U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 1-13478
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QUIKBIZ INTERNET GROUP, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 88-0320364
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
6801 Powerline Road, Ft. Lauderdale, Florida 33309
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(Address of principal executive offices)
(954) 970-3553
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(Issuer's telephone number including area code)
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(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
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State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of May 8, 2000, the issuer had
outstanding 14,278,236 shares of Common Stock, par value $.002 per share.
<PAGE>
QUIKBIZ INTERNET GROUP, INC. AND SUBSIDIARIES
Page
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Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets -
December 31, 1999 and March 31, 2000................. 3
Condensed Consolidated Statements of Operations -
Three Months Ended March 31, 1999 and 2000.......... 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1999 and 2000.......... 5
Notes to Condensed Consolidated Financial Statements. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 7
Part II. Other Information
Item 1. Legal Proceedings................................... 9
Item 2. Changes in Securities.............................. 9
Item 6. Exhibits and Reports on Form 8-K................... 9
Signatures.................................................. 10
2
<PAGE>
Item 1. Condensed Consolidated Financial Statements
QuikBIZ Internet Group, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Assets
<TABLE>
December 31, 1999 (1) March 31, 2000
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(Unaudited)
<S> <C> <C>
Current Assets
Cash $ 35,957 $ 21,298
Accounts receivable 620,501 720,542
Other 26,786 23,121
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Total current assets 683,244 764,961
Property and equipment
Furniture and equipment 176,937 176,937
Leasehold improvements 44,862 44,862
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221,799 221,799
Less accumulated depreciation (73,880) (88,695)
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Depreciated cost 147,919 133,104
Other Assets
Goodwill, net of accumulated amortization of
$159,496 and $186,604, respectively 924,894 897,786
Note receivable from shareholder 151,586 154,807
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Total assets $ 1,907,643 $ 1,950,658
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Liabilities and Shareholders' Equity December 31, 1999 March 31, 2000
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Current liabilities
Accounts payable and accrued expenses $ 1,461,580 $ 1,483,667
Current maturities of long-term debt 337,909 342,502
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Total current liabilities 1,799,489 1,826,169
Long-term debt 7,769 7,769
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Total liabilities 1,807,258 1,833,938
Shareholders' equity
Preferred stock; $.001 par value, 3,000 shares
authorized; 261 shares issued and
outstanding 10,208 10,208
Common stock; $.002 par value; 25,000,000
shares authorized; 14,061,426 and
14,278,236 shares issued and outstanding,
respectively 28,121 28,555
Additional paid-in capital 3,358,227 3,409,878
Accumulated deficit (3,182,150) (3,249,816)
Unearned compensation on restricted stock (114,021) (82,105)
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Total shareholders' equity 100,385 116,720
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Total liabilities and shareholders' equity $ 1,907,643 1,950,658
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</TABLE>
See accompanying notes
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(1) The balance sheet at December 31, 1999 has been derived from the audited
consolidated financial statements at that date.
3
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
Three Months Ended
March 31,
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1999 2000
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<S> <C> <C>
Revenue
Advertising $ 367,089 $ 1,346,218
Multimedia services and products 317,537 380,306
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Total revenue 684,626 1,726,524
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Operating expenses
Direct costs 408,331 1,435,721
Selling, general and administrative
expenses 378,874 311,953
Depreciation and amortization 27,510 41,923
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Total operating expenses 814,715 1,789,597
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(Loss) from operations (130,089) (63,073)
Interest expense 5,211 4,593
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Net loss $ (135,300) $ (67,666)
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Weighted average number of common shares
outstanding 13,279,580 14,189,103
Basic (loss) per common share $ (0.010) $ (0.005)
</TABLE>
See accompanying notes
4
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
Three Months Ended March 31,
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1999 2000
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<S> <C> <C>
Operating activities
Net (loss) $ (135,300) $ (67,666)
Adjustments to reconcile net (loss) to net cash
used in operating activities:
Depreciation and amortization 27,510 41,923
Amortization of unearned compensation 38,897 31,916
Amortization of note receivable - (3,221)
Changes in operating assets and liabilities,
net of effects of acquisition:
(Increase) in accounts receivable (147,071) (100,041)
(Increase) decrease in other current assets (1,474) 3,665
Increase in accounts payable and
accrued expenses 17,004 78,765
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Net cash (used in) operating activities (200,434) (14,659)
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Investing activities
Purchases of property and equipment (8,125) -
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Net cash (used in) investing activities (8,125) -
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Financing activities
Proceeds from notes payable 75,128 -
Issuance of common stock 137,000 -
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Net cash provided by financing activities 212,128 -
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Net increase (decrease) in cash 3,569 (14,659)
Cash, beginning of period 18,059 35,957
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Cash, end of period $ 21,628 21,298
=========================== ==========================
Supplemental disclosures of cash flow information:
Cash paid for interest $ 5,211 -
Supplemental schedule of noncash investing and
financing activities:
Accounts payable paid by issuance of common stock - $ (52,085)
</TABLE>
See accompanying notes
23515.4
5
<PAGE>
QuikBIZ Internet Group, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Note A - Business
QuikBIZ Internet Group, Inc. and subsidiaries (the "Company") have two
reportable segments, both of which sell their products and services in the
Southeastern United States. One segment provides its clients with internet site
design, television and radio commercial development and production, print
advertising development and production, public relations and promotions. The
other segment offers audio, video, multimedia and Internet design services and
products. It also produces and assists companies in creative content for
corporate communications including sales, training, public relations and
promotion.
Note B - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310 of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31, 2000
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-KSB/A.
Note C - Going Concern - Uncertainty
As shown in the accompanying financial statements, the Company has incurred
recurring operating losses and negative cash flows from operating activities and
has negative working capital. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.
There can be no assurance that the Company will be able to successfully
implement its plans, or if such plans are successfully implemented, that the
Company will achieve its goals.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern and do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that might result from
the outcome of this uncertainty.
6
<PAGE>
Item 2. Management's Discussion and Analysis Of Financial Condition and Results
of Operations
Results of Operations
Three Months ended March 31, 2000 Compared to Three Months ended March 31,
1999.
Revenues.
Revenues were $684,626 for the three months ended March 31, 1999 and grew
to $1,726,524 for the three months ended March 31, 2000, an increase of
approximately 152%. The increase in revenues reflected our acquisitions in 1999,
growing demand for Internet professional services and the introduction of new
strategy, creative and technology services to the marketplace.
Direct Costs.
Direct costs were $408,331 for the three months ended March 31, 1999 and
grew to $1,435,721 for the three months ended March 31, 2000, an increase of
252%. As a percentage of revenues, direct costs increased from approximately 60%
for the three months ended March 31, 1999 to approximately 83% for the three
months ended March 31, 2000. The increase in absolute dollars and percentage
terms was primarily attributable to higher costs relating to acquired
businesses.
Selling General and Administrative Expenses.
Selling, general and administrative expenses were $378,874 for the three
months ended March 31, 1999 and decreased to $311,953 for the three months ended
March 31, 2000, a decrease of approximately 18%. As a percentage of revenues,
general and administrative expenses decreased from approximately 55% for the
three months ended March 31, 1999 to approximately 18% for the three months
ended March 31, 2000. The decrease in percentage terms was primarily
attributable to improved economies of scale. The decrease in selling, general
and administrative expenses in absolute dollar terms was the result of the
termination of two employees.
Amortization of Goodwill.
Amortization of goodwill was $16,843 for the three months ended March 31,
1999 and $27,108 for the three months ended March 31, 2000. As a percentage of
revenues, amortization of goodwill represented 2% of revenues in the first three
months of 1999 and 2% of revenues in the first three months of 2000.
Depreciation and Amortization.
Depreciation and amortization expenses, net of amortization of goodwill,
were $10,667 for the three months ended March 31, 1999 and increased to $14,185
for the three months ended March 31, 2000, an increase of approximately 39%.
Depreciation and amortization, net of amortization of goodwill, represented
approximately 2% of revenues in the three months ended March 31, 1999 and
approximately 1% of revenues in the three months ended March 31,2000. The
increase in absolute dollar terms from year to year resulted from our
acquisition of G&L Group.
Liquidity and Capital Resources
Since inception, we have funded our operations and investments in property
and equipment through cash from operations, equity financings, borrowings from
commercial banks and capital leases.
Our cash and cash equivalents were $21,628 at March 31, 1999 and $21,298 at
March 31, 2000. Cash used in operating activities of $200,434 in the three
months ended March 31, 1999 was augmented by net cash used in investing
activities of $8,125 but offset by net proceeds of financing activities of
$212,128 in the three months ended March 31, 1999. Cash used in operating
activities was $14,659 in the three months ended March 31, 2000.
7
<PAGE>
On July 9, 1999 we entered into an investment agreement with Swartz Private
Equity, LLC to raise up to $20 million through a series of sales of common
stock. The dollar amount of each sale is limited by the trading volume and a
minimum period of time must occur between sales. In order to sell shares to
Swartz, there must be an effective registration statement on file with the SEC
covering the resale of the shares by Swartz and we must meet certain other
conditions. The agreement is for a three-year period ending July 9, 2002.
We have incurred recurring operating losses and negative cash flows from
operating activities and have negative working capital. We believe that our
available equity financing arrangement with Swartz will be sufficient to meet
our working capital and capital expenditure requirements for at least the next
two years. However, there can be no assurance that we will receive financing
from Swartz, that we will not require additional financing within this time
frame or that such additional financing, if needed, will be available on terms
acceptable to us, if at all.
Forward-Looking Statements
This report contains, in addition to historical information,
forward-looking statements regarding the Company that involve risks and
uncertainties. The Company's actual results could differ materially. For this
purpose, any statements contained in this report that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the generality of the foregoing, words such as "may," "will," "expect,"
"believe," "anticipate," "intend," "could," "estimate," or "continue" or the
negative or other variations thereof or comparable terminology are intended to
identify forward-looking statements. Factors that could cause or contribute to
such difference include, but are not limited to, history of operating losses and
accumulated deficit; possible need for additional financing; competition;
dependence on management; risks related to proprietary rights; government
regulation; and other factors discussed in this report and the Company's other
filings with the Securities and Exchange Commission.
8
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Our subsidiary QuikBIZ Media Centers, Inc. ("QuikBIZ Media") is a defendant
in a lawsuit filed in June 1999 in the Circuit Court of the 17th Judicial
Circuit, in Broward County, Florida. The plaintiff, Lynda V. McGlawn, is seeking
to collect a debt resulting from the assignment to her by Telephonetics
International, Inc. of a debenture of QuikBIZ Media the amount of $110,000.
QuikBIZ Media previously filed a separate action in the Circuit Court against
Telephonetics International, Inc. alleging, among other things, that QuikBIZ
Media was fraudulently induced to execute the debenture. QuikBIZ Media is
currently seeking to have the two lawsuits consolidated.
On March 24, 2000, we commenced an action in the Circuit Court of the 17th
Judicial Circuit, in Broward County, Florida against Andrew D. Smith, a
principal shareholder and former officer of QuikBIZ Internet Group, Inc. and
former officer and employee of our subsidiary SmithAgency.com, Inc.
("SmithAgency"), Charles Robb, a former employee of SmithAgency.com, and Random
House, Inc. Our complaint alleges that Messrs. Smith and Robb breached their
employment and non-competition agreements with SmithAgency and violated their
fiduciary duties to SmithAgency by wrongfully taking confidential information
relating to an advertising campaign developed for one of our clients and put
that information into a manuscript for publication as a book by Random House,
Inc. Our complaint further alleges that Messrs. Smith and Robb created a
competing advertising agency after their employment with SmithAgency was
terminated, in violation of their noncompetition agreements. We are seeking
damages from Messrs. Smith and Robb and an injunction against further violation
of their agreements. Our action against Random House, Inc. was settled amicably
in May 2000.
Item 2. Changes in Securities
(c) Recent Sales of Unregistered Securities
During the three months ended March 31, 2000, we made the sale of
unregistered securities described below. We relied on Section 4(2) of the
Securities Act of 1933 as the basis for an exemption from registration for the
transaction below, because the transaction did not involve any public offering.
In February 2000 we issued 200,000 shares of common stock to Kirk J.
Girrbach pursuant to an employment agreement dated April 13, 1998 between Mr.
Girrbach and Capital Network of America, Corp., a subsidiary of QuikBIZ that is
now dormant, and we issued 12,310 shares of common stock to Mr. Girrbach in
payment of $8,100 of accrued legal fees and disbursements.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (March 31, 2000)
(b) Reports on Form 8-K
On March 22, 1999, we filed a report on Form 8-K to report that we had
dismissed our former accountants and hired new accountants (Item 4). We filed an
amendment to such report on Form 8-K/A on January 25, 2000.
9
<PAGE>
SIGNATURES
In accordance with requirements of the Exchange Act, the Registrant caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: May 15, 2000
QUIKBIZ INTERNET GROUP, INC.
By: /s/ David B. Bawarsky
-----------------------------
David B. Bawarsky, Chief Executive
Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-1-2000
<PERIOD-END> MAR-31-2000
<CASH> 21,298
<SECURITIES> 0
<RECEIVABLES> 720,542
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 764,961
<PP&E> 221,799
<DEPRECIATION> 88,695
<TOTAL-ASSETS> 1,950,658
<CURRENT-LIABILITIES> 1,826,169
<BONDS> 0
<COMMON> 28,555
0
10,208
<OTHER-SE> 77,957
<TOTAL-LIABILITY-AND-EQUITY> 1,950,658
<SALES> 1,726,524
<TOTAL-REVENUES> 1,726,524
<CGS> 1,435,721
<TOTAL-COSTS> 1,435,721
<OTHER-EXPENSES> 353,876
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,593
<INCOME-PRETAX> (67,666)
<INCOME-TAX> 0
<INCOME-CONTINUING> (67,666)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (67,666)
<EPS-BASIC> (0.005)
<EPS-DILUTED> (0.005)
</TABLE>
