UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the quarter period ended September 30, 1998
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For the transition period from: to
Commission file number: 0-24408
IJNT INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
InterJet Net Corporation
(Former Name)
Delaware 33-0611753
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
13405 NW Freeway, Suite 228 Houston, Texas 77095
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 462-4222
Indicate by check mark whether the registrant (1) has filed all reports
to be filed by Section 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. Yes X No
The number of shares outstanding of the registrant's common stock on
November 10, 1998 was 14,910,216.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
The following Condensed Consolidated Financial Statements of the
Company and its subsidiaries and related notes are included herein:
Condensed Consolidated Balance Sheets as of March 31, 1998 and September
30, 1998;
Condensed Consolidated Statements of Income for the three and six
months ended September 30, 1998, for the three months ended September 30, 1998
and pro-forma results ended September 30, 1997 and for the six months ended
September 30, 1998 and pro-forma results ended September 30, 1997;
Condensed Consolidated Statement of Cash Flows for the six months ended
September 30, 1998 and pro-forma as of September 30, 1997;
Notes to Condensed Consolidated Financial Statements.
<PAGE>
IJNT International, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
(Audited) (Unaudited)
March 31, September 30,
1998 1998
------------- --------------
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 63,303 $ 2,482,347
Accounts Receivable 39,912 151,024
Stock Subscription Receivable 794,325 0
Prepaid Expenses 12,108 150,832
Loan to Shareholder 0 38,246
Short-Term Receivable 0 25,336
Inventory 44,834 313,795
------------- --------------
Total Current Assets 954,482 3,161,580
Property, Plant & Equipment 975,839 1,399,043
Other Assets:
Organizational Costs 8,992 7,868
Deposits 8,907 47,347
Licenses and Other 761,475 972,852
------------- --------------
779,374 1,028,067
TOTAL ASSETS $ 2,709,695 $ 5,588,690
============= ==============
LIABILITIES & SHAREHOLDERS EQUITY Current Liabilities:
Accounts Payable $ 490,244 $ 206,507
Accrued Liabilities 46,392 63,448
Income Taxes Payable 800 800
Note Payable 35,000 0
Loans from Shareholders 13,690 4,940
Current Portion of Long-Term Debt 19,913 32,378
------------- --------------
Total Current Liabilities 606,039 308,073
Long-Term Debt 49,162 42,966
------------- --------------
Total Liabilities 655,201 351,039
Shareholders Equity:
Common Stock, $.001 par value;
Authorized 20,000,000 shares;
Issued and Outstanding 12,854,145
at March 31, 1998 and 14,910,216
at September 30, 1998 12,854 14,910
Additional Paid-in Capital 4,614,838 9,502,492
Retained Earnings (Deficit) (2,573,198) (4,279,751)
------------- --------------
Total Shareholder's Equity 2,054,494 5,237,651
------------- --------------
TOTAL LIABILITIES & EQUITY $ 2,709,695 $ 5,588,690
============= ==============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
IJNT International, Inc.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
THREE AND SIX MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
9/30/98 9/30/98
------------- --------------
<S> <C> <C>
Revenues $ 372,875 $ 544,067
Cost of Sales 64,571 144,532
------------- --------------
Gross Profit 308,304 399,535
General & Administrative Expenses:
Professional Services 335,866 475,635
Salaries - Officers 65,395 117,595
Salaries - Others 365,246 591,384
Payroll Taxes & Benefits 53,061 92,141
Office Expenses 35,659 57,819
Advertising & Marketing 109,267 213,829
Auto Expense 7,930 15,746
Travel & Entertainment 24,823 122,081
Computer Expenses 12,383 16,916
Depreciation & Amortization 57,457 98,067
Channel Lease Payments (15,605) (1,855)
Equipment Lease Payments 16,922 40,991
Postage & Delivery 10,935 21,026
Insurance 12,645 23,654
Interest Expense 1,097 1,098
Rent 36,719 72,741
Temporary Help & Outside Services 12,187 24,409
Tower Lease Payments 3,195 7,835
Telephone Expense 108,436 132,437
Taxes - Other (1,469) 2,187
------------- --------------
Total General & Administrative 1,252,149 2,125,736
Interest Income 18,569 19,649
State Income Taxes 0 0
------------- --------------
Net Income (Loss) $ (925,276) $ (1,706,552)
============= ==============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
IJNT International, Inc.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1997 and SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Pro-Forma
Three Months Three Months
Ended Ended
9/30/97 9/30/98
------------- --------------
<S> <C> <C>
Revenues $ 0 $ 372,875
Cost of Sales 5,744 64,571
------------- --------------
Gross Profit (5,744) 308,304
General & Administrative Expenses:
Professional Services 89,663 335,866
Salaries - Officers 54,175 65,395
Salaries - Others 64,175 365,246
Payroll Taxes & Benefits 9,654 53,061
Office Expenses 26,838 35,659
Advertising & Marketing 31,806 109,267
Auto Expense 5,527 7,930
Travel & Entertainment 37,563 24,823
Computer Expenses 0 12,383
Depreciation & Amortization 18,785 57,457
Channel Lease Payments 1,600 (15,605)
Equipment Lease Payments 0 16,922
Postage & Delivery 5,757 10,935
Insurance 8,224 12,645
Interest Expense 2,829 1,097
Rent 29,771 36,719
Temporary Help & Outside Services 3,406 12,187
Tower Lease Payments 1,915 3,195
Telephone Expense 20,132 108,436
Taxes - Other 1,326 (1,469)
------------- --------------
Total General & Administrative Expenses 413,146 1,252,149
Interest Income 5,308 18,569
State Income Taxes 0 0
------------- --------------
Net Income (Loss) $ (413,582) $ (925,276)
============= ==============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
IJNT International, Inc.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED SEPTEMBER 30, 1997 and SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Pro-Forma
Six Months Six Months
9/30/97 9/30/98
------------- --------------
<S> <C> <C>
Revenues $ 0 $ 544,067
Cost of Sales 5,744 144,532
------------- --------------
Gross Profit (5,744) 399,535
General & Administrative Expenses:
Professional Services 113,259 475,635
Salaries - Officers 97,925 117,595
Salaries - Others 111,091 591,384
Payroll Taxes & Benefits 20,915 92,141
Office Expenses 22,236 57,819
Advertising & Marketing 33,939 213,829
Auto Expense 19,179 15,746
Travel & Entertainment 61,799 122,081
Computer Expenses 4,059 16,916
Depreciation & Amortization 18,785 98,067
Channel Lease Payments 1,500 (1,855)
Equipment Lease Payments 0 40,991
Postage & Delivery 7,545 21,026
Insurance 7,545 23,654
Interest Expense 5,925 1,098
Rent 50,308 72,741
Temporary Help & Outside Services 11,148 24,409
Tower Lease Payments 2,915 7,835
Telephone Expense 29,453 132,437
Taxes - Other 1,326 2,187
------------- --------------
Total General & Administrative 620,852 2,125,736
Interest Income 5,307 19,649
State Income Taxes 800 0
------------- --------------
Net Income (Loss) $ (622,089) $ (1,706,552)
============= ==============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
IJNT International, Inc.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
SIX MONTHS ENDED SEPTEMBER 30, 1997 and SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Pro-Forma
Six Months Six Months
Ended Ended
9/30/97 9/30/98
------------- --------------
OPERATING ACTIVITIES
<S> <C> <C>
Net Income (Loss) $ (622,089) $ (1,706,552)
Adjustments:
Depreciation and Amortization 18,785 98,067
Expenses Paid with Common Stock 321,252 481,548
Changes in current accounts 49,143 129,782
------------- --------------
Net Cash Required by Operating Activities (232,909) (997,155)
INVESTING ACTIVITIES
Purchase of Inventory 0 (268,961)
Purchase of Fixed Assets (693,276) (325,137)
Purchase of Licenses (97,220) 0
Deposits 0 (38,440)
------------- --------------
Net Cash Required by Investing Activities (790,496) (632,538)
FINANCING ACTIVITIES
Loans 42,793 (51,117)
Repayment of Loans (4,861) (49,946)
Sale of Common Stock 1,978,716 4,149,800
------------- --------------
Net Cash Provided (Required) by Investing Activities 2,016,648 4,048,737
Increase (Decrease) in Cash and Cash Equivalents 993,243 2,419,044
Cash and Cash Equivalents at
Beginning of Period 0 63,303
------------- --------------
Cash and Cash Equivalents at
End of Period $ 993,243 $ 2,482,347
============= ==============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
IJNT INTERNATIONAL, INC.
formerly known as INTERJET NET CORPORATION
A DELAWARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED
SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1998
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principals for interim
financial information and with the instructions to Form 10-QSB and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principals for complete
financial statements. In the opinion of the Company's management, all
adjustments (consisting of normal accruals) considered necessary for a fair
presentation of these financial statements have been included.
The Company was essentially inactive prior to the acquisition of InterJet Net,
Inc., a Nevada Corporation, now known as IJNT, Inc. (See Note 2 below). This
acquisition was completed in August of 1997. Where appropriate, the Company has
used pro-forma financial information which includes the activity of IJNT, Inc.
prior to the acquisition in presenting comparative financial results.
NOTE 2: CAPITALIZATION
The Company was incorporated in the State of Delaware under the name Picometrix,
Inc. on June 11, 1992 and authorized 20,000,000 shares of $0.01 par value common
stock. On June 30, 1997 the Company effected a 2.3399365-for-1 share forward
stock split. The split increased the total outstanding shares from 579,600 to
1,356,377. On August 8, 1997 the Company issued 9,964,286 shares of post
forward-split stock to InterJet Net, Inc. in conjunction with the purchase of
all of the outstanding stock of InterJet Net, Inc. Immediately following the
acquisition of InterJet Net, Inc., the Company changed its name to InterJet Net
Corporation and conducted a private placement of 680,000 shares of its common
stock at a price of $1.95 per share. This offering was completed on August 27,
1997. This quarter the Company changed its name to IJNT International, Inc. and
InterJet Net, Inc., a wholly owned subsidiary of the Company, changed its name
to IJNT, Inc.
The Company has entered into various private placement offerings and offerings
under Regulation S of the Securities and Exchange Act of 1933. As of March 31,
1998, the Company had sold a total of 642,582 shares of its common stock in
various offerings with net proceeds to the Company totaling $1,189,846. This
fiscal year (from the period from April 1, 1998 to September 30, 1998), the
Company has sold an additional 1,360,825 shares with net proceeds of $4,060,436
resulting from such sales. Of these sales, 660,825 shares were sold in the
quarter ended September 30, 1998 with net proceeds of $1,382,143.
In the six months ended September 30, 1998, the Company has issued 131,112
shares of its common stock for services rendered to and on behalf of the
Company.
NOTE 3: RELATED PARTY TRANSACTIONS
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their business
interests. The Company has not formulated a policy for the resolution of such
conflicts.
<PAGE>
As of September 30, 1998, the Company has loaned $38,246 to the officers of the
Company and their wholly owned subsidiary. As of March 31, 1998, the Company had
borrowed $13,960 from these same officers.
NOTE 4: INCOME TAXES
The Company has available at September 30, 1998, estimated net operating loss
carryforwards of approximately $4,250,000 which may provide future tax benefits
expiring in June of 2010.
NOTE 5: WARRANTS TO PURCHASE COMMON STOCK
On August 27, 1998, a holder of warrants to purchase 512,821 shares of the
Company's common stock at $1.95 per share exercised these options. The net
proceeds to the Company were $1,000,000. These represented the only issued and
outstanding warrants or options to purchase the Company's common stock.
NOTE 6: STOCK SUBSCRIPTION RECEIVABLE
As of March 31, 1998, the Company had sold 500,000 shares of its Common Stock,
subject to receipt of the subscription price of $890,635. The final installment
was received in May of 1998. For purposes of these condensed consolidated
financial statements, it was assumed that the shares were issued as of March 31,
1998.
NOTE 7: ACQUISITIONS
Effective June 1, 1998, the Company acquired Webit of Utah, Inc. ("Webit") as a
wholly-owned subsidiary. Webit is an operating web hosting company in Salt Lake
City, Utah. The Company exchanged 20,000 shares of its common stock for all of
the outstanding stock of Webit. Also in connection with the acquisition, the
Company made certain payments of $9,000 and assumed a note in the amount of
$15,000.
Effective August 5, 1998, the Company acquired Man Rabbit House Multimedia
("MRHM") as a wholly-owned subsidiary. MRHM is a web design, web hosting and
computer programming company located in Newport Beach, California. The Company
exchanged 25,000 shares of its common stock for all of the outstanding stock of
MRHM.
On August 8, 1998, the Company acquired certain software rights and client
accounts from Cedro Group, Inc. The Company exchanged 10,288 shares of its
common stock for these rights.
The previously announced Letter of Intent to acquire Visual Numerics, Inc. has
been abandoned.
SUBSEQUENT EVENTS
See "PART II - Item 5. Other Information".
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The Company's loss for the three months ended September 30, 1998 was equal to
$925,276. The loss for the three month period ended September 30, 1997 was
prepared on a pro-forma basis reflecting the activity of InterJet Net, Inc.,
which is now a wholly-owned subsidiary of the Company which has changed its name
to IJNT, Inc. ("IJNT"). The loss for the Company on a pro-forma basis for the
three month period ended September 30, 1997 was equal to $413,582. The loss in
the current quarter was primarily attributable to the Company's Selling, General
and Administrative Expenses of which salaries, telephone, professional fees and
marketing made up the largest amount. The increased loss this quarter, compared
to the losses in the previous quarters, reflects the implementation of the
Company's aggressive growth strategy. The increased expenses also reflect the
activity of Access Communications, Inc., , Man Rabbit House Multimedia and WebIt
of Utah, Inc., which are now wholly owned subsidiaries of the Company. The
Company's aggressive growth strategy has resulted in additional expenses due to
the aforementioned acquisitions as well as increased marketing and advertising
costs.
Total salaries of $460,641 were paid or accrued for the three months ended
September 30, 1998. This equated to 34.4% of the total expenses for the quarter
which totaled $1,252,149. This salary expense is compared to $118,350 (which was
28.6% of total expenses of $413,146) incurred by the Company on a pro-forma
basis in the three months ended September 30, 1997. The Company incurred
expenses of $335,866 on professional fees, or 26.8% of total expenses for the
quarter. This includes amounts paid to attorneys, accountants, engineers, and
consultants. The Company incurred significant legal fees with respect to the
acquisition of Access Communications, Inc. This acquisition also increased
accounting and engineering fees. The Company pays several individuals as
consultants, including engineers, outside accountants, and business consultants.
There were significant costs incurred in the pursuit of the acquisition of
Visual Numerics, Inc., with which the Company decided not to continue. The total
cost advertising and marketing expenses for the quarter totaled $109,267 for the
three months ended September 30, 1998. This represented to 8.7% total expenses
for the quarter. The Company's advertising and marketing expense in the quarter
ended September 30, 1997 was equal to $31,806, or 7.6% of total expenses.
The Company produced gross revenues of $372,875 for the quarter ended September
30, 1998. Of these revenues, $94,237 or 25.2% were derived from the Company's
Houston operations (Access Communications, Inc.) and $124,814 or 33.4% were
derived from the Company's newly acquired subsidiary, Man Rabbit House
Multimedia. Revenues for Salt Lake and Beaumont were equal to $123,670 and
$23,259, or 33.2% and 6.2%, respectively. The Company anticipates generating
additional revenues from existing operations as well as new operations in the
Orange County, California market in the next quarter. Neither the Company or
IJNT, Inc. generated revenues in the quarter ended September 30, 1997. The
revenues for the Company in the last quarter, which ended on June 30, 1998, were
equal to $171,192. The revenues in the current quarter represent an increase of
118% compared to the quarter ended June 30, 1998.
The Company has current assets totaling $3,161,580 at September 30, 1998 with
total net working capital of $2,853,507. This equates to a current ratio of
approximately 10.2.
<PAGE>
PART II - OTHER INFORMATION
ITEM 5. Other Information.
Acquisition of Webit of Utah, Inc. Effective June 1, 1998, the Company
acquired Webit of Utah, Inc. ("Webit") as a wholly-owned subsidiary. Access is
an operating web hosting company in Salt Lake City, Utah. The Company exchanged
20,000 shares of its common stock for all of the outstanding stock of Webit.
Also in connection with the acquisition, the Company made certain payments of
$9,000 and assumed a note in the amount of $15,000.
Letter of Intent with Visual Numerics, Inc. In the current quarter, the
Company has decided not to pursue the acquisition of Visual Numerics, Inc. in
order to continue to acquire companies and grow within the Internet industry.
Acquisition of Man Rabbit House Multimedia. Effective August 5, 1998,
the Company acquired Man Rabbit House Multimedia ("MRHM") as a wholly-owned
subsidiary. MRHM is a web design, web hosting and computer programming company
located in Newport Beach, California. The Company exchanged 25,000 shares of its
common stock for all of the outstanding stock of MRHM.
Acquisition from Cedro Group, Inc. On August 8, 1998 the Company
acquired certain software rights and client accounts from Cedro Group, Inc. The
Company exchanged 10,288 shares of its common stock for these rights.
ITEM 6. Exhibits and Reports on Form 8-K
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.
Dated: November 16, 1998
IJNT INTERNATIONAL, INC.
s:/ Jon H. Marple
Jon H. Marple, President, Chairman,
Chief Operating Officer and
Chief Financial Officer
s:/ Mary E. Blake
Mary E. Blake, Vice President and
Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from IJNT
International, INc. (formerly InterJet Net Corporation) September 30, 1998
financial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000925739
<NAME> IJNT International, Inc.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<CASH> 2,482,347
<SECURITIES> 0
<RECEIVABLES> 151,024
<ALLOWANCES> 0
<INVENTORY> 313,795
<CURRENT-ASSETS> 3,161,580
<PP&E> 1,592,316
<DEPRECIATION> (193,273)
<TOTAL-ASSETS> 5,588,690
<CURRENT-LIABILITIES> 308,073
<BONDS> 42,966
0
0
<COMMON> 14,910
<OTHER-SE> 5,222,741
<TOTAL-LIABILITY-AND-EQUITY> 5,588,688
<SALES> 544,067
<TOTAL-REVENUES> 563,716
<CGS> 144,532
<TOTAL-COSTS> 2,270,268
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,098
<INCOME-PRETAX> (1,706,552)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,706,552)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,706,552)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
