UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934.
For the quarter ended September 30, 2000 Commission file number 000-30519
MEGA MICRO TECHNOLOGIES GROUP
-----------------------------
(Exact name of registrant as specified in its charter)
Nevada 88-0287451
------- -----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2887 North Green Valley Pkwy, Suite 380
Henderson, Nevada 89014
-------------------- -------
(Address of principal executive offices) (Zip Code)
(702) 260-0900
---------------
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 such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
As of November 9, 2000, there were 16,918,193 shares of common stock
outstanding.
<PAGE>
MEGA MICRO TECHNOLOGIES GROUP
FOR THE QUARTER ENDED
SEPTEMBER 30, 2000
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheet as of September 30, 2000
and December 31, 1999 3
Income Statement for the nine months
ending September 30, 2000 and September 30, 1999 4
Statement of Cash Flow for the nine months 5
ending September 30, 2000 and September 30, 1999
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 8-10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults by the Company upon its
Senior Securities 10
Item 4. Submission of Matter to a Vote of
Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports of Form 8-K 10
SIGNATURES 11
<PAGE>
<TABLE>
MEGA MICRO TECHNOLOGIES GROUP
BALANCE SHEETS
SEPTEMBER 30, 2000
PART I - FINANCIAL INFORMATION
ASSETS
September December 31,
30
2000 1999
(UNAUDITED)
-------------------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ - $
83,888
Accounts receivable, net of allowance
for doubtful accounts
of $46,000 and $47,000, respectively 442,449 479,010
Inventories, net of valuation
allowance of $26,000
and $31,000, respectfully 223,345 434,288
Prepaid expenses and other current 30,723 54,934
assets -----------------------
Total current assets 696,517 1,052,120
-----------------------
Property and equipment, net (Note 2) 1,374,137 1,232,691
Deposits 21,185 16,685
Goodwill, net of accumulated 204,425 -
amortization of $16,575 ----------------------
Total non-current assets 1,599,747 1,249,376
-----------------------
Total assets $2,296,264 $2,301,496
=======================
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Current liabilities
Excess of outstanding checks over
bank balance $ 88,914 $ -
Accounts payable and accrued expenses 1,334,825 1,099,530
Related party notes payable 79,431 64,431
Notes payable 306,170 355,760
Capital lease obligations 18,290 16,875
Deferred revenue 38,682 69,883
------------------------
Total current liabilities $ 1,866,312 $ 1,606,479
------------------------
Non-current liabilities
Related notes payable, less current 56,487 126,487
portion
Notes payable, less current portion 824,887 743,434
Capital lease obligation, less 44,922 59,004
current portion
Deferred rent 13,461 28,636
------------------------
Total non-current liabilities 939,757 957,561
------------------------
Commitments and contingencies (Note 3)
Shareholders' equity
Common stock, $.001 par value
Authorized 50,000,000;
issued and outstanding 17,043,909
-9/30/00 (see Note (e) forward split) 17,044
issued and outstanding 9,030,267-12/31/99 9,031
Additional paid in capital 2,412,037 1,568,745
Accumulated (deficit) (2,938,885) (1,840,320)
------------------------
Total shareholders' equity (deficit) (509,804) (262,544)
Total liabilities and -----------------------
shareholders' equity $ 2,296,265 $ 2,301,496
==========================
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
MEGA MICRO TECHNOLOGIES GROUP
INCOME STATEMENT
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
Nine Months Ended
September 30,
---------------------
2000 1999
---------------------
<S> <C> <C>
Sales $ 11,451,666 $ 15,517,832
Cost of sales 10,288,445 13,940,123
--------------------------
Gross Profit 1,163,221 1,577,709
Selling, general and administrative
expenses 2,209,418 2,538,433
--------------------------
Operating loss (1,046,197) (960,724)
--------------------------
Other income (expense)
Interest income (expense), net (39,230) (53,722)
(Loss) on disposal of assets, net (13,138) (8,760)
(Expenses) in connection with private - (114,599)
placement ------------------------
(52,368) (177,081)
------------------------
Net loss $ (1,098,565) $ (1,137,805)
===========================
Basic and diluted (loss) per common share $ (0.06) $ (0.13)
===========================
Weighted average number of common shares 17,043,909 8,651,492
outstanding ===========================
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
MEGA MICRO TECHNOLOGIES GROUP
STATEMENT OF CASH FLOW
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
For the Nine Months Ended
September 30,
-----------------------
2000 1999
-----------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(1,098,565) $(1,137,805)
Adjustments to reconcile net income to
net cash provided
by operating activities
Depreciation and amortization 153,415 97,911
Increase (decrease) in provision for (1,000) (32,000)
accounts receivable
Increase (decrease) in provision for (5,000) (3,000)
inventory obsolescence
Changes in assets and liabilities:
Decrease in accounts receivable 37,561 57,976
Decrease in inventories 215,943 44,968
Increase (decrease) in prepaid assets 24,211 (1,734)
Increase in accounts payable and 235,295 398,390
accrued expenses
Increase (decrease) in deferred (31,201) 29,936
revenue
Increase (decrease) in deferred rent (15,175) 10,391
---------------------
Net cash (used) by (484,516) (534,967)
operating activities ---------------------
Cash flows from investing activities:
Expenditures for property and (309,842) (33,280)
equipment
Proceeds form the sale of property 31,556 3,449
and equipment
Issuance of common stock for purchase
of assets
in excess of market value (221,000)
---------------------
Net cash (used in) investing (499,286) (29,831)
activities ---------------------
Cash flows from financing activities:
Decrease in deposits (4,500) 5,179
Repayment of related party notes (115,000) 130,000
payable
Borrowings from related notes payable 60,000 -
Repayment of notes and mortgages (447,637) (11,681)
payable
Borrowings from notes payable and 479,500 350,000
mortgage payable
Repayment of capital leases (12,667) (2,177)
obligations
Proceeds from issuance of common 851,304 -
stock
Expenditures for the retirement of - (31,633)
common stock --------------------
Net cash provided by financing 811,000 439,688
activities --------------------
Net decrease in cash and cash equivalents (172,802) (125,110)
Cash and cash equivalents at beginning of 83,888 (16,841)
period ---------------------
Cash and cash equivalents at end of period $ (88,914) $(141,951)
=======================
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE>
Note 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) Description of Business
Mega Micro Technologies Group (formerly Mirage Computers) and its wholly
owned subsidiary Mega Micro, Inc., a California Corporation markets
computers, computer components, software, and custom built systems to
corporate customers and to businesses serving business. Mega Micro
Technologies Group also owns 80 percent of Type2 Communications, Inc., a
Nevada Corporation. ("Type2") (formally Mirage Internet Communications,
Inc.), an Internet Service provider. Type2 provides a turnkey network
solution, including mail, radius servers, web housing, ISDN access and T1
access.
Mega Micro Technologies Group and its subsidiaries (collectively the
"Company") provide a suite of products and related services to assist small
and medium sized companies in their document management needs.
(b) Cancellation of Shares
On February 2, 2000 the Company reduced its outstanding common stock by
3,000,000 shares. The share reduction was accomplished through a tri-party
agreement between the Company, Capital Growth LLC. and two of the Company's
former officers. In a private transaction, Capital Growth LLC. Purchased
from the former officers 3,500,000 shares of restricted common stock bound by
an 18-month lock up agreement. The Company negotiated and authorized the
cancellation of the 3,500,000 shares of common stock in the lock up
agreement, in consideration for 500,000 shares of restricted common stock.
As a result of the transaction, the number of the Company's outstanding
shares was reduced from 9,236,288 shares to 6,236,288, of which 3,234,796 are
restricted.
(c) Name Change
On April 10, 2000 the Company changed its name to Mega Micro
Technologies Group. On April 27, 2000 Mirage Internet Communications, Inc.
changed its name to Type2 Communications, Inc.
(d) Merger - TourPro Golf
On April 28, 2000 the Company merged with TourPro Golf, Inc. ("TourPro")
a 12(g) reporting company under the Securities Exchange Act of 1934. The
company issued 150,000 shares to the TourPro stockholder in exchange for all
of 9,800,000 outstanding shares of TourPro's common stock. The Company then
cancelled all Tourpro shares. TourPro has never commenced any significant
operations and was considered a public "shell". Upon completion of the
merger, TourPro was dissolved, with the Company being the successor company.
For accounting and reporting purposes, the acquisition was treated as a
reverse merger with the Company as the acquirer and surviving entity.
<PAGE>
(e) Stock Dividend
On April 28, 2000 the Company issued 8,064,651 shares of restricted
common stock under rule 144 as part of a 100% stock dividend. The dividend
increased the number of outstanding shares to 16,129,302
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is recognized on
the straight-line method over the following estimated useful lives of the
assets. Depreciable lives of property and equipment are as follows:
Machinery and Equipment 3 to 5 years
Furniture and fixtures 7 years
Vehicles 5 years
Leasehold improvements 5 years
Building 40 years
Leasehold improvements are amortized over the lesser of the lease term
or the useful life of the assets.
Normal repairs and maintenance are charged to expense when incurred.
Betterments and expenditures, which materially extend the useful life of the
asset are capitalized.
Depreciation expense was $61,686 for the period ended September 30,
2000.
NOTE 3 - LIQUIDITY AND CAPITAL RESOURCES
The Company's success is substantially dependent upon raising additional
capital through private placements and/or obtaining additional financing and
generating positive operating earnings and cash flows. While there can be no
assurances, management anticipates that the funds raised through private
placements as well as funds generated from operations will be sufficient to
allow it to continue operations. However, if the Company is not able to
raise a sufficient amount of financing through private placements or from
other sources and it is unable to improve its profitability and cash flows,
it may be unable to continue operations. If it ceased operations, assets
would likely be liquidated at amounts less than their carrying value.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis should be read in conjunction with
the Company's unaudited financial statements and the notes thereto contained
elsewhere in this filing.
Overview
Mega Micro Technologies Group ("MMTG"), formerly Mirage Computers, Inc.,
is a holding company with two operating subsidiaries: wholly owned Mega
Micro, Inc. a California Corporation, and 80% owned Type2 Communications,
Inc. a Nevada Corporation. MMTG is in the business of acquiring and
developing a group of synergistic technology related companies, which will
share customer databases, administration and marketing costs. This is
projected to yield lower overhead per company and higher overall earnings.
Type2 Communications, Inc.,("Type2") is an Internet Service Provider
primarily directing its efforts toward corporate business services. Type2 can
provide an Internet Service solution for startup Internet Service Providers
(ISP's), companies who want to provide Internet Access for their own
customers, and corporations that need Virtual Private Networks (VPN) for
Interoffice capabilities, and for the corporations mobile executives and
sales agents.
Type2 can provide a full turnkey network solution including: mail &
radius servers, DNS & web hosting servers, port assignment for modem and ISDN
access, management & transport for T1 services, and collocation for servers,
routers, and other equipment. Type2 provides its members with a core set of
features through its standard Internet service, which provides unlimited
Internet access and several related services for a $19.95 monthly fee. Type2
also offers a variety of broadband and premium services to its individual and
business members. Recurring revenues, which are generally paid for in advance
with credit cards, consist of monthly fees charged to members for Internet
access and other ongoing services including business Web site hosting,
dedicated ISDN, dial-up accounts, and T-1 and T-3 services.
Mega Micro, Inc. ("Mega") has provided computer components, software,
and custom-built systems to corporate customers and to businesses serving
business since 1991. Moreover, Mega designs, installs, and services Local
Area Networks (LAN), Wide Area Networks (WAN), and intranets and extranets.
Mega is striving to become a provider of business-to-business (B2B)
electronic commerce ("e-commerce") solutions. By leveraging its experience in
hardware sales and networking services along with resources provided to it
via relationships with companies such as EDS, Datamax, and Cisco, Mega can
provide an advanced and tightly integrated business process automation
solution. Mega has entered into a VAR agreement with Datamax Technologies, a
developer of the VisiFLOW Enterprise Business Automation Suite. The inclusion
of the VisiFLOW suite in Mega's product line has accelerated the transition
from retail computer sales to B2B and serving corporate customers directly.
Mega can offer clients the ability to collect data from multiple sources,
distribute this data through out the client's workflow and present the data
as web content. The natural progression would be to then utilize the power of
<PAGE>
the Internet to deliver this data both internally and externally through
intranets, networks, self service web sites, and media enhanced browsers. The
VisiFlow software bridges the gap between paper and electronic commerce
across the enterprise and throughout supply chains.
Other products include an information distribution system developed by
EDS. Mega currently has 841 computer systems running EDS's flight information
display system at McCarran International Airport, in Las Vegas, Nevada. Mega
also has approximately 100 computer systems running another EDS custom
application at the Venetian Hotel in Las Vegas, Nevada. EDS is currently
bidding to install their information distribution systems in airports, hotels
and convention facilities across the United States. Mega's systems are being
included in these bids bundled with EDS' software solution.
The sales process by which Mega's integrated solutions are marketed are
typically directed to an executive-level decision maker by prospective end-
users and generally requires Mega and its Partners to engage in a lengthy
and complex sales cycle (typically between six and twelve months from the
initial contact date). Mega distributes its solutions through an on-site
support team. Systems support engineers are trained in both networking and
the application specific for the entire solution provided to the client. The
systems support engineer will many times personally install the system,
provide the initial on-site training, and also provide any post sale support
required for both the hardware and software components of the solution. This
approach gives the customer one point of contact for technical support
Results of Operations for the nine months ended September 30, 2000 and the
period ending September 30, 1999
Revenues
Sales were $11,451,666 for the nine months ended September 30, 2000
compared to $15,517,832 for the nine months ended September 30, 1999,
representing a $4,066,166 or a 26% reduction in Sales. During this same
period Gross Profit was $1,163,221 for the period ending September 30, 2000
compared to $1,577,709 for the period ending September 30, 1999, representing
a $414,488 or 26% reduction in Gross Profits.
This reduction in Sales which resulted in a reduction in Gross Profits
was primarily the result of Mega discontinuing its hardware retail sales in
four store locations and shifting energies to its integrated business process
automation solutions business via relations with companies such as EDS,
Datamax and Cisco.
Expenses
Operating expenses were $2,209,418 for the nine months ended September
30, 2000 compared to $2,538,433 for the none months ended September 30, 1999,
representing a $329,015 or a 13% reduction in Expenses.
<PAGE>
This reduction in Expenses was primarily a result of the discontinued
store operations which concurrently reduced Sales.
Net Loses
Net loses were $1,098,565 for the period ending September 30, 2000 as
compared to $1,137,805 for the period ending September 30, 1999, representing
a $39,240 or a 3.4% reduction in Net Losses. Mega, by discontinuing the
retail stores is shifting its business to what Mega deems as a more
profitable operation, i.e. the integrated business process automation
solution business. This shift has occurred as a result of Mega's experience
in hardware sales and networking services along with resources provided via
relationships with companies such as EDS, Datamax and Cisco.
By striving to become a provider of business-to-business (B2B)
electronic commerce ("e-commerce") solutions, Mega believes it will increase
revenues while reducing prior expenses related to its hardware retail sales,
thus increasing its gross profit margins. While it is unknown whether or not
Mega will reach these goals, Mega is postured for the B2B business solutions
as a result of its relationships with EDS, Datamax and Cisco,
Forward-Looking Statements and Associated Risks
This Quarterly Report on Form 10-QSB contains forward-looking statements
made pursuant to the safe harbor provisions of the Securities Litigation
Reform Act of 1995. These forward looking statements are based largely on
the Company's expectations and are subject to a number of risks and
uncertainties, many of which are beyond the Company's control, including, but
not limited to, economic, competitive and other factors affecting the
Company's operations, markets, products and services, expansion strategies
and other factors discussed elsewhere in this report and the documents filed
by the Company with the Securities and Exchange Commission. Actual results
could differ materially from these forward-looking statements. In light of
these risks and uncertainties, there can be no assurance that the forward-
looking information contained in this report will in fact prove accurate.
The Company does not undertake any obligation to revise these forward-looking
statements to reflect future events or circumstances.
Liquidity and Capital Reserves
As of September 30, 2000 and December 31, 1999.
As of September 30, 2000, the Company's assets were $2,296,264 and its
liabilities were $2,806,069 resulting in a deficit of $(509,804). Cash was $0
at September 30, 2000 as compared to cash of $83,888 on December 31, 1999, a
decrease of $83,888. This represented a 100% decrease in available cash. This
decrease in cash was primarily the result of an additional cash requirement
for Mega's shift to a B2B solutions provider. There was an overall
insignificant change in Assets and Liabilities for the periods September 30,
1999 and 2000.
<PAGE>
Subsequent Events
On October 6, 2000, as a result of the rescission of the March 15, 2000
Agreement between Prince Resource Corporation and the Company, the Company
cancelled 125,000 shares of common stock that was issued to Prince Resource
Corporation
On October 18, 2000, as a result of the cancellation of an employee
stock purchase plan, the Company cancelled 716 shares of common stock that
was issued to employees.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None.
Item 3. Defaults by the Company upon its Senior Securities.
None.
Item 4. Submission of Matter to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports of Form 8-K.
None
<PAGE>
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.
MEGA MICRO TECHNOLOGIES GROUP
(Registrant)
By: /s/ David S. Steffey
----------------------
David S. Steffey
Secretary
Date: November 14, 2000
