U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: March 31, 2001
Commission File Number: 0-28053
INVESTMENT ASSOCIATES, INC.
(Exact name of small business issuer as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
98-0204280
(IRS Employer Identification No.)
104-1456 St. Paul St.
Kelowna, British Columbia, Canada
(Address of principal executive offices)
V1Y 2E6
(Zip Code)
(250) 868-8177
(Issuer's Telephone Number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 ____.
The number of shares of the registrant's only class of common stock issued and
outstanding, as of May 4, 2001, was 1,000,000 shares.
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the six month period ended March 31,
2001 are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
unaudited financial statements and notes thereto included herein. In connection
with, and because it desires to take advantage of, the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995, the Company cautions
readers regarding certain forward looking statements in the following discussion
and elsewhere in this report and in any other statement made by, or on the
behalf of the Company, whether or not in future filings with the Securities and
Exchange Commission. Forward looking statements are statements not based on
historical information and which relate to future operations, strategies,
financial results or other developments. Forward looking statements are
necessarily based upon estimates and assumptions that are inherently subject to
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond the Company's control and many of which, with respect
to future business decisions, are subject to change. These uncertainties and
contingencies can affect actual results and could cause actual results to differ
materially from those expressed in any forward looking statements made by, or on
behalf of, the Company. The Company disclaims any obligation to update forward
looking statements.
Plan of Operation
Investment Associates, Inc. ("we," "our," or "the Company") intends to seek
to acquire assets or shares of an entity actively engaged in business, in
exchange for its securities. As of the date of this report, our management has
had preliminary discussions with potential merger or acquisition candidates, but
there is no definitive agreement with any third party relevant thereto. In the
event we do enter into an agreement with such a third party, our Board of
Directors intends to obtain certain assurances of value of the target entity
assets prior to consummating such a transaction, with further assurances that an
audited financial statement would be provided within sixty days after closing of
such a transaction. Closing documents relative thereto will include
representations that the value of the assets conveyed to or otherwise so
transferred will not materially differ from the representations included in such
closing documents, or the transaction will be voidable.
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We have no full time employees. Our President and Secretary have agreed to
allocate a portion of their time to our business, without compensation. These
officers anticipate that our business plan can be implemented by their devoting
approximately 20 hours per month to our business affairs and, consequently,
conflicts of interest may arise with respect to the limited time commitment by
such officers.
Because we presently have nominal overhead or other material financial
obligations, we believe that our short term cash requirements can be satisfied
by our management injecting whatever amounts of cash to cover these incidental
expenses. There are no assurances whatsoever that any additional cash will be
made available to us through any means.
Liquidity and Capital Resources
We presently have nominal cash or cash equivalents. Because we are not
required to pay rent or salaries to any of our officers or directors, we believe
that we have sufficient funds to continue operations through the foreseeable
future.
Our securities are currently not liquid. There are no market makers in our
securities and it is not anticipated that any market will develop in our
securities until such time as we successfully implement our business plan of
engaging in a business opportunity, either by merger or acquisition of assets.
We presently have no liquid financial resources to offer such a candidate and
must rely upon an exchange of our stock to complete such a merger or
acquisition.
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 SECURITY HOLDERS -
NONE.
ITEM 5. OTHER INFORMATION - NONE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K -
(a) Exhibits - none
(b) Reports on Form 8-K - none.
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
INVESTMENT ASSOCIATES, INC.
(Registrant)
Dated: May 4, 2001
By: s/Robert Hemmerling
--------------------------------
Its: Secretary
-------------------------------
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INVESTMENT ASSOCIATES, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEET
(Unaudited)
March 31, 2001
ASSETS
TOTAL ASSETS $ -
==========
LIABILITIES AND SHAREHOLDERS' (DEFICIT)
LIABILITIES:
Accounts payable and accrued liabilities.......................$ 500
----------
TOTAL LIABILITIES 500
----------
SHAREHOLDERS' (DEFICIT) (Note D):
Preferred stock................................................ -
Common stock................................................... 1,000
Additional paid-in capital..................................... 17,409
Deficit accumulated during the development stage............... (18,909)
----------
TOTAL SHAREHOLDERS' (DEFICIT) (500)
----------
$ -
==========
See accompanying notes to condensed financial statements
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INVESTMENT ASSOCIATES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
July 18, 1997
Three Months Ended Six Months Ended (inception)
-------------------- --------------------- Through
March 31, March 31, March 31, March 31, March 31,
2001 2000 2001 2000 2001
--------- --------- --------- --------- -------------
COSTS AND EXPENSES
Legal fees...........................$ 934 $ 104 $ 1,704 $ 10,104 $ 12,894
Accounting fees...................... 250 250 500 2,231 4,480
Licenses and fees..................... - - - - 535
Stock-based compensation for
organizational costs (Note B)... - - - - 1,000
--------- --------- --------- --------- -------------
LOSS FROM OPERATIONS 1,184 354 2,204 12,335 18,909
--------- --------- --------- --------- -------------
INCOME TAXES (Note C).................... - - - - -
--------- --------- --------- --------- -------------
NET LOSS $ 1,184 $ 354 $ 2,204 $ 12,335 $ 18,909
========= ========= ========= ========= =============
BASIC AND DILUTED
LOSS PER COMMON SHARE................$ * $ * $ * $ 0.01
========= ========= ========= =========
BASIC WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING...................1,000,000 1,000,000 1,000,000 1,000,000
========= ========= ========= =========
* Less than .01 per share
See accompanying notes to condensed financial statements
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INVESTMENT ASSOCIATES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
July 18, 1997
Six Months Ended (inception)
March 31, Through
------------------ March 31,
2001 2000 2001
-------- -------- -------------
Net cash used in operating activities.............$ (3,204) $(12,420) $ (17,409)
-------- -------- -------------
Cash flows from financing activities:
Third party expenses paid by affiliate on
behalf of the company, recorded as
additional-paid-in capital............... 3,204 12,420 17,409
-------- -------- -------------
Net cash provided by financing activities......... 3,204 12,420 17,409
-------- -------- -------------
Net change in cash - - -
Cash, beginning of period......................... - - -
-------- -------- -------------
Cash, end of period $ - $ - $ -
======== ======== =============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest.................................$ - $ - $ -
======== ======== =============
Income taxes.............................$ - $ - $ -
======== ======== =============
Non-cash financing activities:
1,000,000 shares common stock
issued for services...................$ - $ - $ 1,000
======== ======== =============
See accompanying notes to condensed financial statements
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INVESTMENT ASSOCIATES, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: BASIS OF PRESENTATION
The condensed financial statements presented herein have been prepared by the
Company in accordance with the accounting policies in its audited financial
statements for the year ended September 30, 2000 as filed in its form 10-KSB on
January 12, 2001 and should be read in conjunction with the notes thereto. The
Company entered the development stage in accordance with Statement of Financial
Accounting Standard ("SFAS") No. 7 on July 18, 1997 and is a "blank check"
company with the purpose to evaluate, structure and complete a merger with, or
acquisition of, a privately owned corporation.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
Interim financial data presented herein are unaudited.
NOTE B: RELATED PARTY TRANSACTIONS
The Company maintains a mailing address at an affiliate's address. This address
is Suite 104, 1456 St. Paul Street, Kelowna, B.C., Canada V1Y 2E6. At this time,
the Company has no need for an office.
The Company does not maintain a checking account and all expenses incurred by
the Company are paid by an affiliate. During the six months ended March 31,
2001, the affiliate paid expenses totaling $3,204, which increased the Company's
additional paid-in capital from $14,205 at September 30, 2000 to $17,409 at
March 31, 2001.
During the six months ended March 31, 2001, the Company incurred legal expense
of $1,704 and accounting expense of $500. The affiliate does not expect to be
repaid for the expenses it pays on behalf of the Company. Accordingly, as the
expenses are paid, they are classified as additional paid-in capital.
NOTE C: INCOME TAXES
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". The Company incurred
net operating losses during the periods shown on the condensed financial
statements resulting in a deferred tax asset, which was fully allowed for,
therefore the net benefit and expense result in $-0- income taxes.
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INVESTMENT ASSOCIASTES, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE D: FORWARD STOCK SPLIT
Common Stock
- ------------
The Company initially authorized 25,000 shares of no par value common stock. On
July 23, 1999 the Board of Directors approved an increase in authorized shares
to 50,000,000 and changed the par value to $.001. On July 20, 1997, the Company
issued 1,000 shares of common stock for services valued at $1.00 per share, or
$1000.
On October 5, 1999 the Company filed amended articles with the state of Nevada
to change the authorized shares of common stock originally approved by the Board
of Directors to 50,000,000, $.001 par and 25,000,000 shares of preferred stock
$.001 par.
On October 6, 1999, the Board of Directors approved a 1,000 to 1 forward split.
This increased outstanding common shares from 1,000 to 1,000,000. The financial
statements take into account this split.
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