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 quarterly period ended: June 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
INTERJET NET CORPORATION
(Exact name of small business issuer as specified in its charter)
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
August 10, 1998 was 13,624,282.
<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 Sheet as of June 30, 1998;
Condensed Consolidated Statements of Income for the three months ended
June 30, 1998 and June 30, 1997 presented on a pro-forma basis reflecting the
acquisition of InterJet Net, Inc.;
Condensed Consolidated Statement of Cash Flows for the three months
ended June 30, 1998 and June 30, 1997 presented on a pro-forma basis reflecting
the acquisition of InterJet Net, Inc.;
Notes to Condensed Consolidated Financial Statements.
<PAGE>
INTERJET NET CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
Current Assets
<S> <C>
Cash $ 443,761
Accounts Receivable 39,447
Stock Subscription Receivable 975,000
Prepaid Expenses 4,757
Loan to Shareholder 21,063
Inventory 210,511
-------------
Total Current Assets 1,694,539
Property, Plant, and Equipment 966,297
Other Assets
Organizational Costs 8,430
Deposits 16,258
Licenses and Other 761,474
-------------
786,162
-------------
TOTAL ASSETS $ 3,446,998
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 364,291
Accrued Liabilities 44,706
Income Taxes Payable 800
Note Payable 0
Loans from Shareholders 4,940
Current Portion of Long-term Debt 18,319
-------------
Total Current Liabilities 433,056
Long-Term Debt 44,622
-------------
Total Liabilities 477,678
Stockholders' Equity
Common stock, $.001 par value:
Authorized 200,000,000 shares;
Issued and Outstanding 13,504,282 13,504
Additional Paid-in Capital 6,310,295
Retained Earnings (Deficit) (3,354,479)
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,446,998
=============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
INTERJET NET CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Revenues $ 179,851 $ 0
Cost of Sales 97,270 0
------------- -------------
Gross Profit 82,581 0
General and Administrative Expenses
Professional Services 142,537 23,597
Salaries - Officers 52,200 43,750
Salaries - Others 226,139 46,915
Payroll Taxes & Benefits 26,860 2,405
Office Expenses 19,193 7,520
Advertising & Marketing 105,253 115
Auto Expenses 7,816 13,653
Travel & Entertainment 96,730 24,236
Computer Expenses 9,067 1,597
Depreciation & Amortization 40,609 0
Channel Lease Payments 13,750 0
Equipment Lease Payments 11,291 0
Postage & Delivery 10,848 1,788
Insurance 23,227 8,177
Interest Expense 7 3,096
Rent 36,020 20,538
Temporary Help & Outside Services 11,107 0
Tower Lease Payments 4,640 1,000
Telephone Expenses 24,002 9,321
Taxes - Other 3,656 0
------------- -------------
Total General and Administrative Expenses 864,942 207,708
Interest Income 1,080 0
State Income Taxes 0 (800)
------------- -------------
NET INCOME (LOSS) $ (781,281) $ (208,508)
============= =============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
INTERJET NET CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Three Months Ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------- -------------
OPERATING ACTIVITIES
<S> <C> <C>
Net Income (Loss) $ (781,281) $ (208,508)
Adjustments:
Depreciation and Amortization 40,609 0
Expenses Paid with Common Stock 88,948 174,230
Changes in Current Accounts (162,564) (237,229)
------------- -------------
Net Cash Required by Operating Activities (814,288) (271,507)
INVESTING ACTIVITIES
Purchase of Inventory (165,677) (128,688)
Purchase of Fixed Assets (104,407) (322,751)
Purchase of Licenses 0 (745,183)
Licenses Above Paid for in Common Stock 0 549,000
------------- -------------
Net Cash Required by Investing Activities (270,084) (647,622)
FINANCING ACTIVITIES
Loans (4,250) 0
Repayment of Loans (17,540) 0
Sale of Common Stock 1,486,620 1,326,000
------------- -------------
Net Cash Provided by Financing Activities 1,464,830 1,326,000
------------- -------------
Increase (Decrease) in Cash and Cash Equivalents 380,458 406,871
CASH AND CASH EQUIVALENTS
Beginning of Period $ 63,303 $ 0
------------- -------------
End of Period $ 443,761 $ 406,871
============= =============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
INTERJET NET CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
InterJet Net Corporation and its wholly-owned subsidiaries InterJet Net, Inc.
Access Communication, Inc., and Webit of Utah, Inc., have been prepared in
accordance with generally accepted accounting principals for interim financial
information and with the instructions to Form 10-Q 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 (See Note 2 below). As such, comparable financial
statements have been presented on a pro-forma basis using only the financial
numbers for InterJet Net, Inc. for the period ending June 30, 1997.
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 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.
The Company has entered into various private placement offerings and offerings
under Regulation S of the Securities and Exchange Act of 1933. To date these
offerings have been for a total of 1,200,000 shares of common stock with the
Company receiving net proceeds of $3,177,284.
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.
NOTE 4: INCOME TAXES
The Company has available at December 31, 1997, net operating loss carryforwards
of approximately $2,500,000 which may provide future tax benefits expiring in
June of 2010.
NOTE 5: WARRANTS TO PURCHASE COMMON STOCK
At June 30, 1998, there are outstanding 512,821 warrants to purchase 512,821
shares of common stock at $1.95 per share. These warrants expire on August 27,
1998. The Company anticipates the party holding these warrants will exercise its
warrant to purchase these shares prior to the expiration of the warrants.
NOTE 6: STOCK SUBSCRIPTION RECEIVABLE
The Company sold 600,000 shares of its Common Stock on June 3, 1998, subject to
receipt of the subscription price of $1,486,620. The final installment was
received on July 27, 1998. For purposes of these condensed consolidated
financial statements, it is assumed that the shares were issued on June 3, 1998.
NOTE 7: 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 June 30, 1998 was equal to
$781,281. The loss for the three month period ended June 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. The loss for InterJet Net, Inc. for
the period ended June 30, 1997 was equal to $208,508. During this period
InterJet Net, Inc. was in a development stage. The loss for the current quarter
was primarily attributable to the Company's Selling, General and Administrative
Expenses of which salaries, travel, 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., a wholly owned subsidiary of the Company which operates as
an Internet service provider in Houston, Texas.
Total salaries of $278,339 were paid or accrued for the three months ended June
30, 1998. This equated to 32.2% of the total expenses for the quarter which
totaled $864,942. This salary expense is compared to $90,665 (which was 43.7% of
total expenses of $207,708) incurred by InterJet Net, Inc. in the three months
ended June 30, 1997. Travel and related costs equaled $96,730 for the quarter,
or approximately 11.2% of total expenses. The Company incurred expenses of
$142,537 on professional fees, or 16.5% 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. The total cost
advertising and marketing expenses for the quarter totaled $105,253 for the
three months ended June 30, 1998. This represented to 12.2% total expenses for
the quarter.
The Company produced gross revenues of $179,851 for the quarter ended June 30,
1998. Of these revenues, $117,955 were derived from the Company's Houston
operations (Access Communications, Inc.). This represents 65.6% of total
revenues for the quarter. Revenues for Salt Lake and Beaumont were equal to
$54,801 and $7,095, or 30.5% and 3.9%, 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 InterJet Net, Inc. generated revenues in the quarter ended June
30, 1997.
The Company has current assets totaling $1,694,539 at June 30, 1998 with total
net working capital of $1,261,483. This equates to a current ratio of
approximately 3.91.
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. 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.
Letter of Intent with Visual Numerics, Inc. Pursuant to a Letter of
Intent dated June 15, 1998, the Company has agreed to acquire Visual Numerics,
Inc. ("VNI"). The terms of the acquisition include the Company issuing 2,200,000
shares of its common stock in exchange for all of the outstanding stock in VNI.
The Company would assume substantial liabilities of VNI in additional
consideration. The Company is currently involved in due diligence on VNI.
VNI was incorporated in 1970 under the name International Mathematical and
Statistical Libraries, Inc. VNI is one of the world's leading and most respected
software providers of computational algorithm libraries and visual data, used by
scientists, researchers, engineers and information technology professionals, to
perform complex numerical and computational functions used in computer
applications. Its client list includes more than 500,000 business and technical
professionals from 65 countries around the world. Four hundred of the Fortune
1000 companies are clients, including GE, Hewlett-Packard, Ford, BMW, Lockheed
Martin, AT&T, Harvard, MIT, Swiss Bank, Motorola, McDonnell Douglas, Chevron,
etc.
With headquarters in Houston, VNI is privately held with offices in France,
Germany, Japan, Taiwan, Korea, Mexico, the United Kingdom and Boulder, Colorado.
The Company grossed $23 million in net sales in the year ended December 31,
1997.
<PAGE>
The Company believes that in offering its various Internet services to the
existing client base of VNI, that it will be able to substantially increase its
revenues.
ITEM 6. Exhibits and Reports on Form 8-K
Reports of Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Issuer has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 18, 1998
INTERJET NET CORPORATION
/s/
Jon H. Marple, President, Chairman, and
Chief Financial Officer
/s/
Mary E. Blake, Vice President and Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from InterJet Net Corporation March 31, 1998 financial
statements and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000925739
<NAME> InterJet Net Corpoation
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 443,761
<SECURITIES> 0
<RECEIVABLES> 39,447
<ALLOWANCES> 0
<INVENTORY> 210,511
<CURRENT-ASSETS> 1,694,539
<PP&E> 1,103,226
<DEPRECIATION> 136,929
<TOTAL-ASSETS> 3,446,998
<CURRENT-LIABILITIES> 433,056
<BONDS> 44,622
0
0
<COMMON> 13,504
<OTHER-SE> 2,955,816
<TOTAL-LIABILITY-AND-EQUITY> 3,446,998
<SALES> 179,851
<TOTAL-REVENUES> 180,931
<CGS> 97,270
<TOTAL-COSTS> 864,942
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7
<INCOME-PRETAX> (781,281)
<INCOME-TAX> 0
<INCOME-CONTINUING> (781,281)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (781,281)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
