<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 March 31, 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.)
19951 Mariner Ave., Torrance, California 90503
--------------------------------------------- ---------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(310) 921-1999
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 at March 31, 2000.
Transitional Small Business Disclosure Format (check one):
Yes No X
<PAGE>
INETVISIONZ.COM, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NO.
------------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Letter from Accountant 3
Comparative Consolidated Balance Sheets
for the 3 months ended March 31, 2000 (unaudited) and December 31, 1999 4
Comparative Unaudited Consolidated Statements of Operations
for the 3 months ended March 31, 2000 and March 31, 1999 6
Comparative Unaudited Consolidated Statements of Cash Flows
for the 3 months ended March 31, 2000 and March 31, 1999 7
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation. 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 19
Item 2. Changes in Securities and Use of Proceeds. 19
Item 3. Defaults Upon Senior Securities. 19
Item 4. Submission of Matters to a Vote of Security Holders. 19
Item 5. Other Information. 19
Item 6. Exhibits and Reports of Form 8-K. 19
(a) Exhibits
(b) Reports on Form 8-K
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1.
Independent Accountants' Report
We have reviewed the accompanying consolidated balance sheet of Inetvisionz,
Inc. as of March 31, 2000, and the related statements of operations and cash
flows for the three-month period then ended. These financial statements are the
responsibility of the company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
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 financial statements for them to be in conformity
with generally accepted accounting principles.
KABANI & COMPANY, INC
CERTIFIED PUBLIC ACCOUNTANTS
Fountain Valley
May 12, 2000
3
<PAGE>
INETVISIONZ.COM, INC.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000 AND DECEMBER 31, 1999
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
(Unaudited)
March 31 December 31
2000 1999
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $43,605 $1,000
Cash-restricted - 107,957
House Accounts receivable,
net of allowance for doubtful accounts
of $112,941 690,674 333,639
Common stock receivable - 50,000
Other current assets 10,635 23,220
-------------- ------------
Total Current Assets 744,914 515,816
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization 486,377 402,396
OTHER ASSETS:
Customer Lists, net 191,436 205,436
Product license, copyrights, trademark
and concept, net 170,925 183,425
Covenant not to compete, net 34,185 36,685
Loan receivable-related party 13,750 12,750
-------------- ------------
Total Assets $1,641,587 $1,356,508
============== ============
</TABLE>
4
<PAGE>
INETVISIONZ.COM, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
AS OF MARCH 31, 2000 AND DECEMBER 31, 1999
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
(unaudited)
March 31 December 31
2000 1999
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDER'S DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $1,201,245 $1,164,457
Deferred revenues 37,353 90,451
Loan payable, bank 100,015
Notes payable, related parties 685,543 -250,000
------------- ------------
Total Current Liabilities $1,924,141 $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 3,052,210 3,052,210
Accumulated Deficit (3,345,970) (3,311,832)
------------- ------------
Total Stockholders' deficit (282,553 (248,415)
------------- ------------
Total Current Liabilities and $1,614,587 $1,356,508
Stockholder's deficit ============= ============
5
</TABLE>
<PAGE>
INETVISIONZ.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDING MARCH 31, 2000 AND MARCH 31, 1999,
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
(unaudited) (unaudited)
Three months ended Three months ended
March 31, 2000 March 31, 1999
------------------- -------------------
<S> <C> <C>
NET REVENUES $1,009,634 $725,711
COST OF REVENUES 354,865 281,953
------------ ---------
GROSS PROFIT 654,768 443,758
OPERATING EXPENSES 688,906 451,738
------------ ---------
NET LOSS $ (34,138) $ (7,980)
============ =========
NET LOSS PER SHARE $ (0.003) $ (0.001)
basic and diluted ============ =========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING
basic and diluted 11,207,626 6,758,033
============ =========
</TABLE>
6
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INETVISIONZ.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
(AMOUNTS EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
as at as at
March 31, 2000 March 31, 1999
------------------- -----------------
<S> <C> <C>
CASH FLOWS (USED FOR) OPERATING ACTIVITIES:
Net loss $ (34,138) $ (7,980)
--------- ---------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH (USED FOR) OPERATING
ACTIVITIES:
Depreciation and amortization 70,676 70,000
Increase (decrease) in Assets:
Accounts Receivable (357,035) (8,578)
Other Current Assets 12,585 (7,124)
INCREASE (DECREASE) IN LIABILITIES:
Accounts payable and accrued expenses 36,788 (5,982)
Deferred income (53,099) (83,338)
--------- ---------
Total adjustments (290,085) (35,022)
--------- ---------
Net cash used for operating activities (324,223) (43,002)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash-restricted (restriction released) 107,957 --
Advances on loan receivable (1,000) (2,300)
Payments to acquire property, equipment and intangibles (125,657) (75,000)
--------- ---------
Net cash used for investing activities (18,700) (77,300)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable, related parties 435,543 94,000
Repayment of loan payable, bank (100,015) --
Common stock receivable 50,000 23,692
Net cash provided by financing activities 385,528 117,692
--------- ---------
NET INCREASE (DECREASE) IN CASH 42,605 (2,610)
CASH, beginning of year 1,000 4,066
--------- ---------
CASH, end of year $ 43,605 $ 1,456
========= =========
</TABLE>
7
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INETVISIONZ.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited for the 3 Months ended March 31, 2000 & 1999)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL:
Martinique Ventures, Inc. was incorporated in the State of Delaware on July 13,
1988 as a C corporation. On July 9, 1997, Martinique Ventures, Inc. changed its
name to Zebulon Enterprises, Inc.
Pursuant to a share acquisition agreement dated March 31, 1998, all the
outstanding common stock (1,142,857 shares) of Zebulon Enterprises, Inc. was
purchased for $114,286 and accordingly, there was a change in control of the
Company. Immediately following this transaction, the new stockholders changed
its name from Zebulon Enterprises, Inc. to TAO Partners, Inc. and on April 30,
1999, changed its name to Inetvisionz.com, Inc. (the "Company").
During September 1998, the Company acquired certain assets of a computer
training division from NovaQuest InfoSystems, Inc. and transferred its assets to
Inetversity, Inc., a wholly owned subsidiary. Until this time, the Company had
no operations.
PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include the accounts of
Inetvisionz.com, Inc. (the "Parent"), and its wholly owned subsidiary,
Inetversity, Inc. All material intercompany transactions have been eliminated in
consolidation.
BUSINESS ACTIVITY:
The Company and its subsidiary provide education through the distance learning
environment and develop and deliver technology training lessons using the
Internet as a means of delivery. The Company also plans to provide major
corporations e-commerce solutions to conduct business via the Internet.
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.
REVENUE RECOGNITION:
TUITION REVENUES
The Company, through its iNetVersity subsidiary, 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, through its iNetversity subsidiary, also provides tuition services
and technical training under Federal and State funded Job Training Programs,
which are as follows:
8
<PAGE>
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.
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, through its iNetproz division, 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, through its iNetecommerce division, 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 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.
FAIR VALUE:
Unless otherwise indicated, the fair values of all reported assets and
liabilities which represent financial instruments, none of which are held for
trading purposes, approximate the carrying values of such amounts.
9
<PAGE>
CASH:
EQUIVALENTS
For purposes of the statement of cash flows, cash equivalents include all highly
liquid debt instruments with original maturities of three months or less which
are not securing any corporate obligations.
CONCENTRATION
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts.
PROPERTY AND EQUIPMENT:
Property and equipment are stated at cost. Expenditures for maintenance and
repairs are charged to earnings as incurred, whereas, additions, renewals, and
betterments are capitalized. When property and equipment are retired or
otherwise disposed of, the related cost and accumulated depreciation are removed
from the respective accounts, and any gain or loss is included in operations.
Depreciation is computed using the straight-line method over the estimated
useful lives of 3-5 years.
INTANGIBLES:
During September 1998, the Company entered into a non-compete agreement and
acquired customer lists, product licenses and copyrights from the training
division of Novaquest InfoSystems, Inc. Based on management's best estimates,
the Company allocated $600,000 to these intangible assets, which are stated at
cost and are being amortized straight-line over the estimated useful lives of 60
months from the date of acquisition.
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF:
The Company adopted the provision of FASB No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. This statement
requires that long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amounts of the assets exceed the fair values of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. Adoption of this statement did not have
a material impact on the Company's financial position, results of operations or
liquidity.
INVESTMENT:
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.
ACCOUNTING FOR STOCK-BASED COMPENSATION:
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related interpretations
in accounting for its employee stock options because the alternative fair value
accounting provided for under FASB Statement No. 123, "Accounting for
Stock-Based Compensation," requires use of option valuation models that were not
developed for use in valuing employee stock options. Under
10
<PAGE>
APB 25, because the exercise price of the Company's employee (including key
consultants and directors) stock options equals the fair market value of the
underlying stock on the date of grant, no compensation expense is recognized.
INCOME TAXES:
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which adopts the asset and
liability approach to measurement of temporary differences between financial
reporting and income tax return reporting. The principal temporary difference is
the Federal and State net operating loss carryforward. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for effects of
changes in tax laws and rates on the date of enactment. Federal net operating
loss carryforward starts to expire on December 31, 2018 and California state net
operating loss carryforward starts to expire on December 31, 2003. A summary is
as follows:
<TABLE>
<CAPTION>
Federal State
1999 1999
---- -----
<S> <C> <C>
Net operating loss
Carry forward $ 2,850,000 $2,850,000
Estimated tax rate 35% 6%
Deferred tax benefit 997,500 171,000
Less valuation allowance 997,500 171,000
----------- -----------
$ - $ -
=========== ===========
</TABLE>
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 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.
During the quarter ended March 31, 2000 and 1999, the Company operated primarily
to provide education through the Internet and traditional classroom tuition,
which accounted for 98% and 100% of the Company's operations, respectively. The
other 2% of the Company's operation during these periods was in the
web-consulting and e-commerce division.
NEW ACCOUNTING PRONOUNCEMENTS:
The Company has adopted Statements of Financial Accounting Standards No. 130
"Reporting Comprehensive Income" and No. 133 "Accounting for Derivative
Instruments and Hedging Activities." The Company also adopted Statement of
Position No. 98-5 "Reporting on the Costs of Start-up Activities." Adoption of
these activities did not materially affect the financial statements.
NOTE 2 GOING CONCERN
The Company's consolidated financial statements are prepared using the generally
accepted accounting principles
11
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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 3 MAJOR CUSTOMER
During the quarter ended March 31,2000 and 1999, revenues under the JTPA
accounted for approximately 45% and 34% respectively. Included in accounts
receivable at March 31, 2000 is approximately $270,000 due from various agencies
under the JTPA.
NOTE 4 PROPERTY EQUIPMENT
Property and equipment is comprised of the following:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
(UNAUDITED)
<S> <C> <C>
Computer and electronic equipment $ $494,295 $373,137
Office furniture and equipment 171,559 168,560
Leasehold improvements 76,850 75,350
Automobile 9,305 9,305
---------- ----------
752,009 626,352
Less accumulated depreciation and amortization 265,632 223,956
---------- ----------
$486,377 $402,396
========== ==========
</TABLE>
Depreciation and amortization expense related to property and equipment for the
quarters ended March 31, 2000 and 1999 amounted to $41,676 and $41,000
respectively.
NOTE 5 CUSTOMER LIST
A summary is as follows:
<TABLE>
<CAPTION>
March 31,
2000
---------
<S> <C>
Customer list $280,000
Less accumulated depreciation and amortization 88,564
---------
$191,436
=========
</TABLE>
Amortization expense related to customer list for the quarter ended March 31,
2000 and 1999 amounted to $14,000, each.
12
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NOTE 6 PRODUCT, LICENSE, COPYRIGHTS, TRADEMARK AND CONCEPT
A summary is as follows:
<TABLE>
<CAPTION>
March 31,
2000
----
<S> <C>
Product license, copyrights, trademark and concept $250,000
Less accumulated depreciation and amortization 79,075
---------
$170,925
=========
</TABLE>
Amortization expense related to Product license, copyrights, trademark and
concept for the Quarter ended March 31, 2000 and 1999 amounted to $12,500 each.
NOTE 7 NON-COMPETE AGREEMENT
A summary is as follows:
<TABLE>
<CAPTION>
March 31,
2000
------
<S> <C>
Non-compete agreement $50,000
Less accumulated depreciation and amortization 15,815
---------
$34,185
=========
</TABLE>
Amortization expense related to customer list for the quarter ended March
31, 2000 and 1999 amounted to $2,500 each.
NOTE 8 ACCOUNTS PAYABLE AND ACCRUED EXPENSES
A summary is as follows:
<TABLE>
<CAPTION>
March 31,
2000
------
<S> <C>
Delinquent payroll taxes payable, including
estimated penalties and interest (see Note 28) $ 394,020
Accounts payable 530,306
Payroll and related taxes 210,986
Sales taxes payable 7,323
Interest 11,085
Other overhead expenses 45,525
---------
$1,201,245
=========
</TABLE>
NOTE 9 NOTES PAYABLE, RELATED PARTIES
During December 1999, the Company commenced an offering of up to 20 units to
raise up to $500,000 and is exempt from registration under Regulation D of the
Securities Act of 1933. Each unit is comprised of the following:
a. A $25,000 promissory note which bears interest at 8% per annum,
interest calculated daily, unsecured and principal and interest is due
on the maturity date. Pursuant to this agreement, the maturity date
shall be one year from the execution date of the promissory note or
the raising of at least $1 million in equity financing, whichever is
earlier.
b. One warrant ("Warrant") which shall entitle the note holder to
purchase 10,000 shares of the Company's
13
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common stock at an exercise price of $0.80 per share which may be
adjusted based upon fair market value. Pursuant to this agreement, the
exercise price of this Warrant shall not exceed $2.00 per share in the
event of an adjustment as set forth in the Warrant agreement. The
Company is responsible for all costs related to registering the Common
Stock shares underlying the Warrants in any registration statements
filed with the Securities and Exchange Commission under the Securities
Act of 1933. In the event the underlying shares of the Warrants are
not registered within 1 year after the issuance of this Warrant, the
holder has the right to demand registration at the Company's expense
and be entitled to a 5% reduction per month on the exercise price.
As of December 31, 1999, the Company raised $250,000 from the issuance of 10
units to related parties. Interest expense related to this note amounted to
$5,000 during the quarter ended March 31, 2000.
Note payable from related parties also include payable to various related
parties amounting $105,543 on March 31, 2000. These notes were unsecured,
non-interest bearing and payable on demand.
Notes payable, related parties, at March 31,2000 includes a note payable of
$80,000.00 to a related party, and was non-interest bearing, unsecured and due
on demand. The note has been paid subsequent to March 31, 2000.
During March 2000, the Company received $250,000 from Winthrop Venture Fund,
Ltd., an accredited investor, from the issuance of two securities in exchange
for this investment, which are as follows:
a. Promissory note payable, bears interest at 9% per annum, unsecured and
all interest and principal due by March 2001.
b. 75,000 warrants were granted with an exercise price of $0.80 per
share, which expire in three years from the date of grant.
Pursuant to this agreement, in the event the Company completes a registration
statement under the Securities Act of 1933, the Company shall be obligated to
register the shares underlying these warrants.
NOTE 10 COMMITMENTS
The Company leases its office space and training locations under renewable
operating leases, which expire at various times starting September 2001 to
December 2004. Pursuant to these lease agreements, the Company is also
responsible for maintaining certain minimum insurance requirements and general
utilities.
The following is a schedule by years of future minimum rental payments
(including subsequent event) as required under operating leases that have
noncancellable lease terms in excess of one year as of March 31, 2000:
<TABLE>
<S> <C>
2000 $ 432,000
2001 414,700
2002 114,000
--------------
$ 960,700
==============
</TABLE>
Total rent expense amounted to $66,000 and $54,567 for the quarter ended March
31, 2000 and 1999, respectively.
SERVICE AGREEMENTS
The Company entered into agreements with RxAlternative.com, Inc. 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 shall receive 750,000 shares of RxAlternative's restricted common
shares (4.17% of undiluted interest through the IPO of RxAlternative) and was
granted 100,000 stock options to purchase 100,000
14
<PAGE>
shares of common stock at $1.00 per share. The Company will also receive $10,000
per month as consulting revenues 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.
NOTE 11 STOCKHOLDERS' EQUITY (DEFICIT)
PRIVATE PLACEMENTS
During April 1998, the Company initiated a private placement offering (the
"April 1998 Private Placement") of 1,114,000 shares of the Company's common
stock at an offering price of $0.085 per share. The Private Placement was exempt
from the registration provisions of the Securities and Exchange Commission Act
of 1933 and Rule 504 of Regulation D. As of December 31, 1998, proceeds amounted
to $94,690.
During May 1998, the Company initiated a private placement offering (the "May
1998 Private Placement") of 1,400,000 shares of the Company's common stock at an
offering price of $0.15 per share. The Private Placement was exempt from the
registration provisions of the Securities and Exchange Commission Act of 1933
and Rule 504 of Regulation D. As of December 31, 1998, proceeds amounted to
$210,000.
During December 1998, the Company initiated two private placement offerings (the
"December 1998 Private Placements") of 400,000 and 180,000 shares of the
Company's common stock at offering prices of $.625 and $1.00, respectively, per
share. The Private Placement was exempt from the registration provisions of the
Securities and Exchange Commission Act of 1933 and Rule 506 of Regulation D. As
of December 31, 1998, proceeds amounted to $430,000.
During March 1999, the Company initiated a private placement offering (the
"March 1999 Private Placement") of 500,000 shares of the Company's common stock
at an offering price of $0.25 per share. The Private Placement was exempt from
the registration provisions of the Securities and Exchange Commission Act of
1933 and Rule 504 of Regulation D. As of December 31, 1999, proceeds amounted to
$75,000.
During December 1999, the Company initiated a private placement offering (the
"December 1999 Private Placement") of 200,000 shares of the Company's common
stock at an offering price of $0.25 per share. The Private Placement was exempt
from the registration provisions of the Securities and Exchange Commission Act
of 1933 under Rule 504 of Regulation D. As of March 23, 2000, proceeds amounted
to $50,000.
SERVICES RENDERED
Pursuant to three consulting agreements with related parties, the Company issued
233,334 restricted common shares for (i) services rendered during the year ended
December 31, 1999 in the amount of $88,000, and (ii) from the satisfaction of
$17,000 of accrued consulting fees for the year ended December 31, 1998. These
shares were recorded at a value of $0.45 per share, management's best estimate
of their fair value at date of issuance.
PURCHASE OF ASSETS OF TRAINING DIVISION
During September 1998, the Company acquired certain assets from the training
division of Novaquest InfoSystems, Inc. for a total cost of $1,000,000. Pursuant
to this agreement, the Company paid $500,000 in cash and issued $500,000 worth
of shares (520,000 shares) of its restricted common stock.
STOCK OPTIONS
On November 11, 1999, the Company granted 500,000 options to purchase restricted
shares of the Company's common stock to select employees, consultants and
non-employee directors. The options were not issued under a formal plan, as the
Company has not yet adopted an Option Plan. The options have a three-year term,
are exercisable at $1.00 per share, and are exercisable on or after January 1,
2000 and vest effective January 1, 1999 to December 31, 1999.
15
<PAGE>
During November 1999, the Company granted 300,000 common stock options to a
current shareholder/corporate counsel at a cash exercise price of $0.75 per
share. Pursuant to this agreement, the stock options will vest at the rate of 1
common stock option for $1 of legal and consulting fees billed to the Company at
various times. The options expire, if not exercised, on the 5th year after the
presentation of the legal and consulting bills to the Company. Upon the
successful filing of Form 10 and becoming effective pursuant to the Securities
Act of 1933, the shares underlying the options shall be registerable pursuant to
Form S-8, however, after the exercise of the options, the common shares will be
restricted for 90 days thereafter.
The number and weighted average exercise price of outstanding options at
December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Weighted Average
Shares Exercise Price
--------- ---------------
<S> <C> <C>
Outstanding at beginning of period - $ -
Outstanding at end of period 800,000 1.28
Exercisable at end of period 60,000 1.75
Granted during period 800,000 1.28
Exercised during period - -
</TABLE>
Pro forma information regarding the effect on operations is required by SFAS
123, and has been determined as if the Company had accounted for its employee
stock options under the fair value method of that statement. Pro forma
information using the Black-Scholes method at the date of grant based on the
following assumptions:
<TABLE>
<CAPTION>
<S> <C>
Expected life (years) 3-5 years
Risk-free interest rate 6.50%
Dividend yield -
Volatility 70%
</TABLE>
This option valuation model requires input of highly subjective assumptions.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing model does not necessarily
provide a reliable single measure of fair value of its employee stock options.
For purposes of proforma disclosures, the estimated fair value of the options
is amortized to expense over the option's vesting period. The Company's
proforma information is as follows:
<TABLE>
<CAPTION>
December 31,
1999
-----
<S> <C>
Net loss, as reported $ (1,746,041)
Proforma net loss $ (2,071,458)
Basic and diluted historical loss per share $ (0.23)
Proforma basic and diluted loss per share $ (0.27)
</TABLE>
NOTE 12 SUBSEQUENT EVENTS
TAX PAYMENTS
During April 2000, the Company used the cash proceeds raised from the Private
Offering in March 2000 to pay down $15,000 of the delinquent payroll taxes. The
Company has negotiated a payment plan on the remaining balance and plans to pay
off the entire balance as cash flow improves. Under the payment plan, the
company will make monthly payments of $15,000 until the liability is fully paid
off.
LOAN FROM RELATED PARTY:
In May, 2000, the company borrowed an amount of $150,000 from a related party.
The loan is unsecured, due on demand and interest free.
16
<PAGE>
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.
THREE MONTHS ENDING MARCH 31, 2000 (UNAUDITED) COMPARED TO THE THREE MONTHS
ENDING MARCH 31, 1999 (UNAUDITED).
The following table sets forth certain items on a percentage of revenue:
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
Net Revenue 100.0% 100.0%
Cost of Revenue 35.1% 38.8%
------- -------
Gross Profit 64.9% 61.2%
Operating Expenses 68.2% 62.2%
------- -------
Net Loss 3.3% 1.0%
======= =======
</TABLE>
Revenues for the three month period ended March 31, 2000 increased 39.1% to
$1,009,634 from $725,711 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 $114,000 for the quarter ended March 31, 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 61.2% in last year's first quarter to 64.9%,
in the current quarter, 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.
Operating expenses increased to 68.8% revenue in the quarter ended March 31,
2000 as compared to 62.2% of revenue in the last years period. The Company had
$688,906 in operating expenses for the quarter ended March 31, 2000, as compared
to $451,738 of such expense for the same period in 1999. As substantially all
expenses are incurred by the Company's subsidiary, mainly attributable to the
subsidiary's expenses including rent, expense from two training locations,
increase in number of employees and key personnel to accommodate the growing
needs of the Company and increase in professional fees.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, the Company had cash and cash equivalent balance of
$43,605 as compared to $1,000 as of December 31, 1999.
Net investing activities consumed $18,700 in the current quarter as compared to
$77,300 in the corresponding period last year. 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.
17
<PAGE>
Cash provided by financing activities amounted to $385,528 as compared to
$117,692 in the same period last year. The increase reflects borrowing from
related parties.
Cash used in operating activities consumed $324,223 as compared to $43,002 same
period last year, mainly due to increases in accounts receivable. The increase
in accounts receivable by $357,035 in the current quarter is due to increase in
business with Government agencies. The Governmental agencies are typically,
slower in repayment of dues.
18
<PAGE>
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.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27.1: Financial Data Schedule
(b) Reports on Form 8-K
None.
19
<PAGE>
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 May 14, 2000 /s/ Noreen Khan
-----------------------------------
Noreen Khan,
Chief Executive Officer and Director
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001102997
<NAME> INETVISIONZ.COM, INC.
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-START> JAN-31-2000 JAN-31-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 43,605 0
<SECURITIES> 0 0
<RECEIVABLES> 803,615 0
<ALLOWANCES> (112,941) 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 744,914 0
<PP&E> 752,009 0
<DEPRECIATION> (265,632) 0
<TOTAL-ASSETS> 1,641,587 0
<CURRENT-LIABILITIES> 1,924,141 0
<BONDS> 0 0
0 0
0 0
<COMMON> 11,207 0
<OTHER-SE> (293,760) 0
<TOTAL-LIABILITY-AND-EQUITY> 1,641,587 0
<SALES> 0 0
<TOTAL-REVENUES> 1,009,634 725,711
<CGS> 0 0
<TOTAL-COSTS> 354,865 281,953
<OTHER-EXPENSES> 688,906 451,738
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (34,138) (7,980)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (34,138) (7,980)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (34,138) (7,980)
<EPS-BASIC> (.003) (.001)
<EPS-DILUTED> (.003) (.001)
</TABLE>
