UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-QSB
( X ) Quarterly report pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934.
For the quarterly period ended September 30, 2000
------------------
( ) Transition report pursuant to Section 13 or 15(d) of the
Exchange Act for the transition period from _______ to ______ .
Commission File Number: 333-72097
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Lifelong.com Inc.
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(Exact name of registrant as specified in charter)
Colorado 98-0223498
------------------------ -------------------------
(State of Incorporation) (I.R.S. Employer I.D. No)
329 East Main Street, North Adams, Mass
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(Address of Principal Executive Offices)
(888) 725-3433
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(Registrant's Telephone Number, Including Area Code)
Check whether the registrant: (1) has filed all reports required to be filed
by Section 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 ( )
Indicate the number of shares outstanding of each of the issuer's classes of
stock as of November 6, 2000.
20,743,000 Common Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (X)
<PAGE> 1
LIFELONG.COM, INC.
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INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheet as of September 30, 2000 3
Statements of Operations for the three months
ended and period February 16, 2000 through
September 30, 2000 4
Statement of Stockholders' Equity (Deficit) for
the period February 16, 2000 through
September 30, 2000 5
Statements of Cash Flows for the three months
ended and period February 16, 2000 through
September 30, 2000 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ..................................... 14
Item 2. Changes in Securities ................................. 14
Item 3. Defaults Upon Senior Securities ....................... 14
Item 4. Submission of Matters to a Vote of Securities Holders . 14
Item 5. Other Information ..................................... 14
Item 6. Exhibits and Reports on Form 8-K ...................... 14
Signatures
<PAGE> 2
Lifelong.com, Inc.
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(A Development Stage Enterprise)
--------------------------------
BALANCE SHEET AS OF SEPTEMBER 30, 2000
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ASSETS
------
CURRENT ASSETS:
Cash $ 2,855
Affiliate receivable 1,661
------------
Total current assets 4,516
COMPUTER EQUIPMENT (net of accumulated depreciation
of $2,781) 27,940
OTHER 6,376
------------
TOTAL $ 38,832
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 192,587
Accrued payroll and benefits 118,540
Stockholder advances 75,000
Accrued and other liabilities 8,190
------------
Total current liabilities 394,317
CONVERTIBLE DEBT 103,960
------------
Total liabilities 498,277
------------
STOCKHOLDERS' DEFICIT:
Preferred stock - $.001 par value: 50,000,000
shares authorized; zero shares issued and
outstanding 0
Common stock - $.001 par value; 50,000,000 shares
authorized; 20,743,000 shares issued and
outstanding 20,743
Additional paid-in capital 14,291,927
Deficit accumulated during the development stage (14,772,115)
------------
Total stockholders' deficit (459,445)
------------
TOTAL $ 38,832
============
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See notes to financial statements
<PAGE> 3
Lifelong.com, Inc.
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(A Development Stage Enterprise)
--------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
For the period
February 16, For the three
2000 (date of months ended
incorporation) September 30,
to September 2000
30, 2000 (Unaudited)
-------------- --------------
<S> <C> <C>
OPERATING EXPENSES:
Stock-based expenses:
Employee compensation and benefits $ 7,105,585 $ 0
Professional and consulting fees 4,839,315 2,551,034
Product development 37,950 0
Selling and marketing 13,800 0
Loss from impairment of goodwill 1,912,670 534,670
Other employee compensation and benefits 465,349 241,132
Other product development 222,052 112,119
Other professional and consulting fees 34,534 12,000
Other selling and marketing 47,433 5,433
Travel and entertainment 22,579 6,173
Other 70,848 50,963
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NET LOSS $ 14,772,115 $ 3,513,524
============= ==============
NET LOSS PER SHARE:
Basic and diluted $ 0.75 $ 0.18
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Weighted average number of common shares
outstanding 19,675,000 19,692,600
============= ==============
------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE> 4
Lifelong.com, Inc.
------------------
(A Development Stage Enterprise)
--------------------------------
STATEMENT OF STOCKHOLDERS' DEFICIT
for the period February 16, 2000 (date of incorporation)
to September 30, 2000
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Deficit
Accumulated
Additional During the
Common Stock Paid-In Development
Shares Par Value Capital Stage Total
---------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balances, February 16, 2000
(date of incorporation) 0 $ 0 $ 0 $ 0 $ 0
Sales of common stock 613,551 614 422,736 423,350
Other issuance's of common stock:
To founding stockholders 9,777,949 9,778 6,737,007 6,746,785
To other employees for services 520,000 520 358,280 358,800
To consultants for services 7,088,500 7,088 4,883,977 4,891,065
In connection with merger 743,000 743 511,927 512,670
In connection with acquisition 2,000,000 2,000 1,378,000 1,380,000
Net loss for the period
February 16, 2000 (date of
incorporation) to September
30, 2000 (14,772,115) (14,772,115)
---------- --------- ----------- ------------ ------------
Balances, September 30, 2000 20,743,000 $ 20,743 $14,291,927 $(14,772,115) $ (459,445)
========== ========= =========== ============ ============
------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE> 5
Lifelong.com, Inc.
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(A Development Stage Enterprise)
--------------------------------
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
February 16, For the three
2000 (date of months ended
incorporation) September 30,
to September 2000
30, 2000 (Unaudited)
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES:
Net loss $ (14,772,115) $ (3,513,524)
Adjustment to reconcile net loss to net
cash used by operating activities:
Depreciation 2,781 2,781
Loss from impairment of goodwill
(net of liabilities assumed) 1,890,670 512,670
Stock based compensation 11,996,650 2,551,034
(Increase)/decrease in accounts
receivable (1,661) 4,888
Increase in accounts payable and
other liabilities 319,317 239,863
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NET CASH USED BY OPERATING ACTIVITIES (564,358) (202,288)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of computer equipment (28,721) (2,325)
Other (6,376) (50)
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CASH USED BY INVESTING ACTIVITIES (35,097) (2,375)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of
convertible debentures 103,960 (292,833)
Proceeds from issuance of common stock 423,350 423,350
Advances from stockholders 75,000 75,000
-------------- --------------
CASH PROVIDED BY FINANCING ACTIVITIES 602,310 205,517
-------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,855 854
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 0 0
-------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,855 $ 854
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Taxes Paid $ 0 $ 0
============== ==============
Interest Paid $ 0 $ 0
============== ==============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES -
During the period February 16, 2000 (date of incorporation) to
September 30, 2000, the Company issued 2,743,000 shares of its common
stock in connection with two business combinations (see Notes A and C).
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</TABLE>
<PAGE> 6
Lifelong.com, Inc.
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(A Development Stage Enterprise)
--------------------------------
NOTES TO FINANCIAL STATEMENTS
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NOTE A - FORMATION AND OPERATIONS OF THE COMPANY
Lifelong.com, Inc. (the "Company") was incorporated under the laws of
the state of Delaware on February 16, 2000. The Company, which is
considered to be in the development stage as defined in Financial
Accounting Standards Board Statement No. 7, intends to deliver highly
interactive, computer-based learning programs for corporate training
and educational purposes over the Internet. The planned principal
operations of the Company have not commenced, therefore most of the
accounting policies and procedures have not yet been established.
On September 7, 2000, the Company merged with Providence Capital II,
Inc. ("Providence"), which was formed in 1999 for the purpose of
acquiring a private company desiring to become public. For financial
statement purposes, the merger has been treated as a reverse
acquisition with the Company being treated as the acquiree; as such
Providence was considered to be the surviving legal entity and
succeeded to the name of Lifelong.com, Inc.
The transaction was accounted for as a purchase. Accordingly, and
because Providence had no operations and/or assets as of the merger
date, the entire purchase price of approximately $535,000 (consisting
of 743,000 shares of the Company's common stock and liabilities
assumed of approximately $22,000) was reflected as goodwill as of the
merger date. Subsequently, the goodwill was determined to be impaired
and as such the entire amount has been included in the loss from
impairment of goodwill in the accompanying statement of operations.
Use of Estimates
----------------
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at
the date of the financial statements. The reported amounts of
revenues and expenses during the reporting period may be affected by
the estimates and assumptions management is required to make. Actual
results could differ from those estimates.
Year End
--------
The Company's year-end is December 31.
NOTE B - GOING CONCERN
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As of
September 30, 2000, the Company had a stockholders' deficit of
approximately $459,000 and a net working capital deficiency of
approximately $390,000. In addition, the
<PAGE> 7
Company anticipates that it will incur net operating losses for the
foreseeable future, and require a significant amount of capital to
commence its planned principal operations and proceed with its
business plan. Accordingly, the Company's ability to continue as a
going concern is dependent upon its ability to secure an adequate
amount of capital to finance its planned principal operations and
implement its business plan. The Company's plans include continued
sales of their common stock and the issuance of debt, however there is
no assurance that they will be successful in their efforts to raise
the amount of capital necessary to proceed with their business plans.
These factors, among others, may indicate that the Company will be
unable to continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the
amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
NOTE C - COMMON STOCK
In addition to the issuance of common stock discussed at Note A,
common stock was issued as follows:
During the period February 16, 2000 (date of incorporation) to
September 30, 2000, the Company sold 613,551 shares of its common
stock to approximately sixty investors at a price of $0.69 per share.
During the period February 16, 2000 (date of incorporation) to
September 30, 2000, the Company issued 9,777,949 shares of its common
stock to its founding stockholders as consideration for services
rendered. The value of these services, which was based on the number,
and fair value, of shares issued ($0.69 per share based on the price
at which other shares were sold) has been included in employee
compensation and benefits in the accompanying statement of operations.
In March 2000, the Company purchased substantially all of the assets
of Lifelong Software, Inc. (an affiliated entity by virtue of common
ownership with one individual who beneficially owns approximately 15%
of the Company) for total consideration of approximately $1,380,000
(consisting of 2,000,000 shares of the Company's common stock). The
transaction was accounted for as a purchase. Accordingly, and because
the purchase price was $1,378,000 greater than the fair value of the
net assets acquired, goodwill was created. Subsequently, the goodwill
was determined to be impaired and as such $1,378,000 has been included
in the loss from impairment of goodwill in the accompanying statement
of operations.
During the period February 16, 2000 (date of incorporation) to
September 30, 2000, the Company issued 7,608,500 shares of its common
stock to various employees and consultants as consideration for the
following services:
<PAGE> 8
<TABLE>
<CAPTION>
Shares Share Value of
Description of Service Issued Price Services
---------------------- --------- ----- -----------
<S> <C> <C> <C>
Product development - consultant 55,000 $0.69 $ 37,950
Marketing - consultant 20,000 $0.69 13,800
Marketing - employee 500,000 $0.69 345,000
Business planning /general - employees 20,000 $0.69 13,800
Business planning /general - consultants 7,013,500 $0.69 4,839,315
--------- -----------
Totals 7,608,500 $ 5,249,865
========= ===========
</TABLE>
The value of these services, which was based on the number, and fair
value, of shares issued (share prices represent the price at which
other shares were being sold during the period February 16, 2000 (date
of incorporation) to September 30, 2000, has been included in various
stock-based expenses in the accompanying statement of operations.
The Company intends to develop a stock option plan whereby options to
purchase up to five million shares of the Company's common stock may
be granted over the next twelve months.
NOTE D - CONVERTIBLE DEBENTURES
Convertible debentures bear interest at a fixed rate of 10% per annum
and entitle their holders to convert such debentures to the Company's
common stock at a conversion price of $1.00 per share at any time
between January 1, 2001 and their maturity date of October 31, 2001.
NOTE E - OTHER RELATED PARTY TRANSACTIONS
The Company periodically borrows funds from various stockholders. At
September 30, 2000, advances from stockholders were $75,000. The
advances are unsecured, non-interest bearing and due on demand.
The Company utilizes a Canadian bank account owned by Lifelong
Software Canada, Inc. (an entity owned by two of the Company's
founding stockholders) for the collection and disbursement of Canadian
funds. As of September 30, 2000, the balance due from this account
was $1,661, which amount has been recorded as an affiliate receivable.
NOTE F - INCOME TAXES
During the period February 16, 2000 (date of incorporation) to
September 30, 2000, the Company recognized losses for both financial
and tax reporting purposes. Accordingly, no deferred taxes have been
provided for in the accompanying statement of operations.
At September 30, 2000, the Company had a net operating loss
carryforward of approximately $885,000 for income tax purposes. This
carryforward is available to offset future taxable income
<PAGE> 9
through the period ended September 30, 2020. The deferred income tax
asset arising from this net operating loss carryforward is not
recorded in the accompanying balance sheet because the Company
established a valuation allowance to fully reserve such asset as its
realization did not meet the required asset recognition standard
established by SFAS 109.
NOTE G - NET LOSS PER SHARE
The Company computes net loss per share in accordance with SFAS No.
128 "Earnings per Share" ("SFAS No. 128") and SEC Staff Accounting
Bulletin No. 98 ("SAB 98"). Under the provisions of SFAS No. 128 and
SAB 98, basic net loss per share is computed by dividing the net loss
available to common stockholders for the period by the weighted
average number of common shares outstanding during the period.
Diluted net loss per share is computed by dividing the net loss for
the period by the number of common and common equivalent shares
outstanding during the period. Convertible debentures have not been
included in the loss per share calculations because they are anti-
dilutive. As such and because there are no other common share
equivalents outstanding, basic and diluted net loss per share are the
same.
NOTE H - COMMITMENTS
On April 7, 2000, the Company entered into an agreement with Astronaut
Rick Searfoss whereby Mr. Searfoss will perform content consulting for
the "Team Building and Motivation" and "Mission2Read" programs, act as
a Company spokesperson and participate in or coordinate certain other
projects. As of September 30, 2000, Mr. Searfoss has received $15,000
and 20,000 shares of the Company's common stock as consideration for
services rendered. In addition, Mr. Searfoss is entitled to
indefinitely receive a monthly retainer of $2,500, and will receive
options to purchase at least 30,000 shares of the Company's common
stock.
On September 26, 2000, the Company entered into a letter of intent to
establish a license agreement with AskBeverely.com, Inc., for the
purpose of hosting, distributing, marketing, and developing certain
Internet based articles for newspaper and/or magazine syndication.
Pursuant to terms of the letter of intent, the Company has agreed to
be responsible for marketing and sales, billing and collections,
accounting, planning and advice, web-hosting and technical support and
legal costs. In addition to revenue sharing, the Company is obligated
to grant options for the purchase of up to 500,000 common shares if
certain distribution contracts are secured.
NOTE I - SUBSEQUENT EVENT
On October 6, 2000, the Company entered into a letter of intent to
acquire IC Education, Inc. ("ICED"), an unrelated technology-based
provider of educational products. Pursuant to terms of the letter of
intent, the Company has agreed to issue up to a maximum of three
million shares of its common stock and pay approximately $150,000 of
ICED's debts in exchange for all the outstanding shares of ICED. The
Company anticipates that it will also enter into various employment
and bonus agreements with employees of ICED.
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<PAGE> 10
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
The following discussion and analysis should be read in
conjunction with the balance sheet as of September 30, 2000 and the
financial statements as of and for the three and nine months ended
September 30, 2000 included with this Form 10-QSB.
Information related to our predecessor entity, Providence Capital
II, Inc. ("Providence"), has been omitted as it was formed in 1999 for
the purpose of acquiring a private company desiring to become public.
For financial statement purposes, the merger has been treated as a
reverse acquisition with LifeLong.Com ("Lifelong") being treated as
the acquiree.
Readers are referred to the cautionary statement, which addresses
forward-looking statements made by the Company.
Lifelong is considered to be in the development stage as defined
in Financial Accounting Standards Board Statement No. 7, and we are
currently in the process of creating strategic relationships and
acquiring complementary operating companies within the e-learning
industry that have proven management and state-of-the-art
technologies.
RESULTS OF OPERATIONS
For the period from inception in February 2000 to date, we have
not generated any revenues and incurred a cumulative net loss of
$14,772,115 of which $13,909,320 were non-cash charges. These
expenses are primarily related to our initial development and
implementation of our business plan.
Liquidity and Capital Resources
-------------------------------
Since we have not begun operations, we have depended upon sales
of our common stock, issuance of convertible debentures and borrowings
from certain stockholders to finance our working capital requirements.
During the period from inception to September 30, 2000, we raised
gross proceeds of $423,350 from the sale of equity securities and
$103,960 from the issuance of convertible debentures to investors and
friends and family of our management. We used all of those proceeds to
finance the cost of our operations to date as well as the development
of certain technologies. In addition, we have borrowed $75,000 from
shareholders that are non-interest bearing and payable on demand.
Operating activities from inception to September 30, 2000
created a net use of cash of $564,358.
<PAGE> 11
We intend to raise an additional three million dollars over the
next sixty to ninety days to continue software development, expand our
web site, hire additional personnel, sales and marketing, licensing
content, purchase equipment and general working capital.
We need the proceeds of this offering to expand our operations
and finance our future working capital requirements. Based upon our
current plans and assumptions relating to our business plan, we
anticipate that the net proceeds from this offering will satisfy our
capital requirements for at least twelve months following the closing
of this offering. If our plans change or our assumptions prove to be
inaccurate, we may need to seek additional financing sooner than
currently anticipated or curtail our operations.
Material Agreements
-------------------
On October 6, 2000, the Company entered into a letter of intent
to acquire IC Education, Inc. ("ICED"), an unrelated technology-based
provider of educational products. Pursuant to terms of the letter of
intent, the Company has agreed to issue up to a maximum of three
million shares of its common stock and pay approximately $150,000 of
ICED's debts in exchange for all the outstanding shares of ICED. The
Company anticipates that it will also enter into various employment
and bonus agreements with employees of ICED.
CAUTIONARY STATEMENT
This Form 10-QSB, press releases and certain information provided
periodically in writing or orally by the Company's officers or its
agents contain statements which constitute forward-looking statements
within the meaning of Section 27A of the Securities Act, as amended
and Section 21E of the Securities Exchange Act of 1934. The words
expect, anticipate, believe, goal, plan, intend, estimate and similar
expressions and variations thereof if used are intended to
specifically identify forward-looking statements. Those statements
appear in a number of places in this Form 10-QSB and in other places,
particularly, Management's Discussion and Analysis of Financial
Condition and Results of Operations, and include statements regarding
the intent, belief or current expectations of the Company, its
directors or its officers with respect to, among other things: (i) the
Company's liquidity and capital resources; (ii) the Company's
financing opportunities and plans and (iii) the Company's future
performance and operating results. Investors and prospective investors
are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties,
and that actual results may differ materially from those projected in
the forward-looking statements as a result of various factors. The
factors that might cause such differences include, among others, the
following: (i) any material inability of the Company to successfully
identify, consummate and integrate the acquisition of radio stations
at reasonable and anticipated costs to the Company; (ii) any material
inability of the Company to successfully internally develop its
products; (iii) any adverse effect or limitations caused by
Governmental regulations; (iv) any adverse effect on the Company's
continued positive cash flow and abilities to obtain acceptable
financing in connection with its growth plans; (v) any increased
<PAGE> 12
competition in business; (vi) any inability of the Company to
successfully conduct its business in new markets; and (vii) other
risks including those identified in the Company's filings with the
Securities and Exchange Commission. The Company undertakes no
obligation to publicly update or revise the forward looking statements
made in this Form 10-QSB to reflect events or circumstances after the
date of this Form 10-QSB or to reflect the occurrence of unanticipated
events.
<PAGE> 13
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Securities Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
Form 8-K, Item 1, filed September 7, 2000 amended November 8,
2000.
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.
11/20/2000 /s/ Francis Gariepy
---------------- --------------------
Date Francis Gariepy, CFO
<PAGE> 14
