SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 2005
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 814-00689
IWORLD PROJECTS & SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 76-0784328
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
3834 SUNFLOWER COURT, MERRITT ISLAND, FL 32953
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (407)-810-6125
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT.
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) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the Registrant is an accelerated filer
(as defined by Rule 12b-2 of the Act). Yes |_| No |X|
iWORLD PROJECTS & SYSTEMS, INC.
THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS HISTORICAL INFORMATION AND
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS FORM 10-Q PURSUANT TO THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THEY INVOLVE KNOWN AND UNKNOWN RISKS
AND UNCERTAINTIES THAT MAY CAUSE IWORLD PROJECTS & SYSTEM'S (THE "COMPANY'S")
ACTUAL RESULTS TO DIFFER FROM FUTURE PERFORMANCE SUGGESTED HEREIN.
INDEX PAGE NO.
PART I. FINANCIAL INFORMATION 3
Item 1. Financial Statements 3
Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004 3
Consolidated Statements of Operations for the three-month periods ended March 31, 2005
and March 31, 2004 4
Consolidated Statements of Stockholders' Equity for the three-month periods ended March
31, 2005 and March 31, 2004 5
Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2005
and March 31, 2004 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk 12
Item 4. Controls and Procedures 12
PART II. OTHER INFORMATION 12
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 13
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
IWORLD PROJECTS & SYSTEMS, INC.
BALANCE SHEETS
AT MARCH 31, 2005 (UNAUDITED) AND DECEMBER 31, 2004
March 31, December 31,
2005 2004
--------------- -----------------
Assets:
Cash and cash equivalents $ 234,254 $ -
-------------- ----------------
Total Current Assets $ 234,254 $ -
Other Assets
Loans to Portfolio Companies $ 235,000 $ -
-------------- ----------------
Total Other Assets $ 235,000 $ -
Portfolio Investments $ 10,000,000 $ -
-------------- ----------------
Total Assets $ 10,469,254 -
============== ================
Liabilities
Short term Liabilities:
Accounts payable $ - $ 2,500
Short-term notes payable 352,501 -
-------------- ----------------
Total Short term Liabilities 352,501 2,500
Long term Liabilities:
Note Payable $ 10,000 -
Debentures Payable 500,000 -
-------------- ----------------
Total Long Term Liabilities $ 510,000 $ -
-------------- ----------------
Total Liabilities $ 862,501 $ -
-------------- ----------------
Stockholders' Equity:
Common Stock, Par value $.00001
Authorized 2,000,000,000 shares,
Issued 110,887,051 and 5,037,051 Shares
at March 31, 2005 and December 31, 2004 1,109 50
Paid-In Capital 11,027,801 28,860
Subscriptions receivable (1,360,000) -
Accumulated Deficit (62,157) (31,410)
-------------- ---------------
Total Stockholders' Equity 9,606,753 (2,500)
-------------- ---------------
Total Liabilities and
Stockholders' Equity $ 10,469,254 $ -
============== ===============
The accompanying notes are an integral part of these financial statements.
3
IWORLD PROJECTS & SYSTEMS, INC.
STATEMENTS OF OPERATIONS
For the three months ended
March 31, March 31, For the year ended
----------------- ------------------ December 31
2005 2004 2004
(unaudited) (unaudited)
----------------- ------------------ ------------------
Revenues: $ - $ - $ -
Expenses:
General and Administrative 30,747 - 16,000
----------------- ------------------ ------------------
Net Loss $ (30,747)$ - $ (16,000)
================= ================== ==================
Basic & Diluted loss per share $ (0.003)$ (0.00)
================= ==================
Weighted average shares outstanding 9,123,456 1,895,000
================= ==================
The accompanying notes are an integral part of these financial statements.
4
IWORLD PROJECTS & SYSTEMS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
SINCE JULY 16, 1997 (INCEPTION) TO MARCH 31, 2005
(UNAUDITED)
Stock
Common Stock Paid-In Retained Subscription Stockholders'
Shares Par Value Capital Earnings Receivable Equity
---------------------------------------------------------------
Balance at July 16, 1999 (inception) - $ - $ - $ - $ - $ -
Common Stock Issued
For Services 1,542,051 15 15,395 - - -
Net Loss - - - (15,410) - -
----------------------------------------------------------------
Balance at December 31, 1999 1,542,051 15 15,395 (15,410) - -
----------------------------------------------------------------
Balance at December 31, 2000 1,542,051 15 15,395 (15,410) - -
----------------------------------------------------------------
Balance at December 31, 2001 1,542,051 15 15,395 (15,410) - -
----------------------------------------------------------------
Balance at December 31, 2002 1,542,051 15 15,395 (15,410) - -
----------------------------------------------------------------
Balance at December 31, 2003 1,542,051 15 15,395 (15,410) - -
Shares issued for services 1,600,000 16 15,984 - - -
Acquisition of Silesia
Enterprises 1,895,000 19 (2,519) - - (2,519)
Net Loss - - - (16,000) - -
----------------------------------------------------------------
Balance at December 31, 2004 5,037,051 50 28,860 (31,410) - (2,519)
Shares issued for acquisition
of iWorld Projects & Systems 95,850,000 959 9,999,041 - 1,360,000 10,000,000
Shares issued for Subscription 10,000,000 100 999,900 - - 1,000,000
Net Loss - - - (30,747) - (30,747)
------------------------------------------------------------------
Balance at March 31, 2005 110,887,051 $ 1,109 11,027,801 $ (62,157)$1,360,000 $9,606,753
==================================================================
The accompanying notes are an integral part of these financial statements.
5
IWORLD PROJECTS & SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the For the
three months three months
ended March 31, ended March 31,
2005 2004
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (30,747)$ -
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock issued for services - -
Increase(decrease)in Accounts Payable and Accrued Liabilities (10,000) -
------------- -------------
Net Cash Used in operating activities (40,747) -
------------- -------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Cash invested in Portfolio Companies $ 235,000 -
-------------- -------------
Net cash provided by (used in) investing activities (235,000) -
------------- -------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from notes payable $ 510,000 -
------------- --------------
Net Cash Provided by
Financing Activities $ 510,000 -
Net (Decrease) Increase in
Cash and Cash Equivalents $ 234,254 -
Cash and Cash Equivalents
at Beginning of Period - -
------------- -------------
Cash and Cash Equivalents
at End of Period $ 234,254 $ -
============= =============
SUUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ -
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
None
The accompanying notes are an integral part of these financial statements.
6
IWORLD PROJECTS & SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2005, AND 2004
(UNAUDITED)
NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN
On December 15, 2004 the Company filed a Form N-54A, Notification
with the Securities and Exchange Commission electing to become a
Business Development Company pursuant to Sections 55 through 65
of the Investment Company Act of 1940.
iWorld was in the developmental stage since inception until the
First Quarter of 2005 and its operations up to that date had been
limited to issuing shares and other organizational matters.
During the First Quarter of 2005, the Company acquired all of the
outstanding shares of a private Florida holding company then
known as iWorld Projects & Systems, Inc., on a stock for stock
exchange, as reported on a Form 8-K filed with the SEC on
February 25, 2005. A total of 95,850,000 common shares of the
Company were issued in the acquisition at a valuation of $0.104
per share.
During the First Quarter, the Company also entered into a
convertible debenture agreement with Longview Equity Fund and
Longview International Fund for a total of $500,000 and executed
a convertible note in the amount of $10,000 in favor of Golden
Gate Investors, Inc. The Company also entered into subscription
agreements to raise additional funds from private sources under
the 1-E exemption offering, in the total amount of $360,000. The
Company subsequently closed on the acquisition of Prime Group,
Inc., a Texas construction project management company and
acquired Corinth Town Center, LLC. At March 31, 2005, the Company
had portfolio investments in iWorld Systems & Services, Inc.
(formerly iWorld Projects & Systems, Inc. (Florida)), Process
Integrity, Inc., Prime Group, Inc., Applied Management Concepts,
Inc. and PM Foum.org, Inc.
During the First Quarter, the Company issued 10 million shares of
its common stock in return for a subscription for $1 million in
funding and an agreement to make the related contributions on a
monthly basis over a two year period at the rate of approximately
$50,000 per month. As a result, a total of 110,887,501 common
shares of the Company were outstanding as of March 31, 2005.
iWorld will attempt to locate and negotiate with other eligible
portfolio companies for iWorld to invest in, lend funds to,
acquire an interest in and/or possibly manage. iWorld intends to
offer managerial assistance to eligible portfolio companies in
which it invests.
As a business development company, iWorld will be able to raise
money to acquire interests in small private business, as well as
larger companies.
The accompanying financial statements have been prepared on the
basis of accounting principles applicable to a "going concern",
which assume that the Company will continue in operation for at
least one year and will be able to realize its assets and
discharge its liabilities in the normal course of operations.
Certain conditions and events could cast doubt about the
Company's ability to continue as a "going concern" and the
financial statements included in the Company's 10-K report for
2004 contained a statement regarding the ability of the Company
to continue as a going concern. .The Company has incurred net
losses of approximately $30,747 for the three months ended March
31, 2005 and $16,000 for the year ended December 31, 2004, and
requires additional financing in order to finance its business
activities and proposed acquisitions on an ongoing basis. The
Company, however, has raised more than $510,000 in additional
funding in the First Quarter, has signed subscriptions for an
additional $1,360,000, and believes that its current and
committed capital will be sufficient to meet its obligations and
plans for the next twelve months. The Company is actively
pursuing alternative financing and has had discussions with
various third parties, although no firm commitments have been
obtained. The Company's future capital requirements will depend
on numerous factors including, but not limited to, continued
progress in finding additional acquisition candidates, funding of
its existing portfolio companies and the pursuit of business
opportunities.
7
IWORLD PROJECTS & SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2005, AND 2004
(UNAUDITED)
(Continued)
NOTE 1 - NATURE OF OPERATIONS AND GOING CONCERN (CONTINUED)
These financial statements do not reflect adjustments that would
be necessary if the Company were unable to continue as a "going
concern". While management believes that the actions already
taken or planned, will mitigate the adverse conditions and events
which raise doubt about the validity of the "going concern"
assumption used in preparing these financial statements, there
can be no assurance that these actions will be successful. If the
Company were unable to continue as a "going concern," then
substantial adjustments would be necessary to the carrying values
of assets, the reported amounts of its liabilities, the reported
revenues and expenses, and the balance sheet classifications
used.
NATURE OF BUSINESS
The Company has no products or services as of March 31, 2005
since it is a business development company and is precluded from
offering products or services directly. The Company was organized
as a vehicle to seek merger or acquisition candidates. The
Company intended to acquire interests in various business
opportunities, which in the opinion of management would provide a
profit to the Company. On December 15, 2004 the Company filed a
notification under Form N54a with the United States Securities
and Exchange Commission ("SEC") indicating its election to be
regulated as a business development company ("a BDC") under the
Investment Company Act of 1940. In connection with this election,
the Company has adopted corporate resolutions and intends to
operate as a closed-end management investment company.
ORGANIZATION AND BASIS OF PRESENTATION
The Company was incorporated under the laws of the State of
Nevada as Silesia Enterprises, Inc. On December 27, 2004, the
Company merged with Organic Solutions, Inc., also a Nevada
corporation, and the surviving entity then changed its name to
iWorld Projects & Systems, Inc. The Company's common shares are
listed for trading on The Pink Sheets under the symbol IWPS and
an application has been filed to list the shares on the NASDAQ
Over-the-Counter Bulletin Board (OTC BB).
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
This summary of accounting policies for iWorld Projects &
Systems, Inc. is presented to assist in understanding the
Company's financial statements. The accounting policies conform
to generally accepted accounting principles and have been
consistently applied in the preparation of the financial
statements.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents to the
extent the funds are not being held for investment purposes.
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles required management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
8
IWORLD PROJECTS & SYSTEMS, INC
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2005, AND 2004
(UNAUDITED)
(Continued)
CONCENTRATION OF CREDIT RISK
The Company has no off-balance-sheet concentrations of credit
risk such as foreign exchange contracts, options contracts or
other foreign hedging arrangements.
NOTE 3 - INCOME TAXES
As of March 31, 2005, the Company had a net operating loss
carryforward for income tax reporting purposes of approximately
$62,157 that may be offset against future taxable income through
2025. Current tax laws limit the amount of loss available to be
offset against future taxable income when a substantial change in
ownership occurs. Therefore, the amount available to offset
future taxable income may be limited. No tax benefit has been
reported in the financial statements, because the Company
believes there is a 50% or greater chance the carryforwards will
expire unused. Accordingly, the potential tax benefits of the
loss carryforwards are offset by a valuation allowance of the
same amount.
NOTE 4 - DEVELOPMENT STAGE COMPANY
The Company had not begun principal operations until the First
Quarter of 2005 and as is common with a development stage
company, the Company has had recurring losses during its
development stage. The Company's financial statements are
prepared using generally accepted accounting principles
applicable to a going concern which contemplates the realization
of assets and liquidation of liabilities in the normal course of
business. However, the Company currently has significant cash or
other material assets, including portfolio investments, and has
an expected source of revenues sufficient to cover its operating
costs and to allow it to continue as a going concern.
NOTE 5 - COMMITMENTS
As of March 31, 2005 substantially all activities of the Company
have been conducted by corporate officers from either their homes
or business offices. Currently, there are no outstanding debts
owed by the company for the use of these facilities and there are
no commitments for future use of the facilities. The Company is
actively searching for suitable office space and anticipates
leasing office space during the Second Quarter of 2005.
The Company currently does not have any employment agreements in
place with its principal officers and has no approved policy for
compensation of its independent directors. The Compensation
Committee of the Board of Directors, made up entirely of
independent directors, is expected to recommend compensation
arrangements for the Company's officers and independent directors
during the Second Quarter of 2005 for approval at the next
meeting of the Board of Directors.
NOTE 6 - COMMON STOCK
On March 31, 2005 the Company issued 95,850,000 shares of common
stock to the shareholders of iWorld Projects & Systems, Inc.
("iWorld Florida") at a price of $0.104 per share in exchange for
all of the outstanding shares of iWorld Florida, as a portfolio
investment of the Company.
On December 16, 2004, the Company (as Silesia Enterprises, Inc.)
filed an offering to sell common stock equal to $5,000,000 under
Regulation E promulgated under the Securities Act of 1933 at
prices between $.05 and $5.00 per share. The offering became
effective on December 28, 2004. As of March 31, 2005 the Company
had issued 10,000,000 shares at $.10 per share.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS. THREE-MONTH PERIOD ENDED MARCH 31, 2005 AS COMPARED TO THE
SIMILAR PERIOD IN 2004
LIQUIDITY AND CAPITAL RESOURCES
We have conducted limited operations until the first quarter of 2005, when we
undertook the acquisition of several portfolio investments and raised capital
for further acquisitions and expanded operations.. As a Business Development
Company under the Investment Company Act of 1940, we have been organized to
provide investors with the opportunity to participate, with a modest amount in
venture capital, in investments that are generally not available to the public
and that typically require substantially larger financial commitments. In
addition, we will provide professional management and administration that might
otherwise be unavailable to investors if they were to engage directly in venture
capital investing.
On March 31, 2005, the Company entered into two Convertible Notes (the Notes),
one in the amount of $350,000 in favor of Longview Equity Fund, LP and the other
in the amount of $150,000 in favor of Longview International Equity Fund, LP.
Each of the Notes has a maturity of fifteen months and bears interest at the
rate of four over prime, but not less than eight percent. Each of the Notes is
repayable in ten equal monthly installments of principal and interest commencing
July 1, 2005. Each monthly installment payment of principal and interest may be
converted into common stock of the Company at a fixed conversion price of $0.12
per share under certain circumstances, provided that the result of any
conversion would not result in the holder of the Notes holding more than 4.99
percent of the common shares then outstanding. The Company also pledged certain
assets as security for repayment of the Notes. There were no personal guarantees
or recourse provisions against any third person in the Notes. In addition,
Longview Equity Fund, LP was granted a five year warrant to purchase up to
2,916,667 shares of common stock of the Company at an exercise price of $0.18
per share, and Longview International Equity Fund, LP was granted a five year
warrant to purchase up to 1,250,000 shares of common stock of the Company, also
at an exercise price of $0.18 per share.
On March 15, 2005, the Company entered into a deferred subscription agreement
for a total of $1 million in funding, payable over two years, and issued 10
million shares of its common stock for the deferred payments, which will be made
in installments of approximately $50,000 per month commencing in July 2005. In
addition, the Company entered into a convertible promissory note in the amount
of $10,000 with the same party, payable in two years at 5 1/4 percent interest,
convertible into stock of the Company at a conversion price of the lesser of
$0.50 per share or 80 percent of the average price of the five lowest volume
weighted average trading days prior to the election to convert.
On March 31, 2005, the Company acquired all of the outstanding shares of iWorld
Projects & Systems, Inc., a Florida corporation. The acquisition, which was
first announced publicly on January 3, 2005, was closed based on an Acquisition
Agreement between the companies signed on December 30, 2004. The Company issued
95,850,000 Common shares at an agreed value of $0.104 per share, to acquire all
of the shares of IWSS, which has become a wholly-owned subsidiary of the Company
in a transaction valued at $ 10 million, based on the number of shares issued,
the market price of the shares, and the assets and businesses acquired. The
Florida corporation subsequently changed its corporate name to iWorld Systems &
Services, Inc. (IWSS). The current officers and directors of the Company were
the officers and directors of the Florida corporation and became the officers
and directors of the Company in the acquisition transaction.
IWSS was a holding company with offices in Florida and Dallas, Texas which was
formed for the purpose of locating and acquiring operating companies in the
project management industry as well as supporting companies and technologies.
IWSS has a management team of experienced executives and internationally
recognized experts in project management. IWSS had two wholly-owned operating
subsidiaries, Process Integrity, Inc., based in Arlington, Texas; and Applied
Management Concepts, Inc., based in Clearwater (Houston), Texas. The company had
also signed a letter of intent to acquire all of the outstanding shares of Prime
Group Associates, Inc., a construction industry project management company based
in Corinth, Texas, which the Company assumed and closed on March 31, 2005. IWSS
had engaged in several rounds of private financing prior to its acquisition by
the Company.
At March 31, 2005, the Company held $11,829,254 in assets, including its
portfolio investments acquired through the acquisition of iWorld Florida, as
compared to $0 in assets at December 31, 2004.
Cash and cash equivalents from inception through December 31, 2004 have been
insufficient to provide the operating capital necessary to operate the Company.
The necessary capital to operate the Company was initially provided by the
principals and founders of the Company in the form of both debt and capital
stock issuances as set forth in the financial statements incorporated herein. In
10
order to raise capital, the Company, on December 16, 2004, filed a Form 1-E with
the SEC, proposing to sell up to $5,000,000 of its common stock at prices
between $0.05 and $5.00. Pursuant to the 1-E exemption, the Company accepted
subscriptions for a total of 10,000,000 shares of common stock at the price of
$0.10 to a private purchaser.
The Company believes that its liquidity and capital resources are adequate to
satisfy its current operational needs as well as its investment objectives.
RESULTS OF OPERATIONS
INVESTMENT INCOME AND EXPENSES
For the three months ended March 31, 2005, the Company had no investment income,
and operating expenses of $30,747, resulting in a net loss of ($30,747). For the
three months ended March 31, 2004, the Company (as Silesia Enterprises) had no
investment income, and no operating expenses, resulting in no net gain or loss.
The increase in expenses for the three months ended March 31, 2005 over the same
period in 2004 resulted from the Company commencing its primary operations. The
expenses consist of general and administrative expense of $30,747. The general
and administrative expense consisted primarily of legal fees and expenses and
due diligence expenses associated with the debenture funding, and general
business expenses.
NET ASSETS
The Company's net assets were $10,996,753, or a net asset value per share of
$0.989 at March 31, 2005. This represents a change from net assets of $0, at
December 31, 2004. This increase in net asset value per share resulted primarily
from the acquisition of portfolio companies, through the acquisition of iWorld
Florida, for stock of the Company.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
The Company's Investment and Audit Committees, consisting of independent
Directors of the Company, will make certain critical accounting estimates with
respect to the valuation of private portfolio investments.
PORTFOLIO INVESTMENTS
As a result of the acquisition of IWSS, the Company acquired portfolio
investments in Process Integrity, Inc. and Applied Management Concepts, Inc. The
Company also has acquired portfolio investments in Prime Group, Inc., Corinth
Town Center LLC and PM Forum.org, Inc.
Process Integrity, Inc. is a Texas-based software and services company
specializing in process improvement technologies and solutions. Formed in 1986
by one of Americas top experts in quality and process improvement methodologies,
the company has developed a robust software solution for ensuring zero defects
in manufacturing and other processes. The company's flagship product has been
proven 100% effective in eliminating FDA compliance problems in the
manufacturing of pharmaceutical products, medical devices and other products
subject to federal standards and regulation. The company has attracted the
attention of several large pharmaceutical companies that have committed to
enterprise-wide implementations of the company software.
Applied Management Concepts, Inc. is a Houston-based company formed in 1993 that
sells project management related software, training and consulting services to
large industrial companies in the aerospace, construction, defense,
petrochemical and power industries. AMCi currently has business relations with
aerospace companies working at NASA Johnson Space Center and some of Americas
largest petrochemical companies with plants along the Houston Ship Canal. AMCi
provides the Company with marketing resources and entree into major industries
for other iWorld products and services. One division of AMCi will provide
project planning, scheduling and management services to customers in the
engineering, construction, petrochemical and oil & gas industries, including
plant turnaround services. Another division will provide PM products and
services for the aerospace and defense industries, and will have an office on
NASA Road 1 in Clearlake, Texas, providing Registrant with a base of operations
near NASA. A second AMCi office will be opened near Cape Canaveral on Merritt
Island in Florida, where IWSS already maintains a corporate office. Future
business opportunities include the opening of branches in major cities around
the USA. The president of AMCi is also currently the president of the
Clearlake/Galveston chapter of the Project Management Institute, which serves
industries and organizations in south Houston, including NASA and various
aerospace, construction, engineering, oil& gas, and petrochemical companies.
Prime Group, Inc. is a construction project management services company based in
the Dallas area that provides turnkey project and design/build services to
11
commercial property developers and investors. The company currently has several
projects under contract, including a town home development, small shopping
centers and medical offices, with combined projected revenues of $14.8 million
over the next 15 months. Another 5-10 project opportunities have been
identified, with potential revenues of $20+ million. All of these projects can
be completed during the next two years. The company also will serve as the
project manager to develop a 17-acre master-planned town center for a community
north of Dallas, being developed by Corinth Town Center, LLC, which the Company
also has acquired, and which will generate additional projects, revenues and
profits for the Company.
The Company's general plan of operation is to maintain IWSS as a wholly-owned
operating subsidiary to provide management and financing assistance to portfolio
investments in the software, development and support areas, and to form two
additional wholly-owned operating subsidiaries, one to manage and assist in the
financing of project management portfolio investment companies and the other to
manage and assist in funding of other portfolio investments. It is expected that
each of these subsidiaries will have a Board of Directors made up of directors
of the Company, as appropriate, as well as the chief executive of each portfolio
company in that group.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
EQUITY PRICE RISK
The Company anticipates that a majority of its investment portfolio will consist
of securities in private companies and private investment funds, which are not
publicly traded. These investments would be recorded at fair value as determined
by the Investment Advisers retained by the Company in accordance with valuation
guidelines adopted by the Board of Directors. This method of valuation does not
result in increases or decreases in the fair value of these securities in
response to changes in market prices. Thus, these securities would not be
subject to equity price risk normally associated with public equity markets,
except that to the extent that the private investment funds hold underlying
public securities, the Company is indirectly exposed to equity price risk
associated with the public markets. Thus, there is no exposure to equity price
risk, estimated as the potential loss in fair value due to a hypothetical 10%
decrease in quoted market prices. At March 31, 2005, the Company held no
publicly traded equity securities, although IWSS held 2 million shares of
FineLine Holdings, Inc., a Pink Sheet traded company (FNLH), valued at $20,000
and received during 2004 as payment for consulting services rendered to FineLine
Holdings.
ITEM 4. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures. As of March 31, 2005
(the end of the period covered by this report), the Company's principal
executive officers and principal financial officer evaluated the effectiveness
of the Company's disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and have concluded that, based on such
evaluation, the Company's disclosure controls and procedures were adequate and
effective to ensure that material information relating to the Company was made
known to them by others within those entities.
(b) Changes in Internal Controls. There were no changes in the Company's
internal controls over financial reporting identified in connection with the
evaluation of such internal controls that occurred during the Company's last
fiscal quarter, that have materially affected, or are reasonably likely to
materially affect, the Company's internal controls over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
USE OF PROCEEDS
During the three months ended March 31, 2005, we received a total of
$510,000 in proceeds from the loan and debenture transactions. We used the net
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proceeds from this funding as follows:
Retirement of debt $ 10,000
Loans to portfolio companies 235,000
Operating and administrative expenses 30,747
Working capital (cash) 234,254
--------
$510,000
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
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. (A) EXHIBITS.
31.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
31.2 Certification of Treasurer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
(B) REPORTS ON FORM 8-K.
(1) On January 3, 2005, the Company filed a Current Report on Form 8-K to
report under Item 5.03 the merger of Silesia Enterprises, Inc and Organic
Solutions, Inc., and the corporate name change to iWorld Projects &
Systems, Inc., effective December 30, 2004.
(2) On February 25, 2005, the Company filed a Current Report on Form 8-K to
report under Item 5.01 a change in control of the Company, under Item
5.02 appointment of new Directors and Officers, and under Item 8, the
acquisition of the private Florida company, iWorld Projects & Systems,
Inc..
(3) On March 4, 2005, the Company filed a Current Report on Form 8-K to
report under Item 5.02 the appointment of additional independent
directors of the Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
iWORLD PROJECTS & SYSTEMS, INC.
Date: May 13, 2005 BY: /s/ Robert Hipple
-------------------------------------------------
Robert Hipple
hief Executive Officer/principal executive
C officer
Date: May 13, 2005 BY: /s/ Robert Hipple
-------------------------------------------------
Robert Hipple
Treasurer/principal financial officer
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