<PAGE>1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended November 30, 1999
[ ] 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, 102 Lobby Level, 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)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of latest practicable date: 719,778 shares of Common Stock,
par value $0.0001 per share, as of January 3, 2000.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
Page 1 of 21 pages contained in sequential numbering system.
The Exhibit Index may be found on Page 20 in the sequential page numbering.
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PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Internet Stock Market Resources, Inc.
(hereinafter referred to as the "Registrant" or "Company")
Registrant prepared the accompanying unaudited financial statements from its
books and records. In Management's opinion, these financial statements
present fairly in all material respects Registrant's financial condition and
changes therein as of November 30, 1999, and the results of operations and
cash flows for the period, in conformity with generally accepted accounting
principles (GAAP). The financial statements do not include all information
and footnotes required by GAAP.
2
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INTERNET STOCK MARKET RESOURCES, INC.
<TABLE>
<CAPTION>
BALANCE SHEETS
(unaudited)
As of
November 30, 1999
($)
<S> <C>
ASSETS
CURRENT ASSETS
Cash on hand 16,603
Accounts receivable 56,355
Allowance for doubtful accounts (3,381)
Net accounts receivable 52,974
Recoverable income taxes 4,539
-------
Total current assets 74,116
PROPERTY AND EQUIPMENT
Office equipment 57,104
Less: Accumulated depreciation (22,600)
-------
Total property and equipment 34,504
OTHER ASSETS
Recoverable state income taxes 1,389
Deposits 1,000
-------
Total other assets 2,389
-------
Total assets 111,009
========
3
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LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES
Accounts payable 32,053
Payroll liabilities 483
Accrued professional fees 2,600
Deferred revenue 29,749
-------
Total current liabilities 64,885
LONG-TERM LIABILITIES
Note payable (6% interest) 556,464
-------
Total long-term liabilities 556,464
Total liabilities 621,349
DEFICIENCY IN ASSETS
Common stock, par value $0.0001 per
share, 50,000,000 shares
authorized, 719,778 shares
outstanding 72
Preferred stock, par value $0.01 per
share, 10,000,000 shares
authorized, 0 shares outstanding 0
Additional paid-in capital 560,861
Deficit (1,071,273)
----------
Deficiency in assets (510,340)
----------
Total liabilities and deficiency
in assets 111,009
========
</TABLE>
See accompanying notes.
4
<PAGE>5
INTERNET STOCK MARKET RESOURCES, INC.
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
November 30, November 30,
1999 1998 1999 1998
($) ($) ($) ($)
<S> <C> <C> <C> <C>
REVENUES 82,735 48,680 233,826 97,361
EXPENSES
Bad debts 4,188 - 9,081 -
Depreciation & amortization 2,870 2,762 5,740 5,553
Office rent 1,686 3,371 6,106 6,741
General and administrative 49,553 37,191 100,420 74,353
Interest 8,223 5,696 16,952 11,392
Professional fees 7,120 34,736 20,879 69,473
Telephone 4,718 5,318 12,293 10,637
------- ------- ------- -------
TOTAL EXPENSES 78,338 89,074 171,471 178,149
------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS BEFORE
TAXES 4,377 (40,394) 62,355 (80,788)
PROVISION FOR INCOME TAXES (CREDITS) 1,463 (14,138) 20,827 (28,275)
------- ------- ------- -------
TAX BENEFIT FROM UTILIZATION OF NET
OPERATING LOSS CARRYFORWARDS (1,463) - (20,827) -
NET INCOME (LOSS) 4,377 (26,256) 62,355 (52,513)
======= ======= ======= =======
BASIC NET INCOME (LOSS) PER COMMON
SHARE* 0.01 (0.05) 0.09 (0.14)
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
|------------Number of Shares----------|
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE SHARES OUTSTANDING* 719,778 496,089 686,445 385,711
======= ======= ======= =======
</TABLE>
*Common Stock shares outstanding have been retroactively adjusted to reflect
a one-for-nine reverse split of all Common shares that occurred on June 30,
1999.
See accompanying notes.
5
<PAGE>6
INTERNET STOCK MARKET RESOURCES, INC.
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
November 30,
1999 1998
($) ($)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net (loss) income 62,355 (52,513)
Adjustments to reconcile cash flow:
Depreciation and amortization 5,740 5,553
Changes in assets and liabilities
Decrease (increase) in current assets:
Accounts receivable 3,308 3,877
Other current assets - 27,223
Increase (decrease) in current liabilities:
Accounts payable 20,857 27,025
Accrued and other liabilities (53,001) 6,400
Deferred income (79,139) -
------- -------
NET CASH (USED) PROVIDED BY OPERATIONS (39,880) 17,565
------- -------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (66,303) 80,000
------- -------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of equipment - (963)
------- -------
NET CASH USED BY INVESTING ACTIVITIES 0 (963)
------- -------
(DECREASE) INCREASE IN CASH (106,183) 96,602
CASH, BEGINNING 122,786 107,653
------- -------
CASH, ENDING 16,603 204,255
======= =======
</TABLE>
See accompanying notes.
6
<PAGE>7
NOTES TO FINANCIAL STATEMENTS (unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY
BUSINESS ACTIVITY Internet Stock Market Resources, Inc., (the Company)
provides Internet design and access to financial Websites and information on
behalf of smaller, growing public companies.
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, under an Agreement and Plan of Merger. The shareholders of
Internet Stock Market Corp. were compensated with 2,000,000 restricted
common shares of the Company's stock and a promissory note in the amount of
$1,000,000.
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 merger/acquisition with the Non-surviving Corporation.
ACCOUNTING BASIS These financial statements reflect the merger as if it were
a "pooling of interests" of the two entities as a result of common control.
Accordingly, financial information for periods prior to the merger reflect
retroactive restatement of the companies' combined financial position and
operating results.
RECLASSIFICATIONS AND RESTATEMENTS Amounts in the prior year financial
statements have been reclassified for comparative purposes to conform with
the presentation of the current year financial statements. Additionally,
amounts in the prior year financial statements have been restated to give
retroactive effect to the merger for purposes of comparative financial
statements presentation.
CASH AND CASH EQUIVALENTS For purposes of the statements of cash flows, the
Company considers all highly liquid debt securities purchased with a maturity
of three months or less to be cash equivalents.
CONCENTRATION OF CREDIT RISK Financial instruments, which potentially
subject the Company to a concentration of credit risk, are cash and cash
equivalents and accounts receivable. The Company currently maintains its day-
to-day operating cash balances at a single financial institution. At times,
cash balances may be in excess of the FDIC insurance limits.
As of November 30, 1999 and 1998, the Company had outstanding trade
receivables, which carrying value of these receivables was reduced for
estimated uncollectibility to estimated fair market value by an allowance for
doubtful accounts. The Company's clients are typically smaller publicly-
traded organizations. Consequently, the Company's ability to collect the
amounts due from clients may be affected by economic fluctuations in their
industries and geographical location, as well as fluctuations in the
financial and stock markets in general.
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PROPERTY AND EQUIPMENT Property and equipment, consisting of furnishings and
equipment used in its current operations, is stated at cost, less accumulated
depreciation. Depreciation is begun when the assets are placed in service and
computed using the straight-line method over the estimated useful lives of
the assets, which range from five to seven years.
LONG-LIVED ASSETS Long-lived assets to be held and used are reviewed for
impairment whenever events or changes in circumstances indicate that the
related carrying amount may not be recoverable. When required, impairment
losses on assets to be held and used are recognized based on the fair value
of the asset. Long-lived assets to be disposed of, if any, are reported at
the lower of carrying amount or fair value less cost to sell.
SALES REVENUE Revenues from sales are recorded when the collection of sales
proceeds is reasonably assured and all other material conditions of the sales
are met. Income on contracts in excess of one month is deferred and
recognized monthly, pro-rata, over the term of the agreement. At November 30,
deferred revenues were $29,749.
ADVERTISING Advertising costs are charged to operations in the year incurred.
BASIC NET INCOME (LOSS) PER SHARE Basic net income (loss) per common share is
computed by dividing the net income or loss available to Common stockholders
by the weighted average number of Common shares outstanding during each
period. There were no common stock equivalents as of the periods ended
November 30, 1999 and November 30, 1998. Net income or loss for the periods
presented above are based on a weighted average number of shares outstanding
of 385,711 (adjusted for a one-for-nine reverse split; see Note 3, below)
during the six months ended, 1998 and 686,445 during the six months ended
November 30, 1999.
INCOME TAXES Income taxes are computed under the provisions of the Financial
Accounting Standards Board (FASB) Statement No. 109 (FAS No. 109), Accounting
for Income Taxes. SFAS 109 is an asset and liability approach that requires
the recognition of deferred tax assets and liabilities for the expected
future tax consequences of the difference in events that have been recognized
in the Company's financial statements compared to the tax returns.
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions. These estimates and assumptions 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.
FAIR VALUE OF FINANCIAL INSTRUMENTS In accordance with the requirements of
Statement of Financial Accounting Standards No. 107, the fair value amounts
of financial instruments have been determined based on available market
information and appropriate valuation methodology. The carrying amounts and
estimated fair values of the Company's financial assets and liabilities
approximate fair value due to the short maturity of the instruments. The fair
value of the note payable stockholder is estimated based on an annual
8
<PAGE>9
interest rate of 6% and the anticipated dates of payment and has not been
increased accordingly. Fair value estimates are subjective in nature and
involve uncertainties and matters of significant judgment; therefore, fair
value cannot be determined with precision.
2. RELATED PARTY TRANSACTIONS
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.) This note was due upon demand by the holder, but
subsequently changed to allow the Company to accumulate sufficient working
capital. The shareholder is an officer and director of the Company.
3. REVERSE SPLIT OF COMMON STOCK
Effective June 30, 1999 for all Common shares of record on June 17, 1999, the
Company declared a one-for-nine reverse split.
4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
Property and Equipment
at November 30, 1999
--------------------
<S> <C>
Office equipment $ 57,104
Accumulated depreciation (22,600)
-------
Property and equipment, net $ 34,504
=======
</TABLE>
At November 30, 1999, total depreciation and amortization expense for the
fiscal year commencing June 1, 1999 amounted to $5,740.
5. ACCRUED AND OTHER LIABILITIES
Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
Accrued Liabilities
as of November 30, 1999
-----------------------
<S> <C>
Professional fees $ 20,879
Accrued compensation and related taxes 2,600
------
$ 18,279
======
</TABLE>
6. STOCKHOLDERS' EQUITY
The Company has authorized 50,000,000 shares of common stock with a par value
of $.0001 per share. At November 30, 1999 and November 30, 1998, there were
719,778 shares and 496,087 shares, respectively, were issued and outstanding.
The Company has authorized 1,000,000 shares of preferred $.01 par value.
9
<PAGE>10
PRIVATE OFFERING In August 1998, the Board of Directors authorized the
Company to offer and sell to foreign investors up to 444,445 shares of its
common stock at a purchase price of $.25 per share under a private placement
to foreign investors, pursuant to an exemption available under the Securities
Act of 1933, as amended. Under this offering, which was made prior to the
merger, 311,112 shares were issued at prices ranging from $.12 to $.25
generating net proceeds of $504,937 prior to May 31, 1999. Additional (pre-
reverse split) shares of 133,334 were sold in June 1999 for $72,000, with
payment in July 1999.
7. INCOME TAXES
For the year ended May 31, 1999, the Company generated for U.S. income tax
purposes a net operating loss of approximately $93,300. This loss carry-
forward expires in the year 2018. The Company had a net operating loss
carryforward of approximately $2,850,000 as of May 31, 1998. However, as of
September 1, 1998, and subsequently, there were ownership changes in the
Company as defined in Section 382 of the Internal Revenue Code. Because of
these changes, the Company's ability to utilize net operating losses and
capital losses available before the ownership change were virtually
eliminated. The utilization of the remaining carryforward is dependent on
the Company's ability to generate sufficient taxable income during the
carryforward periods and no further significant changes in ownership.
The Company computes deferred income taxes under the provisions of Statement
of Financial Accounting Standards No. 109, which requires the use of an asset
and liability method of accounting for income taxes. Under FAS No. 109,
deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. These
differences result primarily from the use of the accelerated cost recovery
method of depreciation and the write-off method for accounts receivable as
opposed to the allowance method. Statement No. 109 also provides for the
recognition and measurement of deferred income tax benefits based on the
likelihood of their realization in future years. A valuation allowance must
be established to reduce deferred income tax benefits if it is more likely
than not that a portion of the deferred income tax benefits will not be
realized. It is Management's opinion that the entire deferred tax benefit may
not be recognized in future years. Therefore, a valuation allowance equal to
the deferred tax benefit has been established, resulting in no deferred tax
benefits as of the balance sheet dates.
8. COMMITMENTS AND CONTINGENCIES
LEASED PREMISES The Company leases its facilities in St. Petersburg, Florida
under a three-year lease agreement dated July 24, 1997. The lease provides
for monthly payments of $1,124. Rent expense for the period commencing June
1, 1999 and ended November 30, 1999 was $6,106.
Future minimum lease payments under the lease agreement for years ending May
31 are as follows:
<TABLE>
<CAPTION>
Minimum Lease Payments
Year Amount ($)
<S> <C>
2000 13,488
2001 2,248
------
15,736
======
</TABLE>
10
<PAGE>11
CONSULTING AGREEMENTS From time-to-time, the Company engages, retains and
dismisses various consultants. The consultants provide various services
including assisting with shareholder relations, responding to inquiries,
short and long-term strategic planning, marketing the Company to the
investment community and identification and negotiation of potential
acquisitions.
YEAR 2000 The year 2000 issue results from certain computer systems and
software applications that use only two digits (rather than four) to define
the applicable year. As a result, such systems and applications may recognize
a date of "00" as 1900 instead of the intended year 2000, which could result
in data miscalculations and software failures. The Company has conducted a
preliminary assessment of its key computer systems and software application
and believes they are Year 2000 compliant. Based on the initial assessment,
the Company believes the cost of addressing the Year 2000 issue should not
have a material impact on the Company's financial position or results of
operations.
POTENTIAL ACQUISITIONS On June 30, 1999, a letter of intent was signed by
the Company and Delcor Industries, Inc. (Delcor) to acquire 100% of Delcor
for cash and debt. The letter of intent gave the parties until August 1, 1999
to sign a purchase agreement to finalize the acquisition. By verbal
agreement, the parties have extended this deadline. Delcor manufactures and
assembles electronic components, and employs approximately 75 people.
9. GOING CONCERN AND MANAGEMENT'S PLAN
GOING CONCERN The accompanying interim financial statements have been
prepared assuming the Company will continue as a going concern. The Company
has suffered recurring losses from operations and at May 31, 1999, had a
working capital deficit and a deficiency in assets. These and other factors
raise doubt about the Company's ability to continue as a going concern,
without additional capitalization. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
MANAGEMENT'S PLANS Management has decided to address the Company's financial
situation by the following:
Sale of 133,334 additional shares of Common stock for $72,000 as part of its
foreign private placement, was received in July 1999.
The note payable stockholder has been restructured and will not be satisfied
until the Company has an acceptable working capital.
An SB-2 has been filed with the United States Securities and Exchange
Commission, which would provide for the Company to raise up to $5,000,000
from the general public.
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Acquisition of at least two, possibly four, additional companies in the
computer and Internet fields for a better vertical integration and to spread
general and administrative costs over a broader base. In that regard, three
letters of intent have been signed and the Company is in the process of
drafting agreements and performing its due diligence.
Increase promotional expenditures in an effort to increase revenues.
10. SUBSEQUENT EVENTS AND MATERIAL CONTINGENCIES
In September of 1999, the Company filed with the Securities Exchange
Commission a registration statement pursuant to a contemplated offering of
the Company's securities. Through this proposed secondary public offering,
the Company anticipates raising as much as $5,000,000 prior to the possible
exercise of certain Class A Preferred Stock shares included in the Units of
the offering. Management has no information regarding an "effective date" for
the offering, nor does it have any assurance that, even if the registration
statement is duly qualified, the offering will be successful.
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<PAGE>13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
SAFE HARBOR -- The Private Securities Litigation Reform Act of l995 provides
a "safe harbor" for forward-looking statements. Certain information included
in this quarterly report on Form 10-QSB contain statements that are forward-
looking, such as statements relating to the future anticipated development
activities, plans for future expansion, various activities, planned capital
expenditures, future funding sources, anticipated sales growth and potential
contracts. Such forward-looking information involves important risks and
uncertainties that could significantly affect anticipated results in the
future, and accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of Internet Stock Market
Resources, Inc. These risks and uncertainties include, but are not limited
to, those relating to development and expansion activities, dependence on
existing management, financing activities, domestic and global economic
conditions, change in Federal or state laws, and market competition factors.
On August 17, 1998, the Company 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
transaction as if it were a "pooling of interests" of the private corporation
(the "Non-surviving Corporation") with that of the Company (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 Company's previous fiscal year. The discussion that follows (and all
future discussions) will exclusively address the financial statements of
the "pooled," Surviving Corporation. The Company's fiscal year ends on May
31; as such, the financial statements herein presented are for the six months
ended November 30 of the current fiscal year.
Revenues for the six months were $233,826 against revenues for the year-
previous period of 97,361, marking a rise of 140%. For the second quarter of
the current fiscal year, revenues were $82,735, down from $151,091 for the
first three months of this fiscal year. The rise in revenue for the current
six-month period over that of the previous fiscal year is entirely
attributable to the expansion of the Company's client base. Management
believes that the drop in this quarter's revenue compared to last quarter's
is the result of certain temporary responsibilities the Company's senior
officers assumed during the Autumn that depressed new client development
activities, which are their primary tasks.
Expenses fell 3.7% from the year-previous period's, the majority of this
reduction due to the internalization of costs of professional services now
handled by Company personnel. From the first quarter to the second quarter
of the current fiscal year, total expenses declined 11.4%, this decrease
being the net result of increasing general and administrative expenses and
bad debt expense increasing against a continuing decline in professional
fees. For the year-previous six months, total expenses were 183% of
revenues, while they are 73% of revenues for the current fiscal year to date.
As stated in previous reports, Management believes that this is the result of
certain fixed costs of operation being spread over a larger base of revenues.
Management believes that this process will continue, provided revenues from
operations continue to grow.
The Company's cash position rose to $16,603 at November 30, 1999, from
- -$2,820 at August 31, 1999, this marked improvement being the result of
several factors, the primary one being a more aggressive management of
receivables and payables. It is Management's full intention to maintain this
discipline over cash. From November 30, 1998 to November 30, 1999, cash
declined by almost 83%; however, Management believes that certain temporary
factors resulted in a cash position that was unnecessarily high in the Autumn
of 1998, and considers its cash position now more in line with the level of
operations and the Company's current need for liquidity.
Current assets at November 30, 1999 were 48.4% less than they were one year
earlier, and they were 10.2% less than they were at August 30, 1999. The
decline from the previous year is attributable to the drop in cash noted
above, as well as to certain changes in the recognition of current assets.
The decline in current assets from August to November of the current year is
largely the net effect of a contraction in accounts receivable to provide
cash.
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<PAGE>14
With respect to current liabilities, as mentioned above, Management allowed
accounts payable to rise by $12,000, or 59%, from the August, 1999 level to
conserve cash. The level at November 30, 1999 is also 40.6% higher than it
was at November 30, 1998. Management is currently analyzing the increase in
the Company's accounts payable as a percentage of current liabilities to
determine if the recent increases in operational activity warrant the rise.
Current liabilities at November 30, 1999 were $64,885, which represents a
decline of 56% from November 30, 1998 current liabilities, and a decline of
37% from current liabilities at August 31, 1999. (Note that the year-previous
level of current liabilities discussed here does not include a note payable
that has, since year-previous results were reported, been re-assigned to long-
term liabilities.) The Company's current ratio (current assets divided by
current liabilities, a measure of the Company's ability to meet short-term
obligations with relatively liquid resources) has improved to 1.14X from
0.80X at August 31, 1999 and 0.97X at November 30, 1998.
The Company's sole long-term liability - a note payable to a shareholder -
has declined by 37% from November 30, 1998, but rose about $20,000, or less
than 4%, from August 31, 1999. Management is committed to maintaining a
schedule of retirement of this obligation, but will do so in a manner
consistent with maintaining adequate cash for operations.
The Company's total liabilities have declined 34.5% since November 30, 1998,
and have declined 2.9% from August 31, 1999. Management's current strategy is
to keep downward pressure on total liabilities to reduce the financial risk
of the Company bears. To the extent that current liabilities can be
maintained within a reasonable range of their current levels, and the
outstanding balance on the note payable can continue to be retired,
Management believes that total liabilities can continue to be lessened.
The Company's deficiency in assets as fallen to -$510,340, 32.8% less than it
was at November 30, 1998, and 10.0% less than it was at August 31, 1999. It
is Management's judgment that the contraction of the Company's deficiency in
assets will continue, but that the time frame in which the deficiency will be
eliminated is unpredictable at this time, depending on both the results of
operations and on the results of certain external equity financing discussed
below.
14
<PAGE>15
On June 30, 1999, a letter of intent was signed by the Company and Delcor
Industries, Inc. (Delcor) to acquire 100% of Delcor for cash and debt. The
letter of intent gave the parties until August 1, 1999 to sign a purchase
agreement to finalize the acquisition. By verbal agreement, the parties to
the letter of intent continue to plan for the acquisition. Delcor
manufactures and assembles electronic components, and employs approximately
75 people. This agreement includes a requirement for cash payment that the
Company will be able to make only if the proceeds from a contemplated
offering of Company securities is successful (see the next paragraph).
On September 25, 1999, the Company filed with the Securities and Exchange
Commission a registration statement on Form SB-2 pursuant to a contemplated
offering of securities. The Comapny has subsequently filed amendment to this
registration statement. Management is obligated to restrict Company
activities to the normal course during this period, and to not discuss
certain matters related to the offering.
MANAGEMENT'S PLANS Management is addressing address the Company's financial
situation by the following:
* Continuation of growth in revenues in its core business.
The Company has continued to demonstrate that it can increase revenues
through aggressive marketing of its Internet-related services; furthermore,
this growth in quarter-over-quarter revenues continues to be attended by a
moderate increases in expenses, resulting now in the consecutive quarters of
positive earnings. Although Management anticipates a successful offering of
its securities (see above), the focus of the Company's personnel will
continue to be development of the core business of Internet-based corporate
profiling.
*Sale of 133,334 additional shares of Common stock for $72,000 as part of its
foreign private placement was received in July 1999.
*A note payable stockholder has been restructured and will not be satisfied
until the Company has an acceptable level of working capital. Further
restructuring of this obligation, including a debt-for-equity exchange, may
be instituted. Although Management has not made a final decision with regard
to this possibility, the result would be to substantially reduce the
long-term liabilities of the Company, as well as to remove the outflow of
cash required to service this debt.
*As noted above, in September, 1999, a registration statement on Form SB-2
was filed with the United States Securities and Exchange Commission; the
anticipated proceeds would provide for the Company with as much as $5,000,000
from the general public. Such proceeds would not only increase considerably
the liquidity of the Company, but they would also afford the Company to
complete anticipated acquisitions that would also provide long-term cash flow
enhancements for the Company.
15
<PAGE>16
Management believes that, even in the absence of the net proceeds from an
offering of its securities, the Company has the ability at this time to
continue operations, particularly in light of its growth in revenues. No
material, adverse contingencies are perceived at this time, other than those
arising from the intensely competitive environment in which the Company
operates. Provided the Company can stay abreast of the changes in technology,
and provided the Company can continue to offer its existing and prospective
clients a level of services they cannot find elsewhere, the Company can
remain a going concern and be a permanent part of the information technology
landscape in the 21st Century.
YEAR 2000 The year 2000 issue results from certain computer systems and
software applications that use only two digits (rather than four) to define
the applicable year. As a result, such systems and applications may recognize
a date of "00" as 1900 instead of the intended year 2000, which could result
in data miscalculations and software failures. The Company has conducted a
preliminary assessment of its key computer systems and software application
and believes they are Year 2000 compliant. Based on the initial assessment,
the Company believes the cost of addressing the Year 2000 issue should not
have a material impact on the Company's financial position or results of
operations.
16
<PAGE>17
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.
In June, 1999, the Board of Directors declared a one-for-nine reverse split
of all Common stock shares of the Company, effective June 30, 1999, for
shareholders of record as of June 17, 1999. The Company herewith reports this
action, although it is Management's judgment that the reverse split, in and
of itself, should have no material effect on the shareholders or any
securities of the Company.
On November 24, 1999, the Board of Directors of the Company designated nine
hundred thirty-three thousand three hundred thirty-three (933,333) of its
authorized preferred shares as Class A Preferred Stock of the corporation.
The material features of this designation are as follows:
* Each Class A Preferred Stock share is convertible into two shares of ISMR
Common Stock.
* For one year from the issue date, the conversion price is $2.
* After one year, the conversion price is the market bid price for two shares
of ISMR Common Stock.
* The market bid price to be used otherwise in calculation of conversion
price is the bid price at 4:00 p.m. on the previous business day on the
national exchange on which ISMR Common Stock trades.
* The "previous day" will be the day prior to notification via United States
Postal Service.
* Class A Preferred Stock has no voting rights.
* Other than liquidation rights to the extent of par value, which is $0.01
per share Preferred, the Class A Preferred Stock has no preemptive or other
special rights unless granted by law or statute.
* Class A Preferred Stock has no rights to dividends of any kind.
* The Board of Directors can declare a Class A Preferred Stock dividend if it
wishes to, but if it does declare such a dividend, that does not mean the
Class A Preferred Stock has any right to dividends after that.
* If any part of the designation of the Class A Preferred Stock is held
invalid (by a court, for example), the rest of the class's designation is
still valid.
(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.
In July of 1999, the Company sold 133,334 shares of its Common stock for
$72,000 in a foreign private placement.
ITEM 5. Other Information
On June 30, 1999, a letter of intent was signed by the Company and Delcor
Industries, Inc. (Delcor) to acquire 100% of Delcor for cash and debt. The
letter of intent gave the parties until August 1, 1999 to sign a purchase
agreement to finalize the acquisition. By verbal agreement, the parties have
extended this deadline. The Delcor manufactures and assembles electronic
components, and employs approximately 75 people.
17
<PAGE>18
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, June 24, 1999: Press release concerning one-for-nine reverse
split of Company's Common stock (Item 5).
(2) Form 8-K, July 21, 1999: Press release announcing new client (Item 5).
(3) Form 8-K, July 22, 1999: Press release announcing new client (Item 5).
(4) Form 8-K, September 20, 1999: Press release announcing new client
(Item 5).
(5) Form 8-K, October 4, 1999: Press release announcing new client (Item 5).
(6) Form 8-K, October 14, 1999: Press release announcing new client (Item 5).
(7) Form 8-K, November 17, 1999: Press release announcing new client (Item 5).
18
<PAGE>19
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Internet Stock Market Resources, Inc.
(Registrant)
DATE: 1/13/00 By: /s/ Anastasios Kyriakides
----------------------------
Anastasios Kyriakides
Chairman/Secretary/Director
19
<PAGE>20
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
27 Financial Data Schedule
20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED NOVEMBER 30, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> MAY-31-2000 MAY-31-2000
<PERIOD-START> SEP-01-1999 JUN-01-1999
<PERIOD-END> NOV-30-1999 NOV-30-1999
<CASH> 16,603 16,603
<SECURITIES> 0 0
<RECEIVABLES> 56,355 56,355
<ALLOWANCES> 3,381 3,381
<INVENTORY> 0 0
<CURRENT-ASSETS> 64,885 64,885
<PP&E> 57,104 57,104
<DEPRECIATION> (22,600) (22,600)
<TOTAL-ASSETS> 111,009 111,009
<CURRENT-LIABILITIES> 64,885 64,885
<BONDS> 556,464 556,464
0 0
0 0
<COMMON> 72 72
<OTHER-SE> (510,268) (510,268)
<TOTAL-LIABILITY-AND-EQUITY> 111,009 111,009
<SALES> 82,735 233,826
<TOTAL-REVENUES> 82,735 233,826
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> (70,115) (154,519)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (8,223) (16,592)
<INCOME-PRETAX> 4,377 62,355
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 4,377 62,355
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 4,377 62,355
<EPS-BASIC> 0.006 0.091
<EPS-DILUTED> 0.006 0.091
</TABLE>
