Form 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
[X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended August 31, 1998
[ ] Transition report pursuant section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from ........... to..........
Commission file number: 33-21481-FW
Internet Stock Market Resources, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 76-0246940
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
405 Central Avenue, Fifth Floor, St. Petersburg, Florida 33701
(Address of principal executive offices)
(727) 896-9696
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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 registrant was required to file such reports),
and
(2) has been subject to such filing requirements for the past 90
days. Yes..X... No.......
Applicable only to corporate issuers
State the number of shares outstanding of each of the issuer's classes of
common equity, as of February 28, 1999: 6,478,001
Transitional Small Business Disclosure Format (check one): Yes..... No...X...
Page 1 of 15 pages contained in sequential numbering system.
The Exhibit Index may be found on Page 12 of the sequential numbering system.
<PAGE>2
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Internet Stock Market Resources, Inc.
(hereinafter referred to as the "Registrant" or "Company")
Registrant prepared the accompanying unaudited financial statements from its
books and records. In Management's opinion, these financial statements
present fairly in all material respects Registrant's financial condition and
changes therein as of February 28, 1999, and the results of operations and
cash flows for the period, in conformity with generally accepted accounting
principles.
[Page 2 of 15]
<PAGE>3
INTERNET STOCK MARKET RESOURCES, INC.
f/k/a Internet Stock Exchange Corp.
BALANCE SHEETS (unaudited)
As of
February 28, 1999
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash on hand $ 835
Cash in bank 45,926
Accounts receivable 31,145
Allowance for doubtful accounts (1,157)
Loans to stockholders 0
-------
Total current assets 76,348
PROPERTY AND EQUIPMENT
Furniture and equipment 56,489
Less: Accumulated depreciation (13,882)
-------
Total property and equipment 42,607
OTHER ASSETS
Deposits 500
Less: Accumulated amortization (45)
-------
Total other assets 455
-------
Total assets $ 119,410
========
<PAGE>4
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY IN ASSETS)
CURRENT LIABILITIES
Accounts payable $ 870
Note payable (6% interest) 728,975
Accrued compensation 1,580
Accrued professional fees 4,250
Deferred income taxes 20,537
-------
Total current liabilities $ 756,212
STOCKHOLDERS' EQUITY (DEFICIENCY
IN ASSETS)
Common stock, par value $0.0001 per
share, 50,000,000 shares
authorized, 6,478,001
shares outstanding 648
Preferred stock, par value $0.01 per
share, 10,000,000 shares
authorized, 0 shares outstanding 0
Additional paid-in capital 2,800,064
Deficit (3,437,514)
----------
Total stockholders' equity
(deficiency in assets) $ (636,802)
----------
Total liabilities and stockholders'
equity (deficiency in assets) $ 119,410
==========
</TABLE>
See accompanying notes.
[Page 4 of 15]
<PAGE>5
INTERNET STOCK MARKET RESOURCES, INC.
f/k/a Internet Stock Exchange Corp.
STATEMENTS OF OPERATIONS (unaudited)
Nine Months Ended Three Months Ended
February 28, February 28,
1999 1998 1999 1998
<TABLE>
<S> <C> <C> <C> <C>
REVENUES $ 150,498 366,301 53,137 140,881
EXPENSES
Advertising 3,305 14,311 - 6,532
Auto 209 2,000 - -
Bad debts 51,413 - 51,413 -
Bank charges 1,205 1,067 155 456
Commissions 46,658 101,159 14,092 38,790
Computer Website fees 3,651 33,239 867 28,861
Depreciation & amortization 8,374 - 2,821 -
Meals and entertainment 2,751 3,074 604 723
Gifts 158 467 0 194
Insurance 4,919 3,123 2,539 0
Interest 19,367 - 7,975 -
Laundry and cleaning 118 109 0 68
Licenses and fees 357 245 0 150
Miscellaneous 4,846 2,146 0 458
Office expense 3,995 11,193 313 2,620
Outside services 700 100 50 100
Printing 213 1,134 5 185
Professional fees 67,698 7,377 0 1,650
Postage 2,947 3,928 742 2,360
Rent 10,112 9,488 3,371 3,370
Repairs and maintenance 277 2,526 277 774
Salaries and wages 18,380 3,600 7,180 3,600
Supplies 2,924 3,540 2,266 753
Taxes - payroll 2,512 446 1,513 446
Telephone 14,808 18,559 4,171 4,215
Travel 4,146 1,874 1,126 1,037
Discontinued expenses adj. - - (3,527) (4,738)
-------- -------- ------- -------
Total expenses 276,042 224,705 97,893 92,604
-------- -------- ------- -------
(LOSS) INCOME BEFORE TAXES (125,545) 141,596 (44,756) 48,277
Income taxes (credits) (41,135) 32,663 (12,860) 0
-------- -------- -------- -------
NET (LOSS) INCOME $ (84,410) 108,933 (31,896) 48,277
======== ======= ======== =======
BASIC NET (LOSS) INCOME
PER COMMON SHARE* $ (0.0130) 0.0168 (0.0049) 0.0075
======== ======= ======== ========
</TABLE>
*Based on 6,478,001 shares outstanding
See accompanying notes.
[Page 5 of 15]
<PAGE>6
INTERNET STOCK MARKET RESOURCES, INC.
f/k/a Internet Stock Exchange Corp.
STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Ended Three Months Ended
February 28, February 28,
1999 1998 1999 1998
<TABLE>
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING
ACTIVITIES
Net (loss) income $ (84,410) 108,933 (31,897) 48,368
Adjustments to reconcile
cash flow:
Depreciation 8,374 0 2,821 0
Decrease (increase) in
current assets:
Accounts receivable 22,039 (18,342) 18,162 0
Interest receivable 4,920 - - -
Allowance for
doubtful accounts (986) 0 (986) 0
Loans to stockholders 56,506 (75,178) 0 (103,257)
Increase (decrease) in
current liabilities:
Accounts payable 5,091 4,490 (21,934) 101
Accrued compensation 1,580 0 1,180 0
Accrued professional
fees 6,000 1,192 (1,750) 0
Deferred income
taxes (47,063) 32,663 (12,860) 0
Income taxes payable (5,928) (5,928)
-------- ------- ------- -------
Total adjustments 42,159 (55,175) (24,116) (46,998)
------- ------- ------- -------
Cash provided (used)
by operations (33,877) 53,758 (53,192) 1,279
CASH FLOW FROM INVESTING
ACTIVITIES
Sales (purchases) of assets:
Purchases of assets 0 (52,951) 0 (2,001)
------- ------- ------- -------
Cash provided (used) by
investing 0 (52,951) 0 (2,001)
CASH FLOW FROM FINANCING
ACTIVITIES
Cash provided (used) by:
Notes payable (271,025) 0 (151,025) 0
Common stock issued 345,000 0 145,000 0
-------- ------- ------- ------
Cash provided (used) by
financing activities 73,975 0 (6,025) 0
-------- ------- ------- ------
Net increase (decrease)
in cash 40,098 807 (59,217) (722)
Cash at beginning of
period 0 427 96,602 (19)
------- ------- ------ -------
Other adjustments to
cash 6,663 9,376
------- ------- ------ -------
Cash at end of period $ 46,761 1,234 46,761 (741)
======= ======= ======= =======
</TABLE>
See accompanying notes
[Page 6 of 15]
<PAGE>7
NOTES TO FINANCIAL STATEMENTS (unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Effective September 1, 1998, Internet Stock Market Resources, Inc. (formerly,
Internet Stock Exchange Corp.) acquired 100% of the shares authorized, issued,
and outstanding, consisting of 1,000 shares of Common stock, $1.00 par value
per share, of Internet Stock Market Corp., a closely-held Florida corporation.
These financial statements reflect the transaction as a "pooling of interests"
of the two entities; that is, the accounting principle used in the
acquisition/merger of Internet Stock Market Corp. (the "Non-surviving
Corporation" of the merger) by Internet Stock Market Resources, Inc. (the
"Surviving Corporation," or the "Company") is treated for financial reporting
purposes the same as a "pooling of interests."
ACCOUNTING BASIS
The financial information presented has been prepared without audit from the
books and records of the Company. In the opinion of Management, all
adjustments, consisting of normal entries and adjustments, necessary for a
fair presentation of the financial information for the periods indicated,
have been included. The accounting principle used in the acquisition/merger of
Internet Stock Market Corporation ("Non-survivor") by Internet Stock Market
Resources, Inc. ("Survivor") is the same as a "pooling of interests."
The financial statements included herein do not include all footnote
disclosures normally included in annual consolidated financial statements and,
therefore, should be read in conjunction with the Company's financial
statements and notes in the Company's latest Form 10-KSB. Revenues, expenses,
assets, and liabilities can vary during each quarter of the year. Therefore,
the results and trends in these interim financial statements may not be the
same as those for the full year. Certain items in prior internal financial
statements have been re-classified and adjusted to conform to current interim
financial statements.
TAXES
Income taxes are provided for the tax effects of transactions reported in the
financial statements, and consist of taxes currently due plus deferred taxes.
Deferred taxes are recognized for the differences between the basis of assets
and liabilities for financial statement and income tax purposes. These
differences relate primarily to depreciable assets (use of different
depreciation methods and lives for the financial statements and income tax
purposes) and allowance for doubtful receivables (deductible for financial
statement presentations but not for income tax purposes). The deferred tax
assets and liabilities represent the future income tax consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. Deferred taxes are also recognized for
operating losses and tax credits that will be available to offset future
taxable income, less an allowance for realization.
DEPRECIATION AND AMORTIZATION
The straight-line method of depreciation is applied over the estimated useful
life of the relevant assets, which consist of office furniture and equipment,
and are depreciated over 5 years. The straight-line method of amortization is
applied over the estimated useful life of the intangible assets, which consist
of start-up costs, and are amortized over 5 years.
[Page 7 of 15]
<PAGE>8
NOTE 2. COMPENSATION AND CONVERSION OF SHARES
The compensation to a Non-surviving Corporation (Internet Stock Market
Corp.) shareholder for his equity in that business was $1,000,000 in the form
of a promissory note payable with 6% interest per annum, issued by the
Surviving Corporation (Internet Stock Market Resources, Inc.). The shareholder
is an officer and director of the Company.
NOTE 3. CORPORATE ORGANIZATION
The Non-surviving Corporation was a corporation duly organized and in good
standing in the state of Florida, and was qualified to do business in its
jurisdiction; it had no subsidiaries. The Surviving Corporation is duly
organized under General Corporation Law of the state of Delaware, is in good
standing, and is qualified to conduct business in any lawful jurisdiction. The
Surviving Corporation has completed all aspects of its acquisition of/merger
with the Non-surviving Corporation.
NOTE 4. CAPITALIZATION
The Non-surviving Corporation's authorized capital stock consisted of 1,000
Common shares, par value $1.00 per share. As of September 1, 1998 (the
Effective Date of the merger), the Surviving Corporation's authorized capital
stock consists of 50,000,000 shares of Common stock, par value $0.0001 per
share, and 10,000,000 shares of Preferred stock, par value $0.01 per share,
this par value being subject to Amendment to the (Amended) Certificate of
Incorporation of the Company. As of September 1, 1998, there were 7,748,001
Common shares issued and outstanding, and 0 shares of Preferred stock issued.
[Page 8 of 15]
<PAGE>9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
On August 17, 1998, the Registrant changed its name to Internet Stock Market
Resources, Inc., and subsequently announced that it had merged with the
private, close Florida corporation Internet Stock Market Corp. The financial
statements herewith presented of the Surviving Corporation reflect the effect
of the "pooling of interests" of the private corporation (the "Non-surviving
Corporation") with that of the Registrant (the "Surviving Corporation" of the
merger/acquisition). The effective date of the merger coincides with the first
day (September 1, 1998) of the second quarter of the Registrant's current
fiscal year. The discussion that follows (and all future discussions) will
exclusively address the financial statements of the "pooled," Surviving
Corporation.
Revenues for the 9 months ended February 28, 1999 represent revenues for the
quarter ending at that date of $53,137 against average quarterly revenues of
$48,681 for the first two quarters of the Registrant's current fiscal year,
and represent growth in revenues for the quarter over the first six months of
54.6%, against growth for the same period of the Registrant's last fiscal year
of 62.5%. Management attributes this modest decline in revenue growth to
certain factors related to regulatory inquiries that were made of the
Registrant's clients, inquiries that resulted in no action being taken against
the Registrant, but which, nonetheless, challenged the Registrant's capacity
to conduct business and grow revenues as it otherwise would have been able to.
Registrant's total expenses for the quarter ending February 28, 1999 were
$97,893, compared to average total expenses for the first two quarters of the
current fiscal year of $89,079. Total expenses for the quarter ended
February 28, 1999 are dominated by a charge of $51,413 for bad debts that
were owed to the Company. Absent this item, quarterly total expenses would
have declined markedly, the result largely of control of professional fees as
Registrant stated would be a goal in the previous filing on Form 10-QSB at
November 30, 1998. Furthermore, without the charge to bad debts, the Company
would have realized net income significantly closer to profitability. It is
the judgment of Management that this underlying trend toward operating
profitability will continue, and will be more apparent in subsequent
financial statements of the Registrant.
Finally, with respect to liquidity, the Registrant has realized a decline from
November 30, 1998 to February 28, 1999 of 37% in total assets, this being
largely due to a decline in current assets of 46.9% over the same period,
with cash declining from $104,782 to $46,761, still markedly improved from
cash of $1,234 at February 28, 1998. At current levels, Management believes
that sufficient liquidity exists to satisfy short-term liabilities as they
come due, without holding so much cash as to forego longer-term asset
deployment. In other words, while Management does not intend to keep so
little cash available as to be unable to pay its bills in a timely manner,
neither does it intend to maintain cash that could be better spent on long-
term assets or on reduction of liabilities.
In regard to Registrant's revenue-generating ability in the final quarter of
the current fiscal year, Management anticipates bringing a number of new
clients under contract, and does not foresee any material erosion in its
current customer base. This expected addition of new business will enhance
revenues, while having minimal impact on the Registrant's overall cost
structure, meaning that it is the opinion of Management that the period
commencing March 1, 1999 and ending May 31, 1999 will see the Registrant
come close to profitability for the quarter, if not achieving it.
[Page 9 of 15]
<PAGE>10
The matters discussed above contain forward-looking statements as defined
under Rule 175 of the Securities Act of 1933.
[Page 10 of 15]
<PAGE>11
PART II--OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) If the instruments defining the rights of the holders of any class of
registered securities have been materially modified, give the title of the
class of securities involved and state briefly the general effect of such
modification upon the rights of holders of such securities.
No instrument defining the rights of any holder of any class if securities of
the Registrant has been materially modified during the reporting period.
(b) If the rights evidenced by any class of registered securities have been
materially limited or qualified by the issuance or modification of any other
class of securities, state briefly the general effect of the issuance or
modification of such other class of securities upon the rights of the holders
of the registered securities.
No rights evidenced by any class of registered securities of the Registrant
have been materially limited or modified during the reporting period.
(c) Furnish the information required by Item 701 of Regulation S-B (Section
228.701 of this chapter) as to all equity securities of the Registrant sold by
the registrant during the period covered by the report that were not
registered under the Securities Act.
Common stock sold during the period included 580,000 shares, raising
$145,000 in proceeds. With respect to a merger between the Registrant and a
close, Florida corporation (see Part I, Item 2), two million (2,000,000)
shares of the Registrant's Common stock were issued to the shareholders of
the acquired entity (as described in previous report). These securities are
unregistered, and are therefore "restricted" as that term is meant under
17 CFR Section 230.144. The closing of this merger was effective September 1,
1998, which is the first day of the second quarter of the Registrant's fiscal
year.
(d) If required pursuant to Rule 463 (17 CFR 230.463) of the Securities Act
of 1933, furnish the information required by Item 701(f) of Regulation S-B.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (Item 601 of Regulation S-B).
(1) Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K.
(1) Form 8-K, January 6, 1999: Results of Board meeting, including
appointments of officers and directors (Item 5), and the resignation
of one director (Item 6)
[Page 11 of 15]
<PAGE>12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, as amended, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Internet Stock Market Resources, Inc.
(Registrant)
DATE: 4/13/99 By: /s/ Anastasios Kyriakides
----------------------------
Anastasios Kyriakides
Chairman/Secretary/Director
[Page 12 of 15]
<PAGE>13
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
27 Financial Data Schedule
[Page 13 of 15]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE PERIOD ENDED FEBRUARY 28, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 46,761
<SECURITIES> 0
<RECEIVABLES> 31,145
<ALLOWANCES> (1,157)
<INVENTORY> 0
<CURRENT-ASSETS> 76,348
<PP&E> 56,489
<DEPRECIATION> (13,882)
<TOTAL-ASSETS> 119,410
<CURRENT-LIABILITIES> 756,212
<BONDS> 0
0
0
<COMMON> 648
<OTHER-SE> (637,450)
<TOTAL-LIABILITY-AND-EQUITY> 119,410
<SALES> 150,498
<TOTAL-REVENUES> 150,498
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (256,675)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (19,367)
<INCOME-PRETAX> (125,545)
<INCOME-TAX> (41,135)
<INCOME-CONTINUING> (84,410)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (84,410)
<EPS-PRIMARY> (0.013)
<EPS-DILUTED> (0.013)
</TABLE>
