<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 June 30, 2000
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 0-10065 82-0379959
---------------------------- ----------------- ----------------------
(State or other jurisdiction Commission File (IRS Employer
of incorporation) No. Identification No.)
2504 11th Street, Santa Monica, California 90405
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 392-8179
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 August 11, 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
-- Unaudited Condensed Consolidated Balance Sheets,
June 30, 2000 and June 30, 1999 2
-- Unaudited Condensed Consolidated Statements of Operations
from inception through June 30, 2000 and for the three
months ended June 30, 2000 and June 30, 1999 3
-- Statement of Shareholders' Equity from inception through
June 30, 2000 and for the three months ended June 30, 2000
and June 30, 1999 4 - 6
-- Unaudited Condensed Consolidated Statements of Cash Flows
from inception through June 30, 2000 and for the three
months ended June 30, 2000 and June 30, 1999 7 - 12
-- Notes to unaudited Condensed Consolidated Financial
Statements 13 - 16
<PAGE>
[LETTERHEAD OF MICHAEL JOHNSON & CO., LLC]
Board of Directors
Dynamic I-T, Inc.
We have reviewed the accompanying balance sheet of Dynamic I-T, Inc. (an
Exploration Stage Company, the "Company") as of June 30, 2000, and the related
statements of operations, cash flows, and changes in stockholders' equity for
the period March 3, 1980 (inception), through June 30, 2000, and the three month
period ended June 30, 2000 and June 30, 1999 (as applicable). 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 review.
We conducted our review in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the review to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. A review includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. A review 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 reviews 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 June 30,
2000, and the results of its operations and its cash flows for the period March
3, 1980 (inception), through June 30, 2000, and the three month period ended
June 30, 2000 and June 30, 1999 (as applicable), 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 June 30,
2000, 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
August 10, 2000
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEET
Three-Months
Ended Year Ended
June 30, March 31
ASSETS 2000 2000
------ ----------- -----------
Current Assets:
Cash $ 271,962 $ 488
----------- -----------
Fixed Assets 161,000 --
----------- -----------
TOTAL ASSETS $ 432,962 $ 488
=========== ===========
LIABILITIES AND SHAREHOLDERS'
-----------------------------
Current Liabilities:
Accounts payable & Accrued expenses $ 180,413 $ 255,413
Accrued salary, officer 390,000 390,000
Note Payable (Note 4) 207,645 229,645
Loan Payable - Shareholders (Note 5) 50,000 50,000
----------- -----------
Total Current Liabilities 828,058 925,058
Shareholders' (Deficit):
Common stock, no par value;
authorized 100,000,000 shares;
4,205,213 shares issued and outstanding at
June 30, 2000, and 642,174 as of June 30, 1999 3,713,601 2,735,853
Deficit accumulated during the
exploration stage (4,108,697) (3,660,423)
----------- -----------
Total Shareholders' (Deficit) (395,096) (924,570)
TOTAL LIABILITIES & SHAREHOLDERS' $ 432,962 $ 488
=========== ===========
The accompanying notes are an integral part of the financial statements.
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION) THROUGH JUNE 30, 2000
<TABLE>
<CAPTION>
Cumulative
Amounts from
Inception
(March 3,
1980) through Three Months Ended
June 30, 2000 June 30, 2000 June 30, 1999
------------- ------------- -------------
<S> <C> <S> <S>
Income $ -- $ -- $ --
Costs and Expenses:
General and administrative,
including exploration costs 2,461,929 448,274 --
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) 5,583,070 448,274 --
----------- ----------- -----------
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 (5,591,430) (448,274) --
Provision for income taxes --
----------- ----------- -----------
Net (loss) before extraordinary item (5,591,430) (448,274) --
----------- ----------- -----------
Extraordinary item:
Gain from forgiveness of debt (Note 4) 1,482,733 -- --
----------- ----------- -----------
Net Gain (loss) $(4,108,697) $ (448,274) $ --
=========== =========== ===========
Net Gain (loss) per share: $ (0.33) $ --
----------- -----------
Weighted average shares outstanding 1,368,650 64,217,400
=========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH JUNE 30, 2000
<TABLE>
Deficit
Common Stock Accumulated
----------------------- During The Total
Number Exploration Shareholders'
of 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)
--------- ---------- ----------- -----------
Balances 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>
<TABLE>
<CAPTION>
<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 (2,995,656) (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)
----------- ----------- ----------- -----------
The accompanying notes are an integral part of the financial statements.
<PAGE>
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)
----------- ----------- ----------- -----------
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 profit 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 profit for the year ended
March 31, 2000 - - (95,762) (95,762)
----------- ----------- ----------- -----------
Balance at March 31, 2000 1,001,343 2,735,853 (3,660,423) (924,570)
Issuance for Cash 3,203,840 977,748 - 977,748
Net profit for the period
ended June 30, 2000 - - - -
----------- ----------- ----------- -----------
Balance at June 30, 2000 4,205,183 3,713,601 448,274 448,274
=========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION) THROUGH JUNE 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
Amounts From
March 3, 1980
(Inception)
Through Three-Months Ended
June 30, 2000 June 30, 2000 June 30, 1999
------------- ------------- ----------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net Gain (loss) $(4,108,697) $ (448,274) $ -
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 285,058 (75,000) -
(Decrease) Increase in accrued interest payable - - -
Increase in accrued salary, officer 390,000 - -
-
(Increase) in miscellaneous receivable (2,500) - -
----------- ----------- ----------------
Total Adjustments 3,463,615 (75,000) -
----------- ----------- ----------------
Net cash (used by) operating activities $ (645,082) $ (523,274) $ -
=========== =========== ================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION)
THROUGH JUNE 30, 2000
<TABLE>
<CAPTION>
Cumulative
Amounts From
March 3, 1980
(Inception)
Through Three-Months Ended
June 30, 2000 June 30, 2000 June 30, 1999
------------- ------------- -------------
<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 (1,173,523) (161,000) --
(Increase) in other assets (235,651) -- --
----------- ----------- -----------
Net cash (used by) investing activities (2,579,700) (161,000) --
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from issuance of
common stock 1,226,802 977,748 --
Issuance of long-term debt 109,250 (22,000) --
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 1,109,493 955,748 --
----------- ----------- -----------
Net (decrease) increase in cash and
cash equivalents 271,474 271,474 --
Beginning cash and cash equivalents 488 488 --
----------- ----------- -----------
Ending cash and cash equivalents $ 271,962 $ 271,962 $ --
=========== =========== ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
DYNAMIC I-T, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 3, 1980 (INCEPTION) THROUGH JUNE 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
Amounts From
March 3, 1980
(Inception)
Through Three-Months Ended
June 30, 2000 June 30, 2000 June 30, 1999
------------- ------------- -------------
<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 $ 86,961 $ - $ -
============= ============= =============
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
DYNAMIC I-T, INC.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
From March 3, 1980 (Inception) Through June 30, 2000
<PAGE>
DYNAMIC I-T, INC.
(An Exploration Stage Company)
Notes to Financial Statements
June 30, 2000
(Unaudited)
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. by 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 as of 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 ending 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
June 30, 2000
(Unaudited)
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 and June
30, 2000 was 64,217,400 and 4,205,213, respectively. On August 23, 1999
the Dynamic I-T, Inc. Board of Directors authorized a 1 for 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 - Income Taxes:
As of June 30, 2000, the Company has financial reporting net operating
loss carryforwards of approximately $3,484,711 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 3 - Notes Payable:
Notes payable as of June 30, 2000 are 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 extended
the maturity date to Sept. 30, 2000. $ 25,000
Banknet advance dated 1/30/2000, due upon
demand. 182,645
-----------
Total notes payable $ 207,645
==========
Note 4 - Related Party Transactions:
Accrued officer salary in the amount 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 M. 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, M. Coke Reeves shall hold a pledge of 200,000 shares of
Dynamic I-T, Inc., as collateral for the payment of the accrued and
unpaid salary. This obligation was paid off with proceeds from the
private offering.
<PAGE>
DYNAMIC I-T, INC.
(An Exploration Stage Company)
Notes to Financial Statements
June 30, 2000
(Unaudited)
Note 5 - Going Concern
As shown in the financial statements, the Company incurred a net loss
for the period ended June 30, 2000 of $448,274. The Company's current
liabilities exceeded its current assets by $556,096.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
As discussed in Note 1 to the financial statements, the Company's recurring
losses from operations, its difficulties in generating sufficient cash-flow to
meet its obligations and sustain its operations and its stockholders' capital
deficiency raise substantial doubt about its ability to continue as a going
concern. Management's plans concerning these matters are described in Note 6.
Note 6 - Subsequent Event
On February 14, 2000 subject to certain conditions precedent in a Share
Purchase Agreement, the Board of Directors authorized the issuance of 30,400,000
shares of restricted common stock to Banknet KFT for the acquisition of Banknet.
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 28, 2000 the Board of Directors resolved that the closing
date of the transactions contemplated by the Agreement would be extended from
February 28, 2000 to a date that is after March 31, 2000 and on or before July
31, 2000. On July 31, 2000, the Company completed its acquisition of Banknet
pursuant to the Share Purchase Agreement.
On August 2, 2000, the Company completed the acquisition valued at
$2,605,904.60 of LM Magyarforszag Kft ("LM"), a company organized under the laws
of Hungary, for consideration consisting of cash, shares in Dynamic I-T, Inc.,
and the assumption by the Company of a debt of LM payable to Complex Holdings
Limited ("Complex"). LM's primary asset consists of real property. The cash
total was $500,000 of which a deposit of $161,000 was paid at closing. The
balance of $339,000 will be paid in one payment of $39,000 and six equal
consecutive monthly payments of $30,000. Complex will also receive 700,000
shares in Dynamic for the balance of $2,105,904. The number of shares was
determined based on their estimated fair market value at closing. A debt of LM
payable to Complex in the amount of $4,421,65 was also assumed by Dynamic. It is
the intention of the Board of Directors to sell the property at the earliest
opportunity to raise cash for Dynamic's future expansion.
ITEM 2. 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, Inc. 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 intends to be an
"incubator" of such Internet-related endeavors and to develop an acquired
company to the point that it would be able to begin marketing its own services
and generate revenue. 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
Internet businesses 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 business, corporate, medical and pedagorical
programs through tailored global distance educational courses. 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.
<PAGE>
Although its primary focus will be 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 focusing on its new business
objectives. 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 at any time from any computer with a
modem.
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 technologies 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.
The key to the Company's future success lies in its ability to provide
premier Distance Learning programs, to execute its acquisition strategy and to
expand 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 THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THE
THREE MONTHS ENDED JUNE 30, 1999
REVENUES
Dynamic I-T, Inc. had no revenues for the three months ended June 30,
2000 and had no revenues for the comparable period in 1999. The Company expects
to generate revenues later this year upon commencing the offering of Distance
Learning programs over the Internet.
GENERAL AND ADMINISTRATIVE EXPENSES
The Company's General and Administrative expenses increased to $448,274
for the three months ended June 30, 2000 as compared to nil during the
comparable period ended June 30, 1999. This increase was attributable to
professional fees incurred by the Company consisting of accounting, legal and
consulting services performed on behalf of the Company, for the payment of
salaries, and a note payable. The Company had no other expenses during the three
months ended June 30, 2000 or during the comparable period ended June 30, 1999.
<PAGE>
OTHER INCOME (EXPENSE)
The Company had no other income (expense) during the three months ended
June 30, 2000 or during the comparable period ended June 30, 1999.
NET INCOME (LOSS) BEFORE INCOME TAXES
For the three months ended June 30, 2000, the Company had a loss of
($448,274) as compared to net income (loss) of nil during the three months ended
June 30, 1999. This increase is attributable to the Company's previously noted
fees for professional services, salaries and the payment of a note.
LIQUIDITY AND CAPITAL RESOURCES
In May 2000, the Company completed a private offering ("Offering") in
the amount of $977,748 net of the costs of the Offering from the sale of
3,262,840 shares of the Company's common stock.
The Company had more cash capital at the end of the three months ended
June 30, 2000 than for the comparable period ended June 30, 1999 due primarily
to the proceeds from the Offering. Nevertheless, the Company may still be
forced to either borrow funds or to sell additional 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 loan with First Trust Corporation, which is due on September 30,
2000. The Company also has a demand note with Banknet in the amount of $204,645.
<PAGE>
As of June 30, 2000, the Company had cash capital of $271,784 as
compared with cash capital of $488 for the comparable period ended June 30,
1999. This increase in cash capital is the result of the Offering of the
Company's common stock which was completed during the quarter ended June 30,
2000.
The Company currently anticipates that existing sources of liquidity
and cash may be insufficient to satisfy its operational needs through the next
six to nine months. To make future acquisitions or for other 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
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.
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
<PAGE>
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.
(i) No Reports on Form 8-K were filed during the
period ended June 30, 2000.
(ii) 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: August 15, 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>
<CAPTION>
Signature Position Date
<S> <C> <C>
By: /s/ Melvyn F. Quiller Chief Executive Officer August 15, 2000
Melvyn F. Quiller
By: /s/ Raymond King Chief Financial Officer August 15, 2000
Raymond King
</TABLE>
