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
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March 31, 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
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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.
27,805,373 as of March 31, 2000
<PAGE>
INTERNET VENTURE GROUP, INC.
(A Development Stage Company)
BALANCE SHEET
(unaudited)
Three Months Ending Year Ending
March 31, 2000 December 31,1999
Current Assets:
Checking/Savings $ (214.18) $ 6,006.00
Accounts Receivable - Net 3,732.86 14,145.00
Inventory 73,905.78 79,588.00
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TOTAL Current Assets 69,958.74 99,739.00
Fixed Assets
Fixed Assets - Net 55,546.80 59,546.00
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TOTAL Fixed Assets 55,546.80 59,546.00
Other Asets
Other Assets - Net 295,973.00 301,972.00
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TOTAL Other Assets 295,973.00 301,972.00
TOTAL Assets $421,477.74 461,257.00
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts Payable $215,292.16 206,057.00
Other Payables 60,415.13 35,370.00
Notes Payable 346,753.70 329,656.00
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TOTAL Current Liabilities 622,460.99 571,083.00
Long-Term Liabilities
Notes Payable - -
TOTAL Long-Term Liabilities - -
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TOTAL Liabilities 622,460.99 -
Equity
Common Stock 3,030.00 3,030.00
Additional Paid In Capital 1,961,059.00 1,961,059.00
RETAINED EARNINGS - PRIOR (2,073,915.00) (2,073,915.00)
Retained Earnings-Current Year (81,157.25) -
----------- -----------
TOTAL Equity (190,983.25) (109,826.00)
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TOTAL Liabilities and Equity $421,477.74 $461,257.00
=========== ===========
The accompanying notes are an integral part of the financial statements.
F-1
<PAGE>
INTERNET VENTURE GROUP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(unaudited)
Three Months Ending Three Months Ending
March 31, 2000 March 31, 1999
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Revenue
Sales $84,195.66 $0
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TOTAL Revenue 84,195.66 0
Cost of Sales
Cost of Goods Sold 32,347.92 0
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TOTAL Cost of Sales 32,347.92 0
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Gross Profit 51,847.00 0
Operating Expenses
Administrative & Overhead 131,777.51 0
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TOTAL Operating Expenses 131,777,51 0
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Net Income from Operations (79,929.77) 0
Other Income & Expense
Other Income/Expense (1,227.48) 0
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TOTAL Other Income & Expense (1,227.48) 0
----------- -----------
Earnings before Income Tax (81,157.25) 0
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Net Income (Loss) $(81,157.25) 0
=========== ===========
Income (Loss) per share $(.002) 0
Weighted Average shares
Outstanding 27,805,373.00 4,000,000.00
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
INTERNET VENTURE GROUP, INC.
Consolidated Statement of Cash Flows
For the Quarter Ended March 31, 2000
Three months ended
March 31, 1999
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<S> <C> <C>
Cash Flows from Operating Activities
Net Loss $ (81,157) $0
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 0 0
Amortization 0 0
Changes in Asets & Liabilities:
Decrease in Accounts Receivable 17,878 0
Decrease in Inventory 5,682 0
(Increase) in Acounts Payable 9,235 0
(Increase) in Accrued Expenses 25,044 0
-------- ---
Net Cash Used in Operating Activities (23,318) 0
-------- ---
Cash Flows from Investing Activities
Purchase of equipment 0 0
-------- ---
Cash Flows Used in Investing Activities 0 0
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Cash Flows from from Financing Activities
Proceeds from stock issuance 0 0
Proceeds from notes payable 17,098 0
Note principal payments 0 0
-------- ---
Cash Flow Provided by Financing Activities 17,098 0
-------- ---
Net(Decrease) in Cash and Cash Equivalents (6,220) 0
Cash and Cash Equivalents - Beginning of Year 6,006 0
-------- ---
Cash and Cash Equivalents - End of Year (214) 0
========= ===
Supplemental Cash Flow Information:
Interest Paid 1,227 0
========= ===
Income Taxes Paid 0 0
========= ===
Supplemental schedule of noncash financing activities:
Acquisition of subsidiary:
Assets acquired 0 0
Liabilities assumed 0 0
--------- ---
Net equity efect of acquisition 0 0
========= ====
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
INTERNET VENTURE GROUP, INC.
(a development stage company)
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
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-4
<PAGE>
INTERNET VENTURE GROUP, INC.
Notes to Financial Statements
March 31, 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-5
<PAGE>
INTERNET VENTURE GROUP, INC.
Notes to Financial Statements
March 31, 2000 (Unaudited)
NOTE 2 - PROPERTY AND EQUIPMENT:
Property and equipment consist of the following:
Manufacturing Equipment $105,513
FURNITURE & EQUIPMENT 29,208
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Total 134,721
LESS: ACCUMULATED DEPRECIATION ( 79,175)
---------
$ 55,546
Depreciation expense for 1999 was $21,473.
NOTE 3 -OTHER ASSETS:
Other assets consist of the following:
Patents $320,106
Licensing Agreement 31,250
Trademarks 11,398
Deposits 15,360
ORGANIZATION COSTS 2,500
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Total 380,614
LESS: AMORTIZATION EXPENSE ( 84,642)
---------
$295,972
Amortization expense for 1999 was $24,800.
<TABLE>
<CAPTION>
NOTE 4 - NOTES PAYABLE:
Following is a summary of notes payable at December 31, 1999:
<S> <C>
AMOUNT
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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
---------
$329,656
</TABLE>
F-6
<PAGE>
INTERNET VENTURE GROUP, INC.
Notes to Financial Statements
March 31, 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)
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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 - STOCK OPTIONS:
The Company has granted options to purchase shares 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 options is presented below:
Weighted-Average
Number Exercise Price
of Shares per Share
--------- ----------------
Granted..................... 719,000 $.58
Exercised................... 0 .00
CANCELED................... 0 .00
Balance , December 31, 1998... 719,000 .58
Granted.................... 510,000 .68
Exercised............... 0 .00
CANCELED.................. (65,000) .63
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BALANCE, DECEMBER 31, 1999....... 1,164,150 $.62
========== =====
F-7
<PAGE>
INTERNET VENTURE GROUP, INC.
Notes to Financial Statements
March 31, 2000 (Unaudited)
NOTE 7 - STOCK OPTIONS:CONTINUED
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.%
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. However, the Company
has sustained a substantial operation loss . As shown in the financial
statements, the Company incurred a net loss of $279,181 for 1999 and a
losss of $81,157 for the quarter ended March 31, 2000. At March 31,
2000, current liabilities exceed current assets by $213,462. 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-8
<PAGE>
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The Company has experienced $131,777 expenses for the three month period in 2000
and none in 1999. The Company had revenues for the period in 2000 of $84,195 as
a result of the acquisition of Gee Whiz.com and none in 1999. The Company had a
loss of $81,157 for the period in 2000 and none in 1999 prior to the acquisition
of Gee Whiz.com. The Company will continue to have losses until adequate income
can be achieved to meet expenses. While the company is seeking capital sources
for investment; there is no assurance that sources can be found.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a deficit in cash capital at the end of the period and current
liabilities exceeded assets by $552,502. 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 make private placements
of stock.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
INSERT
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 filed on: April 17,2000
_____________________
<PAGE>
INTERNET VENTURE GROUP, INC., INC., 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., INC., INC.
Date: May 31 , 2000 /s/Elorian Lauders
--------------------
Elorian Lauders, President
