SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
For Quarter Ended June 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
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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 June 30, 2000, there were 7,340,200 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 June 30, 2000
ASSETS
JUNE 30, DECEMBER 31,
2000 1999
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CURRENT ASSETS
Cash $ 7,117 10,223
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Total current assets 7,117 10,223
FIXED ASSETS
Computer and office equipment 9,518 9,299
Accumulated depreciation (2,952) (1,968)
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Total fixed assets 6,566 7,331
OTHER ASSETS
Goodwill 622,000 -
Accumulated amortization (182,000) -
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Total fixed assets 440,000 -
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TOTAL ASSETS $ 453,683 17,554
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 167,597 147,737
Accrued payroll liabilities 165,806 110,527
Accrued liabilities 800 800
Note Payable 16,000 -
Current portion long term liabilities 1,020 719
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Total current liabilities 351,223 259,783
LONG TERM LIABILITIES 1,588 2,227
STOCKHOLDERS' EQUITY
Common stock, $.00001 par value, 200,000,000 shares
authorized, 7,340,200 shares issued and outstanding 74 40,002
Accounts receivable subscribed (1,193,910) (5,000)
Additional paid in capital 3,011,190 402,438
Accumulated deficit - during development stage (1,716,482) (681,896)
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Total stockholders' equity 100,872 (244,456)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 453,683 17,554
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SEE ACCOMPANYING NOTES
INTERSPACE ENTERPRISES, INC.
(A Development Stage Company)
Statement of Operations (Unaudited)
For the Three Months and Six Months Ended June 30, 2000
CUMULATIVE FROM
JANUARY 1, 1998
(INCEPTION OF THE
DEVELOPMENT
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS STAGE) TO
ENDED ENDED ENDED ENDED JUNE 30,
JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 2000 JUNE 30, 1999 2000
-------------- ---------------- ------------------------------------------------------
REVENUES
Sales $ - - $ - $ - $ -
Interest income - - - - 36
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Total Revenue - - - - 36
RESEARCH AND DEVELOPMENT - - - - 5,059
ADMINISTRATIVE AND SELLING EXPENSES
Consulting 22,587 30,600 148,587 32,600 222,162
Depreciation and amortization 182,492 608 182,984 663 184,952
Legal and professional 55,760 17,756 91,117 19,804 242,433
License fees - - 333,000 40,000 373,000
Marketing and promotion 1,038 9,444 12,344 56,588 97,507
Office expense 10,588 8,016 16,956 14,679 52,155
Other administrative expenses 36,276 11,155 52,551 23,410 108,474
Rent 1,736 1,052 2,570 2,020 7,616
Salaries 108,829 47,000 193,737 68,157 429,135
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Total 419,306 125,631 1,033,737 257,921 1,717,434
OTHER INCOME
Note Payable Forgiveness - - - - (7,575)
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Net loss before tax (419,306) ( 125,631) (1,033,737) ( 257,921) (1,714,882)
INCOME TAXES
State income tax - - - - 1,600
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Net loss $(419,306) $ ( 125,631) $ (1,033,737) $ ( 257,921) $(1,716,482)
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Loss per share ($.06) ($.02) ($.14) ($.035) -
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SEE ACCOMPANYING NOTES
INTERSPACE ENTERPRISES, INC.
(A Development Stage Company)
Statement of Cash Flows (Unaudited)
For the Six Months Ended June 30, 2000
JANUARY 1, 1998
(INCEPTION OF THE
DEVELOPMENT
SIX MONTHS SIX MONTHS STAGE) TO
ENDED ENDED JUNE 30,
JUNE 30, 2000 JUNE 30, 1999 2000
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,033,737) (257,921) $ (1,716,482)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 182,984 663 184,952
Stock issued for services 469,000 123,500 627,500
Changes in:
Accounts payable 19,860 3,857 167,597
Accrued payroll liabilities 55,279 15,823 165,806
State tax payable - - 800
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Net Cash Used in Operating Activities (306,614) (114,078) (569,827)
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of note receivable - 3,000 -
Loan payable (338) - 2,608
Purchase of computer equipment (219) (5,240) (9,518)
Stock issued for merger 672,000 - 672,000
Goodwill (622,000) - (622,000)
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Net Cash Used in Investing Activities 49,443 (2,240) 43,090
CASH FLOWS FROM FINANCING ACTIVITIES
Note payable 16,000 (8,000) 20,299
Sale of common stock 238,065 123,500 513,555
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Net Cash Used in Financing Activities 254,065 115,500 533,854
NET DECREASE IN CASH (3,106) (818) 7,117
Cash, beginning of the year 10,223 22,210 0
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Cash, June 30, 2000 $ 7,117 21,392 $ 7,117
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SEE ACCOMPANYING NOTES
INTERSPACE ENTERPRISES, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity (Unaudited)
For the Three Months Ended June 30, 2000
Preferred Stock Common Stock Additional Paid Accounts Rec Accumulated
Description Shares Dollars Shares Dollars in Capital Subscribed Deficit Total
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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)
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Balance March 31, 2000 - - 6,668,200 67 2,339,197 (1,231,250) (1,297,176) ( 189,162)
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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)
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Balance June 30, 2000 - - 7,340,200 74 3,011,190 (1,193,910) (1,716,482) 100,872
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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 June 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 June 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 $182,000.
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.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED JUNE 30, 2000 COMPARED TO
THE SAME PERIOD IN 1999.
The Company continued development of its business model during the quarter
ended June 30, 2000, thus no revenues were achieved. The Company incurred
operating expenses for the three month period of $419,306 in 2000 compared to
$125,631 in the same period in 1999. The Company recorded a net operating loss
of ($419,306) for the 2000 period as compared to ($125,631) 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 ($0.06) compared to ($0.03) in the same quarter of 1999.
RESULTS OF OPERATIONS FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2000 COMPARED TO
THE SAME PERIOD IN 1999.
The Company continued development of its business model during the six
months ended June 30, 2000, thus no revenues were achieved. The Company incurred
operating expenses for the six month period of $1,033,737 in 2000 compared to
$257,921 in the same period in 1999. The Company recorded a net operating loss
of $(1,033,737) for the 2000 period as compared to ($257,921) 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
1999 six months ended June 30 was ($0.14) compared to ($0.07) in the same period
of 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash capital of $7,117 and $6,566 in net fixed assets for
total tangible assets of $13,683 at the end of the period. The Company has
$440,000 in other assets for a combined total assets of $453,683. 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 June 30, 2000, it had no accounts receivable. The Company has current
liabilities of $351,223.
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 quarter ended
June 30, 2000. (incorporated by reference)
May 10, 2000
June 27, 2000
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: August 31, 2000
INTERSPACE ENTERPRISES, INC.
by: /s/ Daniel P. Murphy
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Daniel P. Murphy, President