FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OF
THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE MONTH OF SEPTEMBER, 2001
--------------------------
INSIDE HOLDINGS INC.
---------------------------------------
(Translation of registrant's name into English)
Suite 1260, 609 Granville Street, Vancouver, B.C., Canada
---------------------------------------------------------
(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.]
Form 20-F X Form 40-F
--- ---
[Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.]
Yes No X
--- ---
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
THE COMPANY, A FOREIGN PRIVATE ISSUER DOMICILED IN CANADA, IS REQUIRED, UNDER
THE BRITISH COLUMBIA SECURITIES ACT AND RULES TO FILE WITH THE BRITISH COLUMBIA
SECURITIES COMMISSION, FOR PUBLIC VIEWING, QUARTERLY AND ANNUAL FINANCIAL
STATEMENTS, AND OTHER INFORMATION, WHICH THE REGISTRANT DEEMS OF MATERIAL
IMPORTANCE TO STOCKHOLDERS.
ATTACHED IS THE COMPANY'S QUARTERLY REPORT FOR THE THREE MONTHS ENDED JULY 31,
2001.
INSIDE HOLDINGS INC.
UNAUDITED FINANCIAL STATEMENTS
(EXPRESSED IN CANADIAN DOLLARS)
(A DEVELOPMENT STAGE COMPANY)
JULY 31, 2001
INSIDE HOLDINGS INC.
BALANCE SHEETS
(Unaudited)
(Expressed in Canadian Dollars)
(A Development Stage Company)
===========================================================================================
July 31, April 30,
2001 2001
-------------------------------------------------------------------------------------------
ASSETS
CURRENT
Cash $ 6,585 $ 6,940
Receivable 1,006 681
------------ ------------
7,591 7,621
INTELLECTUAL PROPERTY (Note 3) 15,000 20,000
------------ ------------
$ 22,591 $ 27,621
===========================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities $ 19,780 $ 13,894
Due to related parties (Note 4) 72,100 64,075
------------ ------------
91,880 77,969
------------ ------------
SHAREHOLDERS' EQUITY
Capital stock
Authorized
100,000,000 common shares without par value
Issued
4,637,600 common shares (April 30, 2001 - 4,637,600) 3,368,694 3,368,694
Deficit accumulated during the development stage (111,555) (92,614)
Deficit (3,326,428) (3,326,428)
------------ ------------
(69,289) (50,348)
------------ ------------
$ 22,591 $ 27,621
===========================================================================================
The accompanying notes are an integral part of these financial statements.
INSIDE HOLDINGS INC.
STATEMENTS OF OPERATIONS AND DEFICIT
(Unaudited)
(Expressed in Canadian Dollars)
(A Development Stage Company)
=================================================================================
Cumulative
Amounts
From the
Start of
Development
Stage on
May 1, Three Month Period Ended
2000 to July 31
July 31, ----------------------
2001 2001 2000
---------------------------------------------------------------------------------
EXPENSES
Amortization $ 25,000 $ 5,000 $ -
Consulting 7,500 - 7,500
Listing and transfer agent fees 13,983 690 2,130
Management fees 37,500 7,500 7,500
Office and general 6,528 41 2,648
Professional fees 21,044 5,710 -
---------- ----------- ---------
LOSS FOR THE PERIOD $(111,555) $ (18,941) $(19,778)
=================================================================================
BASIC AND DILUTED LOSS PER SHARE $ (0.004) $ (0.041)
=================================================================================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 4,637,600 487,600
=================================================================================
The accompanying notes are an integral part of these financial statements.
INSIDE HOLDINGS INC.
STATEMENT OF CASH FLOWS
(Unaudited)
(Expressed in Canadian Dollars)
(A Development Stage Company)
=================================================================================
Cumulative
Amounts
From the
Start of
Development
Stage on
May 1, Three Month Period Ended
2000 to July 31
July 31, ----------------------
2001 2001 2000
---------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $(111,555) $(18,941) $(19,778)
Item not involving cash:
Amortization 25,000 5,000 -
Change in non-cash working capital items:
Increase in receivable (1,006) (325) (1,098)
Increase (decrease) in accounts payable 847 5,886 (8,042)
Increase in due to related parties 28,000 8,025 37,301
---------- --------- ---------
Cash used in operating activities (58,714) (355) 8,383
---------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock 65,000 - -
---------- --------- ---------
Cash provided by financing activities 65,000 - -
---------- --------- ---------
INCREASE (DECREASE) IN CASH FOR THE PERIOD 6,286 (355) 8,383
CASH, BEGINNING OF PERIOD 299 6,940 299
---------- --------- ---------
CASH, END OF PERIOD $ 6,585 $ 6,585 $ 8,682
===============================================================================
CASH PAID FOR INCOME TAXES $ - $ - $ -
===============================================================================
CASH PAID FOR INTEREST $ - $ - $ -
===============================================================================
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (Note 5)
The accompanying notes are an integral part of these financial statements.
INSIDE HOLDINGS INC.
STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
(Expressed in Canadian Dollars)
(A Development Stage Company)
========================================================================================================
Common Common Deficit
Shares Shares Accumulated
Issued and Issued and During
Fully Paid Fully Paid Development
(Number) (Amount) Stage Deficit Total
------------------------------------ ----------- ------------ ------------- ------------ ----------
Balance, April 30, 1998 488,235 $ 3,163,181 $ - $(3,044,438) $ 118,743
Cancellation of shares (635) - - - -
Loss for the year - - - (94,464) (94,464)
----------- ------------ ------------- ------------ ----------
Balance, April 30, 1999 487,600 3,163,181 - (3,138,902) 24,279
Loss for the year - - - (187,526) (187,526)
----------- ------------ ------------- ------------ ----------
Balance, April 30, 2000 487,600 3,163,181 - (3,326,428) (163,247)
Shares issued for cash 650,000 65,000 - - 65,000
Shares issued for debt settlement 3,500,000 140,513 - - 140,513
Loss for the year - - (92,614) - (92,614)
----------- ------------ ------------- ------------ ----------
Balance, April 30, 2001 4,637,600 3,368,694 (92,614) (3,326,428) (50,348)
Loss for the period - - (18,941) - (18,941)
----------- ------------ ------------- ------------ ----------
Balance, July 31, 2001 4,637,600 $ 3,368,694 $ (111,555) $(3,326,428) $ (69,289)
========================================================================================================
The accompanying notes are an integral part of these financial statements.
INSIDE HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
(Expressed in Canadian Dollars)
(A Development Stage Company)
JULY 31, 2001
================================================================================
1. NATURE AND CONTINUANCE OF OPERATIONS
The Company was formed under the laws of the province of British Columbia,
Canada, on July 7, 1992 pursuant to a statutory amalgamation of two
predecessor companies previously engaged in the exploration and development
of mineral resource properties in Canada. The balance sheets of the
predecessor companies were carried over at historical cost. Effective
October 6, 2000, the Company changed governing jurisdiction from the
province of British Columbia to the Yukon.
Since the date of formation, the Company raised additional private equity
capital to settle certain indebtedness and for the further purpose of
exploring new lines of business. All costs associated with identifying,
researching and negotiating with prospective businesses have been charged
to earnings in the year they were incurred.
On May 1, 2000, the Company purchased 400 registered Internet domain names
each ending with the suffix "inside.com" from a privately held company (the
"Vendor"). Total purchase consideration consists of a note in the amount of
$40,000 payable without interest on the earlier of; (1) the date on which
the Company is in receipt of proceeds totalling $40,000 from the sale or
lease of any of its domain names; (2) the date on which the Company is in
receipt of proceeds exceeding $200,000 from the sale and issue of common
shares; and (3) June 30, 2001. The vendor has agreed not to demand payment
of the note until such time as the Company has sufficient working capital
to satisfy its current obligations, including the note. The note remains
non-interest bearing. In addition, the Company agrees to pay to the Vendor
a royalty over five years equal to 15% of the gross proceeds received from
the sale or lease of any of its domain names to a maximum of $1 million.
The Company intends to carry on the business of developing a network of
affiliated destination web sites for transacting e-commerce within several
industry segments under a singular brand.
As a consequence of the agreement and the Company's plans, these financial
statements have been prepared to reflect a new development stage commencing
on May 1, 2000.
The Vendor is a related party by virtue of common share ownership.
The Company's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.
As at July 31, 2001, the Company had a working capital deficiency of
$(84,289) and has incurred losses of $111,555 from the start of its new
development stage on May 1, 2000 to July 31, 2001.
The Company's ability to continue as a going concern is dependent upon,
among other things, its ability to raise additional capital and
successfully develop the new line of business, which is not assured. The
financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In preparing these financial statements, management is required 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 and the reported amount of revenues and
expenses for the year. Actual results in the future periods could be
different from these estimates made in the current year. The following is a
summary of the significant accounting policies of the Company.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the period. Actual results could differ from these estimates.
FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, receivable, accounts
payable and accrued liabilities and due to related parties. Unless
otherwise noted, it is management's opinion that the fair value of these
financial instruments approximate their carrying values and the Company is
not exposed to significant interest currency or credit risks arising from
these financial instruments. The fair value of these financial instruments
approximate their carrying values, unless otherwise noted.
INTELLECTUAL PROPERTY
Intellectual property is recorded at cost and is amortized over two years.
INCOME TAXES
Future income taxes are recorded for using the asset and liability method.
Under the asset and liability method, future tax assets and liabilities are
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Future tax assets and
liabilities are measured using enacted or substantively enacted tax rates
expected to apply when the asset is realized or the liability settled. The
effect on future tax assets and liabilities of a change in tax rates is
recognized in income in the period that substantive enactment or enactment
occurs. To the extent that the Company does not consider it to be more
likely than not that a future tax asset will be recovered, it provides a
valuation allowance against the excess.
LOSS PER SHARE
Basic loss per share is calculated using the weighted average number of
common shares outstanding during the year.
SEGMENTED INFORMATION
The Company currently conducts its operations in Canada in one business
segment.
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INSIDE HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
(Expressed in Canadian Dollars)
(A Development Stage Company)
JULY 31, 2001
================================================================================
3. INTELLECTUAL PROPERTY
===========================================================
Net Book Value
---------------------
Accumulated July 31, April 30,
Cost Amortization 2001 2001
-----------------------------------------------------------
Domain names $40,000 $ 25,000 $ 15,000 $ 20,000
===========================================================
4. DUE TO RELATED PARTIES
===============================================================================
July 31, April 30,
2001 2001
-------------------------------------------------------------------------------
Due to a company controlled by directors of the Company. $ 32,100 $ 24,075
Due to a company controlled by directors of the Company
and secured by the intellectual property. 40,000 40,000
--------- ----------
$ 72,100 $ 64,075
===============================================================================
Unless otherwise noted, amounts due to related parties are non-interest
bearing and unsecured.
The fair value of amounts due to related parties are not determinable as
they have no specific repayment terms.
5. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
The following non-cash investing and financing transactions occurred during
the year ended April 30, 2001:
a) The Company issued 3,500,000 shares to settle debts in the amount of
$140,513.
b) The Company issued to a related party, a note payable in the amount of
$40,000 for the purchase of the intellectual property during the year.
There were no significant non-cash transactions for the period ended July
31, 2001.
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INSIDE HOLDINGS INC.
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
(Expressed in Canadian Dollars)
(A Development Stage Company)
JULY 31, 2001
================================================================================
6. RELATED PARTY TRANSACTIONS
The Company entered into the following transactions with related parties
during the year ended July 31, 2001:
a) Paid or accrued $7,500 (2000 - $7,500) in management fees to a company
controlled by directors of the Company.
b) Paid or accrued $Nil (2000 - $7,500) in consulting fees to a
significant shareholder of the Company.
These transactions were in the normal course of operations and were measured at
the exchange amount, which is the amount of consideration established and agreed
to by the related parties.
7. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
These financial statements have been prepared in accordance with generally
accepted accounting principles in Canada. These financial statements also
comply, in all material respects, with accounting principles generally
accepted in the United States and the rules and regulations of the
Securities and Exchange Commission.
NEW UNITED STATES ACCOUNTING STANDARDS
Accounting for derivative instruments and hedging activities
In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities" which establishes accounting and
reporting standards for derivative instruments and for hedging activities.
SFAS 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. In June 1999, the FASB issued SFAS 137 to defer the
effective date of SFAS 133 to fiscal quarters of fiscal years beginning
after June 15, 1999. In June 2000, the FASB issued SFAS No. 138, which is a
significant amendment to SFAS 133. The Company does not anticipate that the
adoption of these statements will have a significant impact on its
financial statements.
Comprehensive income
SFAS No. 130, "Reporting Comprehensive Income", addresses standards for the
reporting and display of comprehensive income and its components.
Comprehensive income includes net income and other comprehensive income.
Other comprehensive income represents revenues, expenses, gains and losses
that are excluded from net income under generally accepted accounting
principles.
For the years ended April 30, 2001 and period ended July 31, 2001, there
were no other items of comprehensive income.
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MANAGEMENT DISCUSSION AND ANALYSIS
OVERVIEW
The Company purchased 400 registered Internet domain names each ending with the
suffix "inside.com" from a privately held company (the "Vendor"). Total purchase
consideration consists of a note in the amount of $40,000 payable without
interest on the earlier of (1) the date on which the Company is in receipt of
proceeds totalling $40,000 from the sale or lease of any of its domain names;
(2) the date on which the Company is in receipt of proceeds exceeding $200,000
from the sale and issue of common shares; and (3) June 30, 2001. The Vendor has
agreed not to demand payment until such time as the Company has sufficient
working capital to satisfy its current obligations, including the note. The
note remains non-interest bearing. In addition, the Company agrees to pay to
the Vendor a royalty over five years equal to 15% of the gross proceeds received
from the sale or lease of any of its domain names to a maximum of $1 million.
The Company intends to carry on the business of developing a network of
affiliated destination web sites for transacting e-commerce within several
industry segments under a singular brand. There is no assurance that the Company
will secure the necessary capital or successfully execute its business plans.
LIQUIDITY AND CAPITAL RESOURCES
The Company has sustained substantial operating losses and has used substantial
amounts of working capital in its operations to July 31, 2001. As of July 31,
2001 the Company had cash equivalents of $6,585 and a working capital deficit of
$84,289. Total liabilities exceeded the book value of total assets by $69,289.
LIQUIDITY AND CAPITAL RESOURCES
The Company's ability to satisfy its liabilities and meet its obligations as
they become due is dependent upon its ability to secure additional funding
through public or private sales of securities, including equity securities of
the Company and there are no assurances that the Company will be successful in
securing such necessary funding.
There is currently no market for the common shares of the Company and there is
no assurance that one will develop, or if a market develops that it will
continue.
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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.
INSIDE HOLDINGS INC.
Date: September 20, 2001 By: /s/ Leonard Petersen
------------------------------
Name: Leonard Petersen
Title: President
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