<PAGE>
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the calendar year ended December 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission File No. 0-16665
THE INTERNET ADVISORY CORPORATION
---------------------------------
(Name of Small Business Issuer in its Charter)
UTAH 87-0426358
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
2455 East Sunrise Blvd., Suite 401
Ft. Lauderdale, Florida 33304
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(Address of Principal Executive Offices)
Issuer's Telephone Number: (954) 453-5000
N/A
---
(Former Name or Former Address, if changed since last Report)
Securities Registered under Section 12(b) of the Exchange Act: None
Name of Each Exchange on Which Registered: None
Securities Registered under Section 12(g) of the Exchange Act: $0.001 par
value common stock
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Company was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
Check if there is no disclosure of delinquent files in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. [ ]
State Issuer's revenues for its most recent fiscal year: December 31, 1998 -
$415,085.
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days.
February 9, 1999 - $23,511,254. There are approximately 2,402,417 shares
of common voting stock of the Company held by non-affiliates. The Company has
valued these shares at $9.7865 per share which is the average bid price for
the Company's common stock from January 1, 1999 through February 24, 1999.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PAST FIVE YEARS)
Not Applicable.
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date:
February 9, 1999
7,518,017
DOCUMENTS INCORPORATED BY REFERENCE
A description of "Documents Incorporated by Reference" is contained
in Item 13 of this report.
Transitional Small Business Issuer Format Yes X No ___
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PART I
Item 1. Description of Business.
------------------------
Business Development.
- ---------------------
For information on the previous business of the Company, see its
Annual Reports on Form 10-KSB for the years ended November 30, 1997, and 1996,
which have been previously filed with the Securities and Exchange Commission
and which are incorporated herein. See Item 13.
The Company completed an Agreement and Plan of Reorganization (the
"Plan") on June 22, 1998. Under the Plan, the Company issued 6,000,000
"unregistered" and "restricted" shares of its common stock to the stockholders
of the Internet Advisory Corporation, a Florida corporation ("IAC Florida"),
in exchange for the assets and liabilities of IAC Florida. Following the
Plan, the IAC Florida stockholders became the majority stockholders of the
Company and the Company became a successor to the operations of IAC Florida,
which are discussed under the caption "Business," below. The Plan was
reported on a Current Report on Form 8-K dated June 22, 1998, which was
amended on September 3, 1998, and filed with the Securities and Exchange
Commission on July 2, 1998, and September 3, 1998, respectively, and which are
incorporated herein by reference. See Item 13.
In connection with the Plan, on August 20, 1998, the Company amended
its Articles of Incorporation to change its name from "Olympus M.T.M.
Corporation" to "The Internet Advisory Corporation." On July 28, 1998, the
Company filed a definitive Information Statement with the Securities and
Exchange Commission with respect to the name change. A majority of the
Company's stockholders voted to approve the name change on August 18, 1998.
See Item 13.
The Company's Board of Directors have chosen to change the Company's
year end from November 30, to December 31.
Business.
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The Company presently offers web site programming and web hosting to
small and medium size companies. The Company offers a simple package that
contains everything that clients need, including web hosting, at an affordable
price. The Company controls costs using volume sales and a unique approach to
marketing web site programming. The volume sales are possible by centralizing
the sales force and conducting all sales via telephone, fax and the internet.
The client is able to view a number of comparable sites, whether in its
industry or not, in a variety of graphical styles. The production side must
also keep up with the sales volume; a typical web site designer takes one to
two days per web site. The Company has increased this to two web sites per
day; this is achieved by using a production line approach to the website
programming together with automated web site development procedures that the
Company has devised to speed production.
The Company is currently in negotiations with several long distance
suppliers, including AT & T, GTE and UUNet, that would enable it to provide
internet access throughout the U.S.
The success of the Company's operations will depend on numerous
factors, some of which it can control and others which are beyond its control.
See the caption "Risk Factors," below.
"Year 2000".
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Management believes that the Company's operations are Year 2000
compliant. All of its hardware systems use the full four-digit format for
defining years. All of the Company's software systems, both purchased and
internally developed, use the full four-digit date format. The Company has
tested its systems by advancing its computer clocks to the year 2000 and
beyond; the systems have passed these tests.
The Company can give no assurance that third parties with whom it
does business (e.g., banks and utilities) will ensure Year 2000 compliance in
a timely manner or that, if they do not, their computer systems will not have
an adverse effect on the Company. However, management does not believe that
Year 2000 compliance issues of such third parties will result in a material
adverse effect on the Company's financial condition or results of operations.
Principal Products or Services and their Markets.
- -------------------------------------------------
The Company is an international internet service provider and web
site designer, and provides web site programming and hosting. See the caption
"Management's Discussion and Analysis or Plan of Operation."
Distribution Methods of the Products or Services.
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The Company uses a centralized sales force that uses the internet,
fax and telephone combined to market internationally.
Status of any Publicly Announced New Product or Service.
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All new products or services that have been publically announced are
fully functional and creating revenue. These include:
Wholesale web site hosting;
automotive and insurance web site programming and hosting;
real estate and travel web site programing and hosting.
Competition.
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As new as the internet is, it is an extremely competitive market.
The Company faces competition from hundreds of entities, many of which have
substantially greater assets and experience than the Company. However, the
Company's marketing and programming have shown success, and management
believes that the Company will be able to compete successfully in its industry
for the foreseeable future. See the Risk Factor "Competition, Low Barriers to
Entry."
Sources and Availability of Raw Materials.
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None; not applicable.
Dependence on One or a Few Major Customers.
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None; not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts.
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The Company has licenses for its internet domain names, "Internet
Academy" and "Hostfacility.com"; each license lasts for two years. The
licenses expire unless renewed for $70.
Governmental Approval of Principal Products or Services.
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The Company is subject to Regulation 14A promulgated by the
Securities and Exchange Commission under the 1934 Act. Section 14(a) of the
1934 Act requires all companies with securities registered pursuant to Section
12(g) thereof to comply with the rules and regulations of the Securities and
Exchange Commission regarding proxy solicitations as outlined in Regulation
14A. Matters submitted to stockholders of the Company at a special or annual
meeting thereof or pursuant to a written consent shall require the Company to
provide its stockholders with the information outlined in Schedules 14A or 14C
of Regulation 14; preliminary copies of this information must be submitted to
the Securities and Exchange Commission at least 10 days prior to the date that
definitive copies of this information are forwarded to stockholders. See the
Risk Factor "Government Regulation and Legal Uncertainties."
Effects of Existing or Probable Governmental Regulations.
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Other than maintaining its good standing in the State of Utah;
complying with applicable local business licensing requirements; preparing its
periodic reports under the Securities Exchange Act of 1934, as amended (the
"1934 Act"); and complying with other applicable securities laws, rules and
regulations as set forth above, the Company does not believe that existing or
probable governmental regulations will have a material effect on its
operations. However, the internet is a rapidly evolving commercial medium and
may become subject to numerous types of regulation in the future. Areas of
potential regulation include user privacy, advertising, information security
and taxation. Because internet commerce is developing so rapidly, it is
impossible to predict the type and extent of governmental regulation in the
future. See the Risk Factor "Government Regulation and Legal Uncertainties."
Cost and Effect of Compliance with Environmental Laws.
- ------------------------------------------------------
None; not applicable.
Research and Development Expenses.
- ----------------------------------
The Company believes that 2,000 hours were spent in each of the last
two calendar years on research and development. Management estimates that a
total of $300,000 was spent on research and development during that period,
with virtually the entire amount taking the form of salaries. See the Risk
Factors "Rapid Technology Change" and "Future Capital Needs; Uncertainty of
Additional Funding."
Number of Employees.
- --------------------
The Company currently has 15 employees, all of whom are employed
full time. During the next 12 months, the Company expects to hire an
additional 12 full-time employees. Management believes that revenues will be
sufficient to pay for all necessary salaries and wages.
Risk Factors.
- -------------
Fluctuations in Quarterly Operating Results and Margins; Seasonality
of Business. The Company's operating results have fluctuated in the past and
are likely to fluctuate in the future as a result of a variety of factors,
many of which will be outside the Company's control. Some of these factors
include material reduction or cancellation of major projects or the loss of a
major client; the amount and timing of the receipt of new business; timing of
hiring or loss of personnel; the amount and timing of the opening or closing
of an office; the amount and the relative mix of high-margin creative or
strategy consulting projects as compared to lower margin projects, capital
expenditures and other costs relating to the expansion of operations; the
level of demand for Intranet, Extranet and Web site development; the ability
to maintain adequate staffing to service clients effectively; the cost of
advertising and related media; the amount and timing of expenditures by
clients for professional services; the introduction of new products or
services by competitors; pricing changes in the industry; relative mix of
lower cost full-time employees versus higher cost independent contractors;
technical difficulties with respect to the use of the Internet; economic
conditions specific to Internet technology usage; government regulation and
legal developments regarding the use of the Internet; and general economic
conditions. The Company may also experience seasonality in its business,
resulting in diminished revenues as a consequence of decreased demand for
professional services during summer and year-end vacation and holiday periods.
Due to all of the foregoing factors, the Company's operating results in any
given quarter may fall below the expectations of securities analysts and
investors. In such event, the trading price of the Company's common stock
would likely be materially and adversely affected.
The Company has experienced some seasonality in its business which
results from timing of product introductions and business cycles of the
Company's clients. The Company's revenues for the fiscal first and fourth
quarters tend to be somewhat lower than other quarters because many clients
have expended most of their marketing budgets prior to the end of the calendar
year and do not release funds from the next calendar year's marketing budget
until mid-to-late January. For the foregoing reasons and other factors, the
Company's historical revenues and operating results are not necessarily
meaningful and cannot be relied upon as indicators of the Company's future
performance.
The Company's historical financial data is of limited value in
planning future operating expenses. Accordingly, the Company's expense levels
will be based in part on its expectations concerning future revenues and will
be fixed to a large extent. The Company will be unable to adjust spending in
a timely manner to compensate for any unexpected shortfall in revenues.
Accordingly, a significant shortfall in demand for services could have an
immediate and material adverse effect on the Company's business, financial
condition, results of operations and prospects.
Limited Operating History; Accumulated Deficit; Evolving Business
Model. The Company's operating predecessor was founded in August of 1997, and
has incurred net losses since inception. Since the closing of the Plan, the
Company has an accumulated deficit of $142,00. Accordingly, the Company will
have only a limited operating history on which to base an evaluation of its
business and prospects.
The Company and its prospects must be considered in light of the
risks, expenses and difficulties frequently encountered by companies in an
early stage of development, particularly companies in new and rapidly evolving
markets such as Internet solutions and services. Such risks for the Company
include, but are not limited to, an evolving business model. To address these
risks the Company must, among other things, strengthen its business
development and management activities while continuing to expand its network,
continue to develop the strength and quality of its operations, maximize the
value delivered to clients by the Company's Internet solutions, develop and
enhance the Company's brands, respond to competitive developments and continue
to attract, retain and motivate qualified employees. There can be no
assurance that the Company will be successful in meeting these challenges and
addressing such risks and the failure to do so could have a material adverse
effect on the Company's business, financial condition, result of operations
and prospects.
Risks Related to Future Acquisitions. A key component of the
Company's continued growth strategy is expected to be the acquisition of firms
that meet the Company's goals for strategic growth and international
expansion. The successful implementation of this strategy will depend of the
Company's ability to identify suitable acquisition candidates , acquire such
companies on acceptable terms and integrate their operations successfully with
those of the Company. There can be no assurance that the Company will be able
to identify additional suitable acquisition candidates or that the Company
will be able to acquire such candidates on acceptable terms. Moreover, in
pursuing acquisition opportunities the Company may compete with other
companies with similar growth strategies, certain of which competitors may be
larger and have greater financial and other resources than the Company.
Competition for these acquisition targets may also result in increased prices
of acquisition targets and a diminished pool of companies available for
acquisition. Acquisitions also involve a number of other risks, including
adverse effects on the Company's reporting operating results from increases in
goodwill amortization, acquired in-process technology, stock compensation
expense resulting from newly hired employees, the diversion of management
attention, potential disputes with the sellers of one or more acquired
entities and the possible failure to retain key acquired personnel. Lack of
client satisfaction or performance problems with an acquired firm could also
have a material adverse impact on the reputation of the Company as a whole,
and any acquired subsidiary could significantly underperform relative to the
Company's expectations. For all of these reasons, the Company's pursuit of an
overall acquisition strategy or any individual pending or future acquisition
may have a material adverse effect on the Company's business, financial
condition, results of operations and prospects. To the extent that the
Company chooses to use cash consideration for acquisitions in the future, the
Company may be required to obtain additional financing, and there can be no
assurance that such financing will be available on favorable terms, if at all.
As the Company issues stock to complete future acquisitions, existing
shareholders will experience further ownership dilution.
Risks Associated with Failure to Manage Growth. The Company's
growth has placed, and any further expansion would continue to place, a
significant strain on its limited personnel, management and other resources.
In the future, the Company will be required to attract, train, motivate and
manage new employees successfully and to continue to improve its operational,
management and information systems and controls. There can be no assurance
that the Company's systems, procedures or controls will be adequate to support
its operations or that its management will be able to achieve the rapid
execution necessary to exploit the market for the Company's business model.
The failure to effectively manage any further growth could have a material
adverse effect on the Company's business, financial condition, results of
operation and prospects.
Competition, Low Barriers to Entry. The market for Internet
professional services is relatively new, intensely competitive, rapidly
evolving and subject to rapid technological change. The Company expects
competition to persist, intensify and increase in the future. The Company's
competitors can be divided into several groups: computer hardware and service
vendors such as IBM and Hewlett Packard; advertising and media agencies such
as Ogilvy & Mather, Young & Rubicam and Foote, Cone & Belding; Internet
integrators and web presence providers such as Agency.com and iXL Holdings;
large information consulting service providers such as Anderson Consulting,
Cambridge Technology Partners and Electronic Data Systems Corporation;
telecommunications companies such as AT&T and MCI; Internet and online service
providers such as America Online, Netcom Online, and UUNet Technologies, and
software vendors such as Microsoft, Netscape, Novell and Oracle. Many of the
Company's current and potential competitors have longer operating histories,
larger installed customer bases, longer relationships with clients and
significantly greater financial, technical, marketing and public relation
sources than the Company and could decide at any time to increase their
resource commitments to the Company's target market. In addition, the market
for web site development is relatively new and subject to continuing
definition, and, as a result, may better position the Company's competitors to
compete in this market as it matures. As a strategic response to changes in
the competitive environment, the Company may from time to time make certain
pricing, service technology or marketing decisions or business or technology
acquisitions that could have a material adverse effect on the Company's
business, financial condition, results of operations and prospects.
Competition of the type described above could materially adversely affect the
Company's business, results of operations, financial conditions and prospects.
In addition, the Company's ability to maintain its existing client
relationships and generate new clients will depend to a significant degree on
the quality of its services and its reputation among its clients and potential
clients, compared with the quality of its services provided by, and the
reputations of, the Company's competitors. To the extent the Company loses
clients to its competitors because of dissatisfaction with the Company's
services or its reputation is adversely affected for any other reason, the
Company's business, result of operations, financial conditions and prospects
could be materially adversely affected.
There are relatively low barriers to entry into the Company's
business. Because firms such as the Company rely on the skill of their
personnel and the quality of their client service, they have no patented
technology that would preclude or inhibit competitors from entering their
markets. The Company is likely to face additional competition from new
entrants into the market in the future. There can be no assurance that
existing or future competitors will not develop or offer services that provide
significant performance, price, creative or other advantages over those
offered by the Company, which could have a material adverse effect on its
business, financial condition, results of operations and prospects.
Developing Internet Economy, Market for e-Commerce Solutions;
Unproven Acceptance of the Company's Complete Media Solutions and Client
Outsourcing. A substantial portion of the Company's revenue is expected to be
derived from service that depend upon the adoption of Internet solutions by
companies to improve their business positioning and processes, and the
continued development of the World Wide Web, the Internet and e- Commerce.
The Internet may not prove to be a viable commercial marketplace because of
inadequate development of necessary infrastructure, lack of development of
complementary products, implementation of competing technology, delays in the
development or adoption of new standards and protocols required to handle
increased levels of Internet activity, government regulation, or other
reasons. The Internet has experienced, and is expected to continue to
experience, significant growth in the number of users and volume of traffic.
There can be no assurance that the Internet infrastructure will continue to be
able to support the demands placed on it by this continuous growth. Moreover,
critical issues concerning the use of Internet and e-Commerce solutions
(including security, reliability, cost ease of deployment and administration
and quality of service) remain unresolved and may affect the growth of the use
of such technologies to maintain, manage and operate a business, expand
product marketing, improve corporate communications and increase business
efficiencies. The adoption of Internet solutions for these purposes,
particularly by those individuals and enterprises that have historically
relied on traditional means, can be capital intensive and generally requires
the acceptance of a new way of conducting business and exchanging information
If critical issues concerning the ability of Internet solutions to improve
business positioning and processes are not resolved or if the infrastructure
is not developed, the Company's business, financial condition, results of
operations and prospects will be materially adversely affected.
Volatility of Stock Price. The trading prices of the Company's
common stock have historically been subject to wide fluctuations, due to a
variety of factors including announcements regarding financial results,
acquisitions, and significant orders. Failure to achieve periodic revenue,
earnings and other operating and financial results as forecasted or
anticipated by brokerage firms or industry analysts could result in an
immediate and adverse effect on the market price of the Company's common
stock. The Company may not discover, or be able to confirm, revenue or
earnings shortfalls until the end of a quarter, which could result in a
greater and immediate and adverse effect on the common stock of the Company.
In addition, the stock market, which has recently been at or near historic
highs, has experienced extreme price and volume fluctuations that have
particularly affected the market prices of equity securities of many
technology companies and that often have been unrelated to the operating
performance of such companies. In the past, following periods of volatility
in the market price of a company's securities, securities class action
litigation has often been instituted against such a company. Such litigation
could result in substantial costs and a diversion of management's attention
and resources, which would have a material adverse effect on the Company's
business, financial condition, results of operations and prospects.
Conflicts of Interest. Conflicts of interest are inherent in
certain segments of the marketing communications industry, particularly in
advertising. The Company has in the past, and will likely in the future, be
able to pursue potential advertising and other opportunities because such
opportunities will require the Company to provide services to direct
competitors of existing clients. In addition, the Company risks alienating or
straining relationships with existing clients each time the Company agrees to
provide services to even indirect competitors of existing Company clients.
Conflicts of interest may jeopardize the stability of revenues generated from
existing clients and preclude access to business prospects, either of which
developments could have a material adverse effect on the Company's business,
financial condition, results of operations and prospects.
Rapid Technology Change. The market for Internet solutions and
marketing services is characterized by rapid technological change, changes in
user and client requirements and preferences, frequent new product and service
introductions embodying new processes and technologies and evolving industry
standards and practices that could render the Company's existing service
practices and methodologies obsolete. The Company's success will depend, in
part, on its ability to improve its existing services, develop new services
and solutions that address the increasingly sophisticated and varies needs of
its current and prospective clients, and respond to technological advances,
emerging industry standards and practices, and competitive service offerings.
Failure to do so could result in the loss of existing customers or the
inability to attract and retain new customers, either of which developments
could have a material adverse effect on the Company's business, financial
condition, results of operations and prospects. There can be no assurance
that the Company will be successful in responding quickly, cost-effectively
and sufficiently to these developments. If the Company is unable, for
technical, financial or other reasons, to adapt in a timely manner in response
to change in market conditions or client requirements, its business, financial
condition, result of operations and prospects would be materially adversely
affected.
Potential Liability to Clients. Many of the Company's consulting
engagements involve the development, implementation and maintenance of
applications that are critical to the operations of their clients' businesses.
Its failure or inability to meet a client's expectations in the performance of
its services could injure the Company's business reputation or result in a
claim for substantial damages, regardless of its responsibility for such
failure. In addition, the Company possesses technologies and content that
may include confidential or proprietary client information. Although the
Company has implemented policies to prevent such client information from being
disclosed to unauthorized parties or used inappropriately, any such
unauthorized disclosure or use could result in a claim for substantial
damages. The Company has attempted to limit contractually its damages arising
from negligent acts, errors, mistakes or omissions in rendering professional
services; however, there can be no assurance that any contractual protections
will be enforceable in all instances or would otherwise protect the Company
from liability for damages. The successful assertion of one or more large
claims against the Company that are uninsured, exceed available insurance
coverage or result in changes to the Company's insurance policies, including
premium increases or the imposition of a large deductible or co-insurance
requirements, could adversely affect the Company's business, results of
operations and financial conditions.
Future Capital Needs; Uncertainty of Additional Financing. The
Company currently anticipates that its available cash resources and credit
facilities will be sufficient to meet its presently anticipated working
capital and capital expenditure requirements for the next 9 months. However,
the Company may need to raise additional funds in order to support more rapid
expansion, develop new or enhanced services and products, respond to
competitive pressures, acquire complimentary businesses or technologies or
take advantage of unanticipated opportunities. The Company's future
liquidity and capital requirements will depend upon numerous factors,
including the success of its existing and new service offerings and competing
technological and market developments. The Company may be required to raise
additional funds through public or private financing, strategic relationships
or other arrangements, particularly as its acquisition strategy matures.
There can be no assurance that such additional funding, if needed, will be
available on terms acceptable to the Company, or at all. Furthermore, any
additional equity financing may be dilutive to stockholders, and debt
financing, if available, may involve restrictive covenants, which may limit
the Company's operating flexibility with respect to certain business matters.
Strategic arrangements, if necessary to raise additional funds, may require
the Company to relinquish its rights to certain of its intellectual property
or selected business opportunities. If additional funds are raised through
the issuance of equity securities, the percentage ownership of the
stockholders of the Company will be reduced, stockholders may experience
additional dilution in net book value per share, and such equity securities
may have rights, preferences or privileges senior to those of the holder of
the Company's common stock. If adequate funds are not available on acceptable
terms, the Company may be unable to develop or enhance its services and
products, take advantage of future opportunities or respond to competitive
pressures, any of which could have a material adverse effect on its business,
financial condition, results of operations and prospects.
Government Regulation and Legal Uncertainties. The Company is not
currently subject to direct government regulation, other than the securities
laws and the regulations thereunder applicable to all publicly owned
companies, and laws and regulations applicable to businesses generally, and
there are currently few laws or regulations directly applicable to access to
or commerce on the Internet. However, due to the increasing popularity and
use of the Internet, it is likely that a number of laws and regulations may be
adopted at the local, state, national and international levels with respect to
the Internet covering issues such as user privacy, freedom of expression,
pricing of products and services, taxation, advertising, intellectual property
rights, information security or the convergence of traditional communication
services with Internet communications. For example, the Telecommunications
Act of 1996 (the "Telecommunications Act") imposes criminal penalties on
anyone who distributes obscene or indecent communications over the Internet.
Although the anti-indecency provisions of the Telecommunications Act have been
declared unconstitutional by the federal courts, the increased attention
focused upon these liability issues as a result of the Telecommunications Act
could adversely affect the growth of the Internet and therefore demand for the
Company's services. In addition, because the growth in the electronic
commerce market, Congress has held hearings on whether to regulate providers
of services and transactions in the electronic commerce market, which
regulations could negatively affect client demand for Internet solutions that
facilitate electronic commerce. Moreover, the adoption of any such laws or
regulations may decrease growth of the Internet, which could in turn decrease
the demand for the Company's services or increase cost of doing business or in
some other manner have a material adverse effect on the Company's business,
financial conditions, results of operations or prospects. In addition, the
applicability to the Internet of existing laws governing issues such as
property ownership, copyrights and other intellectual property issues,
taxation, libel and personal property is uncertain. The vast majority of such
laws were adopted prior to the advent of the Internet and related technologies
and, as a result, do not contemplate or address the unique issues of the
Internet and related technologies. Changes to such laws intended to address
these issues, including some recently proposed changes, could create
uncertainty in the marketplace which could reduce demand for the Company's
services or increase the cost of doing business as a result of costs of
litigation or increased service delivery costs, or could in some other manner
have a material adverse effect on the Company's business, financial condition,
results of operations and prospects.
Concentration of Stock Ownership. The present directors, executive
officers and their respective affiliates beneficially own a majority of the
outstanding common stock of the Company. As a result, these stockholders will
be able to exercise significant influence over all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions. Such concentration of ownership may also
have the effect of delaying or preventing a change in control of the Company.
Susceptibility to General Economic Conditions. The Company's
revenues and results of operations are subject to fluctuations based upon
general economic conditions. If there were to be a general economic downturn
or a recession in the United States, then the Company expects that business
enterprises, including its clients and potential clients, likely will
substantially and immediately reduce their budgets. Because certain clients
of the Company have substantial overseas operations, their budgets may also be
adversely affected by economic conditions in overseas markets, including the
recent volatility in Asian and Russian economies and Asian and Russian
currency and securities markets. In the event of such an economic downturn,
the Company's business, financial condition, results of operations and
prospects may be materially and adversely affected.
Item 2. Description of Property.
------------------------
The Company currently leases 4674 square feet of office space in Ft.
Lauderdale, Florida, at a rate of $6,615.50 per month. The term of the lease
is four years, expiring February 28, 2003.
Item 3. Legal Proceedings.
------------------
The Company is not a party to any pending legal proceeding. No
federal, state or local governmental agency is presently contemplating any
proceeding against the Company. No director, executive officer or affiliate
of the Company or owner of record or beneficially of more than five percent of
the Company's common stock is a party adverse to the Company or has a
material interest adverse to the Company in any proceeding.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
On August 18, 1998, a majority of the Company's stockholders voted to
change its name from "Olympus M.T.M Corporation" to "The Internet Advisory
Corporation." No matter was submitted to a vote of security holders, through
the solicitation of proxies or otherwise, during the fourth quarter of the
fiscal year covered by this Report.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
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Market Information
- ------------------
The Company's common stock is quoted on the OTC Bulletin Board of
the National Association of Securities Dealers, Inc. (the "NASD") under the
symbol "PUNK"; no assurance can be given that any market for the Company's
common stock will be maintained.
STOCK QUOTATIONS*
CLOSING BID
Quarter ended: High Low
- -------------- ---- ---
[S] [C] [C]
March 31, 1998 0.01 0.01
June 30, 1998 3.25 2.625
September 30, 1998 2.9375 .75
December 31, 1998 7.875 1.25
There are no outstanding options, warrants or calls to purchase any
of the authorized securities of the Company.
The issuances of an aggregate of 6,976,932 "unregistered" and
"restricted" post-split shares of common stock to the persons named under the
caption "Recent Sales of Unregistered Securities," below, were the only sales
of any "restricted" securities of the Company during the period covered by
this Report. Future sales of any of these securities may have a future
adverse effect on any "public market" in the common stock of the Company. See
the caption "Recent Sales of Unregistered Securities" of this Report.
Holders.
- --------
The number of record holders of the Company's securities as of the
date of this Report is approximately 531.
Dividends.
- ----------
The Company has not declared any cash dividends with respect to its
common stock and does not intend to declare dividends in the foreseeable
future. The future dividend policy of the Company cannot be ascertained with
any certainty, and if and until the Company completes any acquisition,
reorganization or merger, no such policy will be formulated. There are no
material restrictions limiting, or that are likely to limit, the Company's
ability to pay dividends on its securities.
Recent Sales of Unregistered Securities.
- ----------------------------------------
Date Number of Aggregate
Name Acquired Shares Consideration
---- -------- --------- -------------
IAC Florida Stockholders 6/22/98 6,000,000 (1)
Santiago Alfonso 11/13/98 5,000 Services
Lourdes Alfonso 11/13/98 5,000 Services
Jason Todd Greenberg 11/13/98 5,000 Services
Francis Dropik 1/7/99 5,000 Services
Christopher R. Ebersole 1/7/99 5,000 Services
Private Placement
Subscribers (2) 971,932 $1,214,915
Bensen Capital Management 2/23/99 44,000 Services
Howard Berkowitz 2/23/99 12,000 Services
Mark Teinert 2/23/99 12,000 Services
Bill Von Gremp 2/23/99 12,000 Services
(1) These shares were issued in connection with the Plan, which was
disclosed in the Company's Current Report on Form 8-K, dated June 22, 1998,
and amended September 3, 1998. See Item 13. Also see the heading "Business
Development" of the caption "Business."
(2) These shares were issued over a period of time ranging from
November 11, 1998, to February 15, 1999, pursuant to a private placement of
the Company's "unregistered" and "restricted" common stock at a price of $1.25
per share.
Beginning on June 22, 1999, a total of 6,000,000 of these shares
will become eligible for resale under Rule 144 of the Securities and Exchange
Commission, provided that the Company maintains "current publicly available
information" about itself and that the other requirements of Rule 144 are met.
The sale of all or a portion of these shares may have a material adverse
effect on the market price for the Company's common stock.
Item 6. Management's Discussion and Analysis or Plan of Operation.
----------------------------------------------------------
Plan of Operation.
- ------------------
The disclosure herein contains certain forward-looking statements
that involve risks and uncertainties, including statements regarding the
Company's strategy, planned operations, financial performance, and revenue
sources. The Company's actual results could differ materially from the
results anticipated in these forward-looking statements as a result of
certain factors set forth under "Risk Factors" below.
Overview. The Company is a leading global provider of Internet-
based solutions such as web site design, retail and wholesale web site hosting
and system co-location. The Company offers comprehensive solutions designed
to improve clients' business processes using Internet applications. The
Company's Internet services include strategic consulting; analysis and
design; technology development; implementation and integration; and
maintenance. The Company markets its services to small, medium and large
corporations.
To date, the Company has generated its revenues solely from web
site design and retail web hosting (known when unified as "full service design
and hosting"). The Company has only a limited operating history upon which to
base an evaluation of its business and prospects. The Company and its
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in an early stage of development,
particularly in new and rapidly evolving markets such as the Internet and
companies serving the Internet. Such risks for the Company include but are
not limited to a constantly evolving business model and the management of both
internal and acquisition-based growth. To address these risks, the Company
must among other things, continue to develop the strength and quality of its
web site design and hosting facility; maximize the value delivered to its
clientele; enhance the "Internet Advisory", "PUNK" and "HostFacility.com"
brand names; respond to competitive developments; acquire financing for its
expansion plan, and continue to attract, retain and motivate qualified
employees. There can be no assurance that the Company will be successful in
meeting these challenges and addressing such risks, and the failure to do so
could have a material adverse effect on the Company's business, results of
operations and financial condition. The Company has incurred net losses since
its inception. Although the Company has experienced revenue growth in recent
months, such growth rates may not be sustainable or indicative of future
operating results. The Company expects to continue to incur operating losses
through at least the second quarter (ending June 30) of 1999, and there can be
no assurance that the Company will achieve or sustain profitability.
Sources of Revenue. During the period covered by this Report, the
Company's revenues were derived exclusively from initial web site design and
programming fees and monthly retail web site hosting fees. Typically, these
fees were recognized when received because all obligations required of the
Company by the customer were substantially performed concurrently with the
execution of a design and hosting agreement.
The services offered by the Company include Internet solutions such
as web site programming and design and web site hosting. Each engagement is
billed over the course of the engagement on either a time and materials basis
or a fixed-price basis. Billable rates vary by the services provided and by
the geographical region. The pricing, management and execution of individual
engagements are the sole responsibility of the Company's management.
Cost Structure. The Company recognizes revenues as they are earned,
not necessarily as they are collected. Direct costs such as hosting expense,
design cost, and server expense are classified as cost of revenues. General
and Administrative expenses include accounting, advertising, contract labor,
bank charges, depreciation, entertainment, equipment rental, insurance, legal,
supplies, pay roll taxes, postage, professional fees, telephone, and travel.
Results of Operations.
----------------------
During the calendar year ended December 31, 1998, the Company
received revenues of $415,085, as compared to revenues of $37,560 during the
calendar year ended December 31, 1997. After deducting costs of sales, gross
profits were $358,283 and $9,393 in each of these periods.
Net losses in the calendar years ended December 31, 1998, and 1997,
were $(92,742) ($0.03 per share) and $(50,080) ($0.06 per share),
respectively.
Recent Accounting Pronouncements. In June 1997, the Financial
Accounting Standards Board issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." The adoption of SFAS No. 131 is
required for fiscal years beginning after December 15, 1997. SFAS No. 131
requires that companies report separately in their financial statements
certain financial and descriptive information about operating segments , if
applicable. The Company does not expect the adoption of SFAS No. 131 to have
any impact on the Compans consolidated financial results and is currently
assessing the disclosure requirements of the new pronouncement.
The Company adopted the provisions of Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," in
the fiscal year ending December 31, 1998. SFAS No. 130 requires the Company
to report in its financial statements, in addition to its net income (loss),
comprehensive income (loss), which includes all changes in equity during a
period from non-owner sources including, as applicable, foreign currency
items, minimum pension liability adjustments and unrealized gains and losses
on certain investments in debt and equity securities. During the fiscal year
ending December 31, 1998, such items were not significant, and the Company's
comprehensive loss approximated its net loss.
In April 1998, the American Institute of Certified Public
Accountants issued Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP
98-1 provides guidance for determining whether computer software is internal-
use software and on accounting for the proceeds of computer software
originally developed of obtained for internal use and then subsequently sold
to the public. It also provides guidance on capitalization of costs incurred
for computer software developed or obtained for internal use. The Company has
not determined the impact, if any, of adopting SOP 98-1, which will be
effective for the Company's calendar year ending December 31, 1999.
In June 1998, the SFAS issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS 133 establishes a new
model for accounting for derivatives and hedging activities and supersedes and
amends a number of existing accounting standards. SFAS 133 requires that all
derivatives be recognized in the balance sheet at their fair market value and
corresponding derivative gains or losses be either reported in the statement
of operations or as a deferred item depending on the type of hedge
relationship that exists with respect to such derivatives. The Company has
not yet determined the effect, if any, of adopting SFAS 133, which will be
effective for the Company's fiscal year 2000.
Liquidity and Capital Resources.
- --------------------------------
At December 31, 1998, the Company had approximately $384,934 in
cash, cash equivalents and short-term investments, compared to $ 62,123 at
December 31, 1997.
Cash provided by financing activities was $ 395,000 for the year
ending December 31, 1998, and was primarily due to a private placement of
"unregistered" and "restricted" stock in December.
The Company currently has no material commitments. The Company will
continue to evaluate possible acquisitions of or investments in businesses,
products, and technologies that are complimentary to those of the Company,
which may require the use of cash. The Company believes that existing cash,
investments and borrowings available under its credit facilities will be
sufficient for at least the next 9 months; however, the Company may sell
additional equity or debt securities or seek additional credit facilities if
it believes such actions would be a better way to fund acquisition-related or
other costs. Sales of additional equity or convertible debt securities would
result in additional dilution to the Company's stockholders. The Company may
need to raise additional funds sooner in order to support more rapid
expansion, develop new or enhanced services or products, respond to
competitive pressures, acquire complementary businesses or technologies or
take advantage of unanticipated opportunities. The Company's future liquidity
and capital requirements will depend upon numerous factors, including the
success of the Companies existing and new service offerings and competing
technological and market developments. See the Risk Factor "Future Capital
Needs; Uncertainty of Additional Financing."
Item 7. Financial Statements.
---------------------
<PAGE>
THE INTERNET ADVISORY CORPORATION
Formerly
Olympus M.T.M. Corporation
Financial Statements
and
Independent Auditors Report
December 31, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
The Internet Advisory Corporation
We have audited the accompanying balance sheet of The Internet Advisory
Corporation, formerly Olympus M. T. M. Corporation, as of December 31, 1998,
and the related statements of operations, stockholders' equity, and cash flows
for the year ended December 31, 1998 and 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Internet Advisory
Corporation as of December 31, 1998, and the results of operations and cash
flows for the years ended December 31, 1998 and 1997, in conformity with
generally accepted accounting principles.
Mantyla, McReynolds and Associates
Salt Lake City, Utah
February 9, 1999
<PAGE>
<TABLE>
The Internet Advisory Corporation
Formerly
Olympus M.T.M. Corporation
Balance Sheet
December 31, 1998
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash $ 384,934
Total Current Assets 384,934
Property and Equipment - Note 6 45,888
Less: Accumulated depreciation (7,602)
Net Property and Equipment 38,286
Other Assets:
Deposit 7,002
Total Assets $ 430,222
LIABILITIES AND STOCKHOLDERS EQUITY
Liabilities:
Current Liabilities:
Accounts payable $ 13,625
Accrued liabilities 29,243
Unearned Income 97,829
Total Current Liabilities 140,697
Total Liabilities 140,697
Stockholders Equity:
Common Stock -- 50,000,000 shares
authorized, $.001 par value; 7,533,017
shares issued and outstanding 7,533
Additional Paid-In Capital 3,482,257
Accumulated Deficit (3,200,265)
Total Stockholders Equity 289,525
Total Liabilities and
Stockholders Equity $ 430,222
</TABLE>
See accompanying notes to financial statements.
<TABLE>
The Internet Advisory Corporation
Formerly
Olympus M.T.M. Corporation
Statements of Operations
For the Years Ended December 31, 1998 and 1997
<CAPTION>
1998 1997
<S> <C> <C>
Revenues $ 415,085 $ 37,560
Cost of Sales 56,802 28,167
Gross Profit 358,283 9,393
General and Administrative
Expenses 451,025 59,373
Net Loss from Operations (92,742) (49,980)
Other Income/Expense -0- -0-
Net Loss Before Income Taxes (92,742) (49,980)
Current Year Provision for Income
Taxes -0- 100
Net Loss $ (92,742) $(50,080)
Loss Per Share $ (.03) $ (.06)
Weighted Average Shares
Outstanding 3,701,177 902,017
</TABLE>
See accompanying notes to financial statements.
<TABLE>
The Internet Advisory Corporation
Formerly
Olympus M.T.M. Corporation
Statements of Stockholders' Equity/(Deficit)
For the Years Ended December 31, 1998 and 1997
<CAPTION>
Additional Total
Number of Common Paid-in Accumulated Stockholders'
Shares Stock Capital Deficit Equity
<S> <C> <C> <C> <C> <C>
Balance, December 31,
1996 902,017 $ 902 $3,055,039 $(3,057,443) $ (1,502)
Net loss for the year
ended December 31, 1997 (50,080) (50,080)
Balance, December 31,
1997 902,017 902 3,055,039 (3,107,523) (51,582)
Issued Stock for debt,
June 9, 1998 300,000 300 350 650
Issued Stock for
Assets,
recapitalization,
6/22/98 6,000,000 6,000 13,449 19,449
Issued stock for cash,
December 1998 316,000 316 394,684 395,000
Issued stock for
services,
December 1998 15,000 15 18,735 18,750
Net loss for the year
ended December 31,
1998 (92,742) (92,742)
Balance, December 31,
1998 7,533,017 $7,533 $3,482,257 $(3,200,265) $289,525
</TABLE>
See accompanying notes to financial statements.
<TABLE>
The Internet Advisory Corporation
Formerly
Olympus M.T.M. Corporation
Statement of Cash Flows
For the Years Ended December 31, 1998 and 1997
<CAPTION>
1998 1997
<S> <C> <C>
Cash Flows Provided by/(Used for) Operating
Activities
Net Loss $ (92,742) $ (50,080)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 6,794 808
Issued stock for services 18,750 -
Increase in current liabilities 31,741 107,554
Net Cash Provided by/(Used for) in
Operating Activities (35,457) 58,282
Cash Flows Used for Investing Activities
Lease deposit (7,002)
Purchases of property and equipment (29,730) (16,159)
Net Cash Used for Investing
Activities (36,732) (16,159)
Cash Flows Provided by Financing Activities
Investment in IAC prior to combination - 20,000
Issued stock for cash 395,000 -
Net Cash Provided by Financing
Activities 395,000 20,000
Net Increase in Cash 322,811 62,123
Beginning Cash Balance 62,123 -0-
Ending Cash Balance $384,934 $62,123
Supplemental Disclosure Information:
Issued stock in recapitalization - Note 2
Cash paid during the year for interest $ -0- $ -0-
Cash paid during the year for income taxes 100 -0-
</TABLE>
See accompanying notes to financial statements.
The Internet Advisory Corporation
Formerly
Olympus M.T.M. Corporation
Notes to Financial Statements
December 31, 1998
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
Olympus M.T.M. Corporation ("Olympus" or the "Company") was
incorporated in the State of Utah on September 21, 1981. The Company was
formed for the primary purpose of acquiring and investing in energy resources.
The Company was not successful in its endeavors and ceased operations on or
before April, 1990. The Company was then dormant until it acquired all of the
assets and liabilities of The Internet Advisory Corporation (IAC) on June 22,
1998, pursuant to an Agreement and Plan of Merger. The Internet Advisory
Corporation is a Florida corporation incorporated on August 8, 1997 for the
purpose of providing hosting on the Internet for its customers, and Web
design. Subsequent to the Agreement and Plan of Merger, the name of Olympus
M.T.M. Corporation was changed to The Internet Advisory Corporation.
Pursuant to The Agreement and Plan of Merger, Olympus issued
6,000,000 shares to IAC's shareholders. At the time of said issuance, Olympus
had 1,202,017 shares outstanding. Immediately after this issuance, IAC's
shareholders owned 6,000,000 of the total outstanding of 7,202,017 shares, or
83%.
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles. The following
summarizes the more significant of such policies:
(b) Income Taxes
Effective August 8, 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109 [the Statement],
Accounting for Income Taxes. The Statement requires an asset and liability
approach for financial accounting and reporting for income taxes, and the
recognition of deferred tax assets and liabilities for the temporary
differences between the financial reporting bases and tax bases of the
Company's assets and liabilities at enacted tax rates expected to be in effect
when such amounts are realized or settled. The cumulative effect of this
change in accounting for income taxes as of December 31, 1998 is $0 due to the
valuation allowance established as described below.
(c) Net Loss Per Common Share
Net loss per common share is based on the weighted-average number of
shares outstanding.
(d) Statement of Cash Flows
For purposes of the statements of cash flows, the Company considers
cash and cash equivalents as deposits in commercial banks. The Company
had $384,934 cash at December 31, 1998.
(e) Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(f) Property and Equipment
Property and equipment are stated at cost. Depreciation is provided
using the straight-line basis over the useful lives of the related assets.
Expenditures for maintenance and repairs are charged to expense as incurred.
NOTE 2 RECAPITALIZATION
On June 22, 1998, IAC entered into an agreement and plan of merger
with Olympus , wherein the IAC exchanged all of its assets and liabilities
as of May 31, 1998 for 6,000,000 shares of Olympus. Immediately subsequent to
the exchange, the IAC's shareholders held approximately 83% of the outstanding
shares of Olympus. The Company continues its operations in the Olympus
structure but has changed the name of Olympus M.T.M. Corporation to The
Internet Advisory Corporation. The transaction has been accounted for as a
purchase.
NOTE 3 INCOME TAXES
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 109 [the Statement], Accounting for Income Taxes, as
of August 8, 1997. No provision has been made for income taxes in the
consolidated financial statements because the Company has accumulated
losses since inception.
The tax effects of temporary differences that give rise to
significant portions of the deferred tax asset at December 31, 1998 have no
impact on the financial position of the Company. A valuation allowance is
provided when it is more likely than not that some portion of the deferred tax
asset will not be realized. Because of the lack of taxable earnings history,
the Company has established a valuation allowance for all future deductible
temporary differences.
NOTE 4 RELATED-PARTY TRANSACTIONS
The Company has an agreement with an entity controlled by the
Company's president. The subject entity provides advertising for the Company
at a cost of $1,500 per month.
NOTE 5 STOCK ISSUANCE
In December 1998, the Company issued stock in the following manner:
Description Price per share Number Shares Consideration
Issued shares for cash,
12/11/98 $ 1.25 16,000 $ 20,000
Issued shares for cash,
12/30/98 1.25 200,000 250,000
Issued shares for cash,
12/31/98 1.25 100,000 125,000
Issued shares for services,
12/31/98 1.25 15,000 18,750
Total 331,000 $ 413,750
NOTE 6 PROPERTY AND EQUIPMENT
The major classes of assets as of the balance sheet date are as
follows:
Accumulated
Asset Class Cost Depreciation Method/Life
Equipment and furniture $45,888 $(7,602) SL/5
Current year depreciation expense was $6,794.
NOTE 7 OFFICE LEASE\SUBSEQUENT EVENT
In January, 1998 the Company entered into an operating lease with an
unrelated party for its facilities. The lease is for a period of five years.
Total rent paid for 1998 on this facility was $29,926. Prior to entering into
this lease arrangement, the Company rented space on a month to month basis for
$390 per month. Total rent paid under this agreement for the period ended
December 31, 1998 is $390.
On February 10, 1999 the Company signed an addendum to the original
lease agreement for additional space in the same building as the corporate
offices. The terms of this addendum increase the total rentable square feet
to 4,674, and the future minimum lease payments to the following:
1999 68,009
2000 82,032
2001 85,313
2002 88,726
2003 14,883
NOTE 8 SUBSEQUENT EVENT
By unanimous consent of the Board of Directors, on February 15,
1999, the Company resolved to issue 716,000 "unregistered" and "restricted"
shares of common stock to subscribers for $1.25 per share or $895,000.
This transaction will be effectively recorded as of January 31, 1999.
NOTE 9 SIGNIFICANT CONCENTRATION OF CREDIT RISK
The Company has no single customer that represents a significant
portion of total revenues. The Company's activities are limited only by
access to the Internet and not to any geographic boundaries.
The Company maintains cash balances in a financial institution
located in the Ft. Lauderdale, Florida. Accounts at this institution are
insured by the Federal Deposit Insurance Corporation up to $100,000.
The Company had cash of $284,934 in excess of the FDIC insured limit at
December 31, 1998.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- ---------------------
None; not applicable.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
- --------------------------------------------------
Identification of Directors and Executive Officers
- --------------------------------------------------
The following table sets forth the names of all current directors
and executive officers of the Company. These persons will serve until the
next annual meeting of the stockholders or until their successors are elected
or appointed and qualified, or their prior resignation or termination.
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ---- ---- ----------- --------------
<S> <C> <C> <C>
Jeffrey Olweean President 6/98 *
Director 6/98 *
Nicole Leigh Vice President 6/98 *
Director 6/98 *
Barbara Fytton Director 6/98 *
</TABLE>
* These persons presently serve in the capacities
indicated.
Business Experience.
- --------------------
Jeffrey Olweean, Director and President. Mr. Olweean is 35 years of
age. Mr. Olweean has been involved in the securities and computer industries
for the past 12 years. His business experience includes raising financing for
various companies, both public and private, overseeing the implementation of
business plans for public companies and securities trading. Mr. Olweean is a
1986 graduate of Michigan State University.
Nicole Leigh, Director and Vice President. Ms. Leigh is 27 years of
age. In addition to her involvement with the Company, she has handled broker
and investor relations for various public corporations. Her responsibilities
have included the researching and production of newsletters, press releases
and general promotion of the investor relations firm Chez Inc. Ms. Leighs
prior business experience also includes graphic design and internet website
design.
Barbara Fytton, Director. Ms. Fytton is 70 years of age. For 18
years, Ms. Fytton was a director of Raymond Loewy International Ltd. in the
United Kingdom, France and Switzerland. In addition to her involvement with
the Company, Ms. Fytton is financial comptroller of William White Switchgear
Ltd., a UK defense contractor, and Ward Executive and Management Recruitment
Company, which is also based in the UK.
Significant Employees.
- ----------------------
Francis Fytton is the Company's Technical Coordinator. He has over
20 years' experience in the computer industry, commencing with Sperry Univac
in London and Chicago. Mr. Fytton has served as a Network Specialist with
Xerox Corporation; Software Product Manager for Crowntek Networks; and Product
Manager with Microsoft Corporation. For the past three years, Mr. Fytton has
owned and operated internet websites, acted as an internet consultant and
conducted seminars throughout the US and Canada for business wishing to use
the internet.
Family Relationships.
- ---------------------
Other than Jeffrey Olweean and Nicole Leigh are brother and sister,
there are no other family relationships between any directors or executive
officers of the Company, either by blood or by marriage. Francis Fytton is
the son of Barbara Fytton.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of
the Company:
(1) was a general partner or executive officer of any business
against which any bankruptcy petition was filed, either at the time of the
bankruptcy or two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; or
(4) was found by a court of competent jurisdiction (in a civil
action), the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended or vacated.
Compliance with Section 16(a) of the Exchange Act
- -------------------------------------------------
Each of the Company's directors and executive officers filed a Form
3 Initial Statement of Beneficial Ownership of Securities with the Securities
and Exchange Commission on or about May 19, 1998.
In January, 1999, Barbara Fytton, who is a director of the Company,
gifted certain of the Company's shares that she owned. Ms. Fytton will
promptly file a Form 4 with respect to this transaction.
Item 10. Executive Compensation.
-----------------------
Cash Compensation
- -----------------
The following table sets forth the aggregate compensation paid by
the Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Optionsouts ensat'n
- -----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jeffrey
Olweean 12/31/97 0 0 0 0 0 0 0
President, 12/31/98 $13,128 0 0 0 0 0 0
Director
Nicole
Leigh 12/31/97 0 0 0 0 0 0 0
V.President 12/31/98 $14,391 0 0 0 0 0 0
Director
Barbara
Fytton 12/31/97 0 0 0 0 0 0 0
Director 12/31/98 0 0 0 0 0 0 0
</TABLE>
Except as stated below, no cash compensation, deferred compensation
or long-term incentive plan awards were issued or granted to the Company's
management during the calendar years ended December 31, 1998 and 1997.
Further, no member of the Company's management has been granted any option or
stock appreciation right; accordingly, no tables relating to such items have
been included within this Item.
The Company has an informal arrangement for issuance of
"unregistered" and "restricted" stock to employees whose performance is deemed
to have been particularly beneficial to the Company.
Compensation of Directors.
- --------------------------
There are no standard arrangements pursuant to which the Company's
directors are compensated for any services provided as director. No
additional amounts are payable to the Company's directors for committee
participation or special assignments.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.
- -------------
There are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company, with respect
to any director or executive officer of the Company which would in any way
result in payments to any such person because of his or her resignation,
retirement or other termination of employment with the Company or its
subsidiaries, any change in control of the Company, or a change in the
person's responsibilities following a change in control of the Company.
Nor are there any agreements or understandings for any director or
executive officer to resign at the request of another person; none of the
Company's directors or executive officers is acting on behalf of or will act
at the direction of any other person.
Bonuses and Deferred Compensation
- ---------------------------------
None.
Compensation Pursuant to Plans
- ------------------------------
None.
Pension Table
- -------------
None; not applicable.
Other Compensation
- ------------------
None.
Termination of Employment and Change of Control Arrangements
- ------------------------------------------------------------
None.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
---------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
- ------------------------------------------------
The following table sets forth the share holdings of those persons
who own more than five percent of the Company's common stock as of February 9,
1999. Each of these persons has sole investment and sole voting power over
the shares indicated.
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------- ---------------------------- --------
<S> <C> <C>
Barbara Fytton 2,209,800 29.4%
4 Cavendish Court,
Cardigan Road
Richmond, Surrey
England TW106BL
Nicole Leigh 1,452,900 19.3%
215 NE 23rd Street W309
Wilton Manors, FL 33305
Jeffrey Olweean 1,452,900 19.3%
3850 Galt Ocean Drive 706
Ft. Lauderdale, FL 33308
--------- -----
TOTALS 5,115,600 68.0%
</TABLE>
Security Ownership of Management.
- ---------------------------------
The following table sets forth the share holdings of the Company's
directors and executive officers as of February 9, 1999. Each of these
persons has sole investment and sole voting power over the shares indicated.
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------- ---------------------------- ----------
<S> <C> <C>
Barbara Fytton 2,209,800 29.4%
4 Cavendish Court,
Cardigan Road
Richmond, Surrey
England TW106BL
Nicole Leigh 1,452,900 19.3%
215 NE 23rd Street W309
Wilton Manors, FL 33305
Jeffrey Olweean 1,452,900 19.3%
3850 Galt Ocean Drive 706
Ft. Lauderdale, FL 33308
--------- -----
All directors and executive
officers as a group (3) 5,115,600 68.0%
</TABLE>
Changes in Control.
- -------------------
There are no present arrangements or pledges of the Company's
securities which may result in a change in control of the Company.
Item 12. Certain Relationships and Related Transactions.
-----------------------------------------------
There have been no material transactions between the Company and
any director, executive officer, nominee to become a director or executive
officer, 5% stockholder, parent or promoter during the last fiscal year;
however, for information about transactions with current members of management
prior to their election to these capacities, see the Company's Current Report
dated June 22, 1998, as amended. See Item 13.
Parents of the Issuer.
- ----------------------
The Company has no parents, except to the extent that directors and
executive officers may be deemed to be parents by virtue of collective
ownership of a majority of issued and outstanding shares.
Item 13. Exhibits and Reports on Form 8-K.
---------------------------------
Reports on Form 8-K
Current Report on Form 8-K, dated June 22, 1998, and amended on
September 3, 1998, as filed with the Securities and Exchange Commission on
July 2, 1998 and September 3, 1998, respectively.
Exhibits*
(i)
Where Incorporated
in this Report
--------------
Annual Report on Form 10-KSB for the Part I
year ended November 30, 1996
Annual Report on Form 10-KSB for the year Part I
ended November 30, 1997
Articles of Amendment to Articles of Part I
Incorporation, filed August 20, 1998
Definitive Information Statement filed with Part I
the Securities and Exchange Commission on
July 28, 1998
(ii)
Exhibit
Number Description
- ------ -----------
21 Subsidiaries
27 Financial Data Schedule
* Summaries of all exhibits contained within this
Report are modified in their entirety by reference
to these Exhibits.
** These documents and related exhibits have been
previously filed with the Securities and Exchange
Commission and are incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Company has duly caused this Report
to be signed on its behalf by the undersigned, thereunto duly authorized.
THE INTERNET ADVISORY CORPORATION
Date: 3-8-99 By /s/ Jeffrey Olweean
-------------- --------------------------------------
Jeffrey Olweean, Director and
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated:
THE INTERNET ADVISORY CORPORATON
Date 3-8-99 By /s/ Jeffrey Olweean
------------- ------------------------------------
Jeffrey Olweean, Director and
President
Date: 3-8-99 By /s/ Nicole Leigh
------------- ------------------------------------
Nicole Leigh, Director and Vice
President
SUBSIDIARIES
The Company does not have any subsidiaries; however, it has registered
the use of the following business names, in addition to "The Internet Advisory
Corporation:"
Internet Academy
Hostfacility.com
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 384934
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 384934
<PP&E> 45888
<DEPRECIATION> 7602
<TOTAL-ASSETS> 430222
<CURRENT-LIABILITIES> 140697
<BONDS> 0
0
0
<COMMON> 7533
<OTHER-SE> 281992
<TOTAL-LIABILITY-AND-EQUITY> 430222
<SALES> 415085
<TOTAL-REVENUES> 415085
<CGS> 0
<TOTAL-COSTS> 56802
<OTHER-EXPENSES> 451025
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (92742)
<INCOME-TAX> 0
<INCOME-CONTINUING> (92742)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (92742)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
