<PAGE>
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-Q/A
-----------------------
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999
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.net, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 33-0611753
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
2030 MAIN STREET, 5TH FLOOR
IRVINE, CALIFORNIA 92614
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949) 260-8100
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required 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 registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
As of February 11, 2000 there were 20,162,822 shares of Common Stock
outstanding.
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
IJNT.net, Inc.
INDEX
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1999 (unaudited) and March 31, 1999.............. 3
Consolidated Statements of Operation for the three months and nine months ended
December 31, 1999 and December 31, 1998 (unaudited)........................................... 4
Consolidated Statements of Cash Flows for the nine months ended December 31, 1999
and December 31, 1998 (unaudited)............................................................. 5
Notes to Consolidated Financial Statements...................................................... 6
Item 2. Management's Discussion and Analysis of Consolidated Financial Condition and Results of
Operations...................................................................................... 11
Item 3. Quantitative and Qualitative Disclosure About Market Risk................................... *
PART II--OTHER INFORMATION
Item 1. Legal Proceedings........................................................................... *
Item 2. Changes In Securities and Use of Proceeds................................................... 17
Item 3. Defaults Upon Senior Securities............................................................. *
Item 4. Submission of Matters to a Vote of Security Holders......................................... *
Item 5. Other Information........................................................................... 17
Item 6. Exhibits and Reports on Form 8-K............................................................ 17
SIGNATURES................................................................................................ 18
</TABLE>
* No information provided due to inapplicability of item.
2
<PAGE>
IJNT.net, Inc.
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<CAPTION>
ASSETS
DECEMBER 31, MARCH 31,
1999 1999
------------ ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash ............................................................................................ $ 1,231 $ 903
Accounts receivable, net of allowance for doubtful accounts of $151 and $115, respectively ...... 258 176
Stock subscription receivable (Note 2) .......................................................... 8,975 --
Prepaid expenses and other current assets ....................................................... 187 387
Other receivables ............................................................................... 148 --
------------ ------------
Total current assets ..................................................................... 10,799 1,466
Fixed assets, net of accumulated depreciation of $1,291 and $615, respectively ..................... 9,067 1,564
Other assets:
Deposits ........................................................................................ 209 65
Loan to shareholder (Note 4) .................................................................... -- 80
Deferred financing costs, net of accumulated amortization of $875 ............................... 1,729 --
Licenses and other, net of accumulated amortization of $369 and $6, respectively ................ 938 1,593
------------ ------------
Total other assets ....................................................................... 2,876 1,738
------------ ------------
Total assets ............................................................................. $ 22,742 $ 4,768
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable (Note 7) ....................................................................... $ 7,646 $ 283
Accrued liabilities (Note 7) .................................................................... 1,080 5
Accrued payroll, benefits and related costs ..................................................... 440 200
Notes payable to shareholders (Note 4) .......................................................... -- 157
Line of credit (Note 7) ......................................................................... 7,361 --
Current portion of long term debt ............................................................... -- 26
------------ ------------
Total current liabilities ................................................................ 16,527 671
Long term debt ..................................................................................... -- 196
------------ ------------
Total liabilities ........................................................................ 16,527 867
------------ ------------
Shareholders' equity (Note 2):
Series A Convertible Preferred Stock, $.01 par value; authorized 1,000,000
shares; 2,335 and 2,000 issued and outstanding, liquidation preference of $2,335
and $2,000, respectively ....................................................................... -- --
Common Stock, $.001 par value; authorized 50,000,000 shares;
20,162,822 and 16,098,129 issued and outstanding, respectively ................................ 20 16
Additional paid-in capital ......................................................................... 30,435 15,084
Accumulated deficit ................................................................................ (24,240) (11,199)
------------ ------------
Total shareholders' equity ............................................................... 6,215 3,901
------------ ------------
Total liabilities and shareholders' equity ............................................... $ 22,742 $ 4,768
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
IJNT.net, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues ............................................... $ 628 $ 427 $ 2,292 $ 971
Operating expenses:
Network expenses ..................................... 957 123 1,965 267
Payroll and related expenses ......................... 2,221 602 4,274 1,403
Selling, general and administrative expenses ......... 2,706 705 5,851 1,931
Depreciation and amortization ........................ 949 75 1,346 173
------------- ------------- ------------- -------------
Total operating expenses .......................... 6,833 1,505 13,436 3,774
------------- ------------- ------------- -------------
Operating loss ......................................... (6,205) (1,078) (11,144) (2,803)
Interest income ...................................... 69 25 83 45
Interest expense, including amortization of
deferred financing costs ........................... (984) (9) (1,334) (10)
------------- ------------- ------------- -------------
Net loss ............................................... (7,120) (1,062) (12,395) (2,768)
Preferred stock dividends .............................. (51) -- (198) --
Preferred stock beneficial conversion feature
(Note 2) ............................................. -- (364) (448) (364)
------------- ------------- ------------- -------------
Net loss applicable to common shareholders ............. $ (7,171) $ (1,426) $ (13,041) $ (3,132)
============= ============= ============= =============
Net loss per share, basic and diluted .................. $ (0.40) $ (0.09) $ (0.74) $ (0.21)
============= ============= ============= =============
Weighted-average number of shares, basic and
diluted .............................................. 18,021,095 15,065,489 17,535,103 14,710,486
============= ============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
<TABLE>
IJNT.net, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED
-----------------
DECEMBER 31, DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
Cash flows used in operating activities:
Net loss .................................................................................. $ (12,395) $ (2,768)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization ......................................................... 1,346 173
Amortization of deferred financing costs .............................................. 875 --
Stock issued for services ............................................................. 1,297 542
Changes in current assets and liabilities ............................................. 7,860 273
------------- -------------
Net cash used in operating activities ..................................................... (1,017) (1,780)
------------- -------------
Cash flows used in investing activities:
Purchases of fixed assets ................................................................. (8,119) (881)
Purchase of licenses and other assets ..................................................... (108) (408)
------------- -------------
Net cash used in investing activities ..................................................... (8,227) (1,289)
------------- -------------
Cash flows provided by financing activities:
Borrowings under line of credit ........................................................... 7,361 --
Repayment of long term debt ............................................................... (222) (217)
Repayment of loans to shareholders ........................................................ (157) --
Proceeds from sale of preferred stock, net ................................................ 1,790 1,800
Proceeds from sale of common stock, net ................................................... 800 4,193
------------- -------------
Net cash provided by financing activities ................................................. 9,572 5,776
------------- -------------
Net increase in cash ........................................................................ 328 2,707
Cash at beginning of period ................................................................. 903 63
------------- -------------
Cash at end of period ....................................................................... $ 1,231 $ 2,770
============= =============
Supplemental schedule of non-cash investing and financing activities:
Issuance of common stock for asset purchase ............................................... $ 31 $ --
============= =============
Repayment of loan due from shareholder with contribution of fixed assets .................. $ 80 $ --
============= =============
Warrants issued in connection with debt financing ......................................... $ 1,944 $ --
============= =============
Other disclosures:
Cash paid during the period for interest .................................................. $ 98 $ 10
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
IJNT.net, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of IJNT.net, Inc. and
its wholly owned subsidiaries IJNT, Inc., Access Communications, Inc., Webit of
Utah, Inc., UrJet Backbone Network, Inc., Man Rabbit House Multimedia, Inc. and
Global Broadband Services, Inc. (collectively, the "Company"). All significant
inter-company transactions and balances have been eliminated.
The accompanying consolidated balance sheet at December 31, 1999, and the
consolidated statements of operations and cash flows for the three and nine
months ended December 31, 1999 and 1998 are unaudited. These statements have
been prepared on the same basis as the Company's audited consolidated financial
statements and in the opinion of management reflect all adjustments, which are
only of a normal recurring nature, necessary for a fair presentation of the
consolidated financial position and results of operations for such periods.
These unaudited consolidated financial statements should be read in conjunction
with the audited consolidated financial statements included in the Company's
Form 10-KSB/A as filed with the Securities and Exchange Commission on May 10,
2000.
Certain reclassifications have been made to the 1998 information to conform to
the 1999 presentation.
2. CAPITALIZATION AND SHAREHOLDERS' EQUITY
GENERAL MATTERS
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 IJNT.net, Inc. (formerly known as InterJet Net, Inc. and
IJNT, Inc.) in conjunction with the purchase of all of the outstanding stock of
IJNT, Inc. On November 15, 1999, an amendment to the Articles of Incorporation
was approved by the Board of Directors to increase the number of authorized
shares of common stock to 50,000,000.
PRIVATE PLACEMENTS
In a private placement during the quarter ended June 30, 1999, the Company sold
600,000 shares of common stock for prices between $2.00 and $2.50 per share and
received $800, after offering costs of $545. The shares were issued at a
discount from the prevailing market price of the Company's common stock.
On December 31, 1999, the Company entered into a common stock purchase and
subscription agreement by and between the Company and a group of private
investors for a private offering of securities (the "Offering"). The Company
received the Offering proceeds during January 2000. In the Offering, the Company
issued 2,243,750 shares of common stock at a price of $4.00 per share, for a
total purchase price of $8,975, and warrants to purchase an additional 560,938
shares of common stock. The warrants were issued to the investors in proportion
to individual investments at an exercise price of $9.88. The warrants are
immediately exercisable and expire on January 4, 2004. In the event that at any
time during the four month period commencing on the first anniversary of the
closing date, the average bid price of the Company's common stock falls below
the original sales price of $4.00 per share and remains below such price for
fifteen (15) consecutive trading days, then the Company is required to issue
additional shares to the investors in an amount necessary to make up the
difference between $4.00 per share and the average bid price per share.
The shares and warrants issued pursuant to the aforementioned private placements
were issued in reliance on certain exemptions from registration provided under
Regulations D and S and in section 4(2) of the Securities Act of 1933, as
amended.
6
<PAGE>
IJNT.net, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
2. CAPITALIZATION AND SHAREHOLDERS' EQUITY (CONTINUED)
STOCK GRANTS
In November 1999, the Company issued 10,000 shares of restricted common stock to
purchase assets from TCM Holdings, Inc., a non-affiliated firm. The assets,
valued at $31, are recorded in fixed assets on the consolidated balance sheet
and are being amortized using the straight-line method over a period of three
years.
For the three and nine months ended December 31, 1999, the Company issued 75,000
and 261,556, respectively, shares of common stock in exchange for various
professional services. The fair value of the stock issued of $400 and $1,038,
respectively, has been charged to operations. In addition, 52,500 and 77,677,
respectively, shares of common stock were issued to certain employees as
incentive grants or due to terms of employment agreements during the three and
nine months ended December 31, 1999. The corresponding fair value of the stock
of $149 and $259 has been charged to operations as compensation expense.
CONVERTIBLE PREFERRED STOCK
In December 1998, the Company entered into an agreement with private investors
(the "Investors") whereby the Investors purchased 2,000 shares of the Company's
convertible Preferred Series A Stock (the "Preferred Stock") for a gross price
of $2,000, net of commissions of $200. In May 1999, the Agreement was amended to
include an additional 2,000 shares of Preferred Stock, which netted $1,790 (net
of $210 expenses) to the Company. The Preferred Stock is convertible at a
discount of 20% below the average closing price of the Company's common stock
for the five business days preceding the conversion request.
The convertible feature of the Preferred Stock provides for a rate of conversion
that is below market value, as discussed above. Such feature is normally
characterized as a "beneficial conversion feature". Pursuant to Emerging Issues
Task Force No. 98-5 ("EITF 98-5"), the Company has determined the value of the
beneficial conversion feature of the second issuance of Preferred Stock to be
$448. The Beneficial Conversion feature for the December 1, 1998 issuance of
2,000 shares was $364. In the calculation of basic and diluted net loss per
share, such beneficial conversion features have increased the net loss
applicable to common shareholders.
A dividend of 8% per year accrues on unconverted Preferred Stock held by the
Investors. The dividend is not paid in cash but is converted into additional
shares of the Company's common stock at the time of the Preferred Stock
conversion. As of December 31, 1999, the Company has recorded accrued dividends
payable totaling $128. Dividends incurred for the three and nine months ended
December 31, 1999 were $51 and $198, respectively.
During the nine months ended December 31, 1999, 1,665 shares of Preferred Stock
were converted into 838,982 shares of common stock and $70 in related dividends
was converted into 32,728 shares of common stock, for a total of 871,710 shares
of common stock issued in connection with the Preferred Stock conversions.
3. EARNINGS PER SHARE DISCLOSURE
Basic earnings per share is computed by dividing net loss applicable to common
shareholders by the weighted average number of shares of the Company's common
stock, after giving consideration to shares subject to repurchase that are
outstanding during the period. Net loss applicable to common shareholders has
been increased for the effect of the preferred stock beneficial conversion
feature (see Note 2).
Diluted earnings per share is determined in the same manner as basic earnings
per share except that the number of shares is increased assuming exercise of
dilutive stock options and warrants using the treasury stock method. Shares
issuable upon conversion of Preferred Stock of 306,032 and 809,785,
respectively, and upon the exercise of outstanding warrants (Note 6) totaling
1,178,032 and 0 as of December 31, 1999 and 1998, respectively, have been
excluded from the computation since their effect would be antidilutive.
7
<PAGE>
IJNT.net, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
4. RELATED PARTY TRANSACTIONS
In April 1999, 50,000 shares of common stock were issued to a company owned by
J.R. Marple in exchange for frequency licenses. Mr. Marple is the son of Jon
Marple, CEO of the Company. An amount of $102 was charged to operations during
the current fiscal year for these licenses (see management's discussion and
analysis of network expenses).
At March 31, 1999, the Company owed two stockholders $157, payable within the
next twelve months without interest. This amount was fully repaid prior to June
30, 1999. In addition, the Company was owed $80 by Jon Marple, CEO and Mary
Blake, President, payable within the next twelve months without interest. These
receivables were satisfied by the transfer of property, including office
equipment and supplies, prior to June 30, 1999.
In December 1999, 25,000 shares of common stock were issued to a company owned
by J.R. Marple in exchange for web consulting services. The value of these
shares at the date of issuance was $247. In addition, as of December 31, 1999,
the Company had a note receivable of $64 from a company owned by J.R. Marple.
As of December 31, 1999, the Company had a note receivable from the Company's
Chief Technology Officer in the amount of $67.
5. INCOME TAXES
The Company has incurred losses for both financial and tax reporting purposes
for all periods presented. As a result, the Company's provision for taxes
consists solely of minimum state taxes.
The Company currently has net Federal operating loss carryforwards equal to
approximately $23,000. The Company has not recognized any of this tax benefit as
an asset due to the uncertainty of future income. The Company may be
substantially restricted in its ability to utilize these net operating losses
due to changes in ownership of the Company.
6. WARRANTS TO PURCHASE COMMON STOCK
At December 31, 1999, there were warrants to purchase shares of the Company's
common stock as shown in the table below. Additionally, and as described in Note
2 above, the outstanding Preferred Series A Stock is convertible into 306,032
shares of common stock in the Company. The weighted average exercise price of
all warrants below is $7.08 per share. All the warrants below are immediately
exercisable.
The following represents all warrants outstanding as of December 31, 1999:
DATE OF GRANT NUMBER OF SHARES EXERCISE PRICE
------------- ---------------- --------------
May 26, 1999 25,000 $ 3.24
May 26, 1999 25,000 3.24
July 16, 1999 75,000 2.50
July 30, 1999 (Note 7) 492,094 4.97
December 31, 1999 (Note 2) 560,938 9.88
---------- ---------
TOTAL 1,178,032 $ 7.08
========== =========
8
<PAGE>
IJNT.net, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
7. DEBT
On July 30, 1999, the Company entered into a Master Purchase Agreement and
secured line of credit agreement (the "Agreement") with Nortel Networks
("Nortel"), a Canadian corporation that manufactures telecommunications
equipment. The Agreement provides for aggregate borrowings totaling $39,000.
Under terms of the Agreement, Nortel will provide the Company with $7,000 in
operating capital, to be repaid from future public equity fundraising by the
Company. Interest expense on the outstanding borrowings under this operating
capital line of credit accrues monthly at a rate of 13% per annum. The operating
capital line of credit and all unpaid interest is due in full on July 30, 2000.
As of December 31, 1999, the Company had $7,361 outstanding under the operating
capital line of credit, including accrued interest of $361.
The Agreement also extends a $32,000 line of credit to the Company to purchase
goods and services from Nortel over the next two years for the build-out of the
Company's DSL network. Activation of this line of credit is contingent upon
future public equity fundraising by the Company. This equity must be recorded in
the Urjet Backbone Network (UBN) subsidiary to activate the credit line. In
anticipation of the activation of this line, accounts payable of $5,660 have
been incurred with Nortel, which will be moved to the line when it is activated.
This amount was used by the Company to purchase a Nortel DMS-500
telecommunications switch that was installed at the Company's Los Angeles
facility. When activated, this loan will have a draw period of fifteen months
from the original closing date of July 30, 1999, which expires October 30, 2000.
Interest on outstanding amounts accrues monthly during the draw period at the
rate of either LIBOR plus 4.75% or the base rate plus 3.75% per annum. No
interest was accrued during the third quarter since the funds were only
outstanding for the last two days of the quarter. After the draw period expires,
interest is payable monthly in arrears. The principal is payable over three
years in 12 equal quarterly installments beginning after the end of the draw
period.
In conjunction with the Agreement, the Company issued warrants to Nortel to
purchase 492,094 shares of the Company's common stock at a price of $4.97 per
share. These warrants were immediately exercisable and expire on July 29, 2004.
In accordance with FAS 123, these warrants were valued at $1,944, are classified
on the consolidated balance sheet as deferred financing costs and are being
amortized over twelve months. During the three and nine months ended December
31, 1999, $486 and $810, respectively, of this deferred financing cost had been
amortized and charged to interest expense.
In addition, the Company was required to pay an amount of $660 as a loan
origination fee in connection with the $32,000 line of credit with Nortel
discussed above. This fee became payable at of January 1, 2000, and has been
accrued as of July 30, 1999 on the consolidated balance sheet. The fee has been
deferred and is being amortized over the term of the loan of 51 months. During
the three and nine months ended December 31, 1999, $39 and $65, respectively, of
this deferred financing cost had been amortized and charged to interest expense.
8. SUBSEQUENT EVENT
On February 28, 2000, the Board of Directors of the Company adopted and approved
two stock option plans: the 2000 Management Equity Incentive Plan and the 2000
Equity Incentive Plan. On February 29, 2000, the Compensation Committee
recommended, and the Board of Directors approved, stock option grants to
management and employees of the Company to be effective on and as of March 30,
2000. The Board granted options to purchase an aggregate of 2,755 shares of
Common Stock to 136 persons at exercise prices ranging from $3.00 to $12.75 per
share. The exercise price was determined by the Compensation Committee based on
several factors, including length of service, the nature of each recipient's
position and each recipient's anticipated contributions to the Company's
long-term growth and profitability. Forty percent (40%) of the options vested on
March 30, 2000 and had exercise prices ranging from $3.00 per share to $12.75
per share. The remaining sixty percent (60%) of the options vest over various
periods ranging from two to four years and have exercise prices of $10.812 or
$12.75. At March 30, 2000 the closing sale price of the common stock on the OTC
Bulletin Board was $10.812 per share.
9
<PAGE>
IJNT.net, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
8. SUBSEQUENT EVENT (CONTINUED)
As a result of such option grants, the Company expects to record in the fourth
quarter of its fiscal year ended March 31, 2000, an increase to additional
paid-in capital of $7,113 and a corresponding charge to compensation expense of
$7,113 to reflect the compensatory effect of the forty (40%) vested options, in
accordance with Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees". The Company does not expect to record compensation
expense in future periods with respect to the remaining sixty (60%) of the
options granted as they ratable vest, given that the exercise prices of such
options were equal to or exceeded the market price at the date of grant.
The 2000 Management Equity Incentive Plan and 2000 Equity Incentive Plan will be
submitted for stockholder approval at the Annual Meeting of Stockholders
anticipated to be held on June 20, 2000. The Company has received irrevocable
proxies from stockholders owning more than a majority of the outstanding shares
of voting stock that such stockholders intend to vote in favor of such plans.
The following table summarizes information about stock options outstanding at
March 31, 2000:
<TABLE>
<CAPTION>
Options Outstanding Options exercisable
------------------------------------------------------------------- -----------------------------
Weighted-
Options Average Weighted- Shares Weighted-
Exercise Price Outstanding Remaining Life Average Price Exercisable Average Price
-------------- ----------- -------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
$3.00 - $5.00 890 10 years $ 3.02 890 $ 3.02
$5.01 - $10.00 62 10 years $ 8.00 62 $ 8.00
$10.01 - $12.75 1,803 10 years $ 11.21 150 $ 12.75
</TABLE>
9. CHANGES TO FINANCIAL STATEMENTS
The consolidated financial statements as of and for the nine months ended
December 31, 1999 have been restated to correct the following errors:
During the nine months ended December 31, 1999, 339,233 shares of common stock
were issued for services. The Company has recorded the value of the shares
tendered using the free-trading market price on the date of transfer as the
basis for all such issuances. Such entries resulted in additional expense of
$1,297 for the nine months ended December 31, 1999.
During November 1999, 10,000 shares of common stock were issued to an outside
party to purchase assets. This transaction has now been reflected in the
consolidated financial statements of the Company, resulting in additional
recordation of fixed assets totaling $31.
The loan origination fee of $660 and the value of the warrants of $1,944, both
related to the financing agreement with Nortel, were not previously reflected in
the consolidated financial statements. Such items have now been recorded,
resulting in an increase to liabilities and shareholders' equity, respectively.
The Company has also recorded the amortization of the loan origination fee and
the warrants, totaling $65 and $810, respectively, resulting in a charge to
interest expense.
In connection with the convertible Preferred Stock, the Company has recognized a
beneficial conversion feature in the amount of $448. In addition, the Company
has recognized a total of $198 in dividends related to the Preferred Stock.
The Company has restated revenue to comply with SEC guidelines for accounting
issues related to Internet operations to the net method for revenues related to
the Fair Auction subsidiary. This change resulted in a $459 decrease to revenue
but had no impact on operations.
10
<PAGE>
IJNT.net, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
IN ADDITION TO HISTORICAL INFORMATION, MANAGEMENT'S DISCUSSION AND ANALYSIS
INCLUDES CERTAIN FORWARD-LOOKING STATEMENTS, INCLUDING, BUT NOT LIMITED TO,
THOSE RELATED TO THE GROWTH AND STRATEGIES, FUTURE OPERATING RESULTS AND
FINANCIAL POSITION AS WELL AS ECONOMIC AND MARKET EVENTS AND TRENDS OF THE
COMPANY. ALL FORWARD-LOOKING STATEMENTS MADE BY THE COMPANY, INCLUDING SUCH
STATEMENTS HEREIN, INCLUDE MATERIAL RISKS AND UNCERTAINTIES AND ARE SUBJECT TO
CHANGE BASED ON FACTORS BEYOND THE CONTROL OF THE COMPANY. ACCORDINGLY, THE
COMPANY'S ACTUAL RESULTS AND FINANCIAL POSITION COULD DIFFER MATERIALLY FROM
THOSE EXPRESSED OR IMPLIED IN ANY FORWARD-LOOKING STATEMENT AS A RESULT OF
VARIOUS FACTORS, INCLUDING WITHOUT LIMITATION FACTORS DESCRIBED IN THE COMPANY'S
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION REGARDING RISKS AFFECTING
THE COMPANY'S FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.
OVERVIEW
The majority of the Company's revenues were derived from its wireless and
dial-up ISP and international ISP operations under the name of "UrJet Internet"
for the nine months ending December 31, 1999 and 1998. The Company currently
operates five wireless systems: Salt Lake City, Utah (launched in January 1998);
Beaumont, Texas (launched in March 1998 - currently this system is only offering
dial-up services); Houston, Texas (a dial-up ISP was acquired in January of 1998
and wireless services commenced after the end of the March 31, 1999 fiscal
year); San Francisco Bay Area, California (acquired in January 1999); and
Irvine/Orange County, California (wireless services commenced after the end of
the March 31, 1999 fiscal year).
UrJet Backbone Network ("UBN") was formed in the last calendar quarter of 1998
to deploy fiber backbone connectivity and a variety of telecommunications
carrier services to business and residential customers. Once fully operational,
UBN will compete with local telephone companies to deliver various
telecommunication services to customers. Competitive Local Exchange Carrier
(CLEC) registration has been obtained in Texas and California as of February
2000. UBN installed a Nortel DMS 500 switch in its Los Angeles facility as of
December 31, 1999 and customer trials began in January 2000. Currently, UBN
provides telecommunications services to a limited customer base through its
fiber backbone in such markets as Los Angeles, San Francisco, and Orange County,
California. UBN also has rights to fiber routes and co-location/interconnection
facilities in 13 major cities across the United States.
The Man Rabbit House Multimedia ("MRHM") subsidiary provides high-end web site
design and development for a diverse range of clients. In April 1999, the
Company acquired rights to the Fair Auction web site, whereby merchandise is
sold to customers via auction-style bidding. The Company records revenue based
on the income received from purchase of items on the website net of the
contractual amount remitted to the seller.
RESULTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THE THREE MONTHS ENDED DECEMBER
31, 1998
Total revenues increased 47% or $0.2 million to $0.6 million for the three
months ending December 31, 1999 compared to revenues of $0.4 million for the
three months ending December 31, 1998. Revenue contributed by wireless and
dialup services was 87% of the total revenue for the three months ended December
31, 1999 compared to 70% of total revenue for the previous year. The increase in
wireless and dialup as a percentage of total revenue is due to revenue
adjustments that occurred in the MRHM subsidiary, as discussed in the following
paragraph.
Revenue contributed by the MRHM subsidiary was 10% for the current quarter,
compared to 30% of total revenue for the quarter ended December 31, 1998. During
the month of December 1999, the Company reduced revenue contributed by the MRHM
subsidiary by $0.3 million due to the reconciliation of accounts receivable
11
<PAGE>
IJNT.net, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
resulting from a conversion from a modified cash basis of accounting to the
accrual basis. This change was necessary to be consistent with all subsidiaries
of the Company. Prior to this adjustment, MRHM revenue comprised 41% of the
total revenue for the quarter.
The Company incurred network expenses totaling $1.0 million for the three months
ended December 31, 1999 compared to $0.1 million for the three months ended
December 31, 1998, an increase of 679% or $0.9 million. UBN generated $0.7
million of this increase, comprised of significant network development costs
incurred to install and test telecommunications equipment. Circuit line costs
and co-location fees have been incurred for the backbone network in preparation
for offering service to customers. These activities were not taking place in the
prior year. It is anticipated that total network expenses will continue to
increase for the foreseeable future, although the Company plans to generate
additional revenue to offset such costs.
The Company incurred payroll and related expenses of $2.2 million for the three
months ended December 31, 1999 compared to $0.6 million for the three months
ended December 31, 1998, an increase of 269% or $1.6 million. The increase is
due to growth in headcount in all areas of the Company to support its growth
objectives. The increase in headcount has occurred primarily in the Urjet
Backbone Network subsidiary to support the creation of the network as described
in the above paragraph. In addition, a total of 52,500 shares of the Company's
common stock have been issued to various employees as incentive grants or due to
terms of employment agreements. The total fair value of the stock of $0.1
million has been charged to operations as compensation expense.
The Company incurred total selling, general and administrative expenses ("SG&A")
of $2.7 million for the three months ended December 31, 1999, compared with $0.7
million for the three months ended December 31, 1998, an increase of $2.0
million or 284%. The increase is due to continued expansion of the sales and
marketing efforts, professional fees and the increases in operating costs of the
Company's nine offices throughout the United States. Also, during the three
months ended December 31, 1999, the Company issued 75,000 shares of its common
stock in exchange for marketing and technological professional services. The
fair value of the shares issued of $0.4 million has been charged to operations.
In addition, during December 1999, the Company recognized $0.2 million in costs
relating to the acquisition of Access Communications, which took place in the
prior fiscal year, representing a write-down of various accounts receivable to
their net realizable value.
The Company incurred depreciation and amortization costs of $0.9 million for the
three months ended December 31, 1999 compared to $0.1 million for the
corresponding period of the previous year, an increase of $0.8 million or 1173%.
The increase is due to the large amounts of fixed assets placed into service
during fiscal 1999, particularly for computer equipment and network equipment.
Although the network in Los Angeles is not generating revenue yet, it is
functional for testing, so the Company began depreciation during the quarter
ended December 31, 1999. In addition, the Company recorded additional
amortization of frequency licenses acquired from subsidiaries due to impairment
of carrying value in the amount of $0.5 million during the three months ended
December 31, 1999.
The Company incurred interest expense of $1.0 million in the three months ended
December 31, 1999. Of this amount, $0.8 million was incurred related to the
agreement with Nortel Networks, comprised of $0.3 million in actual interest and
$0.5 in amortization of deferred financing costs. See further discussion of this
agreement in the Liquidity section and in Note 7 to the unaudited Consolidated
Financial Statements.
The Company incurred a net loss of $7.1 million for the three months ended
December 31, 1999, compared to a net loss of $1.1 million for the three months
ended December 31, 1998. The Company plans to continue to increase revenues and
gross profit in the upcoming fiscal year while controlling the growth of SG&A
expenses. The Company does not anticipate generating net income in the near
future, although a decrease in the net loss is expected.
12
<PAGE>
IJNT.net, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
NINE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THE NINE MONTHS ENDED DECEMBER
31, 1998
Total revenues increased 136% or $1.3 million to $2.3 million for the nine
months ended December 31, 1999 compared to revenues of $1.0 million for the nine
months ended December 31, 1998. Revenue contributed by wireless and dialup
services was 73% of the total revenue for the both the nine months ended
December 31, 1999 and December 31, 1998. The increase in overall revenue was a
result of the Company's expansion of its existing wireless and dialup markets
and the launch of additional markets in northern California and Irvine,
California.
Revenue contributed by the MRHM subsidiary was 25% of the consolidated revenue
for the nine months ended December 31, 1999 (after an adjustment to revenue
discussed below), compared to 26% of total revenue for the nine months ended
December 31, 1998. During the month of December, 1999 the Company reduced
revenue contributed by the MRHM subsidiary by $0.3 million due to the
reconciliation of accounts receivable resulting from a conversion from a
modified cash basis of accounting to the accrual basis. This change was
necessary to be consistent with all subsidiaries of the Company. Prior to this
adjustment, MRHM revenue comprised 34% of the total revenue for the nine months.
The Company incurred network expenses totaling $2.0 million for the nine months
ended December 31, 1999 compared to $0.3 million for the nine months ended
December 31, 1998, an increase of 635% or $1.7 million. The operations of UBN
generated $1.2 million of this increase, comprised of significant network
development costs incurred to install and test telecommunications equipment.
Circuit line costs and co-location fees have been incurred for the backbone
network in preparation of offering service to customers. These activities were
not taking place in the prior year. In addition, included in the 1999 figure is
$0.1 million in frequency licenses that were purchased from a related party with
50,000 shares of the Company's common stock. It is anticipated that total
network expenses will continue to increase for the foreseeable future, although
the Company plans to generate additional revenue to offset such costs.
The Company incurred payroll and related expenses of $4.3 million for the three
months ended December 31, 1999 compared to $1.4 million for the three months
ended December 31, 1998, an increase of 205% or $2.9 million. The increase is
due to growth in headcount in all areas of the Company to support its growth
objectives. The increase in headcount has occurred primarily in the UBN
subsidiary to support the creation of the network as described in the above
paragraph. In addition, 77,677 shares of the Company's common stock were issued
to various employees as incentives grants or due to terms of employment
agreements. The total fair value of the stock of $0.3 million has been charged
to operations as compensation expense.
The Company incurred total selling, general and administrative expenses ("SG&A")
of $5.9 million for the nine months ended December 31, 1999, compared with $1.9
million for the nine months ended December 31, 1998, an increase of 203% or $4.0
million. The increase is due to continued expansion of the sales and marketing
efforts, professional fees and the increases in operating costs of the Company's
nine offices throughout the United States. Also, during the nine months ended
December 31, 1999, the Company issued 211,556 shares of its common stock in
exchange for financial, legal, marketing and technological professional
services. The fair value of the shares issued of $1.0 million has been charged
to operations. In addition, during December 1999, the Company recognized $0.2
million in costs relating to the acquisition of Access Communications, which
took place in the prior fiscal year, representing a write-down of various
accounts receivable to their net realizable values.
The Company incurred depreciation and amortization costs of $1.3 million for the
nine months ended December 31, 1999 compared to $0.2 million for the
corresponding period of the previous year, an increase of 680% or $1.1 million.
The increase is due to the large amounts of fixed assets placed into service
during 1999, particularly for computer equipment and network equipment. Although
the network in Los Angeles is not yet generating revenue, it is functional for
testing, so the Company began depreciation during the quarter ended December 31,
1999. In addition, the Company recorded additional amortization of frequency
licenses acquired from subsidiaries due to impairment of carrying value in the
amount of $0.5 million during the nine months ended December 31, 1999.
13
<PAGE>
IJNT.net, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Company incurred interest expense of $1.3 million in the nine months ended
December 31, 1999. Of this amount, $1.2 million was related to the agreement
with Nortel Networks, comprised of $0.3 million in actual interest expense and
$0.9 in amortization of deferred financing costs. See further discussion of this
agreement in the Liquidity and Capital Resources section below.
The Company currently has net Federal operating loss carryforwards equal to
approximately $23.0 million. The Company has not recognized any of this tax
benefit as an asset due to the uncertainty of future income. The Company may be
substantially restricted in its ability to utilize these net operating losses
due to changes in ownership of the Company.
The Company incurred a net loss of $12.4 million for the nine months ended
December 31, 1999, compared to a net loss of $2.8 million for the nine months
ended December 31, 1998. The Company plans to continue to increase revenues and
gross profit in the upcoming fiscal year while controlling the growth of SG&A
expenses. The Company does not anticipate generating net income in the near
future, although a decrease in the net loss is expected.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities was $1.0 million for the nine months ended
December 31, 1999 compared to $1.5 million for the nine months ended December
31, 1998. Cash was impacted primarily by the Company's operating activities for
the nine months ended December 1999. Included in accounts payable at December
31, 1999 was $5.7 million owed to Nortel, see discussion below. Included in the
operating activities was $1.3 million in stock value that was issued for
services, primarily technical and marketing professional services.
Cash used for purchases of fixed assets was $8.1 million for the nine months
ended December 31, 1999 and $0.9 million for the nine months ended December 31,
1998. The expenditures during 1999 were primarily associated with the build-out
of the UBN DSL network as discussed below.
FINANCING AGREEMENT
On July 30, 1999, the Company entered into a Master Purchase Agreement and
secured line of credit agreement (the "Agreement") with Nortel Networks
("Nortel"), a Canadian corporation that manufactures telecommunications
equipment. The Agreement provides for aggregate borrowings totaling $39.0
million. Under terms of the Agreement, Nortel will provide the Company with $7.0
million in operating capital, to be repaid from future public equity fundraising
by the Company. Interest expense on the outstanding borrowings under this
operating capital line of credit accrues monthly at a rate of 13% per annum. The
operating capital line of credit and all unpaid interest is due in full on July
30, 2000. As of December 31, 1999, the Company had $7.3 million outstanding
under the operating capital line of credit, including accrued interest of $0.3
million.
The Agreement also extends a $32.0 million line of credit to the Company to
purchase goods and services from Nortel over the next two years for the
build-out of the Company's DSL network. Activation of this line of credit is
contingent upon future public equity fundraising by the Company. This equity
must be recorded in the Urjet Backbone Network (UBN) subsidiary to activate the
credit line. In anticipation of the activation of this line, accounts payable of
$5.7 million have been incurred with Nortel, which will be moved to the line
when it is activated. This amount was used by the Company to purchase a Nortel
DMS-500 telecommunications switch that was installed at the Company's Los
Angeles facility. When activated, this loan will have a draw period of fifteen
months from the original closing date of July 30, 1999, which expires October
30, 2000. Interest on outstanding amounts accrues monthly during the draw period
at the rate of either LIBOR plus 4.75% or the base rate plus 3.75% per annum. No
interest was accrued during the third quarter since the funds were only
outstanding for the last two days of the quarter. After the draw period expires,
interest is payable monthly in arrears. The principal is payable over three
years in 12 equal quarterly installments beginning after the end of the draw
period.
14
<PAGE>
IJNT.net, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
In conjunction with the Agreement, the Company issued warrants to Nortel to
purchase 492,094 shares of the Company's common stock at a price of $4.97 per
share. These warrants were immediately exercisable and expire on July 29, 2004.
In accordance with FAS 123, these warrants were valued at $1.9 million, are
classified on the consolidated balance sheet as deferred financing costs and are
being amortized over twelve months. During the three and nine months ended
December 31, 1999, $0.5 and $0.8, respectively, of this deferred financing cost
had been amortized and charged to interest expense.
In addition, the Company was required to pay an amount of $0.7 million as a loan
origination fee in connection with the $32.0 million line of credit with Nortel
discussed above. This fee became payable at of January 1, 2000, and has been
accrued as of July 30, 1999 on the consolidated balance sheet. The fee has been
deferred and is being amortized over the term of the loan of 51 months. During
the three and nine months ended December 31, 1999, $39,000 and $0.1 million,
respectively, of this deferred financing cost had been amortized and charged to
interest expense.
CONVERTIBLE PREFERRED STOCK
In December 1998, the Company entered into an agreement with private investors
(the "Investors") whereby the Investors purchased 2,000 shares of the Company's
convertible Preferred Series A Stock (the "Preferred Stock") for $2.0 million,
net of commissions of $0.2 million. In May 1999, the Agreement was amended to
include an additional 2,000 shares of Preferred Stock, which netted $1.8 million
(net of $0.2 million expenses) to the Company. The Preferred Stock is
convertible at a discount of 20% below the average closing price of the
Company's common stock for the five business days preceding the conversion
request.
The convertible feature of the Preferred Stock provides for a rate of conversion
that is below market value, as discussed above. Such feature is normally
characterized as a "beneficial conversion feature". Pursuant to Emerging Issues
Task Force No. 98-5 ("EITF 98-5"), the Company has determined the value of the
beneficial conversion feature of the second issuance of Preferred Stock to be
$0.4 million. In the calculation of basic and diluted net loss per share, such
beneficial conversion feature has increased the net loss applicable to common
shareholders.
A dividend of 8% per year accrues on unconverted Preferred Stock held by the
Investors. The dividend is not paid in cash but is converted into additional
shares of the Company's common stock at the time of the Preferred Stock
conversion. As of December 31, 1999, the Company has recorded accrued dividends
payable totaling $0.1 million. During the nine months ended December 31, 1999,
1,665 shares of Preferred Stock were converted into 838,982 shares of common
stock and $0.1 million in related dividends was converted into 32,728 shares of
common stock, for a total of 871,710 shares of common stock issued in connection
with the Preferred Stock conversions.
PRIVATE PLACEMENTS
In a private placement during the quarter ended June 30, 1999, the Company sold
600,000 shares of Common Stock for prices between $2.00 and $2.50 per share and
received $0.8 million, after offering costs of $0.5 million. The shares were
issued at a discount from the prevailing market price of the Company's common
stock.
On December 31, 1999, the Company entered into a common stock purchase and
subscription agreement by and between the Company and a group of private
investors for a private offering of securities (the "Offering"). The Company
received the Offering proceeds during January 2000. In the Offering, the Company
issued 2,243,750 shares of common stock at a price of $4.00 per share, for a
total purchase price of $9.0 million, and warrants to purchase an additional
560,938 shares of common stock. The warrants were issued to the investors in
proportion to individual investments at an exercise price of $9.88. The warrants
are immediately exercisable and expire on January 4, 2004. In the event that at
any time during the four month period commencing on the first anniversary of the
closing date, the average bid price of the Company's common stock falls below
the original sales price of $4.00 per share and remains below such price for
fifteen (15) consecutive trading days, then the Company is required to issue
additional shares to the investors in an amount necessary to make up the
difference between $4.00 per share and the average bid price per share.
15
<PAGE>
IJNT.net, Inc.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
YEAR 2000 ISSUES
Many computer systems and other equipment with embedded chips or processors use
only two digits to represent the year and may be unable to process accurately
certain data before, during or after the Year 2000. Consequently, business and
governmental entities are at risk for possible miscalculations or systems
failures causing disruptions in their business operation. Furthermore, the Year
2000 is a leap year, which may present additional issues for computer systems
and other equipment with embedded chips or processors.
The Company completed an extensive Year 2000 preparation program during 1999,
with concentrated amounts of testing in the last calendar quarter of 1999. The
Company focused on nine critical areas: 1) provisioning, or delivery of services
to customers, 2) maintenance, or sustaining services to customers and 3) network
surveillance, or monitoring of services provided to customers. In each of these
areas, the Company extensively tested its operating systems and network
equipment, including but not limited to, routers, switches, all interfaces,
machine protocols, and routing tables. No system weaknesses were revealed
through testing. The total costs to address the Year 2000 issues approximated
$0.4 million, which were expensed as incurred.
In addition, the Company identified and contacted its material vendors and
suppliers and formulated a system to understand such material third parties'
ability to continue providing services and products after the Year 2000.
No vendor or supplier weaknesses were detected.
Following the change of the calendar year, the Company experienced no business
or service disruptions associated with Year 2000 computer equipment issues or
issues related to suppliers and vendors.
16
<PAGE>
IJNT.net, Inc.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On November 15, 1999 one resolution was adopted by consent of the majority
shareholders of IJNT.NET, Inc, (the "Company"), acting pursuant to Section 228
of the General Corporation Law of the State of Delaware. Pursuant to the
resolution the Company will file an amendment to its Certificate of
Incorporation that will increase the number of authorized shares of common
stock, $.001 par value, from 20,000,000 to 50,000,000 shares.
ITEM 5. OTHER INFORMATION.
On December 31, 1999 the Company entered into a Common Stock Purchase and
Subscription Agreement by and between IJNT.net, Inc. and a group of private
investors for a private offering of securities on January 11, 2000. In the
offering the Company issued 2,243,750 shares of common stock at a price of $4.00
per share, for a total purchase price of $9.0 million, and warrants to purchase
an additional 560,938 shares of common stock.
The shares and warrants were issued in reliance on the exemption registration
provided under Regulation D and in section 4(2) of the Securities Act of 1933,
as amended.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(1) Exhibits:
27.1 Financial Data Schedule
(2) Reports on Form 8-K:
No reports on Form 8-K were filed in the fiscal quarter ended
December 31, 1999.
17
<PAGE>
IJNT.net, Inc.
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: May 5, 2000
IJNT.net, Inc.
---------------------------------------
Jon H. Marple, Chief Executive Officer
and Chairman of the Board
---------------------------------------
Mary E. Blake, President, Secretary and
Vice Chairman of the Board
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from IJNT.net, Inc. December 31, 1999 financial statements and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> MAR-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,231
<SECURITIES> 0
<RECEIVABLES> 258
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,799
<PP&E> 10,358
<DEPRECIATION> (1,291)
<TOTAL-ASSETS> 22,742
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0
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<COMMON> 20
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<TOTAL-LIABILITY-AND-EQUITY> 22,742
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<INCOME-PRETAX> (12,395)
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