SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 2001
Commission file number: 0-28465
CIK No. 0001098331
INTERSPACE ENTERPRISES, INC.
(Exact name of registrant as specified in this charter)
Colorado 84-1283938
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(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7825 Fay Avenue, #200, La Jolla, California 92037
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(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
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As of March 31, 2001, there were 70,169,230 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)
ASSETS
MARCH 31, DECEMBER 31,
2001 2000
--------------------------------
CURRENT ASSETS
Cash $ 10,740 17,343
Prepaid Expenses - 14,750
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Total current assets 10,740 32,093
FIXED ASSETS
Computer and office equipment 11,281 11,281
Accumulated depreciation (4,998) (4,315)
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Total fixed assets 6,283 6,966
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TOTAL ASSETS $ 17,023 39,059
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 258,411 260,053
Notes payable 165,000 136,000
Accrued payroll liabilities 389,965 279,332
Accrued liabilities 1,600 1,600
Convertible notes payable - 136,000
Accrued interest - 9,105
Current portion long term liabilities 836 930
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Total current liabilities 815,812 823,020
LONG TERM LIABILITIES 805 1,111
STOCKHOLDERS' EQUITY
Common stock 701 658
Accounts receivable subscribed (1,399,987) (1,187,097)
Additional paid in capital 3,092,164 2,313,532
Accumulated deficit - during development stage (2,492,472) (1,912,165)
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Total stockholders' equity (799,594) (785,072)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,023 39,059
===================================================================================================
See Accompanying Notes to Financial Statements
INTERSPACE ENTERPRISES, INC.
(A Development Stage Company)
Statement of Operations
(Unaudited)
CUMULATIVE FROM
JUNE 30, 1998
(INCEPTION OF THE
DEVELOPMENT
THREE MONTHS THREE MONTHS STAGE) TO
ENDED ENDED MARCH 31,
MARCH 31, 2001 MARCH 31, 2000 2001
-------------------------------------------------------
REVENUES
- -
Sales $ - - $ -
- --------------------------------------------------------------------------------------------------------
Total Revenue - - -
RESEARCH AND DEVELOPMENT - - 5,059
ADMINISTRATIVE AND SELLING EXPENSES
Consulting 323,250 126,000 654,075
Depreciation and amortization 683 492 4,998
Legal and professional 72,550 35,357 274,067
License fees - 333,000 373,000
Marketing and promotion 2,092 11,306 101,723
Office expense 9,132 6,368 68,497
Other administrative expenses 22,640 16,275 190,849
Rent 2,078 834 12,901
Salaries 170,989 84,799 873,376
- --------------------------------------------------------------------------------------------------------
Total Administrative Expense 603,414 614,431 2,553,486
- --------------------------------------------------------------------------------------------------------
Net Loss from Operations (603,414) (614,431) (2,558,545)
OTHER INCOME
Interest income (14,002) - (68,473)
Interest expense (9,105) - -
- --------------------------------------------------------------------------------------------------------
Total Other (Income) Expense (23,107) 0 (68,473)
INCOME TAXES - - 2,400
- --------------------------------------------------------------------------------------------------------
Net loss $ (580,307) (614,431) (2,492,472)
========================================================================================================
See Accompanying Notes to Financial Statements
INTERSPACE ENTERPRISES, INC.
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)
JUNE 30, 1998
(INCEPTION OF THE
DEVELOPMENT
THREE MONTHS THREE MONTHS STAGE) TO
ENDED ENDED MARCH 31,
MARCH 31, 2001 MARCH 31, 2000 2001
------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (580,307) (614,431) $ (2,492,472)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 683 492 4,998
Stock issued for services 339,525 469,000 970,475
Changes in:
Prepaid expense 14,750 0
Accounts payable (1,642) 23,255 258,411
Accrued interest (9,105) 0
Accrued payroll liabilities 110,633 19,978 389,965
State tax payable - - 1,600
- ------------------------------------------------------------------------------------------------------------
Net Cash Used in Operating Activities (125,463) (101,706) (867,023)
CASH FLOWS FROM INVESTING ACTIVITIES
Accrued interest related parties (14,002) - (68,473)
Computer and equipment purchases - - (8,335)
Note receivable (payments) 41,112 - 41,112
- ------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities 27,110 0 (35,696)
CASH FLOWS FROM FINANCING ACTIVITIES
Notes payable 29,000 16,000 174,200
Sale of common stock 199,150 201,500 749,764
Repayment of notes (400) (160) (10,505)
Convertible notes (136,000) - 0
- ------------------------------------------------------------------------------------------------------------
Net Cash Used in Financing Activities 91,750 217,340 913,459
NET DECREASE IN CASH (6,603) 115,634 10,740
Cash, beginning of the year 17,343 10,223 17,343
- ------------------------------------------------------------------------------------------------------------
Cash, March 31, 2001 $ 10,740 125,857 $ 28,083
============================================================================================================
See Accompanying Notes to Financial Statements
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, 2000 - - 65,836,800 $ 658 $2,313,532 $ (1,187,097) $(1,912,165) $(785,072)
Conversion of notes payable 423,900 $ 4 $ 199,146 $ - $199,150
Shares issued for services 3,908,530 $ 39 $ 579,486 $ (240,000) $339,525
Interest on notes - $ - $ - $ (14,002) $(14,002)
Due from shareholder - $ - $ - $ 41,112 $41,112
Net loss $ (580,307) $(580,307)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance March 31, 2001 - - 70,169,230 701 3,092,164 (1,399,987) (2,492,472) (799,594)
====================================================================================================================================
See Accompanying Notes to Financial Statements
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.
In the opinion of management, the unaudited interim financial statements for the
period ended March 31, 2001 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 March 31, 2001 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, 2000.
NOTE 2 - NOTES PAYABLE
During the three month period ended March 31, 2001, the Company secured interim
funding partially through notes payable to interested parties totaling $45,000.
Neither party has asked the Company to collateralize the loan, sign notes or
state an interest rate. A similar existing note in the amount of $16,000 was
converted to 57,600 shares of the Company's common stock. The Company intends to
repay these parties when significant funding has been obtained. These notes are
demand notes and therefore classified as a current liability.
NOTE 3 - CONVERTIBLE NOTES PAYABLE
Effective February 22, 2001, the Company's Board of Directors voted to exercise
the Company's option to convert all convertible notes into common stock. A total
of $183,150 of debt was converted resulting in the issuance of 366,300 shares.
As per the terms of the notes, all accrued interest was extinguished on the
conversion.
INTERSPACE ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - NON-MONETARY TRANSACTIONS
The Company issued 3,861,000 shares during the period for certain consulting and
advisory services provided to the Company. The Company valued these transactions
at what they believed to be the fair market value of the services. The value for
these services also approximates what management believes to be the value of the
stock. A portion of the shares issued represent compensation for services to be
issued in subsequent periods, thus the amount related to services which have yet
to be performed have been recorded as due from shareholder.
NOTE 5 - INTEREST INCOME/EXPENSE
Interest income represents accrued interest on promissory notes to the Company
from certain officers incurred as a result of options previously exercised.
Interest expense represents accrued interest recovered as a result of conversion
of notes payable to common stock - see NOTE 3.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2001 COMPARED
TO THE SAME PERIOD IN 2000.
The Company continued development of its business model during the quarter
ended March 31, 2001, thus no revenues were achieved. The Company incurred
operating expenses for the three month period of $603,414 in 2001 compared to
$614,431 in the same period in 2000. The Company recorded a net operating loss
of ($580,307) for the 2001 period as compared to ($614,431) for the same period
in fiscal year 2000. 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 2001 fiscal quarter was ($0.01) compared to ($0.08) in
the fiscal quarter of 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash capital of $10,740 and $6,283 in fixed assets for
total tangible assets of $17,023 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 March 31, 2001, it had no accounts receivable. The Company has current
liabilities of $815,812 which exceed current assets by approximately $798,789.
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 three months
ended March 31, 2001. (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: May 11, 2001
INTERSPACE ENTERPRISES, INC.
by:/s/Daniel P. Murphy
Daniel P. Murphy, President