UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 5(d) OF THE SECURITIES ACT OF 1934:
For the Quarterly Period ended March 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT
For the transition period from __________________ to __________________
Commission File number 1-12023
Level Jump Financial Group, Inc.
(Exact Name of registrant as specified in its charter)
Florida N/A
- ---------------------------------------- --------------------
(State or other jurisdiction of I.R.S. Employer ID No.
incorporation or organization)
30 Broad Street, 28th Floor
New York, New York 10004
----------------------------------------
(Address of principal executive offices)
(212) 344-5867
(Issuer's telephone number)
Indicate by check mark whether the registrant (1) has filed has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ______
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES ____ NO. ____
APPLICABLE ONLY TO CORPORATE ISSUERS
As of April 28, 2000, 8,061,500 shares of the Issuer's Common Stock were
outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
The accompanying unaudited condensed consolidated financial statements of Level
Jump Financial Group, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Rule 10-01 of Regulation S-X. All
adjustments which, in the opinion of management, are necessary for a fair
presentation of the financial condition and results of operations have been
included. Operating results for the three month period ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2000.
These interim condensed consolidated financial statements should be read in
conjunction with the Company's latest Annual Report on Form 10-KSB for the year
ended December 31, 1999.
<PAGE>
Level Jump Financial Group, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
Mar. 31, Dec. 31,
2000 1999
--------------------------------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
Assets
Current
Cash and cash equivalents $ 410,089 $ 19,426
Investments in marketable securities 1,374,233 2,172,389
Accounts receivable, net of allowances
(2000 - $439,787, 1999 - $210,099) 36,444 290,944
Prepaid expenses and deposits 441,520 45,984
Deferred income taxes 33,197 71,474
Due from related parties 218,517 218,517
----------- -----------
2,514,000 2,818,734
Investments in marketable securities 321,032 321,032
Fixed assets 194,550 42,556
Deferred income taxes 31,593 16,179
----------- -----------
$ 3,061,175 $ 3,198,501
- ----------------------------------------------------------------------------------------- ----------- -----------
Liabilities and Shareholders' Equity
Current
Accounts payable $ 102,688 $ 65,657
Accrued liabilities 131,790 16,306
Bank loan 300,000 500,000
Obligations under capital lease (Note 4) 11,905 --
Deferred income taxes 269,557 454,070
Deferred revenues 17,084 130,534
Income taxes payable 567,182 628,453
----------- -----------
1,400,206 1,795,020
Deferred lease inducements 7,055 8,443
Obligations under capital lease (Note 4) 73,992 --
----------- -----------
81,047 8,443
----------- -----------
1,481,253 1,803,463
----------- -----------
Shareholders' equity
Share capital
Authorized
4,999,998 Preferred shares, $.0025 par value
1 Preferred share, class A, $.0025 par value
1 Preferred share, class B, $.0025 par value
200,000,000 Common shares, $.0025 par value
Issued
1 Preferred share, class A, $.0025 par value -- --
1 Preferred share, class B, $.0025 par value -- --
8,061,500 Common shares (Note 2) (1999 - 7,863,500) 20,154 19,659
Par value in excess of capital 530,586 (16,419)
Retained earnings 462,259 518,351
Accumulated other comprehensive income (appreciation of investments) 566,923 873,447
----------- -----------
1,579,922 1,395,038
----------- -----------
$ 3,061,175 $ 3,198,501
- ----------------------------------------------------------------------------------------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
Level Jump Financial Group, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
For the For the
Three Three
Months Ended Months Ended
Mar. 31, 2000 Mar. 31, 1999
--------------------------------------------------- --------------- ----------------
<S> <C> <C>
Revenue $ 115,602 $ 495,804
Cost of revenues 116,986 88,935
----------- -----------
Gross profit (loss) (1,384) 406,869
----------- -----------
Operating expenses
Sales and marketing 64,507 22,621
Product development -- 9,451
General and administration 593,303 208,632
----------- -----------
657,810 240,704
----------- -----------
Income (loss) from operations (659,194) 166,165
Investment income 569,247 205,100
----------- -----------
Income (loss) before income taxes (89,947) 371,265
Provision (recovery) for income taxes (33,855) 132,717
----------- -----------
Net income (loss) for the period (Note 1) ($ 56,092) $ 238,548
- ------------------------------------------------------- ----------- -----------
Basic and diluted earnings (loss) per share (Note 3) ($ 0.01) $ 0.06
Shares used in per share
calculation - basic and diluted 7,982,167 3,700,000
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE>
Level Jump Financial Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
For the For the
Three Three
Months Ended Months Ended
Mar. 31, 2000 Mar. 31, 1999
- -------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) ($ 56,092) $ 238,548
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operations
Amortization 6,902 2,879
Bad debts 229,688 --
Deferred income taxes 37,618 16,739
Realized capital gains (579,751) (199,413)
Fees satisfied by securities -- (375,804)
Consulting and compensation
expenses satisfied by securities 102,500 36,975
Changes in assets and liabilities
Accounts receivable, net 24,812 (288,718)
Prepaid expenses and deposits (75,536) 178
Accounts payable 37,031 101,733
Accrued liabilities 115,484 (304,479)
Deferred revenues (113,450) --
Income taxes (61,271) 117,779
Deferred lease inducements (1,388) --
----------- ---------
(333,453) (653,583)
----------- ---------
Cash flows from investing activities
Due from related parties -- 401,140
Purchases of fixed assets (72,199) (9,243)
Acquisition of Southland Securities Corporation (200,000) --
Investment in Southland Securities Corporation (120,000) --
Proceeds from sale of marketable securities 872,115 314,786
----------- ---------
479,916 706,683
----------- ---------
Cash flows from financing activities
Due to related parties -- (40,119)
Repayment of bank loan (200,000) --
Repayment of obligations under capital lease (800) --
Proceeds from issuance of common shares 445,000 --
----------- ---------
244,200 (40,119)
----------- ---------
Net increase in cash and cash
equivalents during the period 390,663 12,981
Cash and cash equivalents, beginning
of period 19,426 5,658
----------- ---------
Cash and cash equivalents, end of period $ 410,089 $ 18,639
- --------------------------------------------------------------------------- ----------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
Level Jump Financial Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
For the For the
Three Three
Months Ended Months Ended
Mar. 31, 2000 Mar. 31, 1999
- -------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Supplementary schedule of non-cash investing and
financing activities:
Marketable securities received for services not rendered
(included in accrued liabilities) - 125,000
Marketable securities payable on share exchange (included in
accrued liabilities) - (180,000)
Deferred taxes on unrealized gains (losses) of marketable
securities 240,047 12,127
Obligations under capital lease 85,897 -
- --------------------------------------------------------------------------- ------------ -----------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
Level Jump Financial Group, Inc.
Summary of Significant Accounting Policies
(Unaudited)
March 31, 2000 and 1999
- -------------------------------------------------------------------------------
Nature of Level Jump Financial Group, Inc. (the "Company") is developing an
Business and Internet financial portal and on-line financial services web
Basis of site. The Company, through its wholly-owned subsidiary
Presentation thestockpage.com inc., offers financial public relations services
to publicly traded or listed companies.
On October 28, 1999, Caldera Corporation ("Caldera") acquired all
of the issued and outstanding common shares of the Company and
agreed to assume certain obligations with respect to issuing
additional common shares under exchangeable share agreements and
a performance equity plan and issuing preferred shares under a
voting agreement. In exchange for the issued and outstanding
common stock of the Company, the shareholders of the Company were
issued common shares of Caldera in a number that gave the
shareholders of the Company control of Caldera. In addition, at
the time of the transaction, the board of directors of Caldera
resigned and the officers and directors of the Company were
appointed to the board of directors of Caldera. In January, 2000,
Caldera Corporation's name was formally changed to Level Jump
Financial Group, Inc.
On January 31, 2000, the board of directors of the Company passed
a resolution to merge the Company into Level Jump Financial
Group, Inc. (previously Caldera Corporation). On February 14,
2000, the state of Colorado accepted the merger and the Company
ceased to exist. All obligations of the Company were assumed by
Level Jump Financial Group, Inc. (previously Caldera
Corporation). Going forward, all references to the Company in
these financial statements are to Level Jump Financial Group,
Inc. (previously Caldera Corporation).
The accompanying unaudited condensed consolidated interim
financial statements reflect all adjustments, which in the
opinion of management, are necessary for a fair presentation of
the results of operations for the periods shown. The results of
operations for such periods are not necessarily indicative of the
results expected for the full fiscal year or for any future
period.
The accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries, Level
Jump Asset Management, Inc., Level Jump Financial Group (Canada),
Inc., and thestockpage.com inc.
These financial statements should be read in conjunction with the
consolidated financial statements and related notes included in
the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1999.
5
<PAGE>
Recent In June 1998, the Financial Accounting Standards Board ("FASB")
Accounting issued Statement of Financial Accounting Standards 133 ("SFAS
Standards 133"), "Accounting for Derivative Instruments and Hedging
Activities". SFAS 133 requires companies to recognize all
derivative contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically designated
as a hedge, the objective of which is to match the timing of gain
or loss recognition on the hedging derivative with the
recognition of (i) the changes in the fair value of the hedged
asset or liability that are attributable to the hedged risk or
(ii) the earnings' effect of the hedged forecast transaction. For
a derivative not designated as a hedging instrument, the gain or
loss is recognized in income in the period of change. SFAS 133,
as amended, is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. The Company is evaluating the
standard and has not determined the impact on the financial
results or condition of the Company.
In December 1999, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin 101 ("SAB 101"), "Revenue
Recognition in Financial Statements." SAB 101 summarizes certain
of the SEC's views in applying generally accepted accounting
principles to revenue recognition in financial statements. In
March 2000, the SEC issued SAB 101A to defer for one quarter the
effective date of implementation of SAB 101 with earlier
application encouraged. The Company is required to adopt SAB 101
in the second quarter of fiscal 2000. The Company does not expect
the adoption of SAB 101 to have a material effect on its
financial position or results of operations.
6
<PAGE>
Level Jump Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
March 31, 2000 and 1999
- -------------------------------------------------------------------------------
1. Comprehensive Income (Loss)
The components of comprehensive income (loss), net of tax, are as follows:
Three Months Three Months
Ended Ended
Mar. 31, Mar. 31,
2000 1999
---------------------------------
Comprehensive income
Net income (loss) ($56,092) $238,548
Net unrealized gain (loss) on
securities, (net of
reclassification adjustment) (306,524) (34,443)
--------------------------------
($362,616) $204,105
---------------------------------
- ------------------------------------------------------------------------------
2. Shareholders' Equity
On January 24, 2000, the Company issued 178,000 common shares at a price
per share of $2.50 for total proceeds of $445,000.
On January 24, 2000, the Company issued 20,000 common shares as
compensation for a consulting agreement for investor relations and
financial advisory services. The contract is for a term of nine months and
the Company is recognizing consulting expenses of $102,500 during the term
of the contract.
- ------------------------------------------------------------------------------
3. Earnings per Share
For the three months ending March 31, 2000, the number of shares used for
basic and diluted loss per share are the same because the inclusion of
common stock equivalents would be antidilutive.
For the three months ending March 31, 1999, the company had no common stock
equivalents.
7
<PAGE>
Level Jump Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
March 31, 2000 and 1999
- -------------------------------------------------------------------------------
4. Capital Leases
The Company entered into a capital lease that commenced on March 8, 2000
for certain fixed assets including leasehold improvements, furniture and
fixtures, computer equipment and software. The lease is for a term of five
years and gives the Company the option to purchase the fixed assets at the
end of the lease term for $10. The following is a schedule of future
minimum payments under capital leases and obligations under capital leases
(present value of future minimum rentals) as of March 31, 2000:
Mar. 31,
2000
--------------------
2001 26,278
2002 26,278
2003 26,278
2004 26,278
2005 24,673
--------------------
Total minimum lease payments 129,803
Less amount representing interest 43,906
--------------------
Total obligations under capital leases 85,897
Less current maturities of obligations under
capital leases 11,905
--------------------
Obligations under capital leases payable after one year $73,992
--------------------
The following is a schedule of the fixed asset balances under capital
leases as of March 31, 2000:
Mar. 31,
2000
--------------------
Leasehold improvements 7,325
Furniture and fixtures 61,532
Computers and equipment 7,097
Software 10,743
--------------------
86,697
Less: Accumulated amortization -
--------------------
$86,697
--------------------
8
<PAGE>
Level Jump Financial Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
March 31, 2000 and 1999
- -------------------------------------------------------------------------------
5. Commitments and Contingencies
A subsidiary of the Company and its management are involved in a dispute
with a third party regarding failed negotiations between the subsidiary of
the Company and its management to sell an interest in the subsidiary of the
Company to the third party. Claims and counterclaims have been filed by the
subsidiary of the Company and the third party respectively. Management
believes the claims are without merit, and does not believe that the
Company's potential exposure related to this matter would have a material
adverse effect on the Company's financial position.
A subsidiary of the Company has filed a claim against a previous client for
failure to make complete payment for performance under a contract. The
previous client has filed a counterclaim seeking damages for breach of
contract and interference in economic relations. The proceeding is
currently at a very early stage and the Company is unable to predict its
ultimate outcome. Management believes the counterclaim is without merit,
and intends to defend against it vigorously.
Management is not currently aware of any other legal proceeds or claims
that the Company believes will have, individually or in the aggregate, a
material adverse effect on the Company's financial position or results of
operations.
- -------------------------------------------------------------------------------
6. Subsequent Events
On April 3, 2000, Level Jump completed its purchase of Southland Securities
Corporation ("Southland"), a National Association of Securities Dealers
registered broker/dealer. The purchase price for the transaction was
$10,000 paid on January 3, 2000, $190,000 paid at the time of close and
$150,000 to be paid pending the outcome of two arbitrations in which
Southland is a defendant. The $150,000 will be reduced by the amount, if
any, that Southland is required to pay upon settlement/completion of the
arbitrations. On April 7, 2000, the Company changed the name of Southland
to Level Jump Trading, Inc.
As part of the purchase agreement, the previous owner of Southland agreed
to clear out all securities inventory positions and repatriate all but
$120,000 of the capital of Southland to its parent company. At the time of
closing, Level Jump paid the previous owner of Southland $120,000 for the
capital remaining in Southland and invested an additional $150,000 in
equity capital in Southland.
The acquisition of Southland by the Company will be accounted for using the
purchase method.
<PAGE>
ITEM 2. Management's Discussion and Analysis
When used in this Form 10-QSB and in future filings by Level Jump with the
Securities and Exchange Commission, the words or phrases "will likely result,"
"management expects," "Level Jump expects," "will continue," "is anticipated" or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Readers are
cautioned not to place undue reliance on any such forward-looking statements,
each of which speak only as of the date made. These statements are subject to
risks and uncertainties, some of which are described below. Actual results may
differ materially from historical earnings and those presently anticipated or
projected. Level Jump has no obligation to publicly release the results of any
revisions which may be made to any forward-looking statements to reflect
anticipated events or circumstances occurring after the date of such statements.
Introduction
Level Jump Financial Group, Inc. is a Florida corporation that was incorporated
on January 8, 1980 with the name Skyfreight, Inc. On September 9, 1994 the name
was changed to Caldera Corporation Inc. and then on September 6, 1996 to Caldera
Corporation and then in early January 2000 to Level Jump Financial Group, Inc.
From 1980 until 1986 the Company was engaged in the air freight business in
Miami, Florida. During 1994, the Company acquired options to purchase gold
mining leases located in Chile and in Alaska and on April 26, 1997 the leases
were transferred to Au International Inc. (a related party) in exchange for the
assumption of all the Company's liabilities. From April 1997 until October 1999,
the Company had no business operations.
On October 20, 1999, the board of directors of the Company (at the time Caldera
Corporation) entered into an Agreement and Plan of Exchange with Level Jump
Financial Group, Inc. ("Level Jump Colorado"), a Colorado corporation, which was
consummated on October 28, 1999 whereby the Company issued 5,087,500 shares of
Common Stock in exchange for all 3,700,000 shares of common stock of Level Jump
Colorado. In addition, the Company agreed to assume obligations of Level Jump
Colorado to issue shares of Common Stock that could result in the issuance of
5,912,500 Shares under exchangeable share agreements and 2,750,000 Shares under
a Performance Equity Plan. As part of the transaction, the board of directors of
Level Jump Colorado were appointed to the board of directors of the Company and
former directors of the Company resigned from the board of directors. Prior to
the Company's acquisition of Level Jump Colorado, the Company had no significant
operations. The transaction was accounted for as an issuance of stock by the
Company for the net assets of Level Jump Colorado, accompanied by a
recapitalization. Level Jump Colorado's assets were recorded at carryover basis
and no goodwill was recorded from the transaction. Level Jump Colorado's
historical financial statements became those of the Company. On January 31,
2000, the Company completed a reorganization whereby Level Jump Colorado was
merged into the Company and all obligations of Level Jump Colorado were assumed
by the Company.
Level Jump Colorado was a Colorado corporation that was incorporated on March
29, 1999. The company was formed by the shareholders of thestockpage.com inc.
("thestockpage.com"), an Ontario corporation that was incorporated on August 27,
1997. On June 1, 1999, Level Jump Colorado acquired thestockpage.com. The
acquisition was accounted for on a continuity of interest basis as Level Jump
Colorado and thestockpage.com were controlled by the same shareholders before
and after the purchase and sale transaction.
<PAGE>
Level Jump provides financial public relations services through its wholly owned
subsidiary, thestockpage.com. Through its wholly owned subsidiary, Level Jump
Asset Management, Inc., a Delaware corporation, Level Jump provides financial
consulting services. On April 3, 2000, Level Jump acquired Southland Securities
Corporation, a Texas incorporated broker/dealer registered with the Securities
and Exchange Commission ("SEC") and the National Association of Securities
Dealers ("NASD").
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
- -------------------------------------------------------------------------------
For the three months ended March 31, 2000, revenues decreased by 77% to $115,602
from $495,804 for the prior comparable period. For the three months ended March
31, 2000, thestockpage.com did not sign any new clients for its financial public
relations service or traditional investor relations service. thestockpage.com
focused on moving offices and expanding infrastructure to better meet client
needs. For the three months ended March 31, 1999, thestockpage.com signed up and
performed its financial public relations services for two clients. Management of
thestockpage.com are aggressively pursuing a number of prospects for financial
public relations services, however, they have not yet closed any new sales. With
the purchase of Southland Securities Corporation (now Level Jump Trading, Inc.),
management expects to diversify its revenues to include brokerage commissions
and trading gains/losses. Revenue has been generated in Level Jump Trading, Inc.
from April 3, 2000.
The Company's gross profit as a percentage of revenues decreased to a deficit of
1% for the three months ended March 31, 2000 from 82% for the prior comparable
period. This decrease is attributable to increases in direct costs necessary to
complete a client's financial public relations campaign and direct, fixed
salaries.
Operating expenses for the three months ended March 31, 2000 were $657,810, an
increase from $240,704 in the prior comparable period. Sales and marketing
expenses increased to $64,507 from $22,621 for the prior comparable period. This
increase is attributable to preliminary advertising to enhance Level Jump's
profile in the investment community and among prospective clients. Product
development costs decreased to $0 from $9,451 for the prior comparable period.
General and administration costs increased to $593,303 from $208,632. This
increase is attributable to an allowance for doubtful accounts of $229,688,
financial public relations expenses for Level Jump of $28,472, increases in
staff salaries, rent expense due to expansion into New York, market research for
the financial portal, professional fees, and interest on unpaid taxes. Partially
offsetting this increase was a decrease in management compensation to $28,890
from $118,564 in the prior comparable period. The decrease is attributable to a
decision by management and the board of directors to reduce current compensation
to reduce cash outflows while the Company is growing.
For the three months ended March 31, 2000, investment income increased to
$569,247 from $205,100 in the prior comparable period. Investment income is
primarily comprised of capital gains on the sales of securities. Realized gains
are dependent on market and company specific conditions and can vary
dramatically from quarter to quarter and year to year. In the three months ended
March 31, 2000, thestockpage.com realized substantial gains from two clients
that experienced increases in stock prices since thestockpage.com began holding
the securities.
For the three months ended March 31, 2000, the Company's net loss was $56,092 as
compared to net income of $238,548 for the prior comparable period.
Liquidity and Capital Resources
At March 31, 2000, the Company had net working capital of $1,113,794. The
Company's principal sources of liquidity include cash and cash equivalents,
short-term investments in marketable securities, and amounts due from related
parties.
<PAGE>
On October 19, 1999, thestockpage.com obtained a $500,000 demand bank loan from
a Canadian financial institution. The loan provides for a variable interest rate
equal to the bank's U.S. base rate (similar to U.S. prime rate) plus 2.0% which
equaled 11% combined at December 31, 1999. Interest on the loan is to be paid
monthly. A balloon principal payment of $200,000 was made on February 28, 2000
and principal payments of $5,556 per month thereafter are to be made through to
maturity on September 30, 2004. The bank loan is specifically collateralized by
long-term investments with a book value of $226,950 and a fair market value of
$1,043,970 at March 31, 2000. The bank loan is secured by a general security
agreement providing a first charge over accounts receivable, inventory and
equipment. The bank loan agreement allows the bank to sell collateralized
investments to retire the bank loan when the investments become eligible for
resale if the stock price of the collateralized investments falls below $5.00
per share.
At March 31, 2000, the Company and its subsidiaries have current income taxes
payable of $567,182. This balance is payable by thestockpage.com and arises
because thestockpage.com receives restricted securities that it recognizes as
revenues for tax purposes when received but are not sold for periods exceeding
one year from the date of receipt. thestockpage.com anticipates paying this
liability as long-term investments come off restriction and can be monetized.
The Company has a $333,453 deficit in cash from operating activities for the
three months ending March 31, 2000 compared to a deficit of $653,583 for the
comparable prior period. The increase in cash generated from operations during
the three months ending March 31, 2000 is primarily due to bad debts, decreases
in accounts receivable and fees satisfied by securities and increases in accrued
liabilities. Offsetting these amounts was a decrease in deferred revenue and
income taxes.
Net cash of $479,916 was generated by investing activities for the three months
ending March 31, 2000 due to sales of marketable securities of $872,115 that
significantly exceeded purchases of fixed assets of $72,199, acquisition of
Southland of $200,000 and investment in Southland of $120,000. In the comparable
prior period, net cash of $706,683 was generated by investing activities
primarily due to the proceeds from sales of marketable securities of $314,786
and the decrease in amounts due from related parties of $401,140.
Net cash of $244,200 was generated by financing activities for the three months
ending March 31, 2000 due to issuance of common shares of $445,000 which was
partially offset by repayment of the bank loan of $200,000. In the comparable
prior period, a net deficit of $40,119 was caused by a decrease in due to
related parties.
The Company expects to fund short-term operations and other cash expenditures
through the use of available cash, sales of marketable securities, and possible
new equity sources. Over the long-term, management believes that to realize its
business plan, the Company will need to raise significant external financing. If
these funds are not raised, the Company will have to scale back the
implementation of its on-line financial services strategy.
Year 2000
The Year 2000 Issue concerned the inability of information systems, whether due
to computer hardware or software, to properly recognize and process date
sensitive information relating to the year 2000 and beyond. Many of the world's
computer systems recorded years in a two-digit format. Such computer systems may
have been unable to properly interpret dates beyond the year 1999 which could
have lead to business disruptions in the United States and internationally.
Level Jump believes it is Year 2000 compliant, and there were no adverse events
that occurred and no contingency plans were required to be implemented relating
to the Year 2000 Issue at year-end 1999. Although it is now past January 1,
2000, and we have not experienced any adverse impact from the transition to the
year 2000, we cannot give any assurance that our operations or our suppliers and
customers have not been affected in a manner that is not yet apparent. As a
result, Level Jump will continue to monitor the Year 2000 Issue compliance of
itself and its suppliers and customers.
<PAGE>
Part II - OTHER INFORMATION
ITEM 1. Legal Proceedings
On January 26, 2000, thestockpage.com commenced a proceeding in Ontario Superior
Court of Justice, Toronto, Ontario against D.C.H. Technologies Inc. to collect
amounts owing pursuant to a Consulting Agreement relating to services performed
in 1998. The action alleges that the balance of 100,000 shares of common stock
owing to thestockpage.com pursuant to the Consulting Agreement, which was due
and payable one week after DCH became fully reporting with the SEC on or about
October 4, 1999, has not yet been remitted. The claim seeks specific performance
of delivery of 100,000 shares of common stock, or alternatively CDN$1,500,000 in
damages for breach of contract, as well as attorney fees. On March 7, 2000, DCH
filed a Statement of Defence and Counterclaim. The Counterclaim alleges that
thestockpage.com breached its contract with DCH and seeks damages of
US$5,000,000 for breach of contract and US$10,000,000 for deliberate
interference in economic relations. The proceeding is currently at a very early
stage and the Company is unable to predict its ultimate outcome.
thestockpage.com believes the counterclaim filed by DCH is without merit and
intends to defend against it vigorously.
ITEM 2. Changes in Securities
Sales of Unregistered Securities
On January 24, 2000, the Company issued 178,000 common shares to four
individuals at a price per share of $2.50 for total proceeds of $445,000. The
common shares were issued pursuant to Regulation D Rule 506 of the Securities
Act of 1933, as amended and are restricted securities.
On January 24, 2000, the Company issued 20,000 common shares to Weil Consulting
as compensation for a consulting agreement for investor relations and financial
advisory services. The common shares were issued pursuant to Section 4(2) of the
Securities Act of 1933, as amended and are restricted from resale. The Company
is recognizing consulting expenses of $102,500 over the term of the contract.
On April 13, 2000, the Company issued 186,000 common shares to two individuals
at a price per share of $1.00 for total proceeds of $186,000. The common shares
were issued pursuant to Regulation D Rule 506 of the Securities Act of 1933, as
amended and are restricted securities. The Company paid a commission of $8,000
and issued 2,000 common shares to a finder for assistance in raising $100,000 of
the $186,000.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
On April 3, 2000, Level Jump completed its purchase of Southland Securities, a
NASD registered broker/dealer. The purchase price for the transaction was
$10,000 paid on January 3, 2000, $190,000 paid at the time of close and $150,000
to be paid pending the outcome of two arbitrations that Southland is a
defendant. The $150,000 will be reduced by the amount, if any, that Southland is
required to pay upon settlement/completion of the arbitrations. On April 7,
2000, the Company changed the name of Southland to Level Jump Trading, Inc.
As part of the purchase agreement, the previous owner of Southland agreed to
clear out all securities inventory positions and repatriate all but $120,000 of
the capital of Southland to its parent company. At the time of closing, Level
Jump paid the previous owner of Southland $120,000 for the capital remaining in
Southland and invested an additional $150,000 in equity capital in Southland.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits Filed.
None.
(b) Reports on Form 8-K.
Form 8-K dated January 21, 2000. Copy of press release announcing the
execution of the acquisition agreement for the purchase of Southland
Securities Corporation.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act o 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned, thereunto duly authorized.
Dated: May 12, 2000 Level Jump Financial Group, Inc.
By: /s/ Robert Landau
-----------------------------
Robert Landau
President
By: /s/ David Roff
-----------------------------
David Roff
Treasurer
By: /s/ Brice Scheschuk
-----------------------------
Brice Scheschuk
Secretary
(Principal Financial and
Accounting Officer)
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