<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT ISSUED UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Three Months Ended October 31, 1999
Commission file number 0-14026
ii GROUP, INC.
--------------
(Exact name of registrant as specified in its charter)
Delaware 59-219720
- --------------------------------------------------------------------------------
(State or other jurisdiction of I.R. S. Employer Identification No.
incorporation or organization)
7000 W. Palmetto Park Road, Suite 501, Boca Raton, Florida 33433
----------------------------------------------------------------
(Address of principal executive offices)
(561) 620-9202
----------------------------------------------
Issuer's telephone number, including area code:
Daltex Medical Sciences,Inc..
7777 Glades Road, Suite 211, Boca Raton, Florida 33434
------------------------------------------------------
(Former name or address if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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 _______
--------
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes _______ No _______
APPLICABLE ONLY TO CORPORATE ISSUERS
On December 1, 1999, the Registrant had outstanding 372,643 shares of common
stock, $.01 par value.
<PAGE>
iiGROUP, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
October 31,
1999 July 31,
(unaudited) 1999
----------- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,401 $ 541
----------- -----------
Total current assets 6,401 541
----------- -----------
$ 6,401 $ 541
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Notes payable $ 30,000 $ 15,000
Accounts payable and accrued expenses 37,517 87,682
Loans payable -- 5,000
----------- -----------
Total current liabilities 67,517 107,682
----------- -----------
Stockholders' deficit:
Preferred stock, $1 par value, authorized
850,000 shares, 0 shares issued, -- --
Series A Preferred stock, $1 par value, authorized
150,000 shares, 95,000 and 80,000 shares issued
and outstanding 95,000 80,000
Common stock, $.01 par value;
Authorized 50,000,000 shares; 372,643 shares
Issued and outstanding (restated) 3,727 3,727
Additional paid-in capital 7,807,969 7,807,969
Retained deficit (7,967,812) (7,998,837)
----------- -----------
Total stockholders' deficit (61,116) (107,141)
----------- -----------
$ 6,401 $ 541
=========== ===========
</TABLE>
See accompanying notes to financial statements
1
<PAGE>
iiGROUP, INC.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 1999, AND 1998
<TABLE>
<CAPTION>
1999 1998
(unaudited) (unaudited)
---------- -----------
<S> <C> <C>
Expenses:
General and administrative expenses 13,975 16,274
---------- -----------
Loss from operations before extraordinary item (13,975) (16,274)
Extraordinary item:
Gain on extinguishment of debt
(net of income taxes of $8,600) 36,400 --
---------- -----------
Income (loss) before income taxes 22,425 (16,274)
Income tax expense (benefit) 8,600 --
---------- -----------
Net income (loss) $ 31,025 $ (16,274)
========== ===========
Net income (loss) per share information:
Basic:
Loss from operations before extraordinary item $ (.04) $ (.09)
========== ===========
Extraordinary item $ .10 $ .00
========== ===========
Net income (loss) per share $ .08 $ (.09)
========== ===========
Weighted average number of common shares 372,654 172,660
========== ===========
Diluted:
Loss from operations before extraordinary item $ (.04) $ (.09)
========== ===========
Extraordinary item $ .10 $ .00
========== ===========
Net income (loss) per share $ .08 $ (.09)
========== ===========
Weighted average number of common shares 372,654 172,660
========== ===========
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
iiGROUP, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED OCTOBER 31, 1999, AND 1998
<TABLE>
<CAPTION>
1999 1998
(unaudited) (unaudited)
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 31,025 $ (16,274)
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Gain on extinguishment of debt (45,000)
Changes in assets and liabilities:
Accounts payable accrued expenses 9,835 (23,961)
--------- ---------
Net cash used in operations: (4,140) (40,235)
--------- ---------
Cash flows provided by financing activities:
Proceeds from increase of notes payable 10,000
Increase (decrease) in other liabilities -- 32,900
--------- ---------
Net cash provided by financing activities 10,000 32,900
--------- ---------
Net increase (decrease) in cash and cash equivalents 5,860 (7,335)
Cash and cash equivalents, beginning of period 541 22,495
--------- ---------
Cash and cash equivalents, end of period $ 6,401 $ 15,160
========= =========
Supplemental disclosure of non-cash
investing and financing activities:
Issuance of preferred stock for debt $ 15,000 $ --
========= =========
Gain on settlement and mutual
release agreement of debt $ 45,000 $ 871,760
========= =========
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
Notes to Financial Statements
October 31, 1999
(Unaudited)
(1) Basis of Presentation
The unaudited condensed financial statements have been prepared from
the books and records of iiGroup, Inc. (formerly Daltex Medical Sciences, Inc.)
(the "Company") in accordance with generally accepted accounting principles for
interim financial information. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.
The accompanying unaudited condensed financial statements, which are
for interim periods, do not include all disclosures provided in the annual
financial statements. These unaudited condensed financial statements should be
read in conjunction with the financial statements and the footnotes thereto
contained in the Annual Report on Form 10-KSB for the year ended July 31, 1999
as filed with the Securities and Exchange Commission.
In the opinion of the Company, the accompanying unaudited condensed
financial statements contain all adjustments (which are of a normal recurring
nature) necessary for a fair presentation of the financial statements. The
results of operations for the three months ended October 31, 1999 are not
necessarily indicative of the results to be expected for the full year.
Going Concern - The report of the Company's independent accountants on
their audit of the Company's July 31, 1999 consolidated financial statements
contained uncertainties relating to the Company's ability to continue as a going
concern. The Company has incurred a loss from operations for the three months
ended October 31, 1999, and uncertainties exist with regard to the Company's
ability to generate sufficient cash flows from operations or other sources to
meet existing obligations, which gives rise to doubts about the Company's
ability to continue as a going concern. These financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
(2) Stockholders' Equity
During the three months ended October 31, 1999, the Company's president
was issued 15,000 shares of Series A Convertible Preferred Stock in exchange for
the cancellation of indebtedness of $45,000. Each share of Series A Convertible
Preferred Stock is convertible into 20 shares of Common Stock, or an aggregate
of 1,900,000 shares of Common Stock, at any time and votes with the common
shares and not as a separate class on any matters coming before the
shareholders.
<PAGE>
PART I
ITEM 2. Management's Discussion and Analysis or Plan of Operation
General
The following discussion regarding iiGroup and its business and
operations contains "forward-looking statements" within the meaning of Private
Securities Litigation Reform Act 1995. Such statements consist of any statement
other than a recitation of historical fact and can be identified by the use of
forward-looking terminology such as "may," "expect," "anticipate," "estimate" or
"continue" or the negative thereof or other variations thereon or comparable
terminology. The reader is cautioned that all forward-looking statements are
necessarily speculative and there are certain risks and uncertainties that could
cause actual events or results to differ materially from those referred to in
such forward looking statements. iiGroup does not have a policy of updating or
revising forward-looking statements and thus it should not be assumed that
silence by management of iiGroup over time means that actual events are bearing
out as estimated in such forward looking statements.
iiGroup is seeking to acquire companies in the Internet or information
technology areas. iiGroup's officers and directors have had preliminary contact
or discussions with representatives of several companies regarding the
possibility of a business combination between iiGroup and such other company,
although none of these have resulted in any agreements or understandings and it
is possible, if not likely, that no transaction will be consummated with any of
these parties.
The discussion below should be reviewed together with iiGroup's
financial statements and the notes thereto.
Results of Operations
For the three months ended October 31, 1999 and October 31, 1998,
iiGroup had no revenue.
Operating expenses for the three months ended October, 1999 and 1998
consisted principally of general and administrative expenses. General and
administrative expenses in the three months ended October 31, 1999 and 1998 were
$13,974 and $16,274, respectively. iiGroup expects these expenses to stay low
until iiGroup acquires one or more businesses.
iiGroup realized an extraordinary gain of $36,400 for the three months
ended October 31, 1999 from the extinguishment of indebtedness as stock was
issued in cancellation of certain liabilities. This resulted in a tax benefit of
$8,600.
iiGroup had net income of $31,025 for the three months ended October
31, 1999 compared to a net loss of $16,274 for the three months ended October
31, 1998, primarily due to the extraordinary gain.
Liquidity and Capital Resources
At October 31, 1999, iiGroup had cash and cash equivalents of
approximately $6,401, representing an increase of approximately $5,860 over the
July 31, 1999 balance of cash and cash equivalents. During the three months
ended October 31, 1999, iiGroup used net cash for operations of $4,140 as
compared to $40,235 in 1998. This change in cash flows from operations was
primarily due to decreases in accrued expenses. In addition, iiGroup had a
working capital deficit of $61,116 as of October 31, 1999, primarily due to
accrued payables and expenses. iiGroup owed $5,000 to Columbia University that
was past due.
In February 1999, iiGroup issued to three investors 1,000,000 shares of
common stock at a price of $.01 per share in exchange for the cancellation of
<PAGE>
$10,000 in loans from these persons. These investors also were issued 89,000
shares of Series A Convertible Preferred Stock in exchange for $89,000 of cash.
During the three months ended October 31, 1999, iiGroup issued an additional
15,000 shares of Series A Preferred Stock to Bruce Hausman, its president, in
cancellation of $60,000 of indebtedness. All of the outstanding preferred stock
has since been converted to 1,900,000 shares of common stock. In September 1999,
iiGroup issued $30,000 principal amount of convertible notes in exchange for
cash.
Management has continued to curtail expenditures in many areas,
including discretionary expenditures, in order to focus iiGroup's extremely
limited resources in what it believes are the most promising areas of iiGroup's
business in the near term. However, there can be no assurance that iiGroup will
have sufficient funds to carry out these plans or to remain in business. If
iiGroup is unsuccessful in raising additional capital during fiscal year 2000,
iiGroup may be unable to continue as a going concern, even with further
cost-cutting measures. To meet its long-term liquidity requirements, iiGroup
must also generate sufficient income through operations or obtain additional
financing as required, as to which there can be no assurance. However, there can
be no assurance that iiGroup will be successful in meeting its immediate or
long-term liquidity requirements or that iiGroup can continue as a
going-concern.
iiGroup may utilize cash derived from the sale of equity securities,
debt securities or bank or other borrowing or a combination thereof as
consideration in effecting a Business Combination. Although iiGroup has no
commitments as of the date hereof to issue any shares of Common Stock or options
or warrants, iiGroup will, in all likelihood, issue a substantial number of
additional shares in connection with the consummation of a Business Combination.
To the extent that such additional shares are issued, dilution to the interests
of iiGroup's stockholders will occur. Additionally, if a substantial number of
shares of Common Stock are issued in connection with the consummation of a
Business Combination, a change in control of iiGroup may occur which may affect,
among other things, iiGroup's ability to utilize net operating loss carry
forwards, if any.
Year 2000
Since iiGroup does not currently have any operations or computer
systems, it is not required to make any adjustments for the Year 2000 problem.
However, to the extent that iiGroup consummates a Business Combination, it will
be required to insure that the Target Business is Year 2000 compliant.
PART II
ITEM 2. Changes in Securities and Use of Proceeds
(b) See Item 5 below for a description of the reverse stock split and
amendments of the certificate of incorporation.
(c) In September 1999, iiGroup issued an aggregate of $30,000 of
convertible notes to four investors, three of which are directors and the
remainder is a principal stockholder of iiGroup.
ITEM 5. Other Information
Effective November 29, 1999, iiGroup effected a 1-50 reverse split of
its common stock. As a result, there were 372,643 shares of common stock. At the
same time, the name was changed from Daltex Medical Sciences, Inc. to iiGroup,
Inc. At the same time, the 1999 Stock Option Plan became effective.
In December 1999, the holders of the outstanding Series A Preferred
Stock converted all of their shares into common stock in accordance with the
terms.
In December 1999, iiGroup issued an aggregate of 500,000 shares of
common stock and 500,000 options with an exercise price of $1.50 per share to
two unaffiliated consultants.
<PAGE>
In December 1999, iiGroup agreed to enter into a consulting agreement
with MCG Partners, an affiliate of iiGroup, pursuant to which MCG will receive
2,000,000 shares of restricted common stock in exchange for (i) the assignment
to iiGroup of letters of intent to acquire Travlang and @Gov, two internet
sites, (ii) providing consulting services, (iii) the provision of office space
and administrative services to iiGroup for the past and in the future, and (iv)
an agreement to provide or arrange for the provision of additional capital.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits required by Item 601 of Regulations S-B.
3.1(c) Certificate of Amendment to Certificate of Incorporation
(incorporated by reference to the Schedule 14C dated October
29, 1999).
(b) None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on behalf by the
undersigned thereunto duly authorized.
iiGROUP, INC.
By: /s/ Bruce Hausman
----------------------------------------
Bruce Hausman, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-START> AUG-01-1999
<PERIOD-END> OCT-31-1999
<CASH> 6,401
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,401
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,401
<CURRENT-LIABILITIES> 67,517
<BONDS> 0
0
95,000
<COMMON> 3,727
<OTHER-SE> (61,116)
<TOTAL-LIABILITY-AND-EQUITY> (6,401)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 13,975
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 31,025
<INCOME-TAX> 0
<INCOME-CONTINUING> 31,025
<DISCONTINUED> 0
<EXTRAORDINARY> 36,400
<CHANGES> 0
<NET-INCOME> 31,025
<EPS-BASIC> .08
<EPS-DILUTED> .08
</TABLE>
