<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB/A
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended Commission File Number
----------------- ----------------------
March 31, 2000 33-19196-A
INTERNET VENTURE GROUP, INC.
----------------------------
(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.)
9307 WEST SAM HOUSTON PARKWAY SOUTH, BLDG. 100, HOUSTON, TEXAS 77049
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 596-9308
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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 ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 30,713,602 as of March 31, 2000
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<TABLE>
INTERNET VENTURES GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Audited) (Unaudited)
12/31/1999 3/31/2000
------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Current Assets
Cash $ 6,006 ($ 10,795)
Accounts Receivable 14,145 6,745
Inventory 79,588 93,851
------------ ------------
Total Current Assets 99,739 89,801
Fixed Assets 59,546 67,415
Other Assets 301,972 295,772
------------ ------------
Total Assets $ 461,257 $ 452,988
============ ============
LIABILITIES:
Current Liabilities
Accounts Payable $ 206,057 $ 204,228
Accrued Liabilities 35,370 89,897
Notes Payable 329,656 303,227
------------ ------------
Total Current Liabilities 571,083 597,352
Total Liabilities $ 571,083 $ 597,352
SHAREHOLDERS' EQUITY
Common Stock 3,030 3,072
-Par Value: $0.0001
-No. of Shares Authorized: 300,000,000
-No. of Shares Outstanding: 30,298,500 and 30,713,602
issued and outstanding as of 12/31/99 and 3/31/00,
respectively
Additional Paid in Capital 1,961,059 2,014,027
Accumulated Deficit (2,073,915) (2,161,463)
------------ ------------
Total Shareholders' Equity ($ 109,826) ($ 144,364)
TOTAL LIABILITIES PLUS SHAREHOLDERS' EQUITY $ 461,257 $ 452,988
============ ============
</TABLE>
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INTERNET VENTURE GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
March 31,
-----------------------------
1999 2000
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Revenues $ 97,244 $ 84,146
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Costs and Expenses:
Cost of Goods Sold $ 22,297 $ 32,493
General and Administrative Expense 105,435 137,775
Other Income / Expense 0 1,426
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Total Costs and Expenses $ 127,732 $ 171,694
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Earnings Before Income Tax ($ 30,488) ($ 87,548)
Income Tax Expense - -
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Net Loss ($ 30,488) ($ 87,548)
============= =============
-Net Loss per Common Share: (0.007) (0.003)
============= =============
-Weighted Average Number of Shares Outstanding: 4,655,828 30,713,602
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<TABLE>
INTERNET VENTURES GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY For the
Period from December 31, 1998 to March 31, 2000
(Unaudited)
<CAPTION>
Common Stock Additional Accumulated Total
Paid-In
Shares Amount Capital Deficit
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance - December 31, 1998 4,000,000 400 316,625 (317,025) 0
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 30
Shares issued for cash 25,700 3 52,968 52,971
Net Loss for three months (87,548) (87,548)
------------ ------------ ------------ ------------ ------------
Balance - March 31, 2000 30,713,602 3,072 2,014,027 (2,161,463) (144,364)
============ ============ ============ ============ ============
</TABLE>
<PAGE>
INTERNET VENTURE GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Quarter Ended March 31, 2000
(UNAUDITED)
March 31, March 31,
1999 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss (30,488) (87,548)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 0
Amortization 0
Changes in Assets & Liabilities:
Decrease in Accounts Receivable 6,346 7,400
Decrease in Inventory (24,646) (14,263)
Decrease in Accounts Payable (9,209) (1,829)
Increase in Accrued Expenses 42,014 54,527
-------- --------
Net Cash Used in Operating Activities (15,983) (41,713)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and other assets - (1,669)
-------- --------
Cash Flows Used in Investing Activities 0 (1,669)
CASH FLOWS FROM FINANCING ACTIVITIES
Equity and stock issuance adjustments 28,809 53,010
Increase in notes payable 0 (26,429)
-------- --------
Cash Flows Provided by Financing Activities 28,809 26,581
Net Increase in Cash and Cash Equivalents 12,826 (16,801)
Cash and Cash Equivalents - Beginning of Period (3,670) 6,006
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD 9,156 (10,795)
======== ========
<PAGE>
INTERNET VENTURE GROUP, INC.
Notes to Financial Statements
March 31, 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
23,905,374 shares of the Company's stock by the purchase method.
Accordingly, the Company's consolidated financial statements as of and
for the period ended March 31, 2000 reflect the consolidation of all
its operations on a consolidated basis. All significant intercompany
transactions for the period have been eliminated to arrive at the
"Consolidated" financial statements. The impact of the acquisition for
accounting purposes with GeeWhiz.com, Inc. as the acquirer and
Strategic Ventures, Inc. as the acquiree based upon GeeWhiz.com current
officers and directors assuming management control of the resulting
entity and the value and ownership interest being received by current
GeeWhiz.com, Inc. stockholders exceeding that received by Strategic
Ventures, Inc.
The Company's 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:
-------------------------------------------
The 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. Other revenue and commission
income is recognized when earned.
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.
<PAGE>
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 and Equipment 5 years
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 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 are 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.
<PAGE>
PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
12/31/99 3/31/00
Manufacturing Equipment $ 105,513 $ 111,189
Furniture and Equipment 29,208 31,301
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Total 134,721 142,490
Less Accumulated Depreciation (75,175) (75,075)
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$ 59,546 $ 67,415
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<TABLE>
NOTE 3 - OTHER ASSETS:
-------------
<CAPTION>
3/31/00: ACCUM. BOOK
COST AMORTIZATION VALUE
----------- ----------- -----------
<S> <C> <C> <C>
Deposits - Security $ 15,360 $ $ 15,360
Licensing, Patents, Trademarks 362,754 82,842 279,912
Organizational Costs 2,500 2,000 500
----------- ----------- -----------
$ 380,614 $ 84,842 $ 295,772
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</TABLE>
NOTE 4 - NOTES PAYABLE:
--------------
<TABLE>
Following is a summary of notes payable at December 31, 1999 and March 31, 2000:
<CAPTION>
12/31/99 3/31/00
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<S> <C> <C>
Borrowings against a $30,000 line of credit agreement with a $ 22,985 $ 27,515
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 and 10.5% at March 31, 2000). The note is payable on
demand; however if no demand is made it matures on February 2001.
Note Payable to a financial institution, payable on demand, however, 5,628 5,001
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 collaterize the
note.
Short term Notes Payable to related parties that are noninterest -0- 74,600
bearing and are payable on demand.
Note payable to an individual shareholder, interest at 7%, payable in 4,000 -0-
full March 2000.
Note payable to an individual shareholder, interest at 8%, payable in 201,043 130,111
full on demand.
Note payable to an individual shareholder, interest at 10.5%, payable 96,000 66,000
on demand. ---------- -----------
$ 329,656 $ $303,227
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</TABLE>
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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 affects 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:
<TABLE>
<CAPTION>
12/31/99 3/31/00
------------- -------------
<S> <C> <C>
Deferred tax assets
Net operating loss carryforwards $ 2,073,915 $ 2,161,463
Valuation allowance for deferred tax assets (2,073,915) (2,161,463)
------------- -------------
Net deferred tax assets -0- -0-
============= =============
</TABLE>
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. The Company had net operating loss carryforwards of
approximately $2,073,915 as of December 31, 1999 and $2,161,463 as of
March 31, 2000 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
leases approximate the following for each of the five years ending
December 31, 2000 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 and was $16,013 for the three month period ending
March 31, 2000.
NOTE 7 - STOCK OPTIONS:
--------------
The Company has granted options to purchase share of common stock to
employees, directors, consultants, and investors at prices not less
than 100% of the fair market value, as determined by the Board of
Directors, at date of grant. Options generally become exercisable
ratably over a five-year period, commencing one year from the date of
grant and have a maximum term of five years. A summary of the Company's
stock is presented below:
Weighted-Average
Number of Exercise Price
Shares per share
Balance December 31, 1999 1,164,150 $.62
Granted 8,112,475 $.23
Exercised -0- -0-
Cancelled -0- -0-
--------- -------
Balance March 31, 2000 9,276,625 $.28
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The fair value of each stock option was estimated on the date of grant
using the Black-Scholes option-pricing model with the following
weighted-average assumptions: an expected life of four (4) years,
expected volatility of 87%, and a dividend yield of 0%.
<PAGE>
NOTE 8 - 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. The Company has
sustained a substantial operation loss this year. As shown in the
financial statements, the Company incurred a net loss of $279,181 for
the 12 months ended December 31, 1999 and $87,548 for the three months
ended March 31, 2000. At December 31, 1999 current liabilities exceeded
current assets by $471,344 and at March 31, 2000 current liabilities
exceeded current assets by $507,551. These factors indicate there is
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 obtaining such financing, or that it will attain positive
cash flow from operations.
<PAGE>
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the
Company's financial statements and related notes contained in this Form
10-QSB/A.
PLAN OF OPERATION
-----------------
The Company has completed two acquisitions in the year 2000. The
Company merged with GeeWhiz.com in July 2000. GeeWhiz operates a vertical
business portal e-commerce web site designed to access and service the
promotional products, gifts, and souvenir markets, functioning within the
Company as a separate division. To date, GeeWhiz has principally been engaged in
the sale of its proprietary Starglas line of fiber optic illuminated drinking
containers. Although GeeWhiz is currently a division of the Company, management
intends to form a new, wholly-owned subsidiary to operate the GeeWhiz business
prior to the end of 2000. In September 2000, the Company acquired ownership of
approximately 88% of the capital stock of Swan Magnetics, Inc., a California
corporation. The Company plans for Swan to continue its current business,
operating as a subsidiary of the Company.
The Company's plan of operation for the remainder of the year 2000 will
consist of activities aimed at:
o Investigating and, if appropriate, pursuing definitive
agreements for acquisitions believed by the Board to be
consistent with the Company's plan to become an internet
company through the acquisition, development and operation of
early stage companies engaged in "business-to-business,"
"business-to-consumer" and "click and mortar" business
activities;
o Establishing strategic partnerships and alliances with
e-commerce enabling companies, such as front-end web design
firms, back-end transaction support firms, and enablers for
horizontal electronic business communities;
o Continuing the development of the GeeWhiz web site and forming
a new, wholly-owned subsidiary to operate the GeeWhiz
business;
o Continuing the operations of Swan as a subsidiary of the
Company; and
o Seeking additional equity financing for the Company.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
FINANCIAL CONDITION
At March 31, 2000, the Company had current assets of approximately $89,801 and
total assets of approximately $452,888. Current liabilities at March 31, 2000
were approximately $597,352, and the Company had no long-term liabilities. The
Company's stockholders' deficit at March 31, 2000 was $144,364.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended March 31, 2000 to March 31, 1999.
----------------------------------------------------------------------
REVENUES. Revenues decreased approximately $13,098 from $97,244 to $84,146 for
the three month periods ended March 31, 1999 and 2000, respectively. This
decrease was attributable principally to reduced product sales.
COSTS AND EXPENSES. Costs of goods sold during the three months ended March 31,
2000 increased to $32,493 from $22,297 for the same period in 1999. This
increase was primarily the result of increases in the price of materials and
retooling expenses. Other expenses, consisting of selling, general and
administrative expenses, and sales and marketing expenses, increased to $137,775
for the three months ended March 31, 2000 from $105,435 for the three months
ended March 31, 1999. The increase was principally due to the Company seeking
offshore vendors for the purpose of reducing the Company's production costs.
NET LOSS. The Company's net loss for the three months ended March 31, 2000 was
approximately $87,548, compared to a net loss of $30,488 during the three months
ended March 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used by operating activities resulted in a loss of approximately
$41,713 for the three months ended March 31, 2000, compared to a loss of $15,983
for the three months ended March 31, 1999. The Company had a cash deficit in the
amount of $10,795 at March 31, 1999.
The Company financed its operations for the three months ended March 31, 1999
and 2000 principally through the issuance of common stock in private
transactions, and borrowings from its management and stockholders.
The Company secured a $1,000,000 loan from Swan Magnetics, Inc. prior to the
Company's September 2000 acquisition of a majority block of the capital stock of
Swan, and the Company has pending the acquisition of businesses that management
believes can provide additional cash for the Company's operations and be
profitable in both the short and long-term. Management also intends to attempt
to raise additional funds through private sales of the Company's common stock.
Although management believes that these efforts will enable the Company to meet
its liquidity needs in the future, there can be no assurance that these efforts
will be successful.
GOING CONCERN CONSIDERATION
The Company has continued losses from operations, negative cash flow and
liquidity problems. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. The accompanying financial statements do
not include any adjustments relating to the recoverability of reported assets or
liabilities should the Company be unable to continue as a going concern.
The Company has been able to continue based upon the financial support of
certain of its stockholders, and the continued existence of the Company is
dependent upon this support and the Company's ability to acquire assets by the
issuance of stock. Management believes that the Company's recent business
acquisitions can provide additional cash for the Company's operations and be
profitable in both the short and long-term. Management also intends to attempt
to raise additional funds through private sales of the Company's common stock.
Although management believes that these efforts will enable the Company to
continue as a going concern, there can be no assurance that these efforts will
be successful.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On March 9, 2000 Tommy Tipton filed suit against the Company in the
155th Judicial District Court in Fayette County, Texas. Mr. Tipton is a co-owner
of patents relating to the "Starglas" line of products sold by the Company's
GeeWhiz.com division. Mr. Tipton alleges the Company failed to pay royalties on
sales of the Starglas products under a license agreement between Mr. Tipton and
GeeWhiz.com. As of the date of this report, the parties have reached an
agreement to settle the suit. Under the terms of the settlement, the Company
would pay Mr. Tipton $122,000.
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
None
---------------------
INTERNET VENTURE GROUP, INC.
(A Development Stage Company)
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.
INTERNET VENTURE GROUP, INC.
Date: November 1, 2000 /s/ Elorian Landers
----------------------------
Elorian Landers, President
