SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
For Quarter Ended September 30, 2000
Commission file number: 0-28465
CIK No. 0001098331
INTERSPACE ENTERPRISES, INC.
(Exact name of registrant as specified in this charter)
Colorado 84-1283938
------------------------------- --------------------
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7825 Fay Avenue, #200, La Jolla, California 92037
----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (858)456-3539
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 the filing
requirements for at least the past 90 days.
YES X NO
----- -----
As of September 30, 2000, there were 66,061,800 shares of $0.00001 par value
common stock outstanding.
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERSPACE ENTERPRISES, INC.
(A Development Stage Company)
Balance Sheet (Unaudited)
As of September 30, 2000
ASSETS
SEPTEMBER 30, DECEMBER 31,
2000 1999
-------------------------------
CURRENT ASSETS
Cash $ 36,616 10,223
--------------------------------------------------------------------------------------------------
Total current assets 36,616 10,223
FIXED ASSETS
Computer and office equipment 9,518 9,299
Accumulated depreciation (3,444) (1,968)
--------------------------------------------------------------------------------------------------
Total fixed assets 6,074 7,331
OTHER ASSETS
Goodwill 622,000 -
Accumulated amortization (402,000) -
---------------------------------------------------------------------------------------------------
Total fixed assets 220,000 -
---------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 262,690 17,554
===================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 176,586 147,737
Accrued payroll liabilities 197,341 110,527
Accrued liabilities 800 800
Notes Payable 170,000 -
Current portion long term liabilities 1,085 719
--------------------------------------------------------------------------------------------------
Total current liabilities 545,812 259,783
LONG TERM LIABILITIES 1,123 2,227
STOCKHOLDERS' EQUITY
Common stock, $.00001 par value, 200,000,000 shares
authorized, 66,061,800 shares issued and outstanding 661 40,002
Accounts receivable subscribed (1,167,873) (5,000)
Additional paid in capital 3,010,603 402,438
Accumulated deficit - during development stage (2,127,636) (681,896)
--------------------------------------------------------------------------------------------------
Total stockholders' equity (284,245) (244,456)
--------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 262,690 17,554
==================================================================================================
SEE ACCOMPANYING NOTES
INTERSPACE ENTERPRISES, INC.
(A Development Stage Company)
Statement of Operations (Unaudited)
For the three months and nine months ended September 30, 2000
CUMULATIVE FROM
JANUARY 1, 1998
(INCEPTION OF THE
DEVELOPMENT
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS STAGE) TO
ENDED ENDED ENDED ENDED SEPT. 30,
SEPT. 30, 2000 SEPT. 30, 1999 SEPT. 30, 2000 SEPT. 30, 1999 2000
------------------------------------------------------------------------------
REVENUES
Sales $ - - $ - - $ -
Interest income - - - - 36
- --------------------------------------------------------------------------------------------------------------
Total Revenue - - - - 36
RESEARCH AND DEVELOPMENT - - - - 5,059
ADMINISTRATIVE AND SELLING EXPENSES
Consulting 24,500 3,750 173,087 36,350 246,662
Depreciation and amortization 220,492 - 403,476 663 405,444
Legal and professional 12,000 41,516 103,117 61,320 254,433
License fees - - 333,000 40,000 373,000
Marketing and promotion 2,920 21,550 15,264 78,138 100,427
Office expense 10,707 6,599 27,663 21,278 62,862
Other administrative expenses 29,117 8,665 81,668 32,075 137,591
Rent 1,195 676 3,765 2,696 8,811
Salaries 110,223 53,250 303,851 121,407 539,358
- --------------------------------------------------------------------------------------------------------------
Total 411,154 136,006 1,444,891 393,927 2,128,588
OTHER INCOME
Note Payable Forgiveness - - - - (7,575)
- --------------------------------------------------------------------------------------------------------------
-
Net loss before tax (411,154) (136,006) (1,444,891) (393,927) (2,126,036)
INCOME TAXES
State income tax - - - - 1,600
- --------------------------------------------------------------------------------------------------------------
Net loss $ (411,154) (136,006)$ (1,444,891) (393,927)$ (2,127,636)
==============================================================================================================
SEE ACCOMPANYING NOTES
INTERSPACE ENTERPRISES, INC.
(A Development Stage Company)
Statement of Cash Flows (Unaudited)
For the nine months ended September 30, 2000
JANUARY 1, 1998
(INCEPTION OF THE
DEVELOPMENT
NINE MONTHS NINE MONTHS STAGE) TO
ENDED ENDED SEPT. 30,
SEPT. 30, 2000 SEPT. 30, 1999 2000
------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,444,891) (393,927) $ (2,127,636)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 403,476 663 405,444
Stock issued for services 469,000 124,750 627,500
Changes in:
Accounts payable 28,849 52,708 176,586
Accrued payroll liabilities 86,814 32,235 197,341
State tax payable - - 800
- ------------------------------------------------------------------------------------------------------------
Net Cash Used in Operating Activities (456,752) (183,571) (719,965)
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of note receivable - 3,000 -
Loan payable (738) - 2,208
Purchase of computer equipment (219) (5,537) (9,518)
Stock issued for merger 672,000 - 672,000
Goodwill (622,000) - (622,000)
- ------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities 49,043 (2,537) 42,690
CASH FLOWS FROM FINANCING ACTIVITIES
Note payable 170,000 (8,000) 174,299
Sale of common stock 264,102 186,250 539,592
- ------------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities 434,102 178,250 713,891
NET DECREASE IN CASH 26,393 (7,858) 36,616
Cash, beginning of the year 10,223 22,210 0
- ------------------------------------------------------------------------------------------------------------
Cash, September 30, 2000 $ 36,616 14,352 $ 36,616
============================================================================================================
SEE ACCOMPANYING NOTES
INTERSPACE ENTERPRISES, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity (Unaudited)
Preferred Stock Common Stock Additional Paid Accounts Rec Accumulated
Description Shares Dollars Shares Dollars in Capital Subscribed Deficit Total
- ------------------------------------------------------------------------------------------------------------------------------------
Balance December 31, 1999 - - 4,672,200 $ 47 $ 443,242 $ (5,000) $ (682,745) $ (244,456)
Shares issued for cash 1,527,000 $ 15 $1,426,960 $ (1,226,250) $ 200,725
Shares issued for services 469,000 $ 5 $ 468,995 $ 469,000
Net loss $( 614,431) $( 614,431)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance March 31, 2000 - - 6,668,200 67 2,339,197 (1,231,250) (1,297,176) ( 189,162)
====================================================================================================================================
Shares issued for cash - $ - $ - $ 37,340 $ 37,340
Shares issued for merger 672,000 $ 7 $ 671,993 $ 672,000
Net loss $ (419,306) $ (419,306)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance June 30, 2000 - - 7,340,200 74 3,011,190 (1,193,910) (1,716,482) 100,872
====================================================================================================================================
Shares issued for cash - $ - $ - $ 26,037 $ 26,037
Shares issued for merger 58,721,600 $ 587 $ (587) $ -
Net loss $ (411,154) $ (411,154)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance September 30, 2000 - - 66,061,800 661 3,010,603 (1,167,873) (2,127,636) (284,245)
====================================================================================================================================
SEE ACCOMPANYING NOTES
INTERSPACE ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements include the accounts of
InterSpace Enterprises, Inc. (the "Company"). The financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles.
On April 17, 2000, the Company completed a merger with its parent company. The
accompanying unaudited financial statements reflect the effect of the merger
from the beginning of the fiscal year. The cumulative figures also represent the
aggregate figures of both companies since inception.
In the opinion of management, the unaudited interim financial statements for the
period ended September 30, 2000 are presented on a basis consistent with the
audited financial statements and reflect all adjustments, consisting only of
normal recurring accruals, necessary for fair presentation of the results of
such period.
The results for the three months ended September 30, 2000 are not necessarily
indicative of the results of operations for the full year. These financial
statements and related footnotes should be read in conjunction with the
financial statements and footnotes thereto included in the Company's financial
statements of the period ended December 31, 1999.
NOTE 2 - GOODWILL
On April 14, 2000, the Company issued 672,000 shares of its common stock in
exchange for all 672,000 issued and outstanding shares of Marathon Marketing
Corp., a fully reporting 12g3 Company. The transaction was valued at $672,000
including an allocation for goodwill in the amount of $622,000. The Company
plans to amortize this charge over the balance of the fiscal year. Amortization
for the current quarter is $220,000.
NOTE 3 - MERGER WITH SUBSIDIARY
On April 17, 2000, the Company completed a statutory merger of the Parent,
InterSpace Enterprises, Inc., a Delaware corporation, and its wholly owned
subsidiary, Marathon Marketing Corp., a Colorado corporation, with Marathon
Marketing Corp. being the survivor, but changing its name to InterSpace
Enterprises, Inc. The merger was completed via a share-for-share exchange, with
all acquired shares being retired by virtue of the merger.
NOTE 4 - NOTES PAYABLE
The Company has secured interim funding through a various notes payable to
individuals. The principal and accrued interest at 10% p.a. are due within
twelve months and contain an equity conversion at the holders option into
restricted common stock at a discount to market value.
NOTE 5 - STOCK DIVIDEND
On July 14, 2000 the Company declared a stock dividend to all shareholders of
record as of that date. The dividend allowed for the issuance of eight shares
for each existing share outstanding, increasing the total shares outstanding to
66,061,800.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2000
COMPARED TO THE SAME PERIOD IN 1999.
The Company continued development of its business model during the quarter
ended September 30, 2000, thus no revenues were achieved. The Company incurred
operating expenses for the three month period of $411,154 in 2000 compared to
$136,006 in the same period in 1999. The Company recorded a net operating loss
of ($411,154) for the 2000 period as compared to ($136,006) for the same period
in fiscal year 1999. The Company losses will continue until business and
profitable operations are achieved. While the Company is seeking capital sources
for investment, there is no assurance that capital sources can be found. The
loss per share for the 2000 fiscal quarter was ($.01) compared to ($.03) in the
fiscal quarter of 1999.
RESULTS OF OPERATIONS FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2000
COMPARED TO THE SAME PERIOD IN 1999.
The Company continued development of its business model during the quarter
ended September 30, 2000, thus no revenues were achieved. The Company incurred
operating expenses for the nine month period of $1,444,891 in 2000 compared to
$393,927 in the same period in 1999. The Company recorded a net operating loss
of ($1,444,891) for the 2000 period as compared to ($393,927) for the same
period in fiscal year 1999. The Company losses will continue until business and
profitable operations are achieved. While the Company is seeking capital sources
for investment, there is no assurance that capital sources can be found. The
loss per share for the 2000 fiscal period was ($.05) compared to ($.10) for the
nine month period in 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash capital of $36,616 and $6,074 in fixed assets for
total tangible assets of $42,690 at the end of the period. The Company will be
forced to make private placements of stock in order to fund operations
continuance. No assurance exists as to the ability to make private placements of
stock.
At September 30, 2000, it had no accounts receivable. The Company has
current liabilities of $545,812 which exceed current assets by approximately
$503,122.
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) The following are filed as Exhibits to this
Quarterly Report. The numbers refer to the Exhibit Table of
Item 601 of Regulation S-K:
None.
(b) Reports on Form 8-K filed during the nine months
ended September 30, 2000. (incorporated by reference)
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 of the
undersigned thereunto duly authorized.
Dated: November 10, 2000
INTERSPACE ENTERPRISES, INC.
by:/s/Daniel P. Murphy
President