.
<PAGE> 20
Management is investigating the availability, source and terms for
external debt financing. At this time we have not entered into any agreement
with any third parties regarding such financing. We can not assure that funds
will be available from any source, or, if available, that we will be able to
obtain the funds on terms agreeable to us. Also, the acquisition of funding
through the issuance of debt could result in a substantial portion of our cash
flows from operations being dedicated to the payment of principal and interest
on the indebtedness, and could render us more vulnerable to competitive and
economic downturns.
We anticipate that our long term liquidity sources will be primarily
product revenues. New products and expanded sales channels for our current
products hopefully will provide the necessary revenues to fund operations.
Also, management expects that we will add to our revenue source through banner
stream income from Internet advertisers. Banner stream advertising refers to
the ads that appear on Internet Web sites. Management hopes to create a Web
site that will become a primary source of such banner stream income by early
2001. In the event revenues are insufficient to fund our operations,
management expects to rely on sales of our common stock and/or debt financing
for needed funds.
Seasonal Trends
Our market is not seasonal because our products are marketed with a
direct response television media blitz, which is not related to the seasonal
variables.
PART II. OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS
In April 2000 we closed a private placement with an aggregate offering
price of $600,000. We offered six units to accredited investors and each unit
consisted of one $100,000 convertible secured promissory note at 12% per annum
and 50,000 warrants, which expire in March 2005, to purchase 50,000 shares of
our common stock at $1.25 per share. We sold a total of six units, an
aggregate of 300,000 warrants, to eleven accredited investors for $600,000.
The placement agent, M.S. Farrell & Co., Inc., received a 10% commission for
all units sold, a 2 1/2% nonaccountable expense allowance and warrants for
10,000 common shares exercisable at $1.25, which expire in March 2005. We
repaid the notes on May 31, 2000. The issuance of such warrants was exempt
from registration under the Securities Act of 1933 by reason of Section 3(b)
and Regulation D as a limited offering.
ITEM 5: OTHER INFORMATION
New Product Developments
The following discussions involve forward looking statements regarding
our recent new product developments that involve substantial risks and
uncertainties. We cannot assure that we will be able to finalize licensing or
marketing agreements for these products, or that the products will prove to be
marketable or successful.
EFL Fishing Lure. The EFL Fishing Lure is a patented latex plastic in
the shape of a fish which we anticipate will feel like a fish and move like a
fish when it is put over a crank bait. It was developed by actor, Chris
Atkins (known for his performance in Blue Lagoon) and five motion picture
special effects people. Chris Atkins is the spokesman for the EFL Fishing
Lure and we anticipate using many of the recognized pro fishermen along with
celebrities that love to fish as spokespersons. We are in the editing stage
of this 30 minute infomercial and have incurred approximately $35,500 in costs
for its production. We have created a logo and we plan to use a retail
package consisting of a unique type of tackle box with several types of baits
and hooks. We expect the retail price to be $29.95. We anticipate receiving
samples of this product within the next 90 days and if the samples meet with
our approval, we hope to begin production of this product within the next
year.
<PAGE> 21
Tom House Physical Fitness. In December of 1999 Interactive Marketing
and Tom House signed a letter of intent to market Dr. House's fitness
products. Tom House is a retired major-league pitcher who has a Ph.D. in
psychology and he is an consultant, performance analyst and sports
psychologist, and is a trainer of elite athletes. We anticipate that the Tom
House Physical Fitness products will include training equipment that weighs
less than one pound, training tapes and nutritional supplements which will
provide body development necessary for a person's needs whether at home, the
office or while traveling. The nutritional supplements have been formulated
and we anticipate they will be available in the last quarter of 2000. We hope
to launch this product line after the holidays, which we believe is the peak
time for physical fitness products.
Universal Wrench. In January of 2000 we entered into a sales and
distribution agreement with Lacrex SA of Switzerland which granted us the
exclusive North America rights to market the Lacrex Universal Wrench. This
wrench can loosen a range of nuts and bolts and we anticipate it can take the
place of a full set of wrenches at a fraction of the cost. The head of the
wrench has a range of 180 degrees giving it the ability to get into difficult
locations. We are currently test marketing this product to determine if we
will proceed with its marketing. In the event we decide to move forward with
the marketing we have agreed to purchase 300,000 units during the first year
and additional purchases are required in subsequent years to renew this
agreement.
Wonder Ladder. This ladder is extremely light and versatile and comes in
three lengths: 3', 5' and 6'. It is constructed of lightweight aluminum and
when closed it is only 5" wide for easy storage. It will safely hold up to
250 pounds. In December of 1999 we entered into an agreement to market the
Wonder Ladder with a profit split determined by certain specifications. We
have agreed to manufacture and market this product worldwide through
infomercials. The owners of this product will oversee all domestic retail
sales. We have received a sample of this product and are evaluating its
performance. We hope to begin manufacture of this product within the next
year.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Part I: Exhibits.
Exhibit # Description Location
----------- ------------ --------
27 Financial Data Schedule See attached
(b) Reports on Form 8-K.
On June 6, 2000, Interactive Marketing filed an 8-K regarding termination
of the Stock Acquisition and Exchange Agreement with E-Pawn.com, Inc., dated
April 15, 2000.
<PAGE> 22
SIGNATURES
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.
INTERACTIVE MARKETING TECHNOLOGY, INC.
Date: August 14, 2000 By: /s/ Sandy Lang
----------------------------
Sandy Lang, President
