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FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended March 31, 2000
Commission File Number 000-29425
I-TRANSACTION.NET, INC.
(Exact name of registrant as specified in its charter)
New Jersey
(State of jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
934 The East Mall, Etobicoke Ontario M9B 6J9
(Address of principal executive offices) (Zip Code)
(416) 620-8330
(Registrant's telephone number, including area code)
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 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
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common Stock, $0.0001 Par
Value - 11,913,611 Shares as of March 31, 2000
The Exhibit Index is on Page 12
This document contains 13 pages.
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I-TRANSACTION.NET, INC.
AND SUBSIDIARIES
INDEX
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PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet for March 31, 2000.......3
Consolidated Statement of Operations for the nine
months ended March 31, 2000 and 1999...............4
Consolidated Statement of Cash Flows for the nine
months ended March 31, 2000 and 1999...............5
Notes to Consolidated Financial Statements..........6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K....................12
SIGNATURES..........................................13
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i-Transaction.net Inc.
(formerly Phoenix Summus Corp.)
(A Development Stage Company)
(unaudited - prepared by management)
Consolidated Balance Sheet
(U.S. Dollars)
<TABLE>
<CAPTION>
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AUDITED
MAR. 31 MAR. 31 JUNE 30,
2000 1999 1999
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<S> <C> <C> <C>
ASSETS
CURRENT
Cash $ 99,617 $ -- $ --
Promissory notes receivable bearing
interest at 5% per annum due May 1,
2000 -- -- 100,000
Accounts receivable 38,757 -- --
Prepaid and sundry asset 5,000 -- --
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177,519 -- 100,000
CAPITAL ASSETS - NET OF ACCUMULATED
AMORTIZATION OF $4,632 43,349 -- --
GOODWILL NET OF ACCUMULATED AMORTIZATION
OF $1,820 70,995 -- --
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$ 291,863 $ -- $ 100,000
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LIABILITIES
CURRENT
Bank indebtedness $ 20,270 $ -- $ --
Accounts payable and accrued liabilities 2,052,809 -- 25,000
Customer deposits 10,946 -- --
Loans payable, related party, non-interest
bearing and due on demand 98,110 -- 3,007
Bank loan 107,231 -- --
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2,289,366 -- 28,007
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STOCKHOLDERS' DEFICIENCY
Common stock, $.001 par value, 200,000,000
shares authorized, shares issued and outstanding 11,914 204 10,214
Additional paid-in capital 280,402,132 280,328,642 280,399,632
(Deficit) accumulated during development stage (282,411,549) (280,328,846) (280,337,853)
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1,997,503 -- 71,993
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$ 291,863 $ -- $ 100,000
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</TABLE>
SEE ACCOMPANYING NOTES.
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i-Transaction.net Inc.
(formerly Phoenix Summus Corp.)
(A Development Stage Company)
(unaudited - prepared by management)
Consolidated Statement of Operations
(U.S. Dollars)
<TABLE>
<CAPTION>
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AUDITED
NINE MONTHS NINE MONTHS YEAR ENDED
ENDED ENDED JUNE 30,
MAR. 31, 2000 MAR. 31, 1999 1999
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<S> <C> <C> <C>
Sales $ 29,934 $ -- $ --
Cost of sales 4,649 -- --
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Gross profit 25,285 -- --
Selling expense 12,368 -- --
Administration expense 140,342 -- 9,007
Interest 1,817 -- --
Amortization 6,452 -- --
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Loss from operations before undernoted item (135,694) -- (9,007)
Litigation judgement (1,938,002) -- --
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NET LOSS $ (2,073,696) $ -- $ (9,007)
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Per share information:
Basic loss per share from continuing
operations $ (0.19) -- $ (0.01)
Weighted average number of
shares 10,888,611 203,611 5,662,605
</TABLE>
SEE ACCOMPANYING NOTES.
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i-Transaction.net Inc.
(formerly Phoenix Summus Corp.)
(A Development Stage Company)
(unaudited - prepared by management)
Consolidated Statement of Changes in Stockholders' Deficiency
(U.S. Dollars)
<TABLE>
<CAPTION>
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DEFICIT
COMMON ADDITIONAL ACCUMULATED
COMMON STOCK PAID-IN DURING DEVELOP-
ACTIVITY STOCK AMOUNT CAPITAL MENT STAGE TOTAL
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<S> <C> <C> <C> <C> <C>
Balance, June 30, 1999 10,213,611 $ 10,214 $ 280,399,632 $(280,337,853) $ 71,993
Issuance of 1,000,000 shares
on acquisition of ITNI 1,000,000 1,000 2,500 -- 3,500
Issuance of 700,000 shares
on acquisition of Dynamics 700,000 700 -- -- 700
Loss from operations for the
nine month period ended
March 31, 2000 -- -- -- (2,073,696) (2,073,696)
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MARCH 31, 2000 11,913,611 $ 11,914 $ 280,402,132 $(282,411,549) $ (1,997,503)
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</TABLE>
SEE ACCOMPANYING NOTES.
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I-Transaction.net Inc.
(formerly Phoenix Summus Corp.)
(A Development Stage Company)
(unaudited - prepared by management)
Statement of Cash Flows
(U.S. Dollars)
<TABLE>
<CAPTION>
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NINE MONTH NINE MONTH AUDITED
PERIOD ENDED PERIOD ENDED YEAR ENDED
MARCH 31, MARCH 31, JUNE 30,
2000 1999 1999
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<S> <C> <C> <C>
Net loss $ (2,073,696) $ -- $ (8,007)
Adjustment to reconcile net loss to
net cash provided (used in)
operating activities
Amortization of assets and goodwill 6,452 -- --
Changes in assets and liabilities
Accounts receivable (38,757) -- --
Inventory (34,145) -- --
Prepaid and sundry assets (5,000) -- --
Accounts payable and accrued liabilities 2,027,809 -- 25,000
Customer deposits 10,946 -- --
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Net cash provided by (used for) operating activities (106,391) -- 16,993
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INVESTING ACTIVITIES
Increase in promissory note (100,000) -- (100,000)
Capital expenditures 47,981 -- --
Goodwill 72,815 -- --
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Net cash provided by (used for) investing activities (20,796) -- (100,000)
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FINANCING ACTIVITIES
Issuance of stock 4,200 -- 80,000
Loan payable to related party 95,103 -- 3,007
Bank loan 107,231 -- --
Bank indebtedness 20,270 -- --
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Net cash provided by (used for) financing activities 226,804 -- 83,007
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NET INCREASE IN CASH DURING THE PERIOD 99,617 -- --
CASH AT BEGINNING OF PERIOD -- -- --
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CASH AT END OF PERIOD $ 99,617 -- $ --
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</TABLE>
SEE ACCOMPANYING NOTES.
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i-Transaction.net Inc.
(formerly Phoenix Summus Corp.)
(A Development Stage Company)
(unaudited - prepared by management)
Notes to Consolidated Financial Statements
(U.S. Dollars)
1. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been prepared
in accordance with the requirements of Form 10-Q and, therefore, do not
include all information and notes necessary for a presentation of results
of operations, financial position, cash flows and stockholders' deficiency
in conformity with U.S. generally accepted accounting principles (GAAP).
These statements should be read in conjunction with the consolidated
financial statements and related notes in the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1999 (the Form 10-K). In the
opinion of the Company, the unaudited interim financial statements include
all adjustments, comprising only normal recurring adjustments, necessary
for a fair presentation of operating results. Results of operations for
the nine months are not necessarily indicative of those expected for the
fiscal year.
BASIS OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries i-Transaction.net Inc. (ITNI) and
Dynamic Visions Ltd. ("Dynamic"). All intercompany balances and
transactions have been eliminated on consolidation.
GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However the Company has
sustained continuing operating losses and lacks a source
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of commercial income, which creates uncertainty about the Company's
ability to continue as a going concern. The Company's ability to continue
operations as a going concern and to realize its assets and to discharge
its liabilities is dependent upon obtaining additional financing
sufficient for continued operations as well as the achievement and
maintenance of a level of profitable operations.
Management believes that the actions that are being taken and planned to
revise the Company's operations provide for the opportunity for the
Company to continue as a going concern.
2. ACQUISITIONS
i. On September 29, 1999 the Company acquired 100% of the outstanding
common stock of i-Transaction.net Inc., a Bahamas Corporation by
issuing 1,000,000 shares of common stock and 1,000,000 common stock
purchase warrants exercisable at $0.25 per warrant. The acquisition
will be accounted for under the purchase method of accounting, and
accordingly the results of operations will be included in the results
of the Company from the date of acquisition.
In determining the value of the purchase of ITNI, it is appropriate to
use the quoted market price of the shares of the Company at the time of
acquisition if the shares reflected the fair value of the Company. As
the Company was a `shell Company" at the time of acquisition, the fair
value of the Company was nominal and thus the use of the market value
of the shares of the Company in determining the purchase price would
not be appropriate.
As a result the purchase price was determined based upon the value of
the net assets of ITNI and are as follows:
<TABLE>
<S> <C>
Current assets $ 5,000
Current liabilities (1,500)
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NET ASSETS ACQUIRED $ 3,500
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</TABLE>
ii. On November 15, 1999 the Company acquired 100% of Dynamic Visions, Ltd.
("Dynamic"),
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an Ontario, Canada corporation for 700,000 shares of common stock of
the Company which was issued and subject to Rule 144 of the Securities
and Exchange Act of 1933. The acquisition will be accounted for under
the purchase method of accounting, and accordingly the results of
operations will be included in the results of the Company from the date
of acquisition.
In determining the value of the purchase of Dynamic, it is appropriate
to use the quoted market price of the shares of the Company at the time
of acquisition if the shares reflected the fair value of the Company.
As the Company was a "Shell Company" at the time of acquisition the
fair value of the Company at the time of acquisition was nominal and
thus the use of the market value of the shares of the Company in
determining the purchase price would not be appropriate.
As a result the purchase price was determined based upon the fair value
of the net assts of Dynamic which was determined to be book value. The
balances at November 15, 1999 are unaudited and are as follows:
<TABLE>
<S> <C>
Assets $ 153,279
Liabilities 226,092
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NET LIABILITIES $ (72,813)
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</TABLE>
The net liabilities acquired will be considered the goodwill acquired
by the Company. During the period $1,820 of goodwill was amortized.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On September 29, 1999 the Company acquired 100% of the outstanding common shares
of I-Transaction.net, Inc., a Bahamas Corporation by issuing 1,000,000 shares of
common stock and 1,000,000 common stock purchase warrants exercisable at $0.25
per warrant. I-Transaction.net (Bahamas) did not have any sales during the
quarter or the nine months since the beginning of the fiscal year.
On November 15, 1999 the Company acquired 100% of Dynamic Visions, Ltd., an
Ontario corporation for 700,000 shares of common stock. Dynamic produces virtual
reality game systems for the entertainment market as well as virtual reality
training software for the military.
Sales of game systems, revenue sharing on game systems and payments on military
development contracts totaled $29,934 for the nine months ended March 31, 2000.
Sales in the previous quarter were $1,707.
Costs and Expenses
Costs of sales were $4,649 or 15.5% of sales for the nine months and $3,813 or
13.5% of sales for the quarter.
Selling General and Administrative
Selling, General and Administrative expenses for the nine months were $152,710,
increasing $113,625 during the quarter. This increased expense was mainly due to
increased professional fees related to the Company's filing of its Form 10-SB on
February 10, 2000 and increased selling efforts.
Depreciation and Amortization
Depreciation for the nine months was 6,452 and $1,820 for the three months ended
March 31, 2000. Depreciation relates to the assets acquired in the purchase of
Dynamic Visions Ltd.
Other Income and Charges
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During the nine months and three months ended March 31, 2000 the company did not
have any other income. It did have interest expense in the amount of $1,817
during the entire period.
In March 2000 the company became aware of a judgment entered against a
Phoenix Summas Corp., which would appear to be a similar name to the former
name of the company,Phoenix Summus Corp. that was filed in California in
1999. The judgment in the amount of $1,938,002 was the result of a default
being entered against the Company in the case of Sue B. Jones v. Harold
Blethen, ET AL. Case No. 5634126, Fresno County Superior Court (California).
The Company was not aware that any lawsuit had been initiated against it and
disavows any claim made by the Plaintiff in that case. The Company is
vigorously defending against this claim.
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PART II - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
(b) The Company did not file any reports on form 8-K during the quarter ended
March 31, 2000.
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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.
VALUE HOLDINGS, INC.
DATE: May 18, 2000 By: /s/ David Bruce
David Bruce
Chairman, Director
DATE: May 18, 2000 By: /s/ Joanne Broeders
Joanne Broeders
Director
