SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended April 30th, 2001
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission file number 033-20966
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Online International Corporation
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(Exact name of small business issuer as specified in its charter)
Nevada 76-0251547
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1825 I Street, N.W., Suite 400, Washington, D.C. 20009
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(Address of principal executive offices)
(202) 429-2001
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(Issuers telephone number)
n/a
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(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 Exchange Act 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 90
days.
Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuers classes
of common equity, as of the latest practicable date: 7,800,156
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Series A Preferred Shares, convertible into one share of
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common stock per preferred share; 8,358,280 common shares
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PART I FINANCIAL INFORMATION
ONLINE INTERNATIONAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(Unaudited)
April 30, 2001
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 520,101
Inteest receivable 3,196
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Total Current Assets 23,297
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OTHER ASSETS
Investments 50,000
Notes receivable 780,502
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TOTAL ASSETS $ 1,553,799
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 57,088
Accrued income taxes 22,035
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Total Current Liabilities 79,123
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STOCKHOLDERS' EQUITY
5% preferred stock, no par value ; 20,000,000 shares authorized,
7,800,156 issued and outstanding 1,584,855
Common stock, $.001 par value; 100,000,000 shares authorized,
5,818,547 shares issued and 5,617,089
shares outstanding in 2000 5,818
Additional paid-in capital 1,436,559
Accumulated deficit (1,552,556)
Treasury Stock, at cost, 201,458 shares -
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Total Stockholders' Equity 1,474,676
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,553,799
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See notes to consolidated financial statements
1
ONLINE INTERNATIONAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the three months
ended April 30,
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2001 2000
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NET SALES $ - $ 2,276,979
COST OF GOODS SOLD - 2,093,736
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GROSS PROFIT - 183,243
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 59,691 217,389
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INCOME FROM OPERATIONS (59,691) (34,146)
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OTHER INCOME (EXPENSE)
Interest income 29,187 -
Interest expense - (28,839)
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Total other (income) expense 29,187 (28,839)
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INCOME BEFORE INCOME TAXES (30,504) (62,985)
Income tax expense (benefit) - 328,825
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NET LOSS (30,504) (391,810)
ACCUMULATED DEFICIT, beginning of period (1,522,052) (1,321,380)
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ACCUMULATED DEFICIT, end of period $ (1,552,556) $ (1,713,190)
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Weighted average number of shares outstanding - Basic 5,818,547 5,818,547
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Weighted average number of shares outstanding - Diluted 13,618,703 13,618,703
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Net income (loss) per common share - Basic $ (0.01) $ (0.07)
See notes to consolidated financial statements.
2
ONLINE INTERNATIONAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
For the three months
ended April 30,
2001 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (30,504) $ (391,810)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization - 68,100
Deferred taxes - 327,000
Change in:
Accounts receivable - (266,083)
Inventories - 236,394
Prepaid expenses and other - 44,704
Security deposits - 20,855
Accounts payable - 161,802
Accrued expenses and other (33,283) (52,393)
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Net Cash Used in Operating Activities (63,787) 148,569
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CASH FLOWS FROM INVESTING ACTIVITIES
Collection of notes receivable 30,420 700
Acquisition of property and equipment - (76,970)
Proceeds from sale of unconsolidated subsidiary - 15,932
Increase in investments (250,000) 15,932
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Net Cash Used in Investing Activities (219,580) (44,406)
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CASH FLOWS FROM FINANCING ACTIVITIES
Payment of long term debt - (48,697)
Payment of capital lease obligations - (26,358)
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Net Cash Provided by Financing Activities - (75,055)
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NET INCREASE IN CASH (283,367) 29,108
CASH AND CASH EQUIVALENTS
Beginning of period 803,468 40,956
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End of period $ 520,101 $ 70,064
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes $ 5,791 $ 369
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Interest $ - $ 28,839
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See notes to consolidated financial statements.
3
ONLINE INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2001
The accompanying unaudited financial statements do not include
all the information and footnotes necessary for a complete presentation
of financial position, results of operations, cash flows and stockholders'
equity in conformity with generally accepted accounting principles.
Except as disclosed herein, there has been no material change in the
information disclosed in the notes to the financial statement included
in the Company's annual report for the year ended January 31, 2001.
In the opinion of management, all adjustments considered necessary for
a fair presentation of the results of operations and financial position
have been included and all such adjustments are of a normal recurring
nature. Operating results for the three months ended April 30, 2001 are
not necessarily indicative of the results that can be expected for the year
ended January 31, 2002.
INCOME TAXES
Online International Corporation and subsidiary
Consolidated balance sheet
(Unaudited)
April 30, 2001
Deferred income taxes at April 30, 2001 consist of the following:
Deferred tax assets $ 699,000
Deferred tax liabilities -
Valuation allowance (699,000)
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$ -
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The valuation allowance increased by $7,834 during the three months ended
April 30, 2001.
ONLINE INTERNATIONAL CORPORATION AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
APRIL 30, 2001
As part of the Company's strategy to seek a trading status for its
publicly held shares the Company reviewed potential investment opportunities
in various sectors as diverse as medical record/artificial intelligence,
biotechnology and internet currency trading. As the Company has limited
resources, the choices were somewhat restricted.
Towards the end of the previous fiscal year, the Company commenced
negotiations with a view of acquiring a large portion of a company whose
software and web site seeks to offer foreign exchange investments to the
general public. It was anticipated that should the negotiations come to a
positive conclusion, new shares in the Company would be issued to the
vendors and control would pass to them. On closing of the deal, the
Company intended to take steps to re-apply for SEC registration.
The Board of Directors is pleased to report that an agreement was signed in
May 2001 with the vendor company. The company's legal advisors are dealing
with the various regulatory matters arising from the issue of new shares as
well as other statutory requirements to bring this transaction to a close.
To ensure that the company would have a stake in the vendor company, in
March 2001 the Board of Directors approved an investment by the Company
in Priority Marketing Ltd. ('Priority'), and Isle Of Man Corporation, in
accordance with the terms and conditions of a promissory note in the amount
of US$250,000, plus interest. The promissory note is due June 15, 2001. The
terms of the promissory note include a provision that in the event of
non-repayment of the advance, the Company would be entitled to 10%
of the equity of Priority.
Liquidity and Capital Resources
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The Company's cash position, including cash equivalents, at April 30,
2001 was approximately $520,000, a decrease of approximately
$283,000 from January 31, 2001. This decrease is primarily from the
loan investment of $250,000 in Priority and management and legal fees
incurred during the three months ended April 30, 2001.
Results of Operations: Three months ended April 30, 2001
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Since the sale of the subsidiary's business assets on July 17, 2000, the
company only earned interest income from cash investments and notes
receivables. Approximately $11,000 was received from cash
investments during the three months ended April 30, 2001.
The company also collected $49,000 in respect of the quarterly payment
of the note from the purchasers' of the assets of the Company's
subsidiary. Of this amount, approximately $18,000 represents interest.
Management and legal fees, primarily in connection with the investment
strategy were approximately $60,000 during the three months ended
April 30, 2001.
PART II OTHER INFORMATION
Item 1. Legal Proceedings.
The Company was not involved in any material legal proceedings during the
Reporting period.
Item 2. Changes in Securities.
There were no changes in the Company's securities during the reporting period.
Item 3. Defaults Upon Senior Securities.
There were no defaults upon senior securities during the reporting period.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters have been submitted for a vote to securities holders during the
reporting period
Item 5. Other Information.
There is no further material information about the Company that has not been
mentioned herein.
Item 6. Exhibits and Reports on Form 8-K.
There are no exhibits and reports to be filed at the present time.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
ONLINE INTERNATIONAL CORPORATION
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(Registrant)
Date /S/
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(Signature)
MOSES L. GARSON, DIRECTOR
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(Printed Name and Title)
INDEX OF EXHIBITS
EX-10 Stock Purchase Agreement
Promissory Note