<PAGE>
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 Quarterly Period Ended December 31, 1999
Transaction Report under Section 13 or 15(d) of
The Exchange Act for the Transition Period from
_______________________ to _______________________
Commission File Number
Dynamic I-T, Inc.
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Colorado 82-0379959
--------------------------------------------------------------------------------
(State or other jurisdiction Commission File (IRS Employer
of incorporation) No. Identification No.)
c/o 10200 West 44th Street, Wheat Ridge, Colorado 80033
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 422-8127
----------------
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
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 [ ]
At July 12, 2000, there were issued and outstanding 34,605,213 shares
of Common Stock.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X] Item 4.
<PAGE>
DYNAMIC I-T, INC.
CONTENTS
PAGE
-- Accountants' Review Report 1
-- Audited Condensed Consolidated Balance Sheets,
December 31, 1999 and December 31, 1998 2
-- Audited Condensed Consolidated Statements of Operations
from inception through December 31, 1999 and for the
nine months ended December 31, 1999 and 1998 3
-- Statement of Shareholders' Equity from inception through
December 31, 1999 and for the three months ended December 31,
1999 and December 31, 1998 4 - 6
-- Audited Condensed Consolidated Statements of Cash
Flows from inception through December 31, 1999 and for the nine
months ended December 31, 1999 and 1998 7 - 12
-- Notes to audited Condensed Consolidated Financial
Statements 13 - 16
<PAGE>
[LETTERHEAD OF MICHAEL JOHNSON & CO., LLC]
Board of Directors
Dynamic I-T, Inc.
We have audited the accompanying balance sheet of Dynamic I-T, Inc. (an
Exploration Stage Company, the "Company") as of December 31, 1999, and the
related statements of operations, cash flows, and changes in stockholders'
equity for the period March 3, 1980 (inception), through December 31, 1999, and
the nine month period ended December 31, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Dynamic I-T, Inc. at December
31, 1999, and the results of its operations and its cash flows for the period
March 3, 1980 (inception), through December 31, 1999, and the nine month period
ended December 31, 1999, in conformity with generally accepted accounting
principles.
As shown in the financial statements, the Company incurred net losses for all
three years and had incurred substantial losses in the prior years. At December
31, 1999, current liabilities exceed current assets by $924,570. These factors
indicate that the company has substantial doubt about its ability to continue as
a going concern. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary in the event
the company cannot continue in existence.
The financial statements for the years ended March 31, 1980 through March 31,
1992 were audited by other accountants, whose reports dated July 6, 1992 were
qualified as to a going concern. They have not performed any auditing procedures
since that date.
/s/ Michael Johnson & Co., LLC
Michael Johnson & Co., LLC
Denver, Colorado
June 16, 2000
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEET
<TABLE>
<CAPTION>
Dec. 31, Dec. 31,
ASSETS 1999 1998
------ ---- ----
<S> <C> <C>
Current Assets:
Cash $ 488 $ -
------------- --------------
TOTAL ASSETS $ 488 $ -
============= ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable & Accrued expenses $ 360,058 $ 360,058
Accrued salary, officer 390,000 390,000
Note Payable (Note 4) 100,000 100,000
Loan Payable - Shareholders (Note 5) 75,000 -
------------- --------------
Total Current Liabilities 925,058 850,058
------------- --------------
Shareholders' (Deficit):
Common stock, no par value;
authorized 100,000,000 shares;
1,001,343 shares issued and outstanding at
December 31, 1999, and 642,174 as of March 31, 1999 2,735,853 2,714,603
Deficit accumulated during the
exploration stage (3,660,423) (3,564,661)
------------- --------------
Total Shareholders' (Deficit) (924,570) (850,058)
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 488 $ -
============= ==============
</TABLE>
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION) THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
Cumulative
Amounts from
Inception (March
3, 1980) through Nine Months Ended Three Months Ended
Dec. 31,1999 Dec. 31,1999 Dec. 31,1998 Dec. 31,1999 Dec. 31,1998
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Costs and Expenses:
General and administrative,
including exploration costs $ 2,013,655 $ 95,762 $ - $ 9,250 $ -
Interest expense 710,069 - - - -
Bad debt expense 2,500 - - - -
Depreciation 44,325 - - - -
Write-down of deferred mine development
costs, mineral properties, and joint
ventures advances to estimated net
realizable value. 1,227,003 - - - -
Write-down of milling equipment to
estimated net realizable value. 619,365 - - - -
Write-off of abandoned mineral properties
and write-off of advance royalties on
abandoned or expired lease claims. 210,240 - - - -
Write-down of inventories to lower of cost
or market. 18,401 - - - -
Oil and gas dry-hole costs 25,000 - - - -
Write-off of deferred mine development
costs on abandoned mine projects. 264,238 - - - -
-------------- ------------- ------------- ------------ -------------
Operating (Loss) 5,134,796 95,762 - 9,250 -
-------------- ------------- ------------- ------------ -------------
Other Income (Expenses):
Assay services 20,041 - - - -
Interest income 212,754 - - - -
Rental income 38,238 - - - -
Other income 32,149 - - - -
Loss on dispositions including
sale of milling equipment and
abandonments of mine equipment,
buildings and improvements,
furniture and equipment and vehicles. (311,542) - - - -
-------------- ------------- ------------- ------------ -------------
(8,360) - - - -
-------------- ------------- ------------- ------------ -------------
Net (loss) before income taxes
and extraordinary items. (5,143,156) (95,762) - (9,250) -
Provision for income taxes - - -
-------------- ------------- ------------- ------------ -------------
Net (loss) before extraordinary item (5,143,156) (95,762) - (9,250) -
-------------- ------------- ------------- ------------ -------------
Extraordinary item:
Gain from forgiveness of debt (Note 4) 1,482,733 - - - -
-------------- ------------- ------------- ------------ -------------
Net Gain (loss) $(3,660,423) $ (95,762) $ - $ (9,250) $ -
============== ============= ============= ============ =============
Net Gain (loss) per share: $ (0.10) $ - $ (0.01) $ -
------------- ------------- ------------ -------------
Weighted average shares outstanding 1,001,343 64,217,400 1,001,343 64,217,400
============= ============= ============ =============
</TABLE>
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
----------------------- During the Total
Number of Exploration Shareholders'
Shares Amount Stage Equity
---------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
Date of inception, March 3, 1980
Contributed property from officers and
directors 282,500 222,048 222,048
Net (loss) for the period from
inception (March 3, 1980)
through March 31, 1981 - - (9,293) (9,293)
---------- ----------- ------------- ---------------
Balance at March 31, 1981 282,500 222,048 (9,293) 212,755
Sale of stock to officers and directors
for cash - 12,500 20,000 - 20,000
for cash - 2,500 6,250 - 6,250
for cash - 2,500 6,250 - 6,250
Sale of stock (private placement)
during June 1981 - 60,000 300,000 - 300,000
Sale of stock in public offering- 250,179 2,129,473 - 2,129,473
Net (loss) for the year ended
March 31, 1982 -- -- (18,559) (18,559)
---------- ----------- ------------- ---------------
Balances at March 31, 1982 610,179 2,684,021 (27,852) 2,656,169
Net (loss) for the year ended
March 31, 1983 -- -- (236,492) (236,492)
---------- ----------- ------------- ---------------
Balances at March 31, 1983 610,179 2,684,021 (264,344) 2,419,677
Net (loss) for the year ended
March 31, 1984 -- -- (538,995) (538,995)
---------- ----------- ------------- ---------------
Balances at March 31, 1984 610,179 2,684,021 (803,339) 1,880,682
Net (loss) for the year ended
March 31, 1985 -- -- (624,177) (624,177)
---------- ----------- ------------- ---------------
Balances at March 31, 1985 610,179 2,684,021 (1,427,516) 1,256,505
---------- ----------- ------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
----------------------- During the Total
Number of Exploration Shareholders'
Shares Amount Stage Equity
---------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
Issuance of restricted stock for cash
on behalf of the company 17,500 $ 20,082 $ -- $ $20,082
Net (loss) for the year ended
March 31, 1986 -- -- (847,308) (847,308)
---------- ----------- ------------- ---------------
Balance at March 31, 1986 627,679 2,704,103 (2,274,824) 429,279
Issuance of restricted stock for
services 10,000 5,000 -- 5,000
Net (loss) for the year ended
March 31, 1987 -- -- (526,070) (526,070)
---------- ----------- ------------- ---------------
Balances at March 31, 1987 637,679 2,709,103 (2,800,894) (91,791)
Net (loss) for the year ended
March 31, 1988 -- -- (194,762) (194,762)
---------- ----------- ------------- ---------------
Balances at March 31, 1988 637,679 2,709,103 (2,955,656) (286,553)
Issuance of restricted stock for cash 1,995 3,000 -- 3,000
Issuance of restricted stock in
partial settlement of a disputed
liability 2,500 2,500 -- 2,500
Net (loss) for the year ended
March 31, 1989 -- -- (165,082) (165,082)
---------- ----------- ------------- ---------------
Balances at March 31, 1989 642,174 2,714,603 (3,160,738) (446,135)
Net (loss) for the year ended
March 31, 1990 -- -- (725,765) (725,765)
---------- ----------- ------------- ---------------
Balances at March 31, 1990 642,174 2,714,603 (3,886,503) (1,171,900)
Net (loss) for the year ended
March 31, 1991 -- -- (134,961) (134,961)
---------- ----------- ------------- ---------------
Balances at March 31, 1991 642,174 2,714,603 (4,021,464) (1,306,861)
Net (loss) for the year ended
March 31, 1992 -- -- (345,090) (345,090)
---------- ----------- ------------- ---------------
Balances at March 31, 1992 642,174 2,714,603 (4,366,554) (1,655,227)
---------- ----------- ------------- ---------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
Deficit
Common Stock Accumulated
----------------------- During the Total
Number of Exploration Shareholders'
Shares Amount Stage Equity
---------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
Net (loss) for the year ended
March 31, 1993 - - (383,659) (383,659)
Realized loss on security - - - 3,276
---------- ----------- ------------- ---------------
Balance at March 31, 1993 642,174 2,714,603 (4,750,213) (2,035,610)
Net (loss) for the year ended
March 31, 1994 - - (50,370) (50,370)
---------- ----------- ------------- ---------------
Balance at March 31, 1994 642,174 2,714,603 (4,800,583) (2,085,980)
Net (loss) for the year ended
March 31, 1995 - - (50,000) (50,000)
---------- ----------- ------------- ---------------
Balance at March 31, 1995 642,174 2,714,603 (4,850,583) (2,135,980)
Net (loss) for the year ended
March 31, 1996 - - (50,000) (50,000)
---------- ----------- ------------- ---------------
Balance at March 31, 1996 642,174 2,714,603 (4,900,583) (2,185,980)
Net (loss) for the year ended
March 31, 1997 - - (50,000) (50,000)
---------- ----------- ------------- ---------------
Balance at March 31, 1997 642,174 2,714,603 (4,950,583) (2,235,980)
Net (loss) for the year ended
March 31, 1998 - - (50,000) (50,000)
---------- ----------- ------------- ---------------
Balance at March 31, 1998 642,174 2,714,603 (5,000,583) (2,285,980)
Net (loss) for the year ended
March 31, 1999 - - 1,435,922 1,435,922
---------- ----------- ------------- ---------------
Balance at March 31, 1999 642,174 2,714,603 (3,564,661) (850,058)
Issuance for services 357,826 21,250 - 21,250
Additional Shares (Rounding) 1,343 - - -
Net (loss) for the year ended
December 31, 1999 - - (95,762) (95,762)
---------- ----------- ------------- ---------------
Balance at December 31, 1999 1,001,343 $2,735,853 $ (3,660,423) $ (924,570)
=== ==== ========== =========== ============= ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
Cumulative
Amounts From
March 3, 1980
(Inception)
Through Nine Months Ended
Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1998
-------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Gain (loss) $ (3,660,423) $ (95,762) $ -
Adjustments to reconcile net loss
to net cash (used by)
operating activities:
Depreciation and amortization 147,668 - -
Write-down of deferred mine
development costs, mineral
properties and joint venture
advances to estimated net
realizable value 1,227,003 - -
Write-down of milling equipment
to estimated net realizable value 619,365 - -
Write off of abandoned mineral
properties and advance royalties 210,240 - -
Write-off of deferred mine
development costs 264,238 - -
Loss on disposition of mine
equipment, furniture and
equipment, and vehicles 311,542 - -
Gain on disposition of
property and equipment (17,054) - -
Oil and Gas dry-hole costs 25,000 - -
Bad debt expense 2,500 - -
Decrease in other assets 555 - -
(Decrease) Increase in accounts payable 360,058 - -
(Decrease) Increase in accrued interest payable - - -
Increase in accrued salary, officer 390,000 - -
(Increase) in miscellaneous receivable (2,500) - -
--------------- -------------- -------------
Total Adjustments 3,538,615 - -
--------------- -------------- -------------
Net cash (used by) operating activities $ (121,808) $ (95,762) $ -
=============== ============== =============
</TABLE>
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
Cumulative
Amounts From
March 3, 1980
(Inception)
Through
Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1998
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from investing activities:
Proceeds from the disposition
of property and equipment $ 86,628 $ - $ -
Additions to deferred mine
development costs (1,257,154) - -
Acquisition of other property
and equipment (1,012,523) - -
(Increase) in other assets (235,651) - -
--------------- -------------- -------------
Net cash (used by) investing activities (2,418,700) - -
--------------- -------------- -------------
Cash flows from financing activities:
Proceeds from issuance of
common stock 249,054 21,250 -
Issuance of long-term debt 131,250 75,000 -
Advance from an officer 36,350 - -
Proceeds from other notes payable
including $14,809 reclassified from
accounts payable and $1,822 of
interest expense incurred during the
March 31, 1991 fiscal year 43,631 - -
Payment on debt principal including
$2,000 for debt forgiveness in 1991 (83,250) - -
Repayment of advances from officer (36,350) - -
Advance to joint venture (186,940) - -
Shareholder advances - - -
--------------- -------------- -------------
Net cash provided by
financing activities 153,745 96,250 -
--------------- -------------- -------------
Net (decrease) increase in cash and
cash equivalents 488 488 -
Beginning cash and cash equivalents - - -
--------------- -------------- -------------
Ending cash and cash equivalents $ - $ - $ -
=============== ============== =============
</TABLE>
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
Cumulative
Amounts From
March 3, 1980
(Inception)
Through
Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1998
------------- ------------- -------------
<S> <C> <C> <C>
Supplemental schedule of non-cash
investing and financing activities:
Issuance of stock for property 224,548 - -
Investment in preferred stock
in exchange for mining claims 4,024 - -
Investment in marketable equity
security and miscellaneous
receivable resulting from
disposition of milling equipment 13,276 - -
Exchange of miscellaneous
receivable resulting from
milling equipment held for sale (10,000) - -
Supplemental disclosures of cash
information:
Cash paid for:
Interest $ 36,961 $ - $ -
================== ================== ===================
</TABLE>
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
Cumulative
Amounts From
March 3, 1980
(Inception) Year Ended
Through ----------------------------------------
Dec 31, 1999 Dec 31, 1999 March 31, 1999
------------------ ------------------ ------------------
<S> <C> <C> <C>
Cash Flows from operating activities:
Net Gain (loss) $ (3,810,423) $ (45,762) $ 1,435,922
Adjustments to reconcile net loss
to net cash (used by)
operating activities:
Depreciation and amortization 147,665 - -
Write-down of deferred mine
development costs, mineral
properties and joint venture
advances to estimated net
realizable value 1,227,003 - -
Write-down of milling equipment
to estimated net realizable value 619,365 - -
Write-off of abandoned mineral
properties and advance royalties 210,240 - -
Write-off of deferred mine
development costs 264,238 - -
Loss on disposition of mine
equipment, furniture and
equipment, and vehicles 311,542 - -
Gain on disposition of
property and equipment (17,054) - -
Oil and Gas dry-hole costs 25,000 - -
Bad debt expense 2,500 - -
Decrease in other assets 555 - -
(Decrease) Increase in accounts payable 360,058 - 25,000
(Decrease) Increase in accrued interest payable - - (672,003)
Increase in accrued salary, officer 300,000 - -
(Increase) in miscellaneous receivable (2,500) - -
------------------ ------------------ ------------------
Total Adjustments 3,536,615 - (647,003)
------------------ ------------------ ------------------
Net cash (used by) operating activities $ (71,808) $ (45,762) $ 765,919
================== ================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
Cumulative
Amounts From
March 3, 1980
(Inception) Year Ended
Through ----------------------------------------
Dec 31, 1999 Dec 31, 1999 March 31, 1999
------------------ ------------------ ------------------
<S> <C> <C> <C>
Cash flows from investing activities:
Proceeds from the disposition
of property and equipment $ 86,626 $ - $ -
------------------ ------------------ ------------------
Additions to deferred mine
development costs (1,257,154) - -
Acquisition of other property
and equipment (1,012,523) - -
(Increase) in other assets (235,651) - -
------------------ ------------------ ------------------
Net cash (used by) investing activities (2,418,700) - -
------------------ ------------------ ------------------
Cash flows from financing activities:
Proceeds from issuance of
common stock 249,054 21,250 -
Issuance of long-term debt 81,250 25,000 -
Advance from an officer 36,350 - -
Proceeds from other notes payable
including $14,809 reclassified from
accounts payable and $1,822 of
interest expense incurred during the
March 31, 1991 fiscal year 43,631 - -
Payment on debt principal including
$2,000 for debt forgiveness in 1991 (83,250) - -
Repayment of advances from officer (36,350) - -
Advance to joint venture (186,940) - -
Shareholder advances - - (888,919)
------------------ ------------------ ------------------
Net cash provided by
financing activities 103,745 46,250 (888,919)
------------------ ------------------ ------------------
Net (decrease) in cash and cash equivalents 488 488 -
Beginning cash and cash equivalents - - -
------------------ ------------------ ------------------
Ending cash and cash equivalents $ - $ - $ -
================== ================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
Cumulative
Amounts From
March 3, 1980
(Inception)
Through
Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1998
------------- ------------- -------------
<S> <C> <C> <C>
Supplemental schedule of non-cash
investing and financing activities:
Issuance of stock for property 224,548 - -
Investment in preferred stock
in exchange for mining claims 4,024 - -
Investment in marketable equity
security and miscellaneous
receivable resulting from
disposition of milling equipment 13,276 - -
Exchange of miscellaneous
receivable resulting from
milling equipment held for sale (10,000) - -
Supplemental disclosures of cash
information:
Cash paid for:
Interest $ 36,961 $ - $ -
================== ================== ===================
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
DYNAMIC I-T, INC.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
From March 3, 1980 (Inception) Through December 31, 1999
<PAGE>
DYNAMIC I-T, INC.
. (An Exploration Stage Company)
Notes to Financial Statements
December 31, 1999
Note 1 - Organization and Summary of Significant Accounting Policies:
Colorado Gold & Silver, Inc.(the Company) was incorporated under the
laws of the State of Colorado on March 3, 1980. The Company was
organized for the principal purpose of engaging in the business of
acquiring, exploring, and if warranted, developing mineral prospects.
Activities through March 31, 1992, during which time the Company was in
the exploration stage (a development stage company as defined by
Statement of Financial Accounting Standards No. 7), consisted
principally of organizational activities, including the sale of shares
of its common stock, and the acquisition, evaluation, exploration and
development of certain mineral properties for future production.
Certain of these properties were acquired from certain of the Company's
officers and directors. On August 23, 1999, the name of the Corporation
was changed to Dynamic I-T, Inc. per amendment to the articles of
incorporation.
Cash and Cash Equivalents:
For purposes of the Statement of Cash Flows, the Company considers
demand deposits and all highly liquid-debt investments purchased with a
maturity of three months or less to be cash equivalents.
Deferred Mine Development Costs, Mineral Properties
and Advance Royalties:
Mineral exploration costs were charged against income as incurred.
Costs incurred in developing mining properties for commercial
production are capitalized and reflected in the financial statements as
deferred mine development costs. Such costs consist primarily of labor,
supplies, contract construction services, allocated overhead and
capitalized interest related to mine development activities. The
Company capitalized deferred mine development costs at March 31, 1985
of $1,001,752 relating to the development of the Company's Colorado
mine. The Company had suspended development of this mine and had
written down the development costs to $250,000. During the year ended
March 31, 1990, management of the Company made a decision to abandon
this Colorado mining project. The Company recorded a loss of $250,000
on the write down of this Colorado deferred mine development cost to
its estimated net realizable value. In addition, the management of the
Company also abandoned certain of its California deferred mine
development costs, which resulted in a loss of $93,386 during the
year-end of March 31, 1990.
Costs of mineral properties acquired and advance royalties on expected
future production were deferred pending ultimate realization of such
production. All such costs were to be amortized on a unit-of-production
method if commercial production from the Company's mineral properties
occurs. Such costs were charged against income when the mineral
properties and advance royalties were abandoned.
Other Property and Equipment:
Other property and equipment were carried at costs and were depreciated
on the straight-line method over their estimated useful lives which
were as follows:
Vehicles 3 years
Furniture and equipment 5 years
<PAGE>
DYNAMIC I-T, INC.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 1999
Organization Costs:
Organization costs incurred by the Company totaling $5,000 had been
capitalized and have been amortized on the straight-line method over a
five-year period.
Net (Loss) Per Share:
The net (loss) per common share has been computed on the basis of the
weighted average number of shares of common stock outstanding during
the year. The number of shares outstanding on March 31, 1999 was
64,217,400, the outstanding shares at December 31, 1999 was 1,001,343.
On August 23, 1999 the Dynamic I-T, Inc. Board of Directors authorized
a 1/100 reverse split to shareholders of record as of that date.
Shareholder's equity has been restated to give retroactive recognition
to the stock split for all periods presented. All references to number
of shares have been restated to reflect the stock split.
Note 2 - Going-Concern:
As shown in the financial statements, the Company incurred a net loss
for the period ended December 31, 1999 the Company's current
liabilities exceeded its current assets by $874,570.
Working Capital requirements of the Company have been provided
primarily by Mr. M. Coke Reeves, President of the Company. These
factors indicate that the Company may be unable to continue in
existence without future working capital and future profitable
operations. 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 in existence.
Note 3 - Income Taxes:
As of December 31, 1999, the Company has financial reporting net
operating loss carryforwards of approximately $3,610,423 for which the
tax effect has not been recognized for financial reporting purposes.
The Company also has approximately $3,000,000 of tax net-operating
losses available for carry forward to offset future years' taxable
income. Such losses expire at various times through 2013 if not
utilized earlier.
Note 4 - Notes Payable:
Notes payable as of December 31, 1999 is as follows:
First Trust Corp. dated 11/19/98 payable on
July 1, 1999 with interest at 9% per annum.
An extension agreement on July 1, 1999 extending
maturity date to Sept. 30, 2000. $ 100,000
Note 5 - Loan Payable - Shareholder
A note for $75,000, payable over twelve months in quarterly
installments of $25,000 to Coke Reeves for settlement of debt and interest.
<PAGE>
DYNAMIC I-T, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
Note 6 - Related Party Transactions:
Accrued officer salary in the amounts of $390,000 represents salary due
Mr. M. Coke Reeves for services performed through March 31, 1999. An
agreement was reached on April 20, 1999 between Coke Reeves and the
Board of Directors to forgive the $390,000 accrued salary after the
common share price of the Company on the OTC Bulletin Board had
averaged $3.00 per share for thirty (30) consecutive trading days. In
the event that such average price does not occur within two years of
the date of the Agreement, the Company will issue S-8 registered shares
at the then market price, in full satisfaction of the obligation. In
addition, Coke Reeves shall hold a pledge of 20,000,000 shares of
Colorado Gold & Silver as collateral for the payment of the accrued and
unpaid salary.
Note 7 - Subsequent Event
On February 14, 2000 subject to certain conditions in the Share
Purchase Agreement, the Board of Directors authorized the issuance of
30,400,000 shares of restricted common stock to Banknet KFT pursuant to
a Share Purchase Agreement. Banknet provides data communications
services within Hungary and neighboring states. It owns a hub in
Budapest with an installed base of 600 remote sites.
On February 11, 2000 the Board of Directors authorized a total of
1,000,000 warrants to purchase common shares at $.50 per share for a
period of seven years commencing February 1, 2000 as consideration for
services rendered in the acquisition of Banknet.
On February 11, 2000 the Board of Directors authorized the issuance of
a total of 750,000 shares of restricted common stock for the full fair
and adequate consideration for services rendered.
<PAGE>
ITEM 2 B MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
condensed financial statements and notes thereto appearing elsewhere in this
report.
OVERVIEW
Dynamic I-T, Inc. ("Dynamic" or the "Company"), a Colorado corporation,
was incorporated in 1980 as Colorado Gold & Silver Mining to engage in the
exploration, acquisition and development of mining and mineral prospects. In
August 1999, the Company changed its name and ceased all of its efforts in the
mining and minerals industry and approved a plan to pursue the acquisition of
development stage Internet-related companies and technologies which such
companies will likely lack any significant operating or financial histories and,
in all likelihood, be unprofitable with significant losses and negative
shareholders equity and which technologies will likely be development stage
with little or no revenue and no history of sales. The Company would intend to
be an "incubator" of such Internet-related endeavors and to develop an acquired
company to the point that such a company would be able to begin marketing its
services and generate revenue. Thus, the Company amended its articles of
incorporation in order to reflect the change in its basic business and conducted
extensive market research and analysis in order to focus its marketing efforts
more narrowly to an Internet business that would have wide application, have the
ability to generate long term growth, be international in scope, and not require
capital intensive start-up costs. A decision was made by Company management to
enter the distance learning ("Distance Learning") market with the objective of
developing via the Internet and delivering through tailored global distance
educational courses including business, corporate, medical and pedagogical
programs. The Company will offer the programs from the United States for
delivery virtually anywhere in the world. The technology used by the Company in
the delivery of these interactive programs will be via broadband terrestrial and
satellite telecommunications networks utilizing the Internet as the medium for
course work. Although its primary focus will be
<PAGE>
in the business, corporate and medical areas, the Company will be able to
provide educational programs through the Internet for public or private
pedagogical institutions or for the training of executives in virtually any
industry. Instruction can be offered to enhance the subscriber's knowledge for
business or other purposes and could ultimately be for degree or non-degree
programs.
In August 1999, the Company effected a reverse split of its common
stock and simultaneously changed its name to Dynamic I-T, Inc. amending its
stated business purpose in order to begin to focus on the aforementioned
objective of acquiring Internet-related companies and/or technologies. The
Company's strategic and tactical plans are currently in the process of being
implemented by Company personnel as well as through the use of outside
consultants and other professionals. For example, the Company's website is being
developed by Engram Digital, a leading Internet web development company. In
addition, the Company recently announced the completion of the video portion of
the first of 25 online executive seminars that it plans to produce over the next
two years. Each seminar is designed for management personnel of Fortune 1000
companies and can be accessed from any computer with a modem at any time.
The Company's objective is to be one of the leading providers of
Distance Learning in the United States and ultimately internationally. To
achieve this, Dynamic will need to simultaneously grow through direct and
third-party sales, acquisition of small domestic and international companies,
and the generation of multiple revenue streams. The Company also needs to
develop more channels for the marketing of its Distance Learning programs, and
maintain its focus on emerging technology while continuing to develop a high
level of expertise in this industry. The Company intends to introduce many more
innovative product solutions to the Distance Learning industry and to expand
into other Internet-related businesses by exploiting leading technologies and
creating cutting-edge, customized solutions for emerging customer segments. The
Company believes that more and more international opportunities are emerging for
the Company in the Distance Learning arena and intends to pursue that market
more vigorously.
<PAGE>
The key to the Company's future success lies in its ability to provide
premier Distance Learning programs and to execute its acquisition strategy and
the expansion of its product offerings.
The Company's securities are quoted on the Over-the-Counter Bulletin
Board ("OTCBB") under the symbol DYNM.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31,
1999 COMPARED TO THE NINE MONTHS ENDED DECEMBER 31, 1998
REVENUES
Dynamic I-T, Inc. had no revenues for the nine months ended December
31, 1999 and had no revenues for the comparable period in 1998. The Company
expects to generate revenues later this year upon completion of the offering of
educational programs over the Internet.
GENERAL AND ADMINISTRATIVE EXPENSES
The Company's General and Administrative expenses increased to $95,762
for the nine months ended December 31, 1999 as compared to zero during the
comparable period ended December 31, 1998. This increase was attributable to
professional fees incurred by the Company associated with accounting, legal and
consulting services performed on behalf of the Company and for interest on the
default of a note. The Company had no other expenses during the nine months
ended December 31, 1999 or during the comparable period ended December 31, 1998.
OTHER INCOME (EXPENSE)
The Company had no other income (expense) during the nine months ended
December 31, 1999 or during the comparable period ended December 31, 1998.
<PAGE>
NET INCOME (LOSS) BEFORE INCOME TAXES
For the nine months ended December 31, 1999, the Company had a loss of
($95,762) as compared to net income (loss) of $0 during the nine months ended
December 31, 1998. This increase is attributable to the Company's previously
noted fees for professional services and a charge for its default on a note.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31,
1999 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 1998
REVENUES
Dynamic I-T, Inc. had no revenues for the three months ended December
31, 1999 and had no revenues for the comparable period in 1998. The Company
expects to generate revenues during fiscal year 2000 upon the completion of its
website and the offering of its various Distance Learning programs.
GENERAL AND ADMINISTRATIVE EXPENSES
The Company's General and Administrative expenses increased to $9,250
for the three months ended December 31, 1999 as compared to zero during the
comparable period ended December 31, 1998. These expenses were for legal fees
incurred by the Company during the three month-period ended December 31, 1999.
The Company had no other expenses during the three months ended December 31,
1999 or during the comparable period ended December 31, 1998.
OTHER INCOME (EXPENSE)
The Company had no other income (expense) during the three months ended
December 31, 1999 or during the comparable period ended December 31, 1998.
NET INCOME (LOSS) BEFORE INCOME TAXES
<PAGE>
For the three months ended December 31, 1999, the Company had a loss of
($9,250) as compared to net income (loss) of $0 during the three months ended
December 31, 1998. This increase is attributable to legal fees incurred by the
Company.
LIQUIDITY AND CAPITAL RESOURCES
The Company had minimal cash capital at the end of the nine months
ended December 31, 1999 as well as for the comparable period ended December 31,
1998. The Company will be forced to either borrow funds or to sell shares of its
common stock in order to fund operations. Historically, the Company has financed
its working capital requirements through internally generated funds, that is,
prior to its abandoning the mining and minerals prospects business, the sale of
shares of its common stock, and proceeds from short-term bank borrowings. The
Company currently has a note with First Trust Corporation in the outstanding
principal amount of $100,000 which is in default. First Trust Corporation
assessed a penalty in the amount of $50,000 during the nine months ended
December 31, 1999 due to the Company's default . The Company also increased the
principal amount on a note to the former President and Director of the Company,
M. Coke Reeves, by $25,000, or fifty (50%) percent, so that that note now totals
$75,000.
As of December 31, 1999, the Company had cash capital of $488 as
compared with no cash capital for the comparable period ended December 31, 1998.
The Company currently anticipates existing sources of liquidity and
cash to be insufficient to satisfy its operational needs through the next nine
months. To make future acquisitions or for other forthcoming similar expenses,
the Company may seek to increase the amount of its credit facilities, negotiate
additional credit facilities or issue corporate debt or equity securities. Any
debt incurred or issued by the Company may be secured or unsecured, fixed or
variable rate interest and may be subject to such terms as the Board of
Directors of the Company deems prudent. The Company expects any proceeds from
such additional credit or sales of securities to be used primarily in the
development and marketing of its products. No assurances can be given that the
<PAGE>
Company will be successful in obtaining any additional credit facilities or in
generating sufficient capital from the sale of its securities to adequately fund
its operational needs.
The Company does not believe that its business is subject to seasonal
trends.
The Company does not believe that inflation had a significant impact on
the Company's results of operations for the period presented. On an ongoing
basis, the Company attempts to minimize any effects of inflation on its
operating results by controlling operating costs, and, whenever possible,
seeking to insure that product price rates reflect increases in costs due to
inflation.
CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
The statements contained in the section captioned Management's
Discussion and Analysis of Financial Condition and Results of Operations which
are not historical are "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking statements
represent the Company's present expectations or beliefs concerning future
events. The Company cautions that such forward-looking statements involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things, the
uncertainty as to the Company's future profitability; the uncertainty as to the
demand for Distance Learning; increasing competition in the Distance Learning
market; the ability to hire, train and retain sufficient qualified personnel;
the ability to obtain financing on acceptable terms to finance the Company's
growth strategy; and the ability to develop and implement operational and
financial systems to manage the Company's growth.
<PAGE>
New Accounting Pronouncements
No new pronouncement issued by the Financial Accounting Standards
Board, the American Institute of Certified Public Accountants or the Securities
and Exchange Commission is expected to have a material impact on the Company's
financial position or reported results of operations.
PART II OTHER INFORMATION
Item 1 Legal Proceedings
Dynamic I-T, Inc. is not a party to any litigation.
Item 2 Changes in Securities
See Condensed Financial Statements
Item 3 Defaults on Senior Securities
None
Item 4 Submission of Matters to a Vote of Shareholders
None
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K.
<PAGE>
(i) Form 8-K was filed with the Securities and Exchange
Commission on April 30, 1999 to report the Company's cancellation of a Plan and
Agreement of Reorganization with Contract Power, Inc. for non-performance and to
report related business matters. The 8-K also contained information regarding
the appointment of two new directors to the Company's Board of Directors.
(ii) Form 8-K was filed with the Securities and Exchange
Commission on June 23, 1999 to report that one of the directors that was to be
appointed to the Company's Board of Directors could not assume his directorship
until the shareholders of the Company approved an increase in the number of
directors from three.
(iii) Form 8-K was filed with the Securities and Exchange
Commission on August 27, 1999 to report (a) that the Company effected reverse
split of the issued and outstanding common shares of the Company; (b) that the
name of the Company was changed to Dynamic I-T, Inc.; and (c) that the number of
directors of the corporation was increased from not less than three to no more
than nine.
(iv) Previous counsel of the Company filed Form 8-K on October
22, 1999 identical in content to the Form 8-K filed on August 27, 1999.
(v) Form 8-K was filed with the Securities and Exchange
Commission on March 1, 2000 to report the forthcoming acquisition by the Company
of Banknet KFT, a Hungarian corporation with the issuance in consideration of
30,400,000 of shares of the Company's common stock. The closing of the
transaction was postponed until not later than July 31, 2000. The Company plans
to file an amended Form 8-K upon consummation of this transaction.
The following Exhibits are being filed:
27 Financial Data Schedule
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act,
the Company duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
DYNAMIC I-T, INC.
By: /s/ Melvyn F. Quiller
Melvyn F. Quiller
Chief Executive Officer
Date: July 14, 2000
In accordance with the Exchange Act, this Report has been
signed below by the following persons on behalf of the Company in the capacities
set forth and on the dates indicated.
<TABLE>
<S> <C> <C> <C>
Signature Position Date
By: /s/ Melvyn F. Quiller Chief Executive Officer July 14, 2000
Melvyn F. Quiller
By: /s/ Raymond King Chief Financial Officer July 14, 2000
Raymond King
</TABLE>
