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
MARCH 31, 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: 33-43621
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: None
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 March 31, 2001, the Registrant had 251,736,599 shares of
common stock issued and outstanding.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2001 AND JUNE 30, 2000 3
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED
MARCH 31, 2001 AND MARCH 31, 2000 4
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
MARCH 31, 2001 AND MARCH 31, 2000 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK 15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 15
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 15
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS 15
ITEM 5. OTHER INFORMATION 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 16
SIGNATURE 16
PART I.
ITEM 1. FINANCAL STATEMENTS.
INTERNET BUSINESS'S INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31 June 30
2001 2000
ASSETS
Cash and cash equivalents $ 665,888 $ 1,661,963
Accounts receivable, net 151,648 128,389
Mortgage notes held for sale 6,024,895 2,907,741
Prepaid expenses and other 382,483 127,905
Total current assets 7,224,914 4,825,998
Property and equipment, net 1,403,661 575,061
Intangible assets, net 2,721,718 2,884,174
Investments in unconsolidated companies 894,707 0
Note receivable 360,073 654,009
Total Other Assets 5,380,159 4,113,244
Total Assets 12,605,073 8,939,242
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable 292,310 317,998
Accrued liabilities 665,976 48,900
Revolving line of credit 6,044,542 2,958,563
Current portion of long-term debt 41,714 29,165
Deferred revenues 294,481 247,090
Total current liabilities 7,339,023 3,601,716
Long-term debt 1,795,700 203,931
Minority interest in subsidiaries (29,828) (5,868)
Total Liabilities 9,104,895 3,799,779
Stockholders' equity:
Preferred stock, par value $100.00 per
share; 1,000,000 shares authorized; 0 and
23,900 shares issued and outstanding
respectively as of March 31, 2001 and
June 30, 2000 0 2,390,000
Common stock, par value $0.001 per share;
349,000,000 shares authorized;
251,736,599 and 221,115,113 shares
issued and outstanding respectively as of
March 31, 2001 and June 30, 2000 2,517,366 2,211,151
Additional paid-in capital 3,669,490 3,669,490
Accumulated deficit (2,686,678) (3,131,178)
Total stockholders' equity 3,500,178 5,139,463
Total liabilities and stockholders' equity 12,605,073 8,939,242
The accompanying notes are an integral part of these financial statements
INTERNET BUSINESS'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Nine Months
Ended Ended
March 31 March 31 March 31 March 31
2001 2000 2001 2000
Revenues 12,343,896 1,205,361 25,783,683 2,034,693
Cost and expenses:
Cost of revenues 10,007,925 139,818 21,181,112 401,840
Interest expense 0 0 2,726 0
Selling, general and admin. 1,583,957 946,282 5,004,243 1,352,364
Depreciation and amortization 53,403 0 342,725 0
Total costs and expenses 11,645,285 1,086,100 26,530,806 1,754,204
(Loss) income from operations 698,611 119,261 (747,123) 280,489
Other income (expense):
Gain on sale of equity investments 0 0 410,529 0
Interest income 187,508 0 466,668 0
Other expenses (4,370) 88,597 (10,417) 91,006
Total other income, net 191,878 (88,597) 887,614 (91,006)
Income (loss) before
minority interest 189,483 890,489 30,664 140,491
Minority interest in loss of sub 0 0 (29,828) 0
Net (loss) income 890,489 30,664 110,663 189,483
Net loss (income) per common share Nil Nil Nil Nil
Weighted average number of common
shares outstanding 234,271,919 189,179,555 234,271,919 189,179,555
The accompanying notes are an integral part of these financial statements
INTERNET BUSINESS'S INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31 March 31
2001 2000
Cash Flows From Operating Activities:
Net (loss) income $ 110,663 $ 189,483
Adjustments to reconcile net (loss)
income to net cash (used in) provided by
operating activities:
Depreciation and amortization 342,725 0
Gain on sale of equity investment (410,529) 0
Minority interest (29,828) 0
Changes in operating assets and liabilities:
Accounts receivable 151,648 (102,192)
Inventories 129,300 (85,101)
Mortgage loans receivable 730,764 0
Prepaid expenses and other 382,794 0
Accounts payable 292,310 236,004
Accrued liabilities 665,976 54,034
Deferred revenues (294,481) (60,183)
Net cash (used in) provided by operating
activities 2,071,342 232,045
Cash Flows From Investing Activities:
Purchases of property and equipment (828,600) (265,941)
Purchase of intangible assets (1,190,632) 477,585
Proceeds from sale of investment in company 559,812 310,229
Investments in companies' stock (894,707) 0
Net cash used in investing activities (2,354,127) 276,333
Cash Flows From Financing Activities:
Net repayments under revolving line of credits (1,458,110) 79,076
Net repayment of long-term debt 450,884 (54,034)
Collection of notes receivable - stockholder 293,936 0
Issuance of common stock 0 (757,789)
Additional Paid in Capital 0 3,687,794
Net cash (used in) provided by financing
Activities (713,290) 2,955,047
Net decrease in cash (996,075) 3,231,380
Cash, beginning of period 1,661,963 83,050
Cash, end of period 665,888 3,314,430
The accompanying notes are an integral part of these financial statements
INTERNET BUSINESS'S INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation.
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect
the amounts reported in the financial statements. Actual results
could differ materially from those estimates. The unaudited
consolidated financial statements of the Company include the
accounts of all of its wholly or majority owned subsidiaries. All
intercompany accounts or transactions have been eliminated.
The unaudited consolidated financial statements at March 31, 2001
and for the three and nine months ended March 31, 2001 and 2000
are unaudited, but include all normal recurring adjustments and
accruals which are necessary to fairly state the Company's
consolidated financial position, results of operations and cash
flows for the periods presented. Operating results for the three
and nine months ended March 31, 2001 and 2000 are not
necessarily indicative of results that may be expected for any
future periods. The consolidated balance sheet at June 30, 2000
has been derived from the audited consolidated financial
statements at that date but does not include all of the
information and footnotes required by accounting principles
generally accepted in the United States for complete financial statements.
The information included in this report should be read in
conjunction with the Company's audited consolidated financial
statements and notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 2000.
2. Acquisitions
(a) First Quarter of Fiscal Year June 30, 2001
PMCC Financial Corp.
On July 28, 2000, the Company entered into an agreement with PMCC
Financial Corp. ("PMCC"), a full-service mortgage banking
company, whereby the Company would purchase 2,460,000 shares of
PMCC common stock from PMCC's former chairman of the board, which
represents 66.36% of the 3,707,000 total 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 will be released to
the Company based on payments made by the Company, as outlined in
the agreement. Shares of PMCC, a listed AMEX company, are
currently not trading. 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. As of September 30, 2000, the
Company has paid approximately $1,043,000, representing the
payment due at closing and the 1st installment, and has received
269,230 shares of PMCC, representing approximately 7% of the
total outstanding stock of PMCC.
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.
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.
As of February 12, 2001, the former Chairman of the Board of
PMCC and the Company have yet to reach agreement on the
renegotiated purchase price for the stock that is being acquired
by the Company.
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.
International Business Co., Inc.
On August 11, 2000, the Company entered into an agreement to
acquire all of the outstanding shares of International Business
Co. ("IBC"), a software developer that streamlines B2B e-
commerce, in exchange for 2,000,000 shares of restricted Company
shares to be held in escrow, with 1,000,000 restricted company
shares released to the seller on August 11, 2001 and the
remaining 1,000,000 shares released on April 11, 2002. Between
September 1, 2000 through March 1, 2001, the Company can
unilaterally cancel the contract if dissatisfied with the
seller's performance. As of September 30, 2000, the Company has
not completed its acquisition of IBC and has advanced monies to
IBC totaling $18,500.
As of Feburary 28, 2001 the Company canceled the acquisition of
IBC due to lack of performance by the sellers.
(b) Second Quarter of Fiscal Year ending June 30, 2001
SonicAuction.com
On October 5, 2000, the Company entered into a Stock Purchase
Agreement and acquired all of the outstanding stock of
SonicAuction.com, a business-to-business auction marketplace that
provides a forum for business merchants to purchase equipment and
merchandise. The agreement calls for the Company to issue to the
Seller 500,000 shares of Company stock (with certain restrictions
as set forth in the agreement), in exchange for all of the
outstanding and treasury shares of common stock of
SonicAuction.com.
Auction-Sales.com
On October 20, 2000, the Company entered into a Stock Purchase
Agreement ("Agreement") with Auction-Sales.Com, Inc. and its
majority shareholder, Zahid Rafiq (collectively, "Seller"), for
the purchase by the Company of 96.62% of the outstanding and
treasury shares of common stock ("Shares") of Auction-Sales.Com,
Inc., a leading edge e-commerce dynamic pricing application
service provider and has developed a proprietary state of the art
hybrid auction platform that address the combined needs of the
B2C, B2B and C2C markets. In exchange for the Shares, the
Company will pay, under the terms of the agreement, the
following: (a) 11,000,000 shares of Company's restricted common
stock to Seller for all of Seller's Shares, as follows: (i)
5,500,000 restricted shares will be issued to the Seller's
current shareholders, as defined (ii) 2,500,000 restricted shares
will be paid to certain creditors of the Seller. 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 Company, 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 9-
30-00. 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. The Company 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 Company.
As of December 31, 2000 the acquisition was rescinded and the
necessary filings with the SEC were filed in January 2001.
3. Net Profit or Loss Per Share
Basic net profit or loss per share has been computed by dividing
net profit or loss by the weighted average number of shares
outstanding during the period. Diluted net profit or loss per
share is computed by adjusting the weighted average number of
shares outstanding during the period for all potentially dilutive
shares outstanding during the period. Net profit or loss and
weighted average shares outstanding used for computing diluted
profit or loss per share were the same as that used for computing
basic profit or loss per share for the three and nine months
ended March 31, 2001 and 2000.
4. Stock Issuance.
The following shares were issued during the second quarter ended
December 31, 2000; 1. 500,000 shares of restricted 144 stock for
the acquisition of Sonic Auction.Com; and 2. pursuant to the
agreement with the conversion rights of the Preferred Stock
issued December 15, 1998. The following shares were converted to
common based upon the 10 day average of the closing bid price
prior to the to the conversion date. 7,140,406.
During the quarter ended March 31, 2001 the following shares were
issued: 18,981,080, with an additional 5,749,430 to be issued
prior to April 3, 2001, in exchange for the remainder of the
Preferred Stock that originally issued December 15, 1998.
5. Segment 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
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:
Nine Months Ended
March 31 March 31
2001 2000
Full-service ISP
Net sales $ 2,171,903 $ *2,034,693
Operating income 577,791 189,483
Mortgage loan originations held for resale
Net sales 21,516,853
Operating income (307,878)
E Commerce (B2BC)
Net sales 184,171
Operating income (155,526)
Marketing (B2BC)
Net sales 485,545
Operating income (572,415)
Other
Other Income 1,425,211
Net Income 568,691
Total
Net sales 25,783,683 2,034,693
Operating income 110,663 189,483
* Prior to March 31 2000, the Company did not report by segment.
At that time it had a full-service ISP provider services, and an
e-commerce and on line lending division.
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.
Revenues for the three-month period ended March 31, 2001 of
$12,343,896 increased 1024% when compared with revenues of
$1,205,361 in the prior year comparable period of the first
calendar quarter of 2000. Revenues for the nine-month period
ended March 31, 2001 of $25,783,683 increased 1267% when compared
to the revenues of $2,034,693 for the comparable period ended
March 31, 2001.
The gross profits margin of 18.9% for the three months ended
and 17.8% for nine months March 31, 2001 is a decrease from the
gross profit margin of 53.3 % for the same three-month period and
39.8% for the same nine-month period of the previous fiscal year.
Current fiscal margins for the third quarter of this fiscal year
are in line with managements expectations. The Company for the
three and nine months ended March 31, 2001 posted a net profit
for the quarter of $890,489 and $110,663, respectively.
Selling, general, and administrative expenses for the nine
months ended Marchr 31, 2001 increased to $5,004,243 which is a
significant increase when compared with the $ 1,352,364 for the
prior years comparable period. This increase is due to the
additional support personnel required to process the increased revenues.
The resulting income from operations of $698,611 increased
285% for the three months ended March 31, 2001 when compared to
$199,261 for same period ending March 31, 2000.
The most significant change made during this quarter was
increased revenues of $12,343,896 over the previous quarter of
$6,539,850 with only a minimal increase of support staff costs.
Liquidity and Capital Resources.
Net cash provided by the operations of the Registrant was
$665,888 for the three months ended March 31, 2001 is a
significant decrease when compared to the net cash provided by
operating and financing activities of $3,324,429 in the
comparable prior year period.
Capital Expenditures.
Other than as follows, no material capital expenditures were
made during the three quarters ended on March 31, 2001: purchase
of infrastructure equipment totaling $974,352.
Acquisitions
(a) Stock in PMCC Financial Corp.
On July 28, 2000, the Registrant entered into an agreement with
PMCC Financial Corp. ("PMCC"), a full-service mortgage banking
company, whereby the Registrant would purchase 2,460,000 shares
of PMCC common stock from PMCC's former chairman of the board,
which represents 66.36% of the 3,707,000 total PMCC shares
outstanding (see Exhibit 10.11 to this Form 10-Q). The aggregate
purchase price of $3,198,000 is to be paid in cash to the seller
by the Registrant 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 will be released to the Registrant
based on payments made by the Registrant, as outlined in the
agreement. Shares of PMCC, a listed AMEX company, are currently
not trading. In the event that three months after closing, if
PMCC's shares are not actively trading on the AMEX or NASDQ
exchanges and the Registrant has not merged PMCC with the
Registrant or any of the Registrant's subsidiaries, the purchase
price shall be reduced by the amount of the final two $175,000
payments. As of September 30, 2000, the Registrant has paid
approximately $1,043,000, representing the payment due at closing
and the 1st installment, and has received 269,230 shares of PMCC,
representing approximately 7% of the total outstanding stock of
PMCC. The Registrant is currently renegotiating the terms of
this transaction.
Also on July 28, 2000, in a separate transaction, the Registrant
entered into a stock sales agreement with an unrelated individual
whereby the Registrant would sell up to 370,000 of PMCC shares
that the Registrant either owns or will eventually own, for total
consideration of $1,387,500 (see Exhibit 10.12 to this Form 10-
Q). Shares of PMCC stock sold by the Registrant will be released
to the buyer in proportion to payments received. As of September
30, 2000, the Registrant received payments of $420,563 and the
Registrant released 112,150 shares of PMCC stock that it owned.
If PMCC shares are not actively trading within six months of the
agreement, the Registrant will issue to the Buyer the equivalent
number of shares of stock of the Registrant. Management has
represented that PMCC will become actively trading within the
six-month period, and the Registrant has recognized a gain on the
sale of the PMCC stock of $308,413 during the three months ended
September 30, 2000.
(b) International Business Co.
On August 11, 2000, the Registrant entered into an agreement
to acquire all of the outstanding shares of International
Business Co. ("IBC"), a software developer that streamlines B2B
e-commerce, in exchange for 2,000,000 shares of restricted
Registrant shares to be held in escrow, with 1,000,000 restricted
company shares released to the seller on August 11, 2001 and the
remaining 1,000,000 shares released on April 11, 2002 (see
Exhibit 10.13 to this Form 10-Q). Between the period from
September 1, 2000 through March 1, 2001, the Registrant can
unilaterally cancel the contract if dissatisfied with the
seller's performance. As of September 30, 2000, the Registrant
has not completed its acquisition of IBC and has advanced monies
to IBC totaling $18,500.
(c) Sonic Auction.com.
100% of the web based auction site Sonic Auction.com was acquired
by the Registrant on October 5, 2000 in exchange for 500,000
shares of restricted common stock of the Registrant (see Exhibit
10.14 to this Form 10-Q). Sonic Auction is a B2B auction
marketplace, providing an auction site for business merchants to
purchase equipment, and merchandise at a discount. This site has
a loyal customer base and had sales of over $2,000,000 for the
year ended December 31, 1999. The site has over $400 million
worth of auction-able product currently listed for auction.
(d) 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:
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. 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.
Other Agreement - 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.
Other Agreement - 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
plateform. 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.
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.
The Registrant is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Registrant has been threatened.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Pursuant to the agreement with the conversion rights of the
preferred stock issued December 15, 1998, the following shares
were converted to common based upon the 10 day average of the
closing bid price prior to the conversion date during the quarter
ended March 31, 2001: 18,981,080 (7,140,406 were issued on this
basis in the quarter ended December 31, 2000).
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.
Exhibits.
Exhibits included or incorporated by reference herein: See
Exhibit Index.
Reports on Form 8-K.
The following report on Form 8-K were filed during the third
quarter of the fiscal year covered by this Form 10-Q.
A Form 8-K was filed on January 12, 2001 to report that based on
certain breaches of the representations and warranties in the
acquisition agreement with regard to Auction-Sales.Com by the
seller, the Registrant, through its counsel, had notified the
seller that since it failed to cure such breaches the Registrant
was rescinding this agreement.
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: April 19, 2001 By: /s/ Albert R. Reda
Albert R. Reda, Chief Executive Officer
EXHIBIT INDEX
Exhibit Description
No.
2 Agreement and Plan of Merger (incorporated by reference to
Exhibit 2 to the Form 8-K/A filed on November 22, 1999)
3.1 Articles of Incorporation (incorporated by reference to
Exhibit 3.1 to 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 to 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 to 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 to 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
to 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 to 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 to 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 to 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 to 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 to the Form 10-Q filed on February
22, 2000).
10.6 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).
10.7 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).
10.8 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).
10.9 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).
10.10 Stock Purchase Agreement between the Registrant and
Atlas Capital Corporation, dated April 1, 2000 (incorporated by
reference to Exhibit 10.10 to the Form 10-K filed on September
27, 2000).
10.11 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).
10.12 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).
10.13 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).
10.14 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).
10.15 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-Q filed on February 15, 2001)