<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
/X/ Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended June 30, 2000
/ / Transition Report Under Section 13 or 15(d) of the Securities Exchange
Act; For the transition period from _________ to __________
Commission File Number: 000-28845
INETVISIONZ.COM, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 33-0285179
---------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6033 West Century Boulevard, Suite 500, Los Angeles, California 90045
--------------------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(310) 338 9822
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 issuer had 11,207,626 shares outstanding as of June 30, 2000.
Transitional Small Business Disclosure Format (check one):
Yes No X
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INETVISIONZ.COM, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Comparative Consolidated Balance Sheets
as of June 30, 2000 (unaudited) and December 31, 1999 3
Comparative Unaudited Consolidated Statements of Operations for the six and three
months ended June 30, 2000 and June 30, 1999 5
Comparative Unaudited Consolidated Statements of Cash Flows for the six and three
months ended June 30, 2000 and June 30, 1999 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports of Form 8-K 15
(a) Exhibits
(b) Reports on Form 8-K
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INETVISIONZ.COM, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2000 AND DECEMBER 31, 1999
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
(Unaudited)
June 30 December 31
2000 1999
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 86,916 $ 1,000
Cash-restricted -- 107,957
Accounts receivable,
net of allowance for doubtful accounts
of $150,000 as of June 30, 2000 and
$112,941 as of December 31, 1999 755,918 333,639
Common stock receivable -- 50,000
Inventory 36,791 --
License 250,000 --
Other current assets 78,267 23,220
------------ ------------
Total Current Assets 1,207,892 515,816
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 473,353 402,396
OTHER ASSETS:
Customer lists, net 177,436 205,436
Product license, copyrights, trademark
and concept, net 158,425 183,425
Covenant not to compete, net 31,685 36,685
Loan receivable-related party 14,500 12,750
Investment in non-marketable equity securities 1,125,000 --
------------ ------------
Total Assets $ 3,188,291 $ 1,356,508
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
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INETVISIONZ.COM, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
AS OF JUNE 30, 2000 AND DECEMBER 31, 1999
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
(unaudited)
June 30 December 31
2000 1999
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDER'S DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,223,449 $ 1,164,457
Deferred consulting revenues 675,000 --
Deferred tuition 27,000 90,451
Loan payable, bank -- 100,015
Notes payable, related parties, net of debt discount 451,333 250,000
Advances, related parties 429,543 --
Convertible debt, net of debt discount 234,157 --
------------ ------------
Total Current Liabilities 3,040,482 1,604,923
STOCKHOLDERS' DEFICIT
Common stock; $0.001 par value,
71,428,571 shares authorized,
11,207,626 shares issued and outstanding 11,207 11,207
Additional Paid in Capital 3,169,810 3,052,210
Accumulated Deficit (3,033,208) (3,311,832)
------------ ------------
Total Stockholders' deficit 147,809 (248,415)
------------ ------------
Total Current Liabilities and
Stockholder's deficit $ 3,188,291 $ 1,356,508
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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INETVISIONZ.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
(unaudited) (unaudited)
Six months ended Six months ended
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
NET REVENUES $ 2,691,139 $ 1,429,305
COST OF REVENUES 659,177 564,222
------------ ------------
GROSS PROFIT 2,031,962 865,083
OPERATING EXPENSES 1,753,338 975,011
------------ ------------
NET INCOME (LOSS) $ 278,624 $ (109,928)
------------ ------------
NET INCOME (LOSS) PER SHARE
basic and diluted $ 0.02 $ (0.01)
------------ ------------
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
basic and diluted 11,207,626 8,358,358
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
(unaudited) (unaudited)
Three months ended Three months ended
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
NET REVENUES $ 1,681,505 $ 703,594
COST OF REVENUES 304,312 282,269
------------ ------------
GROSS PROFIT 1,377,193 421,325
OPERATING EXPENSES 1,064,432 476,218
------------ ------------
NET INCOME (LOSS) $ 312,761 $ (54,893)
------------ ------------
NET INCOME (LOSS) PER SHARE
basic and diluted $ 0.03 $ (0.01)
------------ ------------
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
basic and diluted 11,207,626 8,697,253
------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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INETVISIONZ.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
as at as at
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
CASH FLOWS (USED FOR) OPERATING ACTIVITIES:
Net income (loss) $ 278,624 $ (109,928)
------------ ------------
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH USED IN OPERATING
ACTIVITIES:
Depreciation and amortization 145,676 94,111
Non-cash revenue (450,000) --
Estimated value of options granted to employees 25,000 --
Debt discount amortization 28,090 --
Changes in operating assets and liabilities
Accounts receivable, net (422,279) (100,824)
License (250,000) --
Other current assets (91,838) 32,237
Accounts payable and accrued expenses 58,992 (29,955)
Deferred tuition revenue (63,451) 7,385
------------ ------------
Total adjustments (1,019,810) 2,954
------------ ------------
Net cash used in operating activities (741,186) (106,974)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash-restricted (restriction released) 107,957 --
Advances on loan receivable (1,750) (44,116)
Payments to acquire property, equipment and intangibles (158,633) (77,461)
------------ ------------
Net cash used in investing activities (52,426) (121,577)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from advances payable, related parties 429,543 296,322
Proceeds from notes payable, related parties 250,000 --
Repayment of loan payable, bank (100,015) --
Proceeds from collection of common stock receivable 50,000 --
Proceeds from convertible debt 250,000 --
------------ ------------
Net cash provided by financing activities 879,528 296,322
------------ ------------
NET INCREASE (DECREASE) IN CASH 85,916 67,771
CASH, beginning of year 1,000 7,160
------------ ------------
CASH, end of year 86,916 74,931
============ ============
</TABLE>
See the accompanying notes to consolidated financial statements for non-cash
financing and investing activities.
The accompanying notes are an integral part of the financial statements.
6
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INETVISIONZ.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited for the 6 Months ended June 30, 2000 & 1999)
NOTE 1 BASIS OF PRESENTATION
The financial statements of iNetVisionz.com (the "Company") for the three and
six months ended June 30, 2000 and 1999 are unaudited. Certain information
and note disclosures normally included in the financial statements prepared
in accordance with generally accepted accounting principles have been
omitted. These financial statements should be read in conjunction with the
audited financial statements and notes thereto as of and for the year ended
12/31/99 included in the Company's Form 10. In the opinion of management, the
financial statements contain all adjustments, consisting of normal recurring
adjustments, necessary to present fairly the financial position of the
Company for the periods presented. The interim operating results may not be
indicative of operating results for the full year or for any other interim
periods.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include the accounts of
Inetvisionz.com, Inc. (the "Parent"), and its wholly owned subsidiaries. All
material intercompany transactions have been eliminated in consolidation.
BUSINESS ACTIVITY:
The Company is in the business of providing technology training services in
technology consulting and technology job placement services. The foundation
in training, "Train, Skill & Development", refers to the Company's migration
towards a full service technology training and service information provider.
REVENUE RECOGNITION:
TUITION REVENUES
The Company recognizes tuition revenue from corporate and individual
customers (excluding JTPA and ETP) as services are performed over the term of
each enrollment, usually ranging from 1 week to 20 weeks.
The Company also provides tuition services and technical training under
Federal and State funded Job Training Programs, which are as follows:
Job Training Placement Act ("JTPA"): The Company currently has yearly
contracts with nine Southern California organizations under the JTPA.
Pursuant to these agreements, the Company recognizes tuition revenue at
various stages as services are performed, which are as follows:
25% - Upon enrollment in the training program and attainment of one learning
objective of core training (not less than 15 hours) and submission of
verification of enrollment, timesheets and corresponding invoice by the
Company to the respective agency.
50% - Upon satisfactory completion of at least 50% of the designated course
hours and competencies as outlined in the course curriculum and attainment of
test scores or achievement levels prescribed in the curriculum. The Company
is responsible for submitting corresponding timesheets, performance
evaluations and test scores documenting activity and related invoice to the
respective agency.
25% - Upon satisfactory completion of the remaining curriculum hours and
being placed in unsubsidized employment of 8 hours or more. The Company is
responsible for submitting corresponding timesheets, correspondence
documenting activity, evidence of employment with certain information and
related invoice to the respective agency.
7
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Employment Training Panel ("ETP") - The Company currently has a contract
under the ETP and is funded by the State of California. Pursuant to this
agreement, the Company recognizes tuition revenue at various stages as
services are performed, which are as follows:
20% - Upon services rendered in connection with enrollment of students in the
training program and submission of verification of enrollment, timesheets and
corresponding invoice by the Company to the respective agency.
80% - Upon satisfactory completion of the curriculum hours and continual
employment for 91 consecutive days after placement by the Company. The
Company is responsible for submitting corresponding timesheets,
correspondence documenting activity, evidence of employment with certain
information and related invoice to the respective agency.
CONSULTING REVENUES
The Company plans to provide computer consulting and technical support on
internal computer networks on an hourly basis, temporary placement of
technical personnel in exchange for a percentage of their hourly wage rates,
and permanent placement of technical personnel with the Company's customers
at revenue amounts to be determined on an individual basis.
The Company plans to implement primarily internet based business plans
developed internally and externally. The Company recognizes revenues at
various stages of the business plan development process as outlined in each
individual agreement.
DEFERRED TUITION REVENUES
Deferred revenue represents amounts received as non-refundable deposits on
student enrollments for which the revenue is not yet recognizable as the
services have not yet been performed. The deposits received are
non-refundable. However, the Company honors delayed enrollments at a future
date, for as long as a timely notice as determined on an individual basis is
provided to the Company.
DEFERRED CONSULTING REVENUES
Deferred consulting revenues represents amounts received for providing
computer consulting and technical support that has not yet been earned.
INVESTMENT IN NON-MARKETABLE EQUITY SECURITIES:
The Company owns 50% of the outstanding common stock of LiquidationBid.com, a
start-up company. This investment is accounted for by the equity method, as
the Company does not have control.
There is no cost basis in this investment and there are no assets,
liabilities nor operating activities of the investee. Pursuant to APB 18,
"The Equity Method of Accounting for Investments in Common Stock," there are
no recorded amounts included in the financial statements.
The Company entered into an agreement with RxAlternative.com in which it
received stock as compensation for services provided that the Company valued
at $1,125,000 (see Note 7).
LICENSE
The Company paid $250,000 in June 2000 for a 12 month license agreement with
a software company, which will be amortized over the contractual life of the
agreement.
8
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NET LOSS PER SHARE:
Basic and diluted net loss per share have been calculated based upon the
weighted average number of common shares outstanding during the period.
Common equivalent shares have been excluded from the calculation of diluted
earnings per share in 2000 and 1999 as their impact would be anti-dilutive.
SEGMENT:
As substantially all the Company's operations occur at the subsidiary level,
and based on the Company's integration and management strategies, the Company
currently believes it operates in two business segments, which are as follows:
- Provide education through the distant learning
environment using the internet and traditional
classroom setting;
- Provide corporations e-commerce solutions through web
consulting.
See Note 10 for segment disclosures.
RECENT ACCOUNTING PRONOUNCEMENTS:
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") 101, "Revenue Recognition," which outlines the
basic criteria that must be met to recognize revenue and provides guidance
for presentation of revenue and for disclosure related to revenue recognition
policies in financial statements filed with the Securities and Exchange
Commission. The effective date of this pronouncement is the fourth quarter of
the fiscal year beginning after December 15, 1999. The Company believes that
adopting SAB 101 will not have a material impact on its financial position
and results of operations.
In March 2000, the FASB issued FASB Interpretation No. 44 ("FIN 44")
"Accounting for Certain Transactions involving Stock Compensation, an
interpretation of APB Opinion No. 25". FIN 44 clarifies the application of
Opinion 25 for (a) the definition of employee for purposes of applying
Opinion 25, (b) the criteria for determining whether a plan qualifies as a
noncompensatory plan, (c) the accounting consequence for various
modifications to the terms of a previously fixed stock option or award, and
(d) the accounting for an exchange of stock compensation awards in a business
combination. FIN 44 is effective July 1, 2000, but certain provisions cover
specific events that occur after either December 15, 1998,or January 12,
2000. The adoption of certain other provisions of FIN 44 prior to March 31,
2000 did not have a material effect on the financial statements. The Company
does not expect that the adoption of the remaining provisions will have a
material effect on the financial statements.
NOTE 3 GOING CONCERN
The Company's consolidated financial statements are prepared using the
generally accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. Without realization of additional capital, it
would be unlikely for the Company to continue as a going concern. This factor
raises substantial doubt about the Company's ability to continue as a going
concern.
Management recognizes that the Company must generate additional resources to
enable it to continue operations. The Company intends to begin recognizing
significant revenues during early 2000. Management's plans also include the
sale of additional equity securities and debt financing from related parties.
However, no assurance can be given that the Company will be successful in
raising additional capital. Further, there can be no assurance, assuming the
Company successfully raises additional equity, that the Company will achieve
profitability or positive cash flow. If management is unable to raise
additional capital and expected significant revenues do not result in
positive cash flow, the Company will not be able to meet its obligations and
will have to cease operations.
NOTE 4 MAJOR CUSTOMERS
During the six months ended June 30, 2000, revenues from the three largest
customers accounted for approximately 45% of total revenues. Revenues from a
related party accounted for approximately 9% of
9
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revenues for the six months ended June 30, 2000. Included in accounts
receivable at June 30, 2000 is approximately $529,000 due from these
customers.
NOTE 5 PAYABLES TO RELATED PARTIES
The Company has various notes payable and advances to related parties. The
notes payable consists of the following at June 30, 2000:
<TABLE>
<S> <C>
Unsecured promissory notes, bearing interest at 8% per annum,
principal and interest due on the maturity date. Pursuant to this
agreement, the maturity date shall be one year from the execution date
of the promissory note (December 2000) or the raising of at least
$1 million in equity financing, whichever is earlier.
$250,000
Unsecured promissory notes, bearing interest at 9% per annum,
principal and interest due on the maturity date. Pursuant to this
agreement, the maturity date shall be one year from the execution date
of the promissory note (March 2001), net of unamortized discount of $48,667.
201,333
--------
$451,333
========
</TABLE>
The total interest expense on the above notes for the three and six month
periods ended June 30, 2000 was approximately $10,000 and $17,500,
respectively.
In addition, in connection with the 9% unsecured promissory notes, the
Company issued warrants to purchase a total of 100,000 shares of common stock
at $0.80 per share, expiring March 2003, immediately exercisable. The
warrants were valued at $73,000 (based on Black-Scholes computation under
SFAS 123) which was recorded as a debt discount and will be amortized over
the life of the promissory note. The related interest expense recognized for
the debt discount amortization for the three and six month periods ended June
30, 2000 was approximately $24,000.
In addition, the Company, from time to time, received advances from other
related parties. The advances from related parties are unsecured,
non-interest bearing and payable on demand. At June 30, 2000, the advances
amounted to $429,543.
NOTE 6 CONVERTIBLE DEBENTURES
In June 2000, the Company issued a $250,000 secured convertible debenture
bearing interest at a rate of 8%. The notes are convertible at one share of
Company common stock per $.75 principal amount of the debenture or 70% of the
five day average of the ask price per share of the Company's common stock
based on the five days preceding the notice of intent to convert.
In connection with this discounted conversion feature the Company recorded
$19,600 of debt discount. The Company will amortize the debt discount over
the period from the date the debt was issued to the date it becomes
exercisable and has recognized $3,757 in interest expense for the three and
six months ended June 30, 2000 in the accompanying Statement of Operations.
NOTE 7 CONTRACTS
The Company entered into agreements with RxAlternative.com, Inc.
("RxAlternative") to develop two websites starting January 2000 and provide
monthly technical support and maintenance services over a period of one year.
Pursuant to these agreements, the Company received 750,000 shares of
RxAlternative's (a private company) restricted common shares (4.17%
undiluted interest of RxAlternative) valued at $1.50 per share (based on
recent private sales of RxAlternative stock) for a total revenues of
$1,125,000, $675,000 of which was deferred at June 30, 2000. The Company was
also granted 100,000 stock options to purchase 100,000 shares of common stock
at $1.00 per share. The Company will also receive $10,000 per month for
maintenance services for up to 40 man-hours of services rendered and plans to
record this revenue over the term of the agreement upon satisfactory
completion of services and acceptance by RxAlternative.
10
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In June 2000, the Company entered into an agreement with a company that is
owned by a member of the Company's board of directors to develop three
websites for $250,000 which was recognized as revenue in the period ended
June 30, 2000.
NOTE 8 STOCK OPTIONS
During the six months ended June 30, 2000, the Company issued 1,000,000
shares to an employee resulting in compensation expense of $250,000 which the
Company will recognize over the 5 years vesting of options. For the three and
six month periods ended June 30, 2000, the Company has recognized $25,000 of
expense.
In addition, the Company issued 100,000 warrants in connection with the
related party notes (see Note 5).
NOTE 9 PAYROLL TAX LIABILITY
In April 2000, the Company negotiated a payment plan on its delinquent
payroll taxes including approximately $154,000 in interest and penalties.
Under the payment plan, the Company will make monthly payments of $15,000
until the liability is fully paid off. The related liability at June 30, 2000
is approximately $550,000.
NOTE 10 SEGMENT INFORMATION
The Company's principal segments are:
- Provide education through distant learning environment using the
internet and traditional classroom settings.
- Provide corporations e-commerce solutions through web consulting.
Financial information about industry segments as of and for the six months
ended June 30, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
Six Months ended June 30,
2000 1999
--------------- ----------------
<S> <C> <C>
Operating revenues:
Education $ 1,922,139 $ 1,429,305
Technological consulting 769,000 -
--------------- ----------------
Total operating revenues $ 2,691,139 $ 1,429,305
=============== ================
Operating income (loss):
Education $ (46,217) $ (109,928)
Technological consulting 324,841 -
--------------- ----------------
Net operating income (loss) $ 278,624 $ (109,928)
=============== ================
Identifiable assets:
Education $ 1,790,615 $ 1,766,931
Technological consulting 1,397,676 -
--------------- ----------------
Total $ 3,188,291 $ 1,766,931
=============== ================
</TABLE>
Operating income (loss) is revenues minus operating expenses.
Identifiable assets by segment are assets used in or otherwise identifiable
with the Company's operations in each segment.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is management's discussion and analysis of iNetVisionz.com's
financial condition and results of operations. Detailed information is
contained in the financial statements included in this document. This section
contains forward-looking statements that involve risks and uncertainties,
such as statements of the company's plans, objectives, expectations and
intentions. The cautionary statements made in this document should be read as
being applicable to all related forward-looking statements wherever they
appear in this document.
SIX MONTHS ENDING JUNE 30, 2000 (UNAUDITED) COMPARED TO THE SIX MONTHS ENDING
JUNE 30, 1999 (UNAUDITED).
Revenues for the six month period ended June 30, 2000 increased 88% to
$2,691,139 from $1,429,305 in the year ago period. The revenue increase
reflected strong demand in the technical training field. The Company formed a
separate department in the quarter ended March 31, 2000, to create, develop
and maintain web sites. The department earned $769,000 for the quarter ended
June 30, 2000. Another department of the Company, iNet-Proz, which is an
internship program for trainees to get real world hands on experience,
started working full force in the quarter ended March 31, 2000.
The increase in gross profit from 60.5% in last year's six months ending June
30, 2000 to 75.5%, in the year ago period, reflects better management and
cost control by the Company in the current period. The Company hired several
instructors on a full time basis resulting in decrease in cost of sales
percentage as compared to prior periods when the Company used outside
contractors at three to four times cost of an on staff instructor. In
addition the Company earned $769,000 in its new technology consulting segment
which produced a higher than average gross margin due to the nature of the
work performed.
Operating expenses increased to 65.2% revenue in the six months ended June
30, 2000 as compared to 68.2% of revenue in the last years period. The
Company had $1,753,338 in operating expenses for the quarter ended June 30,
2000, as compared to $975,011 of such expense for the same period in 1999.
The increase in operating expenses is primarily attributed to the increase in
facilities and the increase in number of employees and key personnel to
accommodate the growing needs of the Company.
As a result of the above factors, net income increased to $278,624 or $0.02
per share in 2000 from a loss of $109,928 or $0.01 per share in 1999.
THREE MONTHS ENDING JUNE 30, 2000 (UNAUDITED) COMPARED TO THE THREE MONTHS
ENDING JUNE 30, 1999 (UNAUDITED).
Revenues for the three month period ended June 30, 2000 increased 139% to
$1,681,505 from $703,594 in the year ago period. The revenue increase
reflected strong demand in the technical training field. The Company formed a
separate department in the quarter ended March 31, 2000, to create, develop
and maintain web sites. The department earned $769,000 for the quarter ended
June 30, 2000. Another department of the Company, iNet-Proz, which is an
internship program for trainees to get real world hands on experience,
started working full force in the quarter ended March 31, 2000.
The increase in gross profit from 59.9% in last year's three months ending
June 30, 2000 to 81.9%, in the year ago period, reflects better management
and cost control by the Company in the current period. The Company hired
several instructors on a full time basis resulting in decrease in cost of
sales percentage as compared to prior periods when the Company used outside
contractors at three to four times cost of an on staff instructor. In
addition the Company earned $769,000 in its new technology consulting segment
which produced a higher than average gross margin due to the native of the
work performance.
12
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Operating expenses decreased to 63.3% revenue in the three months ended June
30, 2000 as compared to 67.7% of revenue in the last years period. The
Company had $1,064,432 in operating expenses for the quarter ended June 30,
2000, as compared to $476,218 of such expense for the same period in 1999.
The increase in operating expenses is primarily attributed to the increase in
facilities and the increase in number of employees and key personnel to
accommodate the growing needs of the Company.
As a result of the above factors, net income increased to $278,624 or $0.02
per share in 2000 from a loss of $109,928 or $0.01 per share in 1999.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, the Company had cash and cash equivalent balance of
$86,916 as compared to $1,000 as of December 31, 1999.
The Company increased cash flows used in operations by $634,212 from $106,974
to $741,186 for the six months ended June 30, 1999 and 2000, due primarily to
payments for a license and increased operating activity related to the
Company's growth.
Net investing activities consumed $52,426 for the six months ended as
compared to $121,577 in the corresponding period last year.
Cash provided by financing activities amounted to $879,528 as compared to
$296,322 in the same period last year. The increase primarily reflects
increased borrowing from related parties.
The Company intends to find future capital expenditures and working capital
requirements through anticipated cash flows from operations. Although the
Company believes that funding will be sufficient, the Company may also
consider the use of funds from other external sources, including, but not
limited to public or private offerings of debt or equity. The Company's
auditors have issued a going concern opinion for the year ended December 31,
1999. While management believes that private sources of funding should be
sufficient to continue as its operations, there is no guaranty that such
funding will be available to the Company as needed or on terms favorable to
the Company.
13
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In management's opinion, there are no material litigation matters
pending or threatened against the company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
Changes in Registrant's Certifying Accountant
The Registrant has engaged Corbin & Wertz, certified public accountants, 2603
Main Street, Suite 600, Irvine, California 92614 ("Corbin & Wertz") as its
independent accountants for all accounting purposes related to the
Registrant's business operations and the Registrant's reporting requirements.
Corbin & Wertz replaces Kabani & Company, Inc., Certified Public Accountants
("Kabani"), who had been retained by the Company as its independent
accountant solely for the purposes of the review of the Company's quarterly
statements for the quarter ending March 31, 2000, and becomes the Company's
principal accountants as of August 14, 2000. Kabani's review of the March 31,
2000 financial statements of the Registrant contained no adverse opinion or a
disclaimer of opinion, or was qualified nor modified as to audit scope or
accounting principles as its actions consisted of a review only. The
engagement of Corbin & Wertz was approved by the Board of Directors.
During the Registrant's period in which Kabani was retained commencing May
11, 2000 and ending August 14, 2000 preceding such registration, declination,
or dismissal, there were no disagreements with Kabani on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedure. There is nothing to report under
Item 304(a)(1)(v)(A) through (D).
A copy of this Form 8-K was sent to Kabani and a letter from Kabani stating
whether or not they agree with the disclosures contained in this Form 10-QSB
has been requested and will be filed as an Amendment to this 10-QSB within 2
days of receipt by Registrant, but no later than 10 days from the date of
filing this Form 10-QSB.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
27.1 Financial Data Schedule
(b) Reports on Form 8-K
On May 17, 2000 the Company filed a Form 8-K to report that Kabani
and Associates, Inc. had replaced Stonefield Josephson as the Company's
certified public accountants for reporting purposes.
On June 5, 2000 the Company filed a Form 8-K/A to report that
Stonefield Josephson agreed with the Company's statements in the May 17, 2000
Form 8-K.
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SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the Registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
INETVISIONZ.COM, INC.
Dated August 21, 2000 /s/ Noreen Khan
--------------------------------------
Noreen Khan,
Chief Executive Officer and Director
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