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 March 31, 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.)
6280 South Pecos, Suite 600
Las Vegas, Nevada 89120
(Address of principal executive offices) (Zip Code)
(702) 792-2500
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 No X
As of May 15, 2000, there were 16,129,302 shares of common stock outstanding.
<PAGE>
MEGA MICRO TECHNOLOGIES GROUP
FOR THE QUARTER ENDED
MARCH 31, 2000
INDEX
PART I - FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Balance Sheet as of March 31, 2000
and December 31, 1999 3
Income Statement for the three months
ending March 31, 2000 and March 31, 1999 4
Statement of Cash Flow for the three months 5
ending March 31, 2000 and March 31, 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
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<TABLE>
MEGA MICRO TECHNOLOGIES GROUP
BALANCE SHEETS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ASSETS
March 31, December 31,
2000 1999
(UNAUDITED)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 2,925 $ 83,888
Accounts receivable, net of allowance
for doubtful accounts
of $46,000 and $47,000, respectively 453,666 479,010
Inventories, net of valuation
allowance of $31,000
and $27,000, respectfully 406,143 434,288
Prepaid expenses and other current assets 54,934 54,934
------------ -----------
Total current assets 917,668 1,052,120
------------ -----------
Property and equipment, net (Note 2) 1,503,447 1,232,691
Deposits 4,925 16,685
Goodwill, net of accumulated 215,475 -
amortization of $ 5,525
----------- -----------
Total non-current assets 1,723,847 1,249,376
----------- ----------
Total assets $2,641,515 $2,301,496
=========== ===========
</TABLE>
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities
Accounts payable and accrued expenses $ 1,267,079 $ 1,099,530
Related party notes payable 64,431 64,431
Notes payable 336,287 355,760
Capital lease obligations 17,228 16,875
Deferred revenue 49,369 69,883
----------- -----------
Total current liabilities 1,734,394 1,606,479
----------- -----------
Non-current liabilities
Related notes payable, less current 26,487 126,487
portion
Notes payable, less current portion 665,084 743,434
Capital lease obligation, less current 54,432 59,004
portion
Deferred rent 11,146 28,636
------------ -----------
Total non-current liabilities 757,149 957,561
Commitments and contingencies (Note 3) ------------ -----------
Shareholders' equity
Common stock, $.001 par value. Authorized
50,000,000;
issued and outstanding 6,406,288 and 6,406 9,031
9,030,267,
Respectively
Additional paid in capital 2,327,879 1,568,745
Accumulated (deficit) (2,184,313) (1,840,320)
------------ ------------
Total shareholders' equity (deficit) 149,972 (262,544)
----------- ------------
Total liabilities and shareholders' equity $ 2,641,515 $ 2,301,496
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
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<TABLE>
MEGA MICRO TECHNOLOGIES GROUP
INCOME STATEMENT
FOR THE THREE MONTHS ENDING MARCH 31, 2000 AND MARCH 31, 1999
Three Months Ended March 31,
2000 1999
<S> <C> <C>
Sales $ 4,988,992 $ 5,385,970
Cost of sales 4,519,166 4,797,255
------------ ------------
Gross Profit 469,825 588,715
Selling general and administrative
Expenses 791,390 984,444
----------- -----------
Operating loss (321,565) (395,729)
Other income (expense)
Interest income (expense), net (12,145) (7,214)
(Loss) on disposal of assets, net (10,284) -
----------- -----------
(22,428) (7,214)
----------- ------------
Net loss $ (343,993) $ (402,943)
=========== ===========
Basic and diluted (loss) per common share $ (0.05) $ (0.10)
============ ============
Weighted average number of common shares 6,406,288 3,875,000
outstanding
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE>
<TABLE>
MEGA MICRO TECHNOLOGIES GROUP
STATEMENT OF CASH FLOW
FOR THE THREE MONTHS ENDING MARCH 31, 2000 AND MARCH 31, 1999
For the Three Months Ended
March 31,
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (343,993) $ (402,943)
Adjustments to reconcile net income to
net cash provided
by operating activities
Depreciation and amortization 47,458 32,637
Increase (decrease) in provision for (1,000) 22,250
accounts receivable
Increase (decrease) in provision for (4,000) 7,000
inventory obsolescence
Changes in assets and liabilities:
Decrease in accounts receivable 26,344 58,046
Decrease in inventories 32,145 16,074
Increase in accounts payable and 167,549 25,967
accrued expenses
Increase (decrease) in deferred revenue (20,514) 53,725
Increase (decrease) in deferred rent (17,490) 3,160
------------ ------------
Net cash (used) by operating activities (113,501) (184,084)
------------ ------------
Cash flows from investing activities:
Expenditures for property and equipment (318,214) (23,731)
Proceeds form the sale of property 3,449
and equipment
Issuance of common stock for purchase
of assets
in excess of market value (221,000)
------------ ------------
Net cash (used in) investing activities (539,214) (20,282)
------------ ------------
Cash flows from financing activities:
Decrease in deposits 11,760 -
Borrowings from related party notes payable - -
Repayment of related party notes payable (100,000) -
Borrowings from notes payable 35,000
Repayment of notes and mortgages payable (132,823)
Repayment of capital leases obligations (4,219) (2,177)
Proceeds from issuance of common stock 762,035 -
------------ ------------
Net cash provided by financing activities 571,753 (2,177)
------------ -------------
Net decrease in cash and cash equivalents (80,962) (206,543)
Cash and cash equivalents at beginning 83,888 (16,841)
of period
------------ -------------
Cash and cash equivalents at end of period $ 2,926 $ (223,384)
============ =============
</TABLE>
See accompanying Notes to Consolidated Financial Statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) Description of Business
Mega Micro Technologies Group, Inc. (formerly Mirage Computers) and its
wholly owned subsidiary, Mega Micro Computers (formerly Mega Micro, Inc.),
markets computers, computer components, software, and custom built systems to
corporate customers and to businesses serving business. Mega Micro
Technologies Group, Inc. also owns 80 percent of Type 2 Communications
(formally Mirage Internet Communications), an Internet Service provider.
Type 2 provides a turnkey network solution, including mail, radius servers,
web housing, ISDN access and T1 access.
Mega Micro Technologies Group, Inc. 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) Asset Purchase - Skylink
On January 13, 2000, the Company purchased certain assets of Skylink
Networks, Inc.,("Skylink") a privately held Internet service provider (ISP),
for a total purchase price of $450,000. The purchase price consisted 128,571
share of the Company's Rule 144 restricted common stock at $3.50, which
equaled the market value of the Company's common stock on January 4, 2000,
the date of the acquisition. The acquisition agreement provided as
additional consideration a two-year employment agreement with Skylink's sole
shareholder, which included $95,000 in bonuses payable over a one-year period
in four quarterly installments. The aggregate of purchase price over the net
assets acquired of approximately $221,000 is being amortized over 10 years.
The company placed the assets purchased from Skylink in a newly created
subsidiary, Mirage Internet Communications, Inc. The company owns 80% of the
subsidiary with the sole shareholder of Skylink as minority owner of 20%.
(c) 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.
(d) Name Change
On April 10, 2000 the Company changed its name to Mega Micro Technologies
Group, Inc. and changed the names of its subsidiaries, Mega Micro, Inc. and
Mirage Internet Communications to Mega Micro Computers and Type 2
Communications.
<PAGE>
(e) Merger - TourPro Golf
On April 28, 2000 the Company merged with TourPro Golf, Inc.
("TourPro"). The company issued 150,000 shares to TourPro shareholders' 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 is
being be treated as a reverse merger with the Company as the acquirer and
surviving entity.
(f) Stock Dividend
On April 28, 2000 the Company issued 8,064,651 shares of common stock 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 consists of the following as of March 31, 2000
and December 31, 1999:
<TABLE>
1999 1998
--------- ----------
<S> <C> <C>
Machinery and equipment $ 559,918 $232,018
Furniture and fixtures 141,721 141,721
Vehicles 86,837 86,837
Leasehold improvements 141,839 141,839
Buildings 717,889 655,389
Land 300,000 300,000
--------- ----------
Less accumulated depreciation (325,113) (325,113)
--------- ----------
$ 1,123,691 $1,123,691
========= ==========
</TABLE>
Depreciation expense was $47,458 for the period ended March 31, 2000.
NOTE 3 - LIQUIDITY AND CAPITAL RESOURCES
The Company's success is substantially dependent upon raising additional
capital through private placement 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 the
private placement 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 placement
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
Computers and 80% owned Type 2 Communications. 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.
Type 2 Communications is an Internet Service Provider primarily
directing its efforts toward corporate business services. Type 2 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.
Type 2 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. Type 2 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. Type 2
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 Computers ("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
the Internet to deliver this data both internally and externally through
<PAGE>
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 McCarren 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 three months ended March 31, 2000 and the
period ending March 31, 1999
Total operating expenses from continuing operations were $791,390 for
the three months ended March 31, 2000 compared to $984,444 for the period
ending March 31, 1999. The expenses were primarily the result of general and
administrative expenses during the period ending March 31, 2000.
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.
<PAGE>
Liquidity and Capital Reserves
As of March 31, 2000 and December 31, 1999.
As of March 31, 2000, the Company's assets were $2,641,515 and its
liabilities were $2,491,543, resulting in an excess of equity of $149,972.
Cash was $2,925 at March 31, 2000 as compared to cash of $83,888 on December
31, 1999, a decrease of $80,963. This represented a 94% decrease in available
cash. This decrease was primarily the result of an increase in operating
expenses.
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.
Subsequent Event
In April 2000 the Company signed a letter of intent to acquire all of
the membership interests in TechCor, LLC. The terms of the agreement have
not been finalized. When a final agreement is reached the Company will
report the agreement and its terms on a form 8-K within 15 days of
completion.
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 Steffy
David S. Steffey
Secretary
Date: May 12, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,925
<SECURITIES> 0
<RECEIVABLES> 453,666
<ALLOWANCES> 0
<INVENTORY> 406,143
<CURRENT-ASSETS> 917,668
<PP&E> 1,503,447
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,641,515
<CURRENT-LIABILITIES> 1,734,394
<BONDS> 0
0
0
<COMMON> 6,406
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,641,515
<SALES> 4,988,992
<TOTAL-REVENUES> 0
<CGS> 4,519,166
<TOTAL-COSTS> 4,519,166
<OTHER-EXPENSES> 791,390
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (343,993)
<INCOME-TAX> (343,993)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (343,993)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
