SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, .C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ________.
Commission File No. 1-12765
IRT INDUSTRIES, INC.
----------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 59-2720096
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
6230 Fairview Road, Suite 102, Charlotte, North Carolina 28210
(Address of Principal Executive Offices)
Issuer's Telephone Number, Including Area Code: (704) 364-2066
Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act during the past
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes [X] No [_]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 31,100,331 shares of common
stock as of October 31, 1999.
Transitional Small Business Disclosure Format (check one):
Yes [_] No [X]
<PAGE>
IRT INDUSTRIES, INC.
INDEX
PAGE
----
PART I. - FINANCIAL INFORMATION....................................... 3
Item 1. Consolidated Financial Statements........................ 3
Consolidated Balance Sheets.............................. 3
Consolidated Statements of Loss.......................... 4
Consolidated Statements of Stockholder's Equity
(Deficiency in Assets)................................. 5
Consolidated Statements of Cash Flows.................... 6
Notes to Consolidated Financial Statements............... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 10
PART II. - OTHER INFORMATION.......................................... 15
Item 6. EXHIBITS AND REPORTS ON FORM 8-K......................... 15
(a) Exhibits................................................. 15
(b) Reports on Form 8-K...................................... 15
Signatures...................................................... 16
-2-
<PAGE>
Part I. Financial Information
Financial Statements.
IRT INDUSTRIES, INC.
Balance Sheet - Unaudited
December 31, 1999
ASSETS
CURRENT ASSETS
Cash in Bank $ 121
Common Stock Held In Escrow 30
Prepaid Rent 7,976
------------
TOTAL CURRENT ASSETS 8,127
OTHER ASSETS
Software Licensing Agreement 10,561,800
------------
TOTAL ASSETS $ 10,569,927
============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 112,886
Taxes Payable 3,318
Loan from Related Party 132,100
Loan from Others -
------------
TOTAL CURRENT LIABILITIES 248,304
SHAREHOLDERS' EQUITY
Common Stock, $.0001 par value,
100,000,000 shares authorized and
31,860,782 shares issued and
outstanding 3,166
Additional paid-in capital 20,928,036
Accumulated Deficit (10,609,519)
Treasury Stock, at cost (60)
Stock Subscription Receivable,
less valuation allowance of $435,571 -
------------
TOTAL STOCKHOLDERS' EQUITY 10,321,623
------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 10,569,927
============
(The accompanying notes are an integral part of this financial statement)
3
<PAGE>
IRT INDUSTRIES, INC.
Statement of Loss - Unaudited
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
December December December December
31, 1999 31, 1998 31, 1999 31, 1998
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
EXPENSES
Consulting, Professional and
Administrative Fees $ (1,194,770) $ (396,344) $ (798,426) $ -
General and Administrative (31,493) (107,771) (25,109) -
Travel & Entertainment (1,700) (475) (46) -
------------ ------------ ----------- -----------
TOTAL EXPENSES (1,227,963) (504,590) (823,581) -
OTHER INCOME
Interest - 34,992 - 17,323
------------ ------------ ----------- -----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS, BEFORE INCOME TAX BENEFIT (1,227,963) (469,598) (823,581) 17,323
Income Tax Benefit - - - -
------------ ------------ ----------- -----------
LOSS FROM CONTINUING OPERATIONS, NET OF
INCOME TAX BENEFIT (1,227,963) (469,598) (823,581) 17,323
DISCONTINUED OPERATIONS
Loss from operations of discontinued
subsidiary - (116,674) - (58,716)
Income Tax Benefit - - - -
------------ ------------ ----------- -----------
LOSS FROM DISCONTINUED OPERATIONS, NET OF
INCOME TAX BENEFIT - (116,674) - (58,716)
------------ ------------ ----------- -----------
Net Loss $ (1,227,963) $ (586,272) $ (823,581) $ (41,393)
============ ============ =========== ===========
Primary and Fully-Diluted Weighted
Average Shares Outstanding 27,125,711 7,904,679 31,202,885 8,100,331
Basic Net Loss Per Share, Primary and
Fully-Diluted From Continuing
Operations $ (0.05) $ (0.06) $ (0.03) $ 0.00
Basic Net Loss Per Share, Primary and
Fully-Diluted From Discontinued
Operations $ - $ (0.01) $ - $ (0.01)
Basic Net Loss Per Share, Primary and
Fully-Diluted $ (0.05) $ (0.07) $ (0.03) $ (0.01)
</TABLE>
(The accompanying notes are an integral part of this financial statement.)
4
<PAGE>
IRT INDUSTRIES, INC.
Statements of Stockholders' Equity (Deficiency) in Assets
<TABLE>
<CAPTION>
Total
Stockholders'
Common Additional Stock Equity
Number Stock Paid-in Accumulated Treasury Subscription (Deficiency)
of Shares Amount Capital Deficit Stock Receivable in Assets
----------- -------- ----------- ------------ --------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - June 30, 1998 - Audited 6,600,331 $ 660 $ 8,761,242 $(8,424,820) $ (60) $ (414,156) $ (77,134)
Issuance of common stock for services 1,500,000 150 449,850 - - - 450,000
Payments received on stock for
subscription receivable - - - - - 50,000 50,000
Issuance of common stock 350,000 35 24,965 - - - 25,000
Accrued interest on subscriptions
receivable - - - - - (71,415) (71,415)
Allowance for stock subscriptions
receivable - - - - - 435,571 435,571
Net Loss for the year ended
June 30, 1998 - - - (956,736) - - (956,736)
---------- -------- ----------- ------------ --------- ------------- -----------
Balance - June 30, 1999 - Audited 8,450,331 $ 845 $ 9,236,057 $ (9,381,556) $ (60) $ - $ (144,714)
Issuance of common stock for services 1,650,000 165 824,835 - - - 825,000
Issuance of common stock for License
Agreement 21,000,000 2,100 10,544,700 - - - 10,546,800
Issuance of common stock for services 560,000 56 322,444 - - - 322,500
Net Loss for the six months ended
December 31, 1999 - Unaudited - - - (1,227,963) - - (1,227,963)
---------- --------- ----------- ------------ --------- ------------- -----------
Balance - December 31, 1999-Unaudited 31,660,331 $ 3,166 $20,928,036 $(10,609,519) $ (60) $ - $10,321,623
========== ========= =========== ============ ========= ============= =============
</TABLE>
(The accompanying notes are an integral part of this financial statement.)
5(a)
<PAGE>
IRT Industries, Inc.
Calculation of Earnings Per Share
<TABLE>
<CAPTION>
Total Discontinued
Actual Days Weighted Loss Loss/Share Loss Loss/Share
--------- ---- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of Shares Outstanding 6/30/1998 6,600,331 184 6,600,331
Stock Issuance 7/24/1998 1,500,000 160 1,304,348
--------- ---------
Totals 12/31/1998 8,100,331 7,904,679 (586,272) (0.07) (116,674) (0.01)
========= =========
Number of Shares Outstanding 6/30/1999 8,450,331 184 8,450,331
Stock Issuance 7/29/1999 1,650,000 155 1,389,946
Stock Issuance 8/2/1999 21,000,000 151 17,233,696
---------- ----------
Totals 9/30/1999 31,100,331 27,073,972 (1,227,963) (0.05) - -
========== ==========
Stock Issuance 12/14/1999 560,000 17 51,739
Totals 12/31/1999 31,660,331 27,125,711 - - - -
========== ==========
</TABLE>
(The accompanying notes are an integral part of this financial statement.)
5(b)
<PAGE>
IRT INDUSTRIES, INC.
Statements of Cash Flows
Six Months
Ended
December
31, 1999
(Unaudited)
--------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (1,227,963)
Adjustments to reconcile net loss to net cash provided
(used) by operating activities:
Common Stock Warrants Issued for Services 1,147,500
Increase in Prepaid Rent (7,976)
Increase in Accounts Payable 30,556
Increase in Loans -
--------------
Net Cash used by operating activities (57,883)
CASH FLOWS FROM FINANCING ACTIVITIES
Receipts:
Loan from related party 71,100
--------------
Net cash provided by financing activities 71,100
--------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Software License Agreement 15,000
--------------
NET DECREASE IN CASH AND EQUIVALENTS (1,783)
CASH AND EQUIVALENTS - BEGINNING 1,904
--------------
CASH AND EQUIVALENTS - ENDING $ 121
==============
SUPPLEMENTAL DISCLOSURES:
Common stock issued for Software License Agreement $ 10,546,800
==============
(The accompanying notes are an integral part of this financial statement.)
6
<PAGE>
IRT INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999 and 1998
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information, the instructions to Form 10-QSB and Item
310 (b) of Regulation SB. Accordingly, they do not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for fair presentation have been included. For further information,
refer to the Financial Statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB for the year ended June 30, 1999 as
filed with the Securities and Exchange Commission.
NOTE B - LOSS PER SHARE
Basic and diluted net loss per share was computed based on the weighted
average number of shares of common stock outstanding during the period.
NOTE C - RECENT DEVELOPMENTS
On August 2, 1999, the Company consummated a licensing arrangement (the
"License") with Commerce Capital Group, L.L.C., a South Carolina limited
liability company ("CCG") to market and sell CCG's proprietary "Personal Estate
Plan(TM)" (the "PEP") which allows professional and individual users to conduct
estate planning and financial planning through use of the Internet. The Company
paid CCG a license fee of 21 million shares of the Company's unregistered
common stock. Pursuant to the License, the Company was given: (i) a right to
market the PEP(TM) system to accountants, stock brokers, insurance companies
and brokers, lawyers, investment advisers, financial planners and human
resource departments (the "Customers"); (ii) a non-exclusive right to use
the logos and names relating to the PEP(TM) system which will be provided
by CCG to the Company, including Personal Estate Plan(TM), Estate Legal
Services, ELS(TM) and ELS(TM); (iii) the right to obtain any current and
future amendments, of sales, usage, limited technical, instructional
and similar documentation and literature relating to the PEP(TM) system; and
(iv) the right to receive any income generated from Customers who sign-up and
use the PEP(TM) system. Under the License, the Company's initial geographic
territory is limited to Florida, although the Company has the option to
expand its territory to Alabama, Georgia, Mississippi and Tennessee by paying
additional license fees.
On August 2, 1999, the Company changed its corporate headquarters to 6230
Fairview Road, Suite 102, Charlotte, North Carolina 28210 and changed its
telephone number to 704-364-2066. At the end of the quarter ended
September 30, 1999, the following officers and directors had been appointed:
(i) Dale K. Chapman, as President, Secretary, Treasurer and Director; (ii)
Eric F. Heintschel, as Director, and (iii) James H. Feeney, as Director. No
additional officers or directors were appointed during he quarater ended
December 31, 1999. James E. Kelly was appointed as Director on February 11,
2000.
On September 22, 1999, the Company announced that it expects to begin
doing business under the name, "Xpedian.com, Inc." On January 25, 2000 the
Company received the approval of the majority shareholder to formally change
the name of the Company to Xpedian, Inc. After verifying with legal counsel
that all required procedures had been followed, the Company formally announced
the changing of the Company name to Xpedian, Inc., and initiated processes
necessary to change the Company's ticker symbol. Formal announcement of the
ticker symbol change will be made when confirmed by the NASD.
On November 21, 1999 the Company completed a marketing agreement (the
"Agreement") with MCC Companies, a Florida based insurance wholesaler ("MCC").
According to the Agreement, MCC will vigorously promote the Company's estate
planning products to its national distribution network of over 18,000
independent insurance brokers. MCC will be responsible for all costs
associated with their sales efforts, in exchange for which the Company will
pay MCC a commission on sales to MCC customers. Concurrent with the
completion of the Company's first product (InsTrust), MCC arranged for
Company representatives to demonstrate their product to an association of
independent insruance brokerage companies, which represents a customer base of
approximately 15,000 brokers throughout the United States, in addition to the
18,000 brokers already serviced by MCC.
7
<PAGE>
Development and completion of the Company's first product, "InsTrust[TM]"
continued through the quarter ended December 31, 2000. On January 29, 2000
the Company held the first public demonstration of the full InsTrust[TM]
product, along with the process for broker/client registration. During the
demonstration, representatives from the Company selected an insurance broker
at random from the audience, registered him on the system and completed an
insruance trust for him. The InsTrust[TM] product is expected to be on the
market in early March, 2000.
NOTE D - LICENSE VALUATION
The amounts expended in connection with the acquisition of the License
has been capitalized and will be amortized over its estimated useful life.
The Company acquired the License in exchange for 21,000,000 shares of its
common stock. For purposes of presentation in these financial statements
and notes thereto, the value assigned to the License was based on the
average per-share closing price of the Company's stock during the 30 days
immediately preceding the effective date of the License. Management will
re-evaluate this valuation prior to the end of the current fiscal year and,
if necessary, adjust its carrying value.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-QSB (the "Report") contains
forward-looking statements concerning, among other things, the Company's
expected future revenues, operations and expenditures, competitors or potential
competitors, and licensing and distribution activity. These forward-looking
statements are identified by the use of terms and phrases such as "anticipate,"
"believe," "could," "estimate," "expect," "intent," "may," "will," "plan,"
"predict," "potential," and similar terms and phrases, including references to
assumptions. These statements are contained in each Part of this Report and in
the documents incorporated by reference herein. These forward-looking statements
represent the expectations of the Company's management as of the filing date of
this Report. The Company's actual results could differ materially from those
anticipated by the forward-looking statements due to a number of factors,
including:(i) limited operating history; (ii) need for financing; (iii)
dependence upon single employee; (iv) reliance on single license;
(v) compliance with law; (vi) lack of sales; (vii) reliance of revenue
growth on economic conditions; (viii) competition; (ix) control by majority
shareholder; (x) absence of dividends; (xi) changes in federal estate tax;
(xii) government regulation of the Internet; (xiii) failure of computer
systems to recognize the Year 2000; and the other risks and uncertainties
described elsewhere herein and in the Company's Annual Report on Form 10-KSB
for the fiscal year ended June 30, 1999 under the caption, "Factors Affecting
Future Operating Results" under Item 2. - "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
The Company is under no obligation to revise or publicly release the
results of any revision to these forward-looking statements. Readers should
carefully review the risk factors described in other documents the Company
files from time to time with the Securities and Exchange Commission ("SEC").
The following discussion and analysis provides information which the
Company's management believes is relevant to an assessment and understanding of
the Company's results of operations and financial condition. This discussion
should be read in conjunction with the financial statements and notes thereto
appearing elsewhere herein.
9
<PAGE>
Liquidity and Capital Resources
As of December 31, 1999, cash and cash equivalents were $121 as compared with
$308 at September 30, 1999. The Company reported losses for the quarter
ended December 31, 1999 of $823,581. The Company will continue to incur
operating losses until it launches its Internet estate planning business and
realizes revenues. The Company had working capital of $(248,183) at
December 31, 1999 as compared to $(186,059) at September 30, 1999.
The Company has experienced significant losses from past operations. The
Company anticipates that it will continue to experience losses during the
fiscal quarter ended March 30, 2000 as it continues to develop and implement
sales and advertising strategies promoting the Company's financial services
products. Management anticpates that losses should decrease as time passes
due to product sales and resulting revenues. During the quarter ended
December 31, 1999, the Company acquired $18,500 in short-term loans to
finance operations until arrangements for more substantial financing is
completed.
The Company expects to fund its first expansion into domestic business-to-
business Internet businesses from funds that are to be derived from
financing from outside sources. Once the Company launches its products and
begins generating revenues, the Company hopes to use its operating revenues
to fund expansion. However, there can be no assurance that outside
financing will be available or that future revenues will be generated in
sufficient amounts or that additional funds will not be required for the
continued expansion of operations. The Company intends to meet its
short-term and long-term liquidity needs through additional financing from
outside sources. There can be no assurance that the Company will achieve
profitability or positive cash flow. If the Company is not successful in
raising additional funds, it may be required to limit the scope of its
proposed expansion into domestic business to business Internet services.
The following discussion and analysis provides information, which the
Company's management believes is relevant to an assessment and understanding
of the Company's results of operations and financial condition. This
discussion should be read in conjunction with the consolidated financial
statements and notes thereto appearing elsewhere herein.
GENERAL
Near the end of fiscal year 1998, the Company changed its focus from
owning and operating casinos and related activities, to focus on domestic
opportunities in the Internet. Subsequently, in 1998 and 1999, the company
10
<PAGE>
discontinued its operations in the casino and related activities, and began
an active search for domestic Internet opportunities. The Company sold its
final remaining casino operation in February 1999. On August 2, 1999 the
Company completed negotiations with Commerce Capital Group ("CCG") for the
rights to market and sell CCG's emerging line of Internet based financial
services products.
During the quarter ended December 31, 1998 the Company had both
operating revenues and operating businesses. Thus the financial statements
for the quarter ended December 31, 1998 contain the revenues, gains and
losses incurred as a result of those operations.
During the quarter ended December 31, 1999 the Company did not have
revenues from operations. As the result of the license agreement with CCG,
from October 1, 1999 to December 31, 1999, the company focused upon
reorganization, audits, completing SEC filings on a timely basis, acquiring
necessary financing and developing the sales strategies and pipelines
necessary to successfully market the products that it anticipates as a result
of the license agreement with CCG.
RESULTS OF OPERATIONS
Quarter Ended December 31, 1999 Compared to Quarter Ended December 31, 1998
Net Revenues for both quarters remained at zero. Revenue collected
during the quarter ended December 31, 1998 was credited to the subsidiaries
that generated the revenue. When consolidated for the Company's financial
reporting, these revenues were offset by losses posted due to discontinued
casino operations.
Expenses for the quarter ended December 31, 1999 increased significantly.
The Company did not report any expenses during the quarter ended December 31,
1998 and reported expenses of $823,581 for the quarter ended December 31,
1999. This increase is primarily the result of consulting fees, which were
paid with 1,110,000 shares of company stock in a disbursement made via an
S-8 registration dated December 14, 1999.
Other Income for the quarter ended December 31, 1999 decreased by 100%, from
$17,323 to zero. This decrease is due to the previously mentioned lack of
operating revenues and a corresponding decrease in interest income. The
Other Income for the quarter ended December 31, 1998 was made up entirely of
interest income.
Losses posted due to Continuing Operations for the quarter ended December 31,
1999 increased significantly. In the quarter ended December 31, 1998 the
Company posted Interest Income of $17,323 and no expenses. In the quarter
ended December 31, 1999 the Company posted $823,581 in expenses and had no
income. Just like expenses, the primary reason for the increase in Losses
posted due to Continuing Operations is primarily attributable to the
consulting fees posted during the quarter.
11
<PAGE>
Losses posted due to Discontinued Operations for the quarter ended December
31, 1999 decreased by 100%, from ($58,716) to zero. This decrease is
attributed to the Company's ceasing of Casino operations during the fiscal
year ended June 30, 1999. Per standard accounting practices, the actual and
foreseeable losses due to the decision to discontinue casino operations were
accounted for in the fiscal year in which the decision was made.
The Company experienced a Net Loss of $823,581 for the quarter ended December
31, 1999. This increase reflects all of the income and loss changes that
occurred between 1998 and 1999.
Net Loss Per Share (Primary and Fully-Diluted) decreased from $.027 in the
quarter ended September 30, 1999 to $.026 in the quarter ended December 31,
1999. When compared to the quarter ended December 31, 1998, Net Loss Per
Share increased from $.005 in the quarter ended December 31, 1998 to $.027
in the quarter ended December 31, 1999.
As of December 31, 1999, cash and cash equivalents were $121 as compared with
$308 at September 30, 1999. The Company reported losses for the quarter
ended December 31, 1999 of $823,581. The Company will continue to incur
operating losses until it launches its Internet estate planning business and
realizes revenues. The Company had working capital of $ (248,183) at
December 31, 1999 as compared to $ (186,059) at September 30, 1999.
The Company expects to fund its first expansion into domestic Internet
businesses from funds that are to be derived from financing from outside
sources. Once the Company launches its products and begins generating
revenues, the Company hopes to use its operating revenues to fund expansion.
However, there can be no assurance that outside financing will be available
or that future revenues will be generated in sufficient amounts or that
additional funds will not be required for the continued expansion of
operations. The Company intends to meet its short-term and long-term
liquidity needs through additional financing from outside sources. There can
be no assurance that the Company will achieve profitability or positive cash
flows. If the Company is not successful in raising additional funds, it may
be required to limit the scope of its proposed expansion into domestic
Internet businesses.
The rate of inflation was insignificant during the quarter ended December 31,
1999. The Company's business is not expected to be seasonal.
FACTORS AFFECTING FUTURE OPERATING RESULTS
The Company operates in a rapidly changing environment that involves numerous
risks, some of which are beyond the Company's control. The following
discussion highlights some of these risks.
12
<PAGE>
Limited Operating History
Since the Company changed its strategic focus in 1999 to the proposed
acquisition of Internet-based domestic businesses, the Company has not yet
generated any revenues from operations. The Company has begun marketing its
proposed Internet-based estate-planning products to certain customer groups
through direct presentations and expects to begin preparing an advertising
campaign in the near future. The Company will be required to incur
significant marketing expenses, including advertising and promotion expenses,
to introduce its products into the marketplace. There can be no assurance
that its proposed products will be given sufficient consumer acceptance at
their intended price range or any other price range to enable the Company to
operate profitably.
Dependence upon Single Employee
The Company's success and operations depends upon the continued employment of
its single direct employee. If the Company loses the services of its
employee and does not find a suitable replacement, the Company's business
could be adversely affected.
Reliance Upon Single License
The Company's proposed Internet-based estate-planning product is based upon
proprietary software which the licensor has granted to the Company under a
non-exclusive license. The license grants the Company the right to market
the software in a specific territory which may be expanded in the future to
specific groups of potential customers. There can be no assurance that the
proprietary nature of the software will not be infringed upon or that others
will not try to reproduce the software. Furthermore, there can be so
assurance that the license will afford protection against possible
competitors who might seek to market their products in the same territory and
to the same customers. In the event that licensor terminates the Company's
license, the termination could have a material adverse effect on the
Company's business.
Marketing; Sales
The Company has targeted potential customer groups for its proposed
Internet-based estate-planning products including certified public
accountants, insurance agents, stock brokers, financial planners, lawyers
and professionals in human resources. There can be no assurance that the
Company will be successful in marketing and selling its proposed products to
such potential customers or in generating revenues from such sales.
Furthermore there can be no assurance that the Company's proposed products
will achieve significant market acceptance or will generate significant
revenue. Additional products that the Company plans to directly or
indirectly market in the future are in various stages of development.
13
<PAGE>
Revenue Growth and Economic Conditions
The revenue growth and profitability of the Company's proposed
Internet-based estate-planning products depends on the overall demand for
estate-planning services. Because the Company's potential customers are
primarily professional and financial services advisers, the Company's
business also depends on general economic conditions. A softening of the
demand for estate-planning advice from professional and financial services
advisers caused by a weakening of the economy may result in lack of
revenues or lack of growth.
Competition
Although the Company is not aware of any direct competitors to its proposed
Internet-based estate-planning products, there can be no assurance that
providers of financial services including certified public accountants,
insurance agents, stock brokers, financial planners, lawyers and
professionals in human resources and related industries will not seek to
develop similar products.
Control by Majority Shareholder
The licensor of the Company's Internet-based estate-planning product,
Commerce Capital Group, L.L.C. ("CCG"), owns a majority of the Company's
common stock. Although the Company had stated that no CCG representative
will be employed as an officer or director, there can be no assurance that
CCG, based upon its majority ownership, would not seek to elect all of the
Company's directors and to determine the results of all matters submitted
to the stockholders for action including fundamental corporate transactions.
Absence of Dividends
The Company does not expect to declare or pay any dividends in the
foreseeable future, but instead intends to retain earnings, if any, to expand
the Company's operations.
Failure of Computer Systems to Recognize Year 2000
Many currently installed computer systems are not capable of distinguishing
21st century dates from 20th century dates because they were programmed using
two digits rather than four digits to define the applicable year. As a
result, at the turn of this century, computer systems and software used by
many companies and organizations in a wide variety of industries may
experience operating difficulties unless they are adequately modified or
upgraded to process information related to the century change. This could
result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, collect revenues or engage in similar normal business
activities.
14
<PAGE>
The Company recognizes the need to ensure that its operations will not be
adversely impacted by Year 2000 software failures. The Company therefore
believes it has identified all significant international information
technology systems ("IT Systems"). Internal and external resources were
utilized to make the required modifications and to test Year 2000 compliance
for the IT Systems and well as the non-IT Systems (i.e., telephone, security,
etc.). The Company believes that it has achieved Year 2000 compliance
readiness for its IT Systems and non-IT Systems.
In addition, the Company has communicated with others with whom it does
significant business, primarily banks and suppliers of electricity, to
determine their Year 2000 compliance readiness and the extent to which the
Company is vulnerable to any third party Year 2000 issues.
There can be no assurance that the systems of other companies on which the
Company relies will be timely converted or that a failure to convert by
another company would not have a material adverse effect on the Company.
Based upon the results of its review of Year 2000 issues to date, the Company
does not believe that a contingency plan to handle the Year 2000 issue is
necessary at this time and has not developed such a plan. The Company will,
however, continue to monitor its Year 2000 compliance program and evaluate
the need for a contingency plan to handle the most reasonably likely worst
case Year 2000 scenario which might include: (i) a key material vendor or
service provider experiencing problems with delivery of materials,
components or services; (ii) the failure of infrastructure services provided
by government agencies and other third parties (e.g., electricity, telephone,
transportation, Internet services, etc. ).
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
IRT INDUSTRIES, INC.
Dated: February 22, 2000
By: /s/Dale K. Chapman
------------------------------
Name: Dale K. Chapman
Title: President
17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Balance
Sheet, Statement of Operations, Statements of Cash Flows and Notes thereto
incorporated in Part I, Item 1. of this Form 10QSB and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 121
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,127
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,569,927
<CURRENT-LIABILITIES> 248,304
<BONDS> 0
0
0
<COMMON> 3,166
<OTHER-SE> 10,318,457
<TOTAL-LIABILITY-AND-EQUITY> 10,569,927
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 823,581
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (823,581)
<INCOME-TAX> 0
<INCOME-CONTINUING> (823,581)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (823,581)
<EPS-BASIC> (0.026)
<EPS-DILUTED> (0.026)
</TABLE>
