UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-QSB
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities and Exchange
Act of 1934.
For the quarterly period ended March 31, 2001.
( ) Transition report pursuant to Section 13 or 15(d) of the Exchange Act for the
transition period from _________________ to ____________ .
Commission File Number: 333-72097
LIFELONG.COM, INC.
(Exact name of registrant as specified in charter)
Colorado 98-0223498
(State of or other jurisdiction of (IRS Employer I.D. No.)
incorporation or organization)
2055 Peel St., Suite 825, Montreal, Canada H3A 1V4
(Address of Principle Executive Offices)
(888) 725-3433
(Registrant's telephone number)
Check whether the registrant: (1) has filed all reports required to be filed by
Section by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES ( X ) NO ( )
Indicate the number of shares outstanding of each of the issuer's classes of stock
as of March 31, 2001.
20,734,000 Common Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (X)
1
LIFELONG.COM, INC.
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (unaudited)
Balance Sheets as of March 31, 2001 and December 31, 2000 3
Statements of Operations for the three months ended March 31,
2001 and 2000, and the period November 24, 1999 (date of
incorporation) to March 31, 2001 4
Statements of Cash Flows for the three months ended March 31,
2001 and 2000, and the period February 16,2000 (date of
incorporation) to March 31, 2001 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations (including
cautionary statement)
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Securities Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 10
2
LIFELONG.COM, INC.
(A Development Stage Enterprise)
BALANCE SHEETS AS OF
ASSETS March 31, 2001 December 31,
(Unaudited) 2000
CURRENT ASSETS :
Cash and cash equivalents $ 40 $ 16,585
Accounts receivable 3,284 -
Employee advances 15,882 -
Affiliate receivable - 7,529
Total current assets 19,206 24,114
COMPUTER EQUIPMENT (net of accumulated
depreciation of $6,319) 28,202 30,021
OTHER 7,605 7,605
TOTAL $ 55,013 $ 61,740
================ =================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 223,874 $ 215,377
Accrued payroll and benefits 237,058 101,607
Stockholder advances 68,381 65,000
Due to affiliate 4,137 -
Accrued and other liabilities 25,189 15,279
Total current liabilities 558,639 397,263
CONVERTIBLE DEBT 401,220 401,220
Total liabilities 959,859 798,483
STOCKHOLDERS' DEFICIT:
Preferred stock - $0.001 par value; 50,000,000
shares authorized; 0 shares issued and outstanding - -
Common stock - $0.001 par value; 50,000,000
common shares authorized; 20,734,000 shares issued
and outstanding 20,734 20,734
Additional paid-in capital 14,291,936 14,291,936
Deficit accumulated during the development stage (15,217,516) (15,049,413)
Total Stockholders' Deficit (904,846) (736,743)
TOTAL $ 55,013 $ 61,740
================ =================
SEE NOTES TO FINANCIAL STATEMENTS.
3
LIFELONG.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Period
November 24, 1999
Three Months Three Months (date of
Ended March 31, Ended March 31, incorporation) to
2001 2000 March 31, 2001
REVENUES - Instructional design $ 3,284 $ - $ 3,284
OPERATING EXPENSES:
Stock-based expenses:
Employee compensation and benefits 7,096,882 7,105,585
-
Professional and consulting fees - 2,332,200 4,839,315
Product development - - 37,950
Selling and marketing - - 13,800
Loss from impairment of goodwill - 1,378,000 1,912,670
Other employee compensation and benefits 138,451 78,285 781,798
Other product development 7,093 10,000 250,430
Other professional and consulting fees 1,983 7,500 70,322
Other selling and marketing - - 47,433
Travel and entertainment - - 26,038
Other 23,860 (1,231) 135,459
Total operating expenses 171,387 10,901,636 15,220,800
NET LOSS $ 168,103 $10,901,636 $ 15,217,516
============== ============= ============
NET LOSS PER SHARE:
Basic and Diluted $ (.00) $ (.71)
============== =============
Weighted Average Number of Common
Shares Outstanding 20,734,000 15,457,400
============== =============
SEE NOTES TO FINANCIAL STATEMENTS.
4
LIFELONG.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the period
November 24, 1999
For the three For the three (date of
months ended months ended March incorporation) to
March 31, 2001 31, 2000 March 31, 2001
Cash Flows From Operating Activities:
Net loss $ (168,103) $ (10,901,636) $ (15,217,516)
Adjustment to reconcile net loss to net cash used by operating
Activities:
Depreciation 1,819 - 6,319
Loss form impairment of goodwill (net of liabilities assumed) - 1,376,405 1,890,670
Stock based compensation - 9,429,082 11,996,650
Increase in other assets - - (7,605)
Increase in accounts receivable (11,637) (214,623) (19,166)
Increase in accounts payable and other liabilities 157,995 5,500 490,258
Net Cash Used by Operating Activities (19,926) (305,272) (860,390)
Cash Flows From Investing Activities -
Purchases of computer equipment - (14,503) (34,521)
Cash Flows From Financing Activities:
Proceeds from issuance of convertible debentures - 319,775 401,220
Proceeds from issuance of common stock - - 425,350
Advances from stockholders 3,381 - 68,381
Cash Provided by Financing Activities 3,381 319,775 894,951
Net Increase In Cash and Cash Equivalents (16,545) - 40
Cash and Cash Equivalents at Beginning of Period 16,585 - -
Cash and Cash Equivalents at End of Period $ 40 $ - $ 40
================= ==================== ===================
Supplemental disclosure of cash flow information:
Cash Paid For:
Interest $ 0 $ 0 $ 0
================= ==================== ===================
Income Taxes $ 0 $ 0 $ 0
================= ==================== ===================
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES -
During the period November 24, 1999 (date of incorporation) to March 31, 2001, the
Company issued 2,734,000 shares of its common stock in connection with two business combinations.
SEE NOTES TO FINANCIAL STATEMENTS.
5
LIFELONG.COM, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - FORMATION AND OPERATIONS OF THE COMPANY
Lifelong.com, Inc. (initially incorporated under the laws of the state of Delaware
on February 16, 2000), merged on September 7, 2000 with Providence Capital II, Inc.
("we", "us", "our") incorporated under the laws of the State of Colorado on November
24, 1999. We are considered to be in the development stage as defined in Financial
Accounting Standards Board Statement No. 7, and intend to deliver highly interactive,
computer-based learning programs for corporate training and educational purposes
over the Internet. Our planned principal operations have not commenced; therefore
most of the accounting policies and procedures have not yet been established.
For financial statement purposes, the merger has been treated as a reverse acquisition
with us being treated as the acquiree; as such Providence was considered to be the
surviving legal entity and succeeded to the name of Lifelong.com, Inc.
The transaction was accounted for as a purchase. Accordingly, and because Providence
had no operations and/or assets as of the merger date, the entire purchase price
of approximately $535,000 (consisting of 734,000 of our shares common stock and
liabilities assumed of approximately $22,000) was reflected as goodwill as of the
merger date. Subsequently, the goodwill was determined to be impaired and as such
the entire amount has been included in the loss from impairment of goodwill in the
accompanying statement
of operations.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements. The reported amounts of
revenues and expenses during the reporting period may be affected by the estimates
and assumptions management is required to make. Actual results could differ from those
estimates.
BASIS OF PRESENTATION
Our accompanying unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and the instructions to Form 10-QSB and
Rule 10-1 of Regulation S-X of the Securities and Exchange Commission (the "SEC").
Accordingly, these consolidated financial statements do not include all of the footnotes
required by generally accepted accounting principles. In our opinion, all adjustments
(consisting of normal and recurring adjustments) considered necessary for a fair
presentation have been included. Operating results for the three months ended March
31, 2001 are not necessarily indicative of the results that may be expected for
the year ended December 31, 2001. The accompanying consolidated financial statements
and the notes thereto should be read in conjunction with our audited consolidated
financial statements as of and for the year ended December 31, 2000 contained in
our Form 10-KSB.
NOTE B - GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. As of March 31, 2001, we had a stockholders' deficit
of approximately $904,846 and a net working capital deficiency of approximately
$940,000. In addition, we anticipate that we will incur net operating losses for
the foreseeable future, and require a significant amount of capital to commence our
planned principal operations and proceed with our business plan. Accordingly, our
ability to continue as a going concern is dependent upon our ability to secure an
adequate amount of capital to finance our planned principal operations and implement
our business plan. Our plans include continued sales of our common stock and the
issuance of debt, however there is no assurance that we will be successful in their
efforts to raise the amount of capital necessary to proceed with our business plan.
These factors, among others, may indicate that the we will be unable to continue
as a going concern for a reasonable period of time.
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The financial statements do not include any adjustments relating to the recoverability
and classification of recorded asset amounts or the amounts and classification of
liabilities that might be necessary should the we be unable to continue as a going
concern.
NOTE C - CONVERTIBLE DEBENTURES
Convertible debentures bear interest at a fixed rate of 10% per annum and entitle
their holders to convert such debentures to the our common stock at a conversion
price of $1.00 per share at any time between January 1, 2001 and their maturity
date of October 31, 2001.
NOTE D - OTHER RELATED PARTY TRANSACTIONS
We periodically borrows funds from various stockholders and other related parties.
At March 31, 2001, such advances outstanding were $68,381. The advances are unsecured,
non-interest bearing and due on demand.
We utilize a Canadian bank account owned by Lifelong Software Canada, Inc. (an entity
owned by two of the our founding stockholders) for the collection and disbursement
of Canadian funds. As of March 31, 2001, the balance due to this account was $1,402,
which amount has been recorded as a due to affiliate.
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Item 2.
Management's Discussion and Analysis of Financial Condition or Plan of Operation.
Overview
The following discussion and analysis should be read in conjunction with the balance
sheet as of March 31, 2001 and the financial statements for the period ended March 31,
2001 included with this Form 10-QSB.
Information related to our predecessor entity, Providence Capital II, Inc. ("Providence"),
has been omitted as it was formed in 1999 for the purpose of acquiring a private
company desiring to become public. For financial statement purposes, the merger has
been treated as a reverse acquisition with LifeLong.Com ("Lifelong") being treated
as the acquiree.
Readers are referred to the cautionary statement, which addresses forward-looking
statements made by us.
Lifelong is considered to be in the development stage as defined in Financial Accounting
Standards Board Statement No. 7, and we are currently in the process of creating
strategic relationships and acquiring complementary operating companies within the
e-learning industry that have proven management and state-of-the-art technologies.
Results of Operations
Although we have been in existence for 14 months, management's efforts to develop
our business have not yet resulted in generation of revenues. For the period from
inception in February 2000 to date, we have not generated any revenues and incurred
a cumulative net loss of $15,217,513 of which $13,891,820 were non-cash charges.
These expenses are primarily related to our initial development and implementation
of our business plan.
To date, management's efforts have focused on developing sales and sales channel
relationships and promoting and conducting research and development to demonstrate
the feasibility and efficacy of our products. With the pending acquisition of IC
Education Inc. our consolidated sales for the first quarter of 2001 would be close
to $50,000. We signed a $55,000 contract in April, 2001 with a Toronto, Canada based
company to deliver a customized e-learning application and a $40,000 contract with
a Montreal, Canada based company in May, 2001 for another customized application.
Future Periods
Management expects that personnel costs will increase substantially in 2001 and
future years as we expand our development efforts. Most of our other operating expenses,
however, are expected to grow with time and expansion. We will increase rent, insurance
and utilities because of our new facility in Montreal, Canada.
There are several revenue producing projects that are in the final stages of negotiation
but no additional expenditures will be incurred until there are signed sales contracts.
Liquidity and Capital Resources
Since we have only begun operations in 2001, we have depended upon sales of our common
stock, issuance of convertible debentures and borrowings from certain stockholders
to finance our working capital requirements.
During the period from inception to March 31, 2001, we raised gross proceeds of
$425,350 from the sale of equity securities and $401,220 from the issuance of convertible
debentures to investors and friends and family of our management. We used all of those
proceeds to finance the cost of our operations to date as well as the development
of certain technologies. In addition, we have borrowed $65,000 from shareholders
that are non-interest bearing and payable on demand. No additional monies were raised
between January 1 and March 31, 2001.
Operating activities from January1 to March 31, 2001 created a net use of cash of
$19,926.
We intend to raise an additional three million dollars over the six months to continue
software development, expand our web site, hire additional personnel, sales and marketing,
licensing content, purchase equipment and general working capital.
We need the proceeds of this offering to expand our operations and finance our future
working capital requirements. Based upon our current plans and assumptions relating
to our business plan, we anticipate that the net proceeds from this offering will
satisfy our capital requirements for at least twelve months following the closing
of this offering. If our plans change or our assumptions prove to be inaccurate,
we may need to seek additional financing sooner than currently anticipated or curtail
our operations.
8
Capital Expenditures
Management intends to make significant capital expenditures in the coming year. Our
minimum needs are approximately $250,000, which we believe can be leased, but we
intend to raise capital to acquire $1,000,000 of additional facilities. If we are
unable to raise the capital needed to acquire the equipment, we will greatly curtail
planned operations. No assurance can be given that we will raise the needed capital.
Staffing
We plan to increase our work force. Currently, we have six full-time employees. Our
plan is to add eight research scientists to develop our products. Upon development
of these products, our marketing plan does not call for building a sales force to
sell to end-users but instead to partner with market segment leaders with existing
sales forces. We will train these sales forces to sell our products and to provide
technical assistance through quarterly service to the systems. We also intend to
add additional help in the accounting, administrative and investor relations areas.
Management expects to add at least twenty employees in 2001. The cost of these additional
employees is expected to be in excess of $1,250,000 in 2001.
CAUTIONARY STATEMENT
This Form 10-QSB, press releases and certain information provided periodically in
writing or orally by our officer or agents contain statements which constitute forward-looking
statements within the meaning of Section 27A of the Securities Act, as amended and
Section 21E of the Securities Exchange Act of 1934. The words expect, anticipate,
believe, goal, plan, intend, estimate and similar expressions and variations thereof
if used are intended to specifically identify forward-looking statements. Those
statements may appear in a number of places in this Form 10-QSB and in other places,
particularly, Management's Discussion and Analysis of Financial Condition and Results
of Operations, and include statements regarding the intent, belief or current expectations
of our directors or officers with respect to, among other things: (i) our liquidity
and capital resources; (ii) our financing opportunities and plans and (iii) our future
performance and operating results. Investors and prospective investors are cautioned
that any such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, and that actual results may differ materially
from those projected in the forward-looking statements as a result of various factors.
The factors that might cause such differences include, among others, the following:
(i) any material inability to successfully identify, consummate and integrate a
potential business combination at reasonable and anticipated costs; (ii) any
material inability to successfully internally develop our products; (iii) any adverse
effect or limitations caused by Governmental regulations; (iv) any adverse effect
on our continued positive cash flow and abilities to obtain acceptable financing in
connection with our growth plans; (v) any increased competition in business; (vi)
any inability to successfully conduct our business in new markets; and (vii) other
risks including those identified in our filings with the Securities and Exchange
Commission. We undertake no obligation to publicly update or revise the forward
looking statements made in this Form 10-QSB to reflect events or circumstances after
the date of this Form 10-QSB or to reflect the occurrence of unanticipated events.
9
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Securities Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SIGNATURE TITLE DATE
/s/ Francis A. Gariepy Director, Chief Accounting Officer May 21, 2001
10
