SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended Commission File Number
----------------- ----------------------
June 30, 2000 33-19196-A
INTERNET VENTURE GROUP, INC.
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(Exact name of registrant as specified in its charter)
Florida 59-2919648
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(State of incorporation) (I.R.S. Employer
Identification No.)
9601 West Sam Houston Parkway South, Bldg. 100, Houston, Texas 77049
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 596-9308
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
30,809,152 common shares as of June 30, 2000
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<TABLE>
<CAPTION>
Part I: FINANCIAL INFORMATION
INTERNET VENTURE GROUP, INC.
(A Development Stage Company
UNAUDITED BALANCE SHEET
Assets Six Months Ending Year Ending
June 30, 2000 December 31, 1999
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<S> <C> <C>
Current Assets $216,397 $ 6,006
Accounts Receivable - Net 11,922 14,145
Inventory 94,580 79,588
Related Party Receivables
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TOTAL Current Assets 322,899 99,739
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Fixed Assets
Fixed Assets - Net 57,180 59,546
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TOTAL Fixed Assets 57,180 59,546
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Other Assets
Other Assets - Net 301,972 301,972
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TOTAL Other Assets 301,972 301,972
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TOTAL Assets $682,051 $ 461,257
=========== ==========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $201,673 206,057
Other Payables 43,389 35,370
Note Payable - 329,656
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TOTAL Current Liabilities 245,062 $ 571,083
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Long-Term Liabilities
Long Term Debt 400,608 -
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TOTAL Long-Term Liabilities 400,608 -
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Stockholders' Equity
Common Stock, Par Value $0.0001,
100,000,000 shares authorized,
30,809,152 issued at June 30,
2000, and 4,000,000 issued at
June 30, 1999 3,089 3,030
Paid-In Capital 2,335,859 1,961,059
Retained Earnings (Deficit) (2,620,208) (2,073,915)
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Total Stockholders' Equity 36,381 (109,826)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $682,051 $ 461,257
============== ==========
</TABLE>
F-1
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INTERNET VENTURE GROUP, INC.
(A Development Stage Company
Unaudited Statement of Operations
For Six Months Ended June 30,
Six Months Six Months
ending June 30 Ending June 30
2000 1999
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Revenues
Sales $ 177,405 $214,444
Other & Settlement Income - 61,376
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TOTAL Revenue 177,405 275,818
Cost of Goods Sold
Cost of Sales 152,061 141,378
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TOTAL Cost of Goods Sold 152,061 141,378
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Gross Profit 25,344 134,440
Operating Expenses
Administrative & Overhead 570,410 214,171
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TOTAL Operating Expenses 540,410 214,171
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OTHER INCOME (EXPENSES)
Interest Income -
Interest Expense (1,227) -
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TOTAL OTHER INCOME (EXPENSE) (1,227) -
NET INCOME (LOSS) $(546,293) ($79,729)
============= =========
Net Loss per Share (0.02) ($.003)
Weighted Average Common Shares 30,553,826 26,100,000
F-2
<PAGE>
INTERNET VENTURE GROUP, INC.
(A Development Stage Company
Unaudited Statement of Operations
For Three Months Ended June 30,
Three Months Three Months
Ending June 30 Ending June 30
2000 1999
-------------- --------------
Revenues
Sales $ 93,209 $177,201
Other & Settlement Income - -
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TOTAL Revenue 93,209 177,201
Cost of Goods Sold
Cost of Sales 119,713 119,081
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TOTAL Cost of Goods Sold 119,713 119,081
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Gross Profit (26,504) 58,120
Operating Expenses
Administrative & Overhead 438,632 108,736
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TOTAL Operating Expenses 438,632 108,736
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OTHER INCOME (EXPENSES)
Interest Income $ (1,375)
Interest Expense - -
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TOTAL OTHER INCOME (EXPENSE) - -
NET INCOME (LOSS) $(465,136) $(49,241)
============ =========
Net Loss per Share (0.02) ($.002)
Weighted Average Common Shares 30,553,826 26,100,000*
F-3
* Adjusted for dividend
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<TABLE>
<CAPTION>
Internet Venture Group, Inc.
(A Development Stage Company)
UNAUDITED STATEMENT OF CASH FLOWS
Six Months Ended June 30 Three Months Ended June 30
2000 1999 2000 1999
------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (546,293) $(79,730) $ (465,136) $ (49,241)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation
Amortization
(Increase) Decrease in current assets (12,769) 85,364 (28,863) 111,815
Increase (Decrease) in current liabilities (326,021) (74,981) (30,645) (107,787)
(Increase) Decrease in other assets 8,081 (5,999) 8,081
------------ -------------- ------------ -----------
NET CASH PROVIDED (USED) BY (885,083) (61,266) (530,643) (37,132)
OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
(Purchase) Sale of property and equipment 2,366 1,022 900 1,022
Increase (Decrease) in notes payable 550,608 203,854
Capital received 542,500 64,914 542,500 36,110
------------ -------------- ------------ -----------
NET CASH FLOWS FROM INVESTING ACTIVITIES 1,095,474 65,936 747,254 37,132
NET INCREASE (DECREASE) IN CASH 210,391 4,670 216,611 0
CASH AT BEGINNING OF PERIOD 6,006 (3,670) (214) 1,000
CASH AT END OF PERIOD $216,397 $ 1,000 $216,397 $ 1,000
============ ============= ============ ===========
</TABLE>
F-4
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<TABLE>
<CAPTION>
Internet Venture Group, Inc.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from December 31, 1998 to June 30, 2000
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Total
------------ ----------- ---------- ------------ -------
<S> <C> <C> <C> <C>
Balance - December 31, 1998 4,000,000 $ 400 $ 316,625 (317,025) -
Acquisition of subsidiary 26,298,500 2,630 1,644,434 (1,477,709) $ 169,355
Net Loss for year - - - (279,181) (279,181
------------ ----------- ----------- ------------ ----------
Balance - December 31, 1999 30,298,500 3,030 1,961,059 (2,073,915) (109,826)
------------ ----------- ----------- ------------ ----------
Adjust shares in acquisition 89,402 9 (9) -
Shares issued for services 300,000 30 299,970 300,000
Shares issued for cash 121,250 12 242,488 242,500
Shares issued for cash 75,000 8 149,992 150,000
Net Loss for six months (546,293) (546,293)
------------ ----------- ----------- ------------ ----------
Balance - June 30, 2000 30,884,152 $ 3,089 $2,653,500 $(2,620,208) $ 36,381
============ =========== =========== ============ ==========
F-5
</TABLE>
<PAGE>
INTERNET VENTURE GROUP, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000 (Unaudited)
NOTE 1 - ORGANIZATION AND PRESENTATION:
Strategic Ventures, Inc. (the Company) was incorporated in the state of
Florida on March 19, 1987. The Company, at the shareholders' meeting on
October 18, 1999, completed its name change to Internet Venture Group,
Inc.
Effective December 31, 1999, the Company acquired all issued and
outstanding shares of GeeWhiz.Com, Inc. (a Texas corporation) for
26,298,500 shares of the Company's stock by the purchase method.
Accordingly, the Company's consolidated financial statements as of and
for the year ended December 31, 1999 reflect the consolidation of all its
operations on a consolidated basis. All significant intercompany
transactions for the year have been eliminated to arrive at the
"Consolidated" financial statements. The impact of the acquisition was
not material in relation to the Company's results of operations.
The Company primary business operations are the development, acquisition,
marketing and distribution of proprietary products as specialty products
and items for the worldwide gift, and novelty and souvenir industries.
The Company fiscal year end is December 31.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
These interim financial statements have been prepared by management and
are not audited.
These financial statements are presented on the accrual method of
accounting in accordance with generally accepted accounting principles.
Significant principles followed by the Company and the methods of
applying those principles, which materially affect the determination of
financial position and cash flows, are summarized below:
REVENUE RECOGNITION
Product Sales are sales of on-line products and specialty items. Revenue
is recognized at the time of sale. Account Receivable are written off
when deemed uncollectable.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments, purchased with
an original maturity of three months or less, to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost. The cost of ordinary
maintenance and repairs is charged to operations while renewals and
replacements are capitalized. Depreciation is computed on the
straight-line method over the following estimated useful lives:
Manufacturing Equipment 5 years
Furniture & Equipment 5 years
F-6
<PAGE>
INTERNET VENTURE GROUP, INC.
Notes to Financial Statements
June 30, 2000 (Unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
INCOME TAXES:
The Company accounts for income taxes under SFAS No. 109, which
requires the asset and liability approach to accounting for income
taxes. Under this method, deferred tax assets and liabilities are
measured based on differences between financial reporting and tax bases
of assets and liabilities measured using enacted tax rates and laws
that are expected to be in effect when the differences are expected to
reverse.
USE OF ESTIMATES:
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 the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could
differ from these estimates.
INVENTORIES
Inventories are stated at cost, which is not in excess of market
determined using the first-in, first-out (FIFO) method. Finished
products comprise all of the Company inventories.
PATENTS, TRADEMARKS, AND LICENSES
The Company capitalizes certain legal costs and acquisition costs
related to patents, trademarks, and licenses. Accumulated costs are
amortized over the lesser of the legal lives or the estimated economic
lives of the proprietary rights, generally seven to ten years, using
the straight-line method and commencing at the time the patents are
issued, trademarks are registered or the license is acquired.
NET EARNING (LOSS) PER SHARE
Basic and diluted net loss per share information is presented under the
requirements of SFAS No. 128, EARNINGS PER SHARE. Basic net loss per
share is computed by dividing net loss by the weighted average number
of shares of common stock outstanding for the period, less shares
subject to repurchase. Diluted net loss per share reflects the
potential dilution of securities by adding other common stock
equivalents, including stock options, shares subject to repurchase,
warrants and convertible preferred stock, in the weighted-average
number of common shares outstanding for a period, if dilutive. All
potentially dilutive securities have been excluded from the
computation, as their effect is anti-dilutive.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, accounts receivable, accounts payable and
accrued expenses ae considered to be representative of their respective
fair values because of the short-term nature of these financial
instruments. The carrying amount of the notes payable and long-term
debt are reasonable estimates of fair value as the loans bear interest
based on market rates currently available for debt with similar terms.
F-7
<PAGE>
INTERNET VENTURE GROUP, INC.
Notes to Financial Statements
June 30, 2000 (Unaudited)
NOTE 2 - PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
Manufacturing Equipment
FURNITURE & EQUIPMENT
NOTE 3 -OTHER ASSETS:
Other assets consist of the following:
Patents
Licensing Agreement
Trademarks
Deposits
ORGANIZATION COSTS
Total
LESS: AMORTIZATION EXPENSE
<TABLE>
<CAPTION>
NOTE 4 - NOTES PAYABLE:
Following is a summary of notes payable at December 31, 1999:
<S> <C>
AMOUNT
------
Borrowings against a $30,000 line of credit agreement with a financial
institution collateralized by a general security agreement covering
substantially all assets of the Company. The note bears interest at two
points above the bank's prime rate (8.25% at December 31, 1999). The
note is payable on demand; however, if no demand is made it matures on
February 2001. $ 22,985
Note payable to a financial institution, payable on demand; however, if
no demand is made, payable in monthly installments of $425, including
interest at 9.75%, through February 2001. Certain equipment and a
personal guaranty by the Company's officers
collateralize the note. 5,628
Note payable to an individual shareholder, interest at 7%, payable in
full - March 2000. 4,000
Note payable to an individual shareholder, interest at 8%,payable
in full - April 2000. 201,043
Note payable to an individual shareholder, interest at 10.5%, payable
in full - June 2000. 96,000
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$329,656
</TABLE>
F-8
<PAGE>
INTERNET VENTURE GROUP, INC.
Notes to Financial Statements
June 30, 2000 (Unaudited)
NOTE 5 - INCOME TAXES
There has been no provision for U.S. federal, state, or foreign income
taxes for any period because the Company has incurred losses in all
periods and for all jurisdictions.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. Significant components of deferred tax assets are as follows:
Deferred tax assets
Net operating loss carryforwards $2,073,915
VALUATION ALLOWANCE FOR DEFERRED TAX ASSETS (2,073,915)
----------
NET DEFERRED TAX ASSETS $ -
==========
Realization of deferred tax assets is dependent upon future earnings, if
any, the timing and amount of which are uncertain. Accordingly, the net
deferred tax assets have been fully offset by a valuation allowance. As
of December 31, 1999, the Company had net operating loss carryforwards of
approximately $2,073,915 for federal income tax purposes. These
carryforwards, if not utilized to offset taxable income begin to expire
in 2003. Utilization of the net operating loss may be subject to
substantial annual limitation due to the ownership change limitations
provided by the Internal Revenue Code and similar state provisions. The
annual limitation could result in the expiration of the net operating
loss before utilization.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
LEASE COMMITMENTS
In December 1997, the Company entered into a five-year operating lease
commencing December 1997 for office and warehouse space located in
Houston, Texas. Future minimum lease commitments for all building lease
approximate the following for each of the five years ending December
31, 2004., and thereafter: 2000 - $75,943; 2001 -$78,386; 2002
-$73,907; and none thereafter. Rent expense for the year ended December
31, 1999 was $73,296.
NOTE 7 - GOING CONCERN:
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company
has sustained substantial operation losses for the period. At June 30,
2000, current liabilities exceed current assets by $28,665. These
factors indicate substantial doubt about the Company's ability to
continue as a going concern. The future success of the Company is
likely dependent on its ability to obtain additional capital to
develop its proposed products and ultimately, upon its ability to
attain future profitable operations. There can be no assurance that
the Company will be successful in obtain such financing, or that it
will attain positive cash flow from operations.
F-9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2000 COMPARED TO
SIX MONTHS ENDED JUNE 30, 1999
The Company had revenues of $177,405 in the period in 2000 as compared to
revenue of $214,444 in 1999. In 1999, $61,376 of the revenue was extraordinary
in that it represented a settlement of a dispute. Sales in 1999 constituted
$214,444 of the ordinary income. The cost of sales was $152,061 in 2000 and
$141, 378 in 1999. Gross profit was $25,344 in 2000 and $73,066 in 1999, net of
settlement income. Operating expenses were $540,410 in 2000 compared to $214,171
in 1999. The greatly increased operating costs were attributable to costs of the
merger between Internet Venture Group, Inc. and GeeWhiz.com, Inc. and other
acquisition negotiations. This trend of increased expenditure can be expected to
continue as the Company seeks to expand its business and capital base through
acquisitions.
The Company had a net loss of ($546,293)in 2000 and a net loss of ($79,729) in
1999 in the six month period. The loss per share (as adjusted) was ($.02) in
2000 and $.003) in 1999.
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2000 COMPARED TO
THREE MONTHS ENDED JUNE 30, 1999.
The Company had revenue of $93,209 in the period in 2000 compared to $117,200 in
1999. The cost of sales was $119,713 in 2000 compared to 4119,082 in 1999. The
gross profit (loss) was ($26,504) in 2000 and $59,495 in 1999.
The Company incurred operating expenses of $438,632 in 2000 and $108,736 in
1999. The 400% increase in operating expenses was due to costs incurred in the
merger of Internet Venture Group and GeeWhiz.com. The net loss was ($465,136) in
2000 and ($9,241) in 1999 in the quarter.
The loss per share was ($.02) in 2000 compared to ($.002) in 1999.
The Company expects that expenses will continue to significantly exceed revenues
in future quarters as the Company expands through acquisitions of other
businesses and companies.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a positive balance of $216,397 in it cash accounts at the end of
the period. However, current liabilities exceeded cash by $28,665. The Company
will be forced to either borrow or make private placements of stock in order to
fund operations. No assurance exists as to the ability to achieve loans or to
make private placements of stock.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K were made for the period for which this report is
filed as follows: April 17, 2000.
<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.
Date: August 21, 2000
INTERNET VENTURE GROUP
/s/ Elorian Landers
--------------------------
Elorian Landers, President
