<PAGE>
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 0-16665
THE INTERNET ADVISORY CORPORATION
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(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: (888) 522-0958
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 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 such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
May 10, 2000
13,345,018*
*See Part II, Item 1, regarding legal proceedings pursuant to which
6,250,000 shares have been attached and will be deposited in the Third
Judicial District Court in and for Salt Lake County, Utah, and
thereafter, canceled.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Financial Statements of the Internet Advisory Corporation, a
Utah corporation (the "Company"), required to be filed with this 10-QSB
Quarterly Report were prepared by management, have been reviewed by Company's
auditors and commence on the following page, together with Related Notes. In
the opinion of management, the Financial Statements fairly present the
financial condition of the Company.
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The Internet Advisory Corporation
Including the accounts of its wholly-owned subsidiary
Sunrise Web Development, Inc.
Condensed Consolidated Financial Statements
March 31, 2000
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<TABLE>
The Internet Advisory Corporation
Condensed Consolidated Balance Sheet
(Unaudited)
<CAPTION>
ASSETS
March 31, 1999
<S> <C>
Current Assets
Cash $92,918
Receivables (net) 31,219
Other current assets 56,699
Total Current Assets 180,836
Equipment, net 507,645
Other Assets 14,361
TOTAL ASSETS $702,842
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 75,668
Accrued liabilities 32,826
Unearned income 15,564
Loan payable 10,000
Total Current Liabilities 134,058
Stockholders' Equity
Common stock 13,344
Additional paid in capital 2,712,115
Accumulated deficit (2,156,675)
Total Stockholders' Equity 568,784
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY 702,842
See accompanying notes
</TABLE>
<TABLE>
The Internet Advisory Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
<CAPTION>
For the Three For the Three
Months Ended Months Ended
March 31, 2000 March 31, 1999
<S> <C> <C>
Revenues $ 190,188 $ 110,104
Sales, general and
administrative expense 628,223 368,634
Net Loss $(438,035) $(258,530)
Net Loss per Share $ (0.03) $ (0.03)
Weighted Average
Number of Shares
Outstanding 13,344,017 8,010,350
</TABLE>
See accompanying notes
<TABLE>
The Internet Advisory Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
For the Three For the Three
Months Ended Months Ended
March 31, 2000 March 31, 1999
<S> <C> <C>
Cash Flows Used for Operating
Activities:
Net Loss $(438,035) $(258,530)
Adjustments to reconcile net loss to
net cash used for operating
activities:
Depreciation 30,221 20,904
Increase in other current assets (19,790)
Increase (decrease) in current
liabilities (131,874) (3,139)
Net Cash Flows Used for Operating
Activities (559,478) (240,765)
Cash Flows Used for Investing
Activities:
Purchase of equipment (29,691) (402,964)
Net Cash Flows Used for Investing
Activities (29,691) (402,964)
Cash Flows Provided by Financing
Activities
Principal collections on loan 625,000
Proceeds from sale of securities -0- 895,000
Net Cash Flows Provided by Financing
Activities 625,000 895,000
Net Increase (Decrease) in Cash 35,831 251,271
Beginning Cash Balance 57,087 384,934
Ending Cash Balance $ 92,918 $636,205
</TABLE>
See accompanying notes
The Internet Advisory Corporation
Notes to Condensed Financial Statements
March 31, 2000
PRELIMINARY NOTE
The accompanying condensed consolidated financial statements have been
prepared without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1999.
ORGANIZATION AND MERGER
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 in 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 access to 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.
The Agreement and Plan of Merger set forth that Olympus would issue
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 then total
outstanding of 7,202,017 shares, or 83 %.
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Item 2. Management's Discussion and Analysis or Plan of Operation.
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Plan of Operation.
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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.
Overview. The Company is a leading global provider of Internet-
based solutions such as web site design, 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. Through Sunrise, the Company provides the on-line community
with access to electronic mail services, public bulletin boards, the buddy
list feature, instant message services, public or private "meeting rooms/chat
rooms" for interactive conversations and live "auditorium" events. The
Company has also recently launched ThePUNK.com Browser.
Through fiscal 1999, the Company has generated its revenues solely
from web site design and retail web hosting (known when unified as "full
service design and hosting"). It anticipates receiving revenues from web site
hosting, design, co-location and selling high-speed access in the year 2000.
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.
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.
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Management has taken steps that will make the Company more efficient
and move it closer to profitability on its operations. It has reduced excess
bandwidth by 50% and local loop charges through implementation of the Bell
South Smartring program.
Management believes that the automation of customer support, online
transactions, in house operations and reduced overhead will set the tone for a
profitable future.
Traffic to websites has increased with the web portal, ThePunk.com,
which has greatly enhanced the awareness of the Company and its products. The
Company has implemented international advertising that management feels will
increase sales in the short term. The areas targeted by management are
Germany, England and Australia. Further, an overhaul of routing tables,
switches, and related facilities has also made our data center, network5.net,
much more efficient.
During the quarterly period ended March 31, 2000, the Company
received revenues of $190,188, and incurred expenses totaling $628,223. Net
loss during the period was $(438,035), equaling $(0.03) per share. During the
quarterly period ended March 31, 1999, the Company received revenues of
$110,104, with expenses of $368,634, for a net loss of $(258,530), or ($0.03)
per share.
Liquidity.
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As of March 31, 2000, the Company had total assets of
$702,842, of which $92,918 was cash; compared to March 31, 1999, the Company
had total assets of $1,063,553, of which $636,205 was cash.
During fiscal 1999, the Company issued 796,000 shares for cash and
services valued at $895,000; and 1,015,000 shares for $302,500 in cash; and
4,000,000 shares for $385,000 cash and for a $615,000 receivable. 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" common stock.
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 loans available under its present 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."
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
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On March 23, 2000, the Third Judicial District Court in and for Salt
Lake County, Utah, entered a Temporary Restraining Order and Writ of
Attachment following the filing of a complaint by the Company, in Civil Action
No. 000902397. In its complaint, the Company was seeking recovery of
6,250,000 shares of its common stock ("restricted securities") which were
issued for deposit into escrow, pending the receipt of funding which was not
paid. The securities were removed from the escrow, without the consent of the
Company. The recipient of these securities had deposited them with a
registered broker/dealer, and had subsequently consented in writing to the
cancellation of the two stock certificates representing these securities,
immediately prior to the filing of the complaint. The broker/dealer that has
possession of these securities has advised the Company's counsel that these
securities will be deposited with the Clerk of this court. Once received, the
Company will seek the court's order to cancel these stock certificates and the
shares of common stock represented thereby in accordance with its complaint
and the consent of the record owner.
Item 2. Changes in Securities.
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There were no material changes in the Company's securities during
the quarterly period ended March 31, 2000; nor were there any issuances of
"unregistered" and "restricted" securities of the Company during that period.
Item 3. Defaults Upon Senior Securities.
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None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
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None; not applicable.
Item 5. Other Information.
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None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
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(a) Exhibits.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE INTERNET ADVISORY CORPORATION
Date: 5/10/00 By/s/Jeffrey A. Olweean
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Jeffrey A. Olweean
President and Director
Date: 5/10/00 By/s/Nicole Leigh
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Nicole Leigh
Vice President and Director
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 92918
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<RECEIVABLES> 31219
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<PP&E> 507645
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<TOTAL-ASSETS> 702842
<CURRENT-LIABILITIES> 134058
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0
0
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<TOTAL-LIABILITY-AND-EQUITY> 702842
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<TOTAL-REVENUES> 190188
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<EPS-BASIC> (0.03)
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