U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________
COMMISSION FILE NUMBER: 0-20259
INTERNET BUSINESS'S INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Nevada 33-0845463
(State or jurisdiction of incorporation ( I.R.S. Employer
or organization) Identification No.)
4634 South Maryland Parkway, Suite 101, Las Vegas, Nevada 89119
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (702) 968-0008
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
stock, $.001 par value
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 the Registrant was required to file such reports),
and (2) been subject to such filing requirements for the past 90 days.
Yes X No .
As of September 30, 2001, the Registrant had 282,736,029 shares
of common stock issued and outstanding.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2001 AND JUNE 30, 2001 3
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 23
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 26
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 26
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 26
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 27
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 27
ITEM 5. OTHER INFORMATION 27
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 27
SIGNATURE 28
PART I.
ITEM 1. FINANCIAL STATEMENTS.
INTERNET BUSINESS'S INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, June 30,
2001 2001
Assets
Cash and cash equivalents $ 243,893 $ 258,019
Accounts receivable, net 221,555 200,968
Inventories 258,700 166,307
Mortgage notes held for sale 5,914,171 6,929,724
Prepaid expenses and other 99,073 106,092
Total current assets 6,737,972 7,661,110
Property and equipment, net 2,010,806 1,869,761
Intangible assets, net 2,434,408 2,543,697
$ 11,182,606 $12,074,588
Liabilities and Stockholders' Equity
Accounts payable $ 573,062 $ 559,292
Accrued liabilities 114,964 40,963
Revolving line of credit 5,214,595 6,230,678
Current portion of long-term debt 10,205 14,048
Deferred revenues 38,444 56,966
Other current liabilities 0 0
Total current liabilities 5,951,270 6,901,947
Long-term debt 323,520 1,168,453
Stockholders' equity:
Preferred stock, par value $100.00 per share;
1,000,000 shares Authorized: There are no issued
and outstanding. as of this date. 0 0
Common stock, par value $0.01 per share;
349,000,000 shares authorized; 282,736,029 shares
issued and outstanding at September 30, 2001 and
June 30, 2001 2,827,360 2,672,360
Additional paid-in capital 3,669,490 3,669,490
Accumulated deficit (1,589,034) (2,337,662)
Total stockholders' equity 4,907,816 4,001,188
Total liabilities and stockholders' equity 11,182,606 12,074,588
The accompanying notes are an integral part of these financial statements
INTERNET BUSINESS'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30 September 30
2001 2000
Revenues $ 30,537,126 $ 6,899,937
Cost and expenses:
Cost of revenues 28,558,597 6,064,866
Interest expense 0 2,726
Selling, general and administration 1,618,814 1,837,044
Depreciation and amortization 243,697 242,159
Total costs and expenses 30,421,108 8,146,795
(Loss) income from operations 116,018 (1,246,858)
Other income (expense):
Other income or (expense) 9,156 308,412
Interest income 0 61,142
Other expenses 648 (4,241)
Total other income, net 8,508 365,313
Income (loss) before minority interest
Minority interest in loss of subsidiaries 0 (19,658)
Net (loss) income 124,526 (861,887)
Net loss (income) per common share Nil Nil
Weighted average number of common shares
Outstanding 277,569,362 189,571,337
The accompanying notes are an integral part of these financial statements
INTERNET BUSINESS'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30 September 30
2001 2000
Cash Flows From Operating Activities:
Net (loss) income $ 124,526 $ (861,887)
Adjustments to reconcile net (loss) income
to net cash (used in) provided by operating
activities:
Depreciation and amortization 243,697 242,159
Reserve for loss on notes receivable 79,960
Reserve for loss on mortgage loans receivable 100,000
Gain on sale of equity investment 0 (308,412)
Minority interest 0 (19,658)
Changes in operating assets and liabilities:
Accounts receivable (221,555) 51,133
Inventories (258,700) 0
Mortgage loans receivable net (779,536) 595,677
Prepaid expenses and other 99,073 26,724
Accounts payable 573,062 65,125
Accrued liabilities 114,964 18,170
Deferred revenues 38,444 (18,061)
Other current liabilities (10,205) 0
Net cash (used in) provided by operating
Activities 103,730 (209,030)
Cash Flows From Investing Activities:
Purchases of property and equipment (141,045) (247,302)
Investment in intangible assets (109,289) 0
Proceeds from sale of investment in company 0 420,562
Investments in companies' stock 0 (1,025,357)
Net cash used in investing activities (31,756) (852,097)
Cash Flows From Financing Activities:
Net repayments under revolving line of credits (101,660) (742,407)
Net repayment of long-term debt 0 115,424
Collection of notes receivable 0 133,309
Issuance of common stock 15,500 0
Net cash (used in) provided by financing
Activities (86,160) (493,674)
Net decrease in cash (14,186) (1,554,801)
Cash, beginning of period 258,019 1,661,963
Cash, end of period 243,833 107,162
The accompanying notes are an integral part of these financial statements
INTERNET BUSINESS'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. DESCRIPTION OF BUSINESS AND CHANGE IN CONTROL
Prior to December 31, 1997, Internet Business's International, Inc.
(the "Company") was in the food product manufacturing business
formerly known as "International Food and Beverage, Inc.". In
November 1998, new stockholders bought majority control from the
previous Chief Executive Officer through a private transaction.
Immediately thereafter, the former CEO resigned and the new
stockholders assumed the executive management positions. In December
31, 1998, after new management was in place, a decision was made to
change the Company's principal line of business from a manufacturing
business to a high technology company. In connection with the change
in business, the Company changed its name from International Food &
Beverage, Inc. to Internet Business's International, Inc., and
reincorporated the Company on December 8, 1998 in the state of Nevada.
The Company, after January 1, 1999 began plans to offer Internet based
e-commerce services. In April of 1999, the Company announce it's first
e-commerce site and was engaged in the development, operation and
marketing of a number of commercial The Company currently has operates
four reporting divisions made up of subsidiaries and or divisions of
the Company. The four division are as follows: Lending on Line (which
includes real estate loans and equipment leasing), Internet Service
Provider (which includes a national Internet access dial-up service,
wireless high speed Internet access in Las Vegas, Nevada and Woodland,
California, and Internet web design and hosting), E-commerce (which
includes auction sites, B2C and B2B Internet transaction, and reverse
auction sites for Europe and the United States), Direct Marketing
(which includes the direct marketing of long distance phone services,
computers with Internet access, wireless high speed Internet access
and bandwidth), and Internet web design hosting). The Company has 7
offices in the US and 1 in Europe and more than 60 employees.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries. Significant intercompany
balances and transactions are eliminated in consolidation. Affiliated
companies in which the Company does not have a controlling interest
are accounted for using the equity method.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Significant
estimates include allowances doubtful accounts and notes receivable
and for mortgage loans receivable. Actual results could differ from
those estimates.
Reclassifications
Certain amounts in the prior year financial statements have been
reclassified to conform to the current year classification.
Cash and Cash Equivalents
The Company considers all short-term, highly liquid investments with
an original maturity date of three months or less to be cash equivalents.
Mortgage Loans Held for Sale
Mortgage loans held for sale, are carried at the lower of cost or
market value as determined by outstanding commitments from investors.
The market value of the loans is based on the note rate and the daily
loans yield spread pricing from the bank that is buying the loans.
When a loan rate is locked then a corresponding price or yield is calculated.
Example: note rate of $100,000 with a 7% locked rate from the bank
paying a yield premium of 101.00%. The value of the note would then
be $101,000. A note rate at 6.875% purchased by the same bank could be
valued at par and therefore the market value is $100,000.
Mortgage loans held for sale are secured by the borrower's mortgaged
property. Revenues resulting from the sale of mortgages are
recognized as of the date the loans are sold to investors.
Property and Equipment
Property and equipment is stated at cost and depreciated or amortized
on a straight-line basis over the estimated useful lives of the assets
or the lease term, whichever is shorter. Estimated useful lives range
from 3 to 7 years.
Capitalized Computer Software
Capitalized computer software included in intangible and other assets,
reflects costs related to purchased Internet websites and related
software that are capitalized and amortized on a straight-line basis
over periods not exceeding five years. Costs incurred to acquire or
upgrade websites and other internal software is capitalized in
accordance with Statement of Position 98-1, Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use.
Amortization expense for first quarter ending September 30, 2001 and
fiscal June 30, 2001 was $243,697 and, $324,910 respectively.
Intangible Assets
The Company has accounted for acquisitions of businesses under the
purchase method, and the excess of the purchase price over the fair
value of the net assets acquired is allocated to subscriber member
bases and customer lists, existing technology, work force in place,
trade names and residual goodwill, which are being amortized on the
straight-line basis over 5 years.
Long-Lived Assets
The Company periodically reviews the values assigned to long-lived
assets and intangible assets, such as property and equipment,
capitalized computer software, goodwill and other intangibles assets,
to determine whether any impairments are other than temporary.
Management reviews the undiscounted projected cash flows related to
such assets and compares them to the carrying value of the assets to
determine if impairment has occurred. If an asset is deemed to be
impaired, the Company records the difference between the projected
cash flows on a discounted basis or the fair market value (whichever
is more appropriate) and the carrying value as an asset impairment
charge in the period incurred. There were no such impairments in the
periods presented. Management believes that the long-lived assets and
intangible assets in the accompanying balance sheets are appropriately valued.
Additional Paid In Capital
By the end of March 2000, the Registrant issued an additional
7,000,000 shares of the Registrant's common stock, in a private
placement to a qualified investor which provided to the Registrant $3,382,560.
There was no additional paid in capital during this fiscal year ending
June 30, 2001.
Revenue Recognition
Revenue is recognized for each of the division as follows:
ISP; for services provided fees paid are recognized as revenue. For
design work fees are paid after the work is completed at which time it
is reported as revenue. If the work is complete and has not been paid
it is a receivable. For services revenue is recognized when paid for
the time frame the services are contracted for. If the company hosts
or provide internet access on a monthly bases then the revenue is
booked as received which is paid in advance of the service actually
being rendered. During this quarter ended September 30 2001, the
company recorded deferred revenues totaling $38,444.
E-commerce; for Auctions normal or reverse fees are paid upon the
completion of the auction and the product is either bought or sold,
revenue is reported only upon receipt of funds. For services revenue
is recognized when paid for the time frame the services are contracted
for. If we list the company in the directory on monthly bases then we
book the revenue as received, which is paid in advance of the service
actually being rendered. For products purchased we report the revenue
upon receipt of it for products shipped. If the product is not shipped
for any reason then the funds are returned to the buyer and there is
no reporting of the funds as revenue.
Lending on line; for the real estate loans revenue is booked according
to the loans funded, revenue from fees for loans not funded by the
company (brokered loans) are booked upon receipt thereof. For the on
line leasing, revenue is booked upon receipt of payment for
advertising the web site on the net.
Direct Marketing; for products and or services sold revenue due is
either reported as account receivable or as revenue upon receipt of
the funds. During this fiscal year
Advertising Expense
All advertising costs are expensed when incurred.
Concentration of Credit Risk
The Company is subject to credit risk through trade receivables.
Monthly Internet access fees and web hosting are generally billed to
the customer's credit card, thus reducing the credit risk. The
Company routinely assesses the financial strength of significant
customers and this assessment, combined with the large number and
geographic diversity of its customers, limits the Company's
concentration of risk with respect to trade accounts receivable.
Income Taxes
The Company accounts for income taxes under the asset and liability
approach where deferred income tax assets and liabilities reflect the
future tax consequences, based on enacted tax laws, of the temporary
differences between financial and tax reporting at the balance sheet date.
Earnings per Share
Basic earnings per share are computed by dividing net income (loss) by
the weighted average of common shares outstanding for the period.
Diluted earnings per share are computed by adjusting the weighted
average number of shares outstanding during the period for all
potentially dilutive shares outstanding during the period.
New Accounting Pronouncement
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives)
and for hedging activities. It requires that an entity recognizes all
derivatives as either assets or liabilities in the statement of
financial position and measures these instruments at fair value. SFAS
No. 133 is effective for the Company in the third quarter of fiscal
2002. The Company is currently evaluating what impact, if any, SFAS
No. 133 may have on its financial statements.
3. ACQUISITIONS AND SERVICE AGREEMENTS
The following notes refer to the Companies acquisitions and service
agreements after July 1, 1999, with the exception of the listing of
the LA Internet acquisition, which occurred in the prior fiscal year
ending June 30, 1999.
In June 1999, the Company acquired the assets of L.A. Internet, a
southern California-based Internet Service Provider, which included
customer accounts, trade name, websites, etc. for $545,000 in exchange
for a reduction of the Note Receivable from Iron Horse Holdings, Inc.
(see Preferred Stock Note 8).
Proforma information (unaudited) for the year ended
June 30, 2000:* LA Internet
Revenues $ 2,500,000
Cost of Operations & Expense $(1,920,000)
Net income (loss) $ 580,000
Income or (loss) per share $ nil
July 1999 MBM Capital Group was acquired for $72,000 and 112,667
shares (@ $.01 per share valued at $1,127) the company was sold during
the fiscal year of acquisition for a $150,000 note. After the sale MBM
ceased operations and the Company considers the note valueless.
In August 1999 and November 1999, the Company purchased Net 2 Loan, an
on-line loan processing website and Optical Brigade, an on-line
sunglass distribution website from the same outside party,
respectively. The total purchase price was 5,050,000 (@ $.01 per
share valued at is $50,500) and 400,000 shares (@ $.01 per share
valued at $4,000) of restricted company stock, respectively.
Proforma information (unaudited) for the year ended
June 30, 2000:* Net 2 Loan Optical Brigade
Revenues $ 630,000 $ 360,000
Cost of Operations & Expense $ (310,000) $ (150,000)
Net income (loss) $ 320,000 $ 210,000
Income or (loss) per share $ nil $ nil
In December of 1999 the company entered into a service agreement to
market the Company services on the Internet for 6,000,000 shares (@
$.01 per share valued at $60,000).
In February 2000, the Company acquired the assets and assumed certain
liabilities of Direct Communications, Inc., a wireless communications
company. In addition to assuming certain liabilities, the Company
paid cash of $80,000 and issued 30,000 shares (@$.01 per share valued
at $300) of restricted company stock. Intangible assets purchased
totaled $265,000, consisting of customers lists, website and
workforce-in-place and is being amortized over 5 years.
Proforma information (unaudited) for the year ended
June 30, 2000:* Allstates Communications
Revenues $ 1,200,000
Cost of Operations & Expense $ (900,000)
Net income (loss) $ 300,000
Income or (loss) per share $ nil
In March 2000, the Company acquired the assets and assumed certain
liabilities of Internet 2xtreme, and Internet Service Provider based
in northern California. The total purchase price was $735,000, which
consisted of cash of $17,635, restricted company stock amounting to
$186,884 (the company issued 124,589 shares based the current upon a
share value of $1.50 per share) and assumption of certain liabilities.
In connection with the acquisition, the Company recorded intangible
assets of approximately $666,000, which consisted of approximately
4,800 customer accounts, website and workforce-in-place, and are being
amortized over 5 years.
Proforma information (unaudited) for the year ended
June 30, 2000:* 2xtreme
Revenues $ 720,000
Cost of Operations & Expense $ (600,000)
Net income (loss) $ 120,000
Income or (loss) per share $ nil
Also in March 2000, the Company acquired 80% of the outstanding shares
of Global GPP for $500,000. Global GPP owns a business-to-business
website and has strategic agreements with IBM Hungary to market
business-to-business services in Eastern Europe.
Proforma information (unaudited) for the year ended
June 30, 2000: * Global GPP
Revenues $ 11,253,224
Cost of Operations & Expense $ (5,444,994)
Net income (loss) $ 5,808,230
Income or (loss) per share $ nil
During this quarter an additional 4,113,871 shares (at 01 per share
valued at $41,139) for services.
In April 2000, the Company acquired all of the outstanding stock of
Atlas Capital Corporation, a mortgage-banking company, for 600,000 (@
$.01 per share equals $6,000) shares of Company stock. In connection
with the acquisition, the Company acquired assets of approximately
$3,183,000 and assuming liabilities of approximately $3,179,000. The
difference of $260,000 was recorded as intangible assets related to
acquisition of trade names, websites, workforce-in-place and is being
amortized over 5 years.
Proforma information (unaudited) for the year ended
June 30, 2000:* Atlas Capital
Revenues $ 37,349,000
Cost of Operations & Expense $ (2,651,000)
Net loss $ (2,498,000)
Loss per share $ (nil)
Other acquisitions occurred during the year ended June 30, 2000 that
were not deemed to be material transactions. All acquisitions are
accounted for under the purchase method of accounting and accordingly,
the operations and net assets have been included in the Company's
consolidated financial statements from the date of acquisition.
*The unaudited Proforma information has been prepared assuming that
material acquisitions during the year ended June 30, 2000 have taken
place at the beginning of the respective period presented. The pro
forma information is not necessarily indicative of the combined
results that would have occurred had the acquisitions taken place at
the beginning of the period, nor is it necessarily indicative of the
result that may occur in the future. The pro forma for immaterial
transactions are not included in the pro forma information.
In October 5, 2000 the Company acquired the auction web site Sonic
Auction. for 500,000 (@$.01 per share equals $5,000) shares of
restricted stock as per rule 144. The site primarily was a database
and a functioning web auction site. Since the web site did not
generate revenue at the time of acquisition but did provide an
additional database that the Company could use to cross-market other
Company products to, therefore a Performa was not developed for this
acquisition.
4. CERTAIN FINANCIAL STATEMENT INFORMATION
September 30 June 30
2001 2001
Accounts receivable:
Accounts receivable $ 323,375 $ 396,977
Less: allowance for doubtful accounts 68,675 (196,009)
Accounts receivable, net $ 258,700 $ 200,968
Mortgage loans held for sale:
Mortgage loans held for sale $5,994,131 $7,049,096
Less: allowance for loan losses 79,960 (119,372)
Mortgage loans held for sale, net $5,914,171 $6,929,724
Property and equipment:
Office furniture and equipment $ 47,531 $ 47,155
Machinery and computer equipment 2,490,071 2,239,781
Leasehold improvements 10,026 1,726
Less: accumulated depreciation (536,822) (418,881)
Property and equipment, net $2,010,806 $1,869,781
Intangible assets:
Capitalized software costs, including websites $1,286,563 $1,270,156
Subscriber member bases 1,302,118 1,302,118
Others, including customer lists, existing
technology, trade names 423,386 423,386
Less: accumulated amortization (577,659) (451,963)
Intangible assets, net $2,434,408 $2,543,697
5. REVOLVING LINES OF CREDIT
The Company has a master mortgage loan warehousing agreement (credit
facility) with a lender that provides a maximum of $5,000,000 under
specified conditions to fund residential mortgages to customers. The
residential loans serve as collateral, and funds are advanced up to
98% of the unpaid principal amount of the qualified mortgage loan
granted to the customer. The credit facility bears interest at the
Prime Rate (9.5% at June 30, 2000) plus 1.0% for loans outstanding for
60 days or less. The interest rate increases to Prime Rate plus 4.0%
for loans outstanding between 60 and 120 days, and increases to Prime
Rate plus 6.0% for amounts outstanding over 120 days. At June 30,
2001 and 2000, amounts outstanding under the credit facility were $0
and $2,579,346, respectively. Subsequent to June 30, 2000, the credit
facility was amended to reduce the maximum available facility to
$3,500,000, and the Company did not renew the line when it came up for
renewal during the fiscal year ending June 30, 2001.
On February 1, 2000, the Company entered into a Master Repurchase
Agreement that provides the Company with a warehouse facility through
IMPAC Warehouse Lending Group ("IMPAC"). The IMPAC line provides the
Company with an open warehouse credit line (as set forth by IMPAC) for
the Company's mortgage originations only. Under the terms of the
agreement, the Company must repay the funded amount within 30 days of
the date the funds were disbursed with interest at the Prime Rate plus
1.0%. If the funds are not repaid within 30 days, the interest rate
increases to Prime Rate plus 3.0% until repaid, and IMPAC reserves the
right to sell the loan and any shortfall remains the liability of the
Company. The IMPAC line is secured by the mortgage loans funded with
the proceeds of such borrowings. The IMPAC line does not have a
stated expiration date but is terminable by either party upon written
notice. Amounts outstanding under the IMPAC line at June 30, 2001 and
2000 were $ 6183,228 and $ 254,217, respectively.
On March of 2001, the Company entered into a Master Repurchase
Agreement that provides the Company with a warehouse facility through
Imperial Warehouse Lending Group ("Imperial"). The Imperial line
provides the Company with an open warehouse credit line (as set forth
by Imperial) for the Company's mortgage originations only. Under the
terms of the agreement, the Company must repay the funded amount
within 30 days of the date the funds were disbursed with interest at
the Prime Rate plus 1.0%. If the funds are not repaid within 30 days,
the interest rate increases to Prime Rate plus 3.0% until repaid, and
Imperial reserves the right to sell the loan and any shortfall remains
the liability of the Company. The Imperial line is secured by the
mortgage loans funded with the proceeds of such borrowings. The
Imperial line does not have a stated expiration date but is terminable
by either party upon written notice. Amounts outstanding under the
IMPAC line at June 30, 2001 and 2000 were $ 865,468 and $ 0, respectively.
The effective interest rate for the credit lines listed above were as
follows per quarter, the interest charge is deducted from the sale
proceeds of the funded loans and is booked as a cost of revenue;
Quarter Prime Rate Impac Imperial* Number of Loans
Held over 30 Days
Sept. 30 2000 9.50% 10.5% N/A 0
Dec. 31, 2000 9.50% 10.5% N/A 0
March 31, 2001 8.0% 9.0% 9.0% 0
June 30, 2001 6.75% 7.75% 7.75% 0
* Imperial line not in use prior to March 2001
In addition, the Company has a bank line of credit that provides for
maximum borrowings up to $125,000. The line of credit is personally
secured by certain officers of the Company, and currently bears
interest at 11.5% at June 30, 2000 and is due on August 31, 2000. The
outstanding balance against the line of credit as of June 30, 2001 and
2000 were $ 0 and $125,000, respectively. The Company paid off the
line of credit line during the fiscal year ending June 30, 2001,
because it was no longer required.
All credit facilities and bank line of credit require the Company to
maintain certain financial ratios and adhere to specific non-financial
requirements. At June 30, 2001, the company was in compliance with
the various covenants contained in the above agreements.
6. LONG-TERM DEBT
Long-term debt at June 30, 2001 consists of the following:
Current
Portion Long-term Total
Note payable to secured by certain Company
assets, requiring monthly payments of $6,494,
including interest at 12.25%, due May 5, 2007 $ 40,506 $283,014 $323,520
During the fiscal year certain real estate loans defaulted. The
Companies subsidiary is making payment to the lender that purchased
the defaulted loans. These payments are made at the note rate for each
loan. The Company has filed claims with the Companies E&O Insurance
carriers. and until the claims are either denied or paid the company
lists these debts as long-term debt. These notes total $844,933.
Effective September 1, 2001 the Company sold the subsidiary Atlas
Capital and these liabilities are included in the sale.
7. EXTRAORDINARY ITEM
After review by legal counsel about the predecessor company's (see
Note 1) unsecured prior debts, it was determined by legal counsel the
Company was no longer liable for certain of the predecessor company's
unsecured debt and management elected to write-off the debts during
the fiscal year ended June 30, 1999 and is included as an
extraordinary item as forgiveness of debt income.
8. STOCKHOLDERS' EQUITY
Authorized Shares
During November 2000, the board of directors of the Company amended
the articles of incorporation to increase the number of authorized
shares of common stock to 349,000,000 shares.
Stock Issuance
At the end of the end of this quarter there were a total number of
282,736,029 common snares issued and outstanding of which 94,582,267
are restricted.
During this quarter ended September 30, 2001, the following shares
were issued: 15,500,000 as per employment contract.
The Company had and issued and outstanding 267,236,029 by the end of
the previous fiscal year ending June 30, 2001.
During the quarter ending June 30, 2001 the following shares were
issued: 19,499,430 additional for the conversion of the Preferred
Stock (that were originally issued December 15, 1998) into common stock.
During the quarter ending December 31, 2000; the following shares were
issued 1. 500,000 shares of restricted 144 stock for the acquisition
of Sonic Auction.Com and 2. 7,140,406 common stock were issued
pursuant to the agreement with the conversion rights of the Preferred
Stock issued December 15, 1998, upon the 10 day average of the closing
bid price prior to the to the conversion date.
During the quarter ending March 31, 2001 the following shares were
issued; 18,981,080 in exchange for Preferred Stock that was originally
issued December 15, 1998.
During March 2000, the Company issued 7,000,000 shares of common stock
through a private placement transaction, resulting in net proceeds to
the Company of $3,382,560.
The Company also issued 6,422,667 and 8,000,000 shares of Company
stock in connection with the acquisition of business's or net assets
during the fiscal years ended June 30, 2000 and 1999, respectively.
The Company also issued 30,389,449 and 11,242,790 shares of Company
stock in connection with services provided or rendered during the
fiscal years ended June 30, 2000 and 1999, respectively.
Preferred Stock
On December 15, 1998, the Company entered into an agreement with Iron
Horse Holdings, Inc. ("IHHI"), a privately held company that in which
officers or family members of the officers of the Company have
minority stock ownership, for IHHI to purchase 23,900 shares of the
Company's preferred stock with a par value of $100.00 per share, in
exchange for a promissory note receivable from IHHI in the amount of
$2,500,000. The difference between the par value of the shares and
the purchase price is treated as additional paid-in-capital. Shares
purchased under the agreement are to be issued to IHHI or its
designee. The promissory note receivable bear interest at 9% per
annum, and is secured by a blanket security agreement executed by IHHI
and perfected by filings as specified by law. Until such note is paid
in full, IHHI shall pay the 3% coupon on such shares as are issued
under the agreement directly to the shareholder(s) of record at the
time such payment is due. During the fiscal year ending June 30, 2001,
the company-received payment in full on the note executed by IHHI,
also during this fiscal year IHHI converted the preferred into common
stock. There are no preferred shares issued and or outstanding as of
this date.
During Fiscal June 30, 2000 the Company received the following
payments on the note executed by IHHI,
Date Balance Payment Interest Paid
June 30, 1999 $1,735,000
Sept. 30, 1999 1,464,754 $ 270,246 $ 39,037
Dec. 31, 2000 1,194,508 270,246 32,957
March 31, 2000 924,262 270,246 26,876
June 30, 2000 654,009 270,253 20,796
Total $ 654,009 $1,080,991 $ 119,666
During Fiscal June 30, 2001 the Company received the following
payments on the note executed by IHHI,
Date Balance Payment Interest Paid
June 30, 2000 $ 654,009
Sept. 30, 2000 490,509 $ 163,500 $ 14,715
Dec. 31, 2000 327,009 163,500 11,036
March 31, 2001 163,509 163,500 7,357
June 30, 2001 0 163,509 3,679
Total $ 0 $ 654,009 $ 36,787
9. Income Taxes
The provision for income taxes for the first quarter ending September
30 and years ended June 30, 2001 consist of the following (there
were no provision for income taxes on the financials due to the net
loss carry forward from the previous years operations):
September 30 June 30
2001 2001
Current income tax expense:
Federal $ 42,339 $ 269,795
State 0 0
42,339 269,795
Deferred income tax expense:
Federal 0 0
State 0 0
0 0
0 0
Amounts for deferred income tax assets and liabilities as follows:
Assets 42,339 269,795
Valuation allowance (42,339) (269,795)
0 0
Liabilities 0 0
Net tax asset or liability 0 0
Deferred income tax assets consist primarily of net operating loss
carry forwards. The Company has provided for a full valuation
allowance on the deferred income tax assets as the realization of such
benefits are uncertain. Such carry forwards begin to expire beginning
in 2004.
For the first quarter ended September 30, 2001 and year ended June 30,
1999, the Company excluded the forgiveness of debt income from taxable
income pursuant to Internal Revenue Code Section 108(A)(1)(B) and 108(B).
10. Commitments
The Company leases certain of its office facilities and certain
equipment under the terms of noncancellable operating leases, which
expire through May 2003. Lease payments under these agreements
totaled $ 176,095 and $138,276 for the years ended June 30, 2001 and 2000.
The future minimum rental commitments at June 30, 2001 under these
leases are as follows:
Year Ending June 30,
June 30, 2002 133,632
June 30, 2003 80,503
$ 214,135
11. Segment Information
In accordance with SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information," management has determined that
there are four reportable segments based on the customers served by
each segment: Full service internet service provider (ISP), mortgage
banking business, and business-to-business ("B2B") provider and
business-to-consumer ("B2C") provider. Such determination was based on
the level at which executive management reviews the results of
operations in order to make decisions regarding performance assessment
and resource allocation.
Full service Internet service provider serves customers requiring
Internet access in the western United States through dial-up, and
high-speed wireless; web hosting and web design. Mortgage banking
business includes online mortgage loan origination, processing,
servicing and resales. Business-to-business provider primarily
provides reverse auction services to foreign companies wishing to
purchase materials and supplies in the United States. Business-to-
consumer provider primarily consists of cellular phone service
origination fees and sales.
Certain general expenses related to advertising and marketing,
information systems, finance and administrative groups are not
allocated to the operating segments and are included in "other" in the
reconciliation of operating income reported below. The accounting
policies of the segments are the same as those described in the
summary of significant accounting policies (see Note 2). Information
on reportable segments is as follows:
Three Months Ended
September 30 September30
2001 2000
Full-service ISP
Revenue $ 1,021,100 $ 792,572
Operating income $ 243,651 $ 160,474
Mortgage loan originations held for
resale
Revenue 29,334,999 5,927,079
Operating income 124,759 (515,734)
E Commerce (B-to-b/c)
Revenue 55,461 0
Operating income 1,146 (99,789)
Marketing (B-to-b/c)
Revenue 9,264 180,286
Operating income (190,871) (164,226)
Other
Revenue 116,302 0
Unallocated expenses (54,159) (627,583)
Total
Revenue 30,537,126 6,899,937
Operating income 124,52 6 (1,246,858)
12. Other Events
a. PMCC
On August 2, 2000, the Company announced that it has entered into an
agreement whereby the Company would purchase 2,460,000 share of PMCC
Financial Corp. ("PMCC"), a full-service mortgage banking company,
common stock from PMCC's former chairman of the board, Ronald
Friedman, and The Ronald Friedman 1997 Grantor Retained Annuity Trust
Ronald Friedman, which represents 66.36% of the 3,707,000 PMCC shares
outstanding. The aggregate purchase price of $3,198,000 is to be paid
in cash to the seller by the Company as follows: $700,000 at date of
closing; $306,857 for each of the seven installment payments to be
paid on the 30th, 60th, 90th, 120th, 150th, 180th and 210th days following
the close; $175,000 on each of the 240th and 270th day after the date
of the closing. Shares of PMCC, a listed AMEX company, were not
trading at the time of the agreement. In the event that three months
after closing, if PMCC's shares are not actively trading on the AMEX
or NASDQ exchanges and the Company has not merged PMCC with the
Company or any of the Company's subsidiaries, the purchase price shall
be reduced by the amount of the final two $175,000 payments.
Also on July 28, 2000, in a separate transaction, the Company entered
into a stock purchase agreement with an unrelated individual whereby
the Company would sell up to 370,000 of PMCC shares that the Company
either owns or will eventually own, for total consideration of
$1,387,500. Shares of PMCC stock sold by the Company will be released
to the buyer in proportion to payments received.
The Company on March 2, 2001 filed an action against Ronald Friedman,
and The Ronald Friedman 1997 Grantor Retained Annuity Trust (Case
Number SA CV 01-268 DOC (Eex)) for recession of the purchase of the
PMCC stock and return of the $1,006,857 on August 16, 2001 Ronald
Friedman, Robert Friedman, and The Ronald Friedman 1997 Grantor
Retained Annuity Trust filed an action against the company (Case
Number 01CV 7637), for the balance of the contract in the amount of
$2,191,143. The company action was filed in Orange County; CA. and
Mr. Friedman's complaint was filed in Southern District, New York. The
company feels that it will prevail in both actions.
As of December 31, 2000, the Company received payments of $559,812 and
the Company released 149,283 shares of PMCC stock that it owned. If
PMCC is not actively trading within six months of the agreement, the
Company will issue to the Buyer the equivalent number of shares of
stock of the Company. PMCC has been actively trading as of January
19, 2001, and the gain on the sale of the PMCC stock of $410,529 has
been included in revenues for the period ending December 31,2000.
In January 2001, the PMCC was delisted from the American Stock
Exchange and began trading on the Pink Sheets under the symbol of
"PMCF"; this met the trading requirement as per the stock sale
agreement the Company had entered into with an unrelated individual
during the first quarter of this fiscal year.
b. IBC
On August 11, 2000, the Company entered into an agreement to acquire
all of the outstanding shares of International Business Co., a
software developer that streamlines B2B e-commerce, in exchange for
2,000,000 shares of restricted Company shares to be held in escrow.
Between the periods from September 1, 2000 through March 1, 2001, the
Company can unilaterally cancel the contract if dissatisfied with the
seller's performance. The Company canceled the purchase during the
cancellation period agreed in the escrow.
c. Auction-Sales.Com, Inc.
On October 19, 2000, the Registrant entered into a Stock Purchase
Agreement with Auction-Sales.Com, Inc. and its majority shareholder,
Zahid Rafiq (collectively, "Seller"), for the purchase by the
Registrant of 96.62% of the outstanding and treasury shares of common
stock of Auction-Sales.Com, Inc., a Delaware corporation (see Exhibit
10.15 of this Form 10-Q). In exchange for the shares, the Registrant
will pay, under the terms of this agreement, the following:
(a) 11,000,000 shares of Registrant's restricted common stock to
Seller for all of Seller's Shares, as follows:
(i) 5,500,000 restricted shares will be issued to current
shareholders, identified on the list attached to the Agreement.
(ii) 2,500,000 restricted shares will be paid to certain
creditors of the Registrant identified in an attachment to
the Agreement. Seller represents that all of these
creditors are unsecured. Seller shall procure signed
consents from each creditor confirming the agreement to
accept restricted shares in proportion to their claims
within 60 days of closing of the transaction. Failure to
procure signed consents will justify rescission of this
Agreement at the option of the Registrant, such that each
party shall restore to the other the consideration which
each placed into the Agreement.
(iii) 3,000,000 restricted shares of the purchase
price will be paid to outside consultants for work performed
for facilitating the transaction.
(b) Earn out for the "Seller": The Seller shall be paid up to an
additional $3,000,000 based upon earnings over the next 3 years
through additional restricted stock. The earn out will be based on a
10% growth per year over the previous years revenue. The $3,000,000
will be distributed equally over the subsequent 3 year i.e. $1,000,000
per year, and can be cumulative. This earn out is further defined as
follows:
(i) The initial base Year ends on September 30, 2000. The
subsequent year base will be the previous revenue.
(ii) The stock will be issued per quarter upon reaching the
Goal per quarter for that portion of the annualized growth of 10%
over the previous year.
(c) The Registrant may invest up to $2,000,000 in Auction-
Sales.Com, Inc., at a rate not to exceed $500,000 per quarter, based
on performance on Auction-Sales.Com as a function of gross revenues
and based on a budget, which is pre-approved by the Registrant.
Auction-Sales.Com is an e-commerce pricing application service
provider. Auction-Sales.Com has developed a proprietary state of the
art hybrid auction platform that address the combined needs of the
B2C, B2B and C2C markets. This is accomplished by providing a single
integrated marketplace and portal technology that empowers all
parties, including manufacturers, distributors, resellers and
consumers. The Auction-Sales.Com platform provides supply chain
integration and economies of scale in connection with dynamic pricing
application targeting businesses and /or consumers.
This acquisition was rescinded in December 2000 and the necessary
documents were filed with the SEC. The site was retained until the
funds invested into Auction-Sales.Com are returned which at this time
management has very low expectations of occurring.
13. Other Agreements
a. Washington State Hotel and Motel Association.
The agreement, entered into in the ordinary course of business,
with the Washington State Hotel and Motel Association, dated October
4, 2000, provides the use of the GGPP reverse auction site as a
platform for hotel association members purchasing products needed for
their different hotel properties. This method of purchasing allows
the suppliers of products the chance to sell products to the buyers in
competition with one another; the net effect is that the buyers would
select the supplier with the lowest per unit cost. This reduces the
cost of supplies and thereby should increase their potential of
profit. This agreement covers the modification of the GGPP website
for use by the Association, and does not involve any payment by the
Registrant.
b. JWC Construction
The agreement, entered into in the ordinary course of business,
with the JWC Construction Company of Poland, dated March 9, 2001 which
will enable companies to list their purchasing requirements on
projects using the reverse auction platform. This method of purchasing
allows the suppliers of products the chance to sell products to the
buyers in competition with one another; the net effect is that the
buyers would select the supplier with the lowest per unit cost. This
reduces the cost of supplies and thereby should increase their
potential of profit. This agreement covers the modification of the
Construction Buying Group website for use by the Construction
industry, and does not involve any payment by the Registrant.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the
financial statements of the Registrant and notes thereto contained
elsewhere in this report.
Results of Operations - Comparison of Quarter Ended September 30, 2001
to Quarter Ended September 30, 2000.
(a) Overall
Revenues for the first quarter ended September 30, 2001 of
$30,537,126 increased approximately 443% when compared with revenues
of $6,889,937 in the prior year. This revenue increase is due to the
Companies increase in Mortgage Loan originations. The interest rates
for the mortgages loans since March of 2001 has remained from the low
6% to high 7% range though the end of September 2001 and it is
expected for the rates to remain in this range through out the end of 2001.
Selling, general and administrative expenses for the first
quarter ending September 30 2001 of $1.618 million is a decrease 12%
of when compared to the same expenses of $1.837 million for the same
time period for the previous fiscal year 2000.
The resulting profit for the three-month period ended September
30, 2001 of $124,526 was a significant increase when compared to the
loss of $861,887 reported for comparable quarter ended September 30, 2000.
(b) Comparison by Segment
Management has determined that there are four reportable segments
based on the customers served by each segment: Full service internet
service provider (ISP), mortgage banking business, and e-commerce
("B2BC") business-to-business and or to-consumer provider and
marketing ("B2B") business-to-business and ("B2C") business-to-
consumer. Such determination was based on the level at which executive
management reviews the results of operations in order to make
decisions regarding performance assessment and resource allocation.
Certain general expenses related to advertising and marketing,
information systems, finance and administrative groups are not
allocated to the operating segments and are included in "other" in the
reconciliation of operating income reported below. Information on
reportable segments is as follows:
Three Months Ended
September 30 September30
2001 2000
Full-service ISP
Revenue $ 1,021,100 $ 792,572
Operating income 243,651 160,474
Mortgage loan originations held for resale
Revenue 29,334,999 5,927,079
Operating income 124,759 (515,734)
E Commerce (B-to-b/c)
Revenue 55,461 0
Operating income 1,146 (99,789)
Marketing (B-to-b/c)
Revenue 9,264 180,286
Operating income (190,871) (164,226)
Other
Revenue 116,302 0
Unallocated expenses (54,159) (627,583)
Total
Revenue 30,537,126 6,899,937
Operating income 124,526 (1,246,858)
The results for the ISP service for the first quarter ended
September 30, 2001 of $1,021,100 is and increase of 128% when compared
to the same period ended September 30, 2000 of $792,572. The increase
is from concentration on the high-speed Internet accesses and increase
in web sale activities. The profits of $243,651 for the three months
ended September 30, 2001 is a increase of 151.8 % for the same three-
month period of the previous fiscal year which reported profits of
$160,474. The improvement in the profit margins is due to the fact
that the profit margins are greater in the wireless Internet access
then the standard dial up access.
The results for the Mortgage originations for the first quarter
ended September 30, 2001 of $29,334,999 is and increase of 494.9% when
compared to the same period ended September 30, 2000 of $5,927,079.
The profits of $124,759 for the three months ended September 30, 2001
is a significant improvement over the same three-month period of the
previous fiscal year which reported losses of $515,734. The increase
in the revenue is from the improved marketing of the Mortgage
division. The profits were due in part to better management and also
selling the former Atlas Capital and the start a new mortgage group
named Guarantee Funding.
The results for the E Commerce service for the first quarter
ended September 30, 2001 of $55,461, which didn't report sales for the
same period, ended September 30, 2000 of zero revenue. The profits of
$1,146 for the three months ended September 30, 2001 is a significant
improvement over the same three-month period of the previous fiscal
year which reported a loss of $99,789.
The results for the Marketing for the first quarter ended
September 30, 2001 of $9,264 is and decrease of 194% when compared to
the same period ended September 30, 2000 of $180,286. The main reason
for the decrease is the decision to stop selling cell phones and begin
marketing company products. The losses of $190,871 for the three
months ended September 30, 2001 is a increase of 115.8 % for the same
three-month period of the previous fiscal year which reported losses
of $164,226. The increase in the losses was also due to the change
over in the marketing of products.
The results for Other revenue are from a service charge that is
generated from the new marketing services that is provided by
corporate to its clients. The revenue of $116,302 for this period
ended September 30, 2001 is not to be compared to the prior period
ended September 30, 2000, which had no reportable revenue. The losses
of $54,159 for the three months ended September 30, 2001 is a decrease
of $573,424 for the same three-month period of the previous fiscal
year which reported losses of $627,583. The reduction in costs is
from the reduction in the corporate staff and overhead costs.
Liquidity and Capital Resources.
Net cash provided by the operations of the Registrant was
$124,526 for the three months ended September 30, 2001 versus net cash
provided by operating activities of ($1,246,858) in the comparable
prior year period.
Capital Expenditures.
Other than as set forth below, no material capital expenditures
were made during the quarter ended on September 30, 2001: (a) purchase
infrastructure equipment totaling $141,025.
Acquisitions
There were no acquisitions made during the quarter ended
September 30, 2001.
Forward Looking Statements.
The foregoing Management's Discussion and Analysis of Financial
Condition and Results of Operations contains "forward looking
statements" within the meaning of Rule 175 of the Securities Act of
1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as
amended, including statements regarding, among other items, the
Registrant's business strategies, continued growth in the Registrant's
markets, projections, and anticipated trends in the Registrant's
business and the industry in which it operates. The words "believe,"
"expect," "anticipate," "intends," "forecast," "project," and similar
expressions identify forward-looking statements. These forward-
looking statements are based largely on the Registrant's expectations
and are subject to a number of risks and uncertainties, certain of
which are beyond the Registrant's control. The Registrant cautions
that these statements are further qualified by important factors that
could cause actual results to differ materially from those in the
forward looking statements, including, among others, the following:
reduced or lack of increase in demand for the Registrant's products,
competitive pricing pressures, changes in the market price of
ingredients used in the Registrant's products and the level of
expenses incurred in the Registrant's operations. In light of these
risks and uncertainties, there can be no assurance that the forward-
looking information contained herein will in fact transpire or prove
to be accurate. The Registrant disclaims any intent or obligation to
update "forward looking statements."
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II.
ITEM 1. LEGAL PROCEEDINGS.
Other than as set forth below, the Registrant is not a party to
any material pending legal proceedings other than ordinary routine
litigation incidental to the business and, to the best of its
knowledge, no such action by or against the Registrant has been threatened.
The Registrant on March 2, 2001 filed an action in the United
States District Court, Central District of California against Ronald
Friedman, and The Ronald Friedman 1997 Grantor Retained Annuity Trust
(Case Number SA CV 01-268 DOC (Eex)) for rescission of the purchase of
the PMCC stock and return of the $1,006,857. On August 16, 2001
Ronald Friedman, Robert Friedman, and The Ronald Friedman 1997 Grantor
Retained Annuity Trust filed an action in the United States District
Court, Southern District of New York against the company (Case Number
CV 01-7637), for the balance of the contract in the amount of
$2,191,143. Each side has filed an answer to the complaints. The
Registrant intends to contest this matter vigorously. Management
cannot take any position at this time as to the likely outcome of the matter.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
The Registrant made the following issuances of unregistered
securities during the quarter ended September 30, 2001:
7,750,000 shares of restricted common stock were issued each to
Albert Reda and Louis Cherry as a bonus under each of their employment
agreements with the Registrant. No commissions or fees were paid in
connection with these issuances. All of the above sales were
undertaken pursuant to the limited offering exemption from
registration under the Securities Act of 1933 as provided under Rule
506 of Regulation D by the fact that:
the sales were made to accredited investors as defined in Rule 502;
the information specified in paragraph (b)2(ii)(B) and paragraph
(b)(2)(ii)(C) of this section was provided to each investor;
the Registrant gave each purchaser the opportunity to ask
questions and receive answers concerning the terms and conditions
of the offering and to obtain any additional information which
the Registrant possessed or could acquire without unreasonable
effort or expense that is necessary to verify the accuracy of
information furnished;
at a reasonable time prior to the sale of securities, the
Registrant advised the purchasers of the limitations on resale in
the manner contained in paragraph Rule 502(d)2 of this section;
neither the Registrant nor any person acting on its behalf sold
the securities by any form of general solicitation or general
advertising; and
the company exercised reasonable care to assure that the
purchasers of the securities are not underwriters within the
meaning of section 2(11) of the Securities Act of 1933 in
compliance with Rule 502(d).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Reports on Form 8-K.
No reports on Form 8-K were filed during the first quarter of the
fiscal year covered by this Form 10-Q as follows
Exhibits.
Exhibits included or incorporated by reference herein are set
forth in the Exhibit Index.
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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.
Internet Business's International, Inc.
Dated: November 12, 2001 By: /s/ Albert R. Reda
Albert R. Reda, Chief Executive Officer
EXHIBIT INDEX
Number Description
2.1 Agreement and Plan of Merger between the Registrant and
Internet Business's International, Inc., a Delaware
corporation, dated July 1, 1999 (incorporated by reference
to Exhibit 2 of the Form 8-K/A filed on November 22, 1999).
2.2 Agreement and Plan of Merger and Share Exchange among the
Registrant, Return Assured Incorporated, and IBUI
Acquisition Corporation, dated June 4, 2001 (incorporated by
reference to Exhibit 2.2 of the Form 10-K filed on October 1, 2001).
3.1 Articles of Incorporation (incorporated by reference to
Exhibit 3.1 of the Form 10-Q filed on December 1, 1999).
3.2 Certificate of Amendment of Articles of Incorporation
(incorporated by reference to Exhibit 3.2 of the Form 10-Q
filed on December 1, 1999).
3.3 Certificate of Amendment of Articles of Incorporation
(incorporated by reference to Exhibit 3.3 of the Form 10-Q
filed on May 22, 2000).
3.4 Certificate of Amendment of Articles of Incorporation
(incorporated by reference to Exhibit 3.4 of the Form 10-Q
filed on May 22, 2000).
3.5 Bylaws (incorporated by reference to Exhibit 3.3 of the Form
10-Q filed on December 1, 1999).
4.1 Retainer Stock Plan for Non-Employee Directors and
Consultants, dated October 1, 1999 (incorporated by
reference to Exhibit 4.1 of the Form S-8 filed on October 8, 1999).
4.2 Consulting Agreement between the Registrant and Mark Crist,
dated October 5, 1999 (incorporated by reference to Exhibit
4.2 of the Form S-8 filed on October 8, 1999).
10.1 Purchase Agreement (LA Internet) between the Registrant and
Iron Horse Holdings, Incorporated, dated June 10, 1999
(incorporated by reference to Exhibit 10.2 of the Form 10-Q
filed on December 1, 1999).
10.2 Purchase Agreement between the Registrant and the
Stockholders of MBM Capital Group Inc., dated July 1, 1999
(incorporated by reference to Exhibit 10.3 of the Form 10-Q
filed on December 1, 1999).
10.3 Acquisition Agreement (Net 2 Loan) between the Registrant
and Lifestyle Mortgage Partners, dated September 15, 1999
(incorporated by reference to Exhibit 10.4 of the Form 10-Q
filed on February 22, 2000).
10.4 Purchase Agreement (license) between the Registrant and
Stockholders of California Land & Home Sale, Inc., dated
October 1, 1999 (incorporated by reference to Exhibit 10.5
of the Form 10-Q filed on February 22, 2000).
10.5 Acquisition Agreement (Optical Brigade) between the
Registrant and Wade Whitley, dated November 1, 1999
(incorporated by reference to Exhibit 10.6 of the Form 10-Q
filed on February 22, 2000).
10.6 Employment Agreement between the Registrant and Al Reda,
dated January 1, 2000 (incorporated by reference to Exhibit
10.6 of the Form 10-K filed on October 1, 2001).
10.7 Employment Agreement between the Registrant and Louis
Cherry, dated January 1, 2000 (incorporated by reference to
Exhibit 10.7 of the Form 10-K filed on October 1, 2001).
10.8 Agreement for Acquisition between the Registrant and Direct
Communications, Inc., dated February 25, 2000 (incorporated
by reference to Exhibit 10.6 of the Form 10-Q filed on May
22, 2000).
10.9 Agreement between the Registrant and Internet 2xtreme, dated
March 6, 2000 (incorporated by reference to Exhibit 10.7 of
the Form 10-Q filed on May 22, 2000).
10.10 Agreement between the Registrant, Roanoke Technology Corp.,
and Global GPP Corp., dated March 21, 2000 (incorporated by
reference to Exhibit 10.8 of the Form 10-Q filed on May 22, 2000).
10.11 Agreement between GPP Hungary Kft and Haitec Magyarorazagi
Kft, dated March 30, 2000 (incorporated by reference to
Exhibit 10.9 of the Form 10-Q filed on May 22, 2000).
10.12 Stock Purchase Agreement between the Registrant and Atlas
Capital Corporation, dated April 1, 2000 (incorporated by
reference to Exhibit 10.10 of the Form 10-K filed on
September 27, 2000).
10.13 Stock Purchase Agreement between the Registrant and Ronald
Friedman, Robert Friedman, and The Ronald Friedman 1997
Grantor Retained Annuity Trust, dated July 28, 2000
(incorporated by reference to Exhibit 10.11 of the Form 10-Q
filed on November 16, 2000).
10.14 Stock Sales Agreement between the Registrant and a buyer,
dated July 28, 2000 (incorporated by reference to Exhibit
10.12 of the Form 10-Q filed on November 16, 2000).
10.15 Stock Purchase Agreement between the Registrant,
International Business Company, Dennis B. Ginther, Clifford
J. Roebuck, Jadwiga L. Ginther, and Bogumila E. Basu , dated
August 19, 2000 (incorporated by reference to Exhibit 10.13
of the Form 10-Q filed on November 16, 2000).
10.16 Stock Purchase Agreement between the Registrant, Sonic
Auction.com, Inc., and Brian Pruett, dated October 5, 2000
(incorporated by reference to Exhibit 10.14 of the Form 10-Q
filed on February 15, 2001).
10.17 Stock Purchase Agreement between the Registrant, Auction-
Sales.Com, Inc., and Zahid Rafiq, dated October 19, 2000
(incorporated by reference to Exhibit 10.15 of the Form 10-Q
filed on February 15, 2001).
21 Subsidiaries of the Registrant (incorporated by reference to
Exhibit 21 of the Form 10-K filed on October 1, 2001).