UNITED STATES 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 March 31, 2000
[ ] Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from _________ to _________
Commission File No. 0-27121
ILIVE, INC.
(Name of Small Business Issuer in Its Charter)
NEVADA 95-4783826
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification Number)
242 N. CANON DRIVE, 3RD FLOOR
BEVERLY HILLS, CALIFORNIA 90210
(Address of Principal Executive Offices) (Zip Code)
(310) 285-5200
(Issuer's Telephone Number)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
(None)
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, par value $0.001
(Title of Class)
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 past 90 days.
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's class of
common stock as of the latest practicable date:
Title of each class of Common Stock Outstanding as May 31, 2000
- ----------------------------------- ---------------------------
Common Stock, $0.001 par value 15,398,334
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets at March 31, 2000 (Unaudited).
Condensed Consolidated Statements of Operations (Unaudited) for the three
months ended March 31, 2000 and 1999.
Condensed Consolidated Statements of Cash Flows (Unaudited) for the three
months ended March 31, 2000 and 1999.
Notes to Condensed Interim Consolidated Financial Statements (Unaudited)
at March 31, 2000.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
ILIVE, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
(Unaudited)
MARCH 31, 2000
----------------
ASSETS
CURRENT ASSETS:
Cash $ 23,277
Inventories 96,558
Advances to related parties 65,000
Other 9,287
----------------
TOTAL CURRENT ASSETS 194,122
PROPERTY AND EQUIPMENT, NET 305,566
OTHER 165,680
----------------
$ 665,368
================
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes payable $ 379,203
Accounts payable 679,835
Payroll taxes payable 389,011
Accrued interest 199,087
Sales taxes 22,699
Other accrued expenses 281,680
----------------
TOTAL CURRENT LIABILITIES 1,951,515
LONG-TERM DEBT 1,270,409
----------------
TOTAL LIABILITIES 3,221,924
----------------
COMMITMENTS AND CONTINGENCIES -
SHAREHOLDERS' DEFICIT:
Common stock 15,313
Additional paid-in capital 1,805,547
Accumulated deficit (4,377,416)
----------------
TOTAL SHAREHOLDERS' DEFICIT (2,556,556)
----------------
$ 665,368
================
See accompanying notes to unaudited interim condensed consolidated financial
statements
ILIVE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 1999
------------ ----------
REVENUES:
Food and beverage $ 630,832 $ -
Club membership 53,520 -
------------ ----------
684,352 -
------------ ----------
EXPENSES:
Cost of food and beverage 198,033 -
Labor 365,256 -
Rent 89,960 -
Other restaurant operating 161,688 -
General and administrative 523,777 -
Depreciation and amortization 8,125 -
------------ ----------
1,346,839 -
------------ ----------
LOSS FROM OPERATIONS (662,487) -
INTEREST EXPENSE 61,700 -
------------ ----------
NET LOSS $ (724,187) $ -
============ ==========
BASIC AND DILUTED NET LOSS PER SHARE $ (0.05) $ -
============ ==========
BASIC AND DILUTED WEIGHTED AVERAGE SHARES 15,147,488 4,363,147
============ ==========
See accompanying notes to unaudited interim condensed consolidated financial
statements
ILIVE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 1999
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(724,187) $ -
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 8,125 -
Changes in assets and liabilities:
Inventories 6,009 -
Other current assets 8,363 -
Other assets (23,160) -
Accounts payable (233,094) -
Payroll taxes payable 151,195 -
Accrued interest 80,231 -
Sales taxes (28,903) -
Other accrued expenses 245,186 -
---------- ----------
Net cash used by operating activities (510,235) -
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Repayments from related parties 21,416 -
Purchases of property and equipment (104,991) -
---------- ----------
Net cash used by investing activities (83,575) -
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 25,000 -
Proceeds from long-term debt 584,457 -
Payments on notes payable (18,404) -
---------- ----------
Net cash provided by financing activities 591,053 -
---------- ----------
Net increase in cash (2,757) -
CASH, BEGINNING OF PERIOD 26,034 -
---------- ----------
CASH, END OF PERIOD $ 23,277 $ -
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ - $ -
Franchise taxes $ - $ -
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of shares for license $ 75,150 $ -
========== ==========
See accompanying notes to unaudited interim condensed consolidated financial
statements
ILIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 2000
ILIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 2000
Basis of Presentation
The accompanying consolidated financial statements include the accounts of
iLive, Inc., ("iLive"), its wholly owned subsidiary, Asia Pacific Co., LTD
("Asia Pacific") and Asia Pacific's majority owned subsidiary, 246 LLC,
(collectively, the "Company"). All material intercompany transactions and
accounts have been eliminated in consolidation.
iLive (formerly Powerhouse International Corporation) was incorporated in 1987
in Nevada, became inactive in 1996, and had no assets or liabilities at August
31, 1999. On September 7, 1999, iLive sold 10,000,000 shares of common stock for
$500,000 cash and on September 30, 1999, it acquired Asia Pacific for 690,000 of
its common shares valued at $74,609. This acquisition was accounted for as a
purchase; accordingly, the results of operations of Asia Pacific are included in
the accompanying consolidated financial statements since the date of
acquisition.
Asia Pacific, incorporated in October 1995 in Niue (a foreign country), acquired
a controlling 64% interest in 246 LLC, a limited liability company organized in
March 1996, to construct and operate a full-service restaurant, bar and
membership club in Beverly Hills, California. The restaurant, known as
Chasen's, commenced operations in April 1997.
Interim periods
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions of Form 10-QSB and do not include all of the
information required by generally accepted accounting principles for complete
financial statements. In the opinion of the Company's management, all necessary
adjustments (consisting of normal recurring adjustments) for a fair presentation
have been included. Operating results for the three months ended March 31,
2000, are not necessarily indicative of results for any future period. These
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended December 31, 1999 included in
the Company's Form 10-KSB.
Subsequent event
Chasen's has experienced losses since its inception and projections at December
31, 1999 did not show positive future cash flows, which is an indication of
asset impairment. In April 2000, management closed Chasen's, but has yet to
decide whether to reorganize or sell the restaurant. Because of the uncertainty
of any future cash flows from restaurant operations, the Company wrote the
assets down to fair value at December 31, 1999, determined to be net selling
price to a liquidator. The restaurant accounts for all revenues and all but
$328,000 of the expenses for the three months ended March 31, 2000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENTS:
This Quarterly Report on Form 10-QSB contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. The Company intends that such
forward-looking statements be subject to the safe harbors created by such
statutes. The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties. Accordingly, to
the extent that this Quarterly Report contains forward-looking statements
regarding the financial condition, operating results, business prospects or any
other aspect of the Company, please be advised that the Company's actual
financial condition, operating results and business performance may differ
materially from that projected or estimated by the Company in forward-looking
statements. The differences may be caused by a variety of factors, including
but not limited to adverse economic conditions, intense competition, including
intensification of price competition and entry of new competitors and products,
adverse federal, state and local government regulation, inadequate capital,
unexpected costs and operating deficits, increases in general and administrative
costs, lower sales and revenues than forecast, loss of customers, customer
returns of products sold to them by the Company, termination of contracts, loss
of supplies, technological obsolescence of the Company's products, technical
problems with the Company's products, price increases for supplies, inability to
raise prices, failure to obtain new customers, litigation and administrative
proceedings involving the Company, the possible acquisition of new businesses
that result in operating losses or that do not perform as anticipated, resulting
in unanticipated losses, the possible fluctuation and volatility of the
Company's operating results, financial condition and stock price, inability of
the Company to continue as a going concern, losses incurred in litigating and
settling cases, adverse publicity and news coverage, inability to carry out
marketing and sales plans, loss or retirement of key executives, changes in
interest rates, inflationary factors and other specific risks that may be
alluded to in this Quarterly Report or in other reports issued by the Company.
In addition, the business and operations of the Company are subject to
substantial risks that increase the uncertainty inherent in the forward-looking
statements. The inclusion of forward-looking statements in this Quarterly
Report should not be regarded as a representation by the Company or any other
person that the objectives or plans of the Company will be achieved.
COMPANY OVERVIEW
iLive, Inc. ("iLive" or the "Company") is an Internet based online entertainment
media company. The Company operates a broadcast entertainment Internet
destination located at www.iLive.com. The Company plans to offer a wide array
of entertainment and musical content through its website which will consist of
the following:
- iLive Shows: iLive produces, directs and films many of its own shows
for broadcast live and on-demand over the Internet. These shows are filmed in
broadcast quality so that as an audience following grows the company maintains
the ability to support, repackage, license, sell and deliver this entertainment
to the consumer via all forms of media:
- Beauty Pageants: Currently, iLive owns the domain name and trademark
rights to Miss Beverly Hills.com. iLive also owns Mrs. Beverly Hills, Miss Teen
Beverly Hills, Mr. Beverly Hills, and Miss Black Beverly Hills.com. The beauty
pageant winners will be determined by the most combined Internet and Club votes.
With the winner receiving a modeling contract, each contestant will be highly
motivated to market herself and have everyone she knows vote for her at
iLive.com. Miss Beverly hills will also lend itself to the licensing of name
products to potentially include: beauty, bath, hair products, calendars and
clothing among others.
- Paul Ryan Show: The Paul Ryan Show is a talk/variety dinner show held
upstairs in the Jockey Club at Chasen's. Mr. Ryan has hosted over 506 episodes
with guest including Robin Williams, Regis Philbin, Brooke Shields, Jay Leno,
Jerry Seinfeld, Ted Danson and others.
- Ballers: Ballers is a sports talk show that will take the viewer behind
the scenes into the life of a professional athlete. The show will include
interactive audience participation and the ability to auction sports
memorabilia.
- Beverly Hills Lifestyles: The Company's take on Lifestyles of the Rich
and Famous. This show will allow the viewer to participate in one of the most
desirable lifestyles in the world. The viewer will attend charity functions,
private parties, film debuts and wrap parties. The Company's Beverly Hills
Lifestyles show will allow everyone to see the world through celebrities' eyes.
Other shows currently under development include: "Miss World United States," "A
day in the Life of," "Behind the Scenes," and "iLive Undercover."
- iLive Music: iLive music will offer musicians the opportunity to promote
themselves over the Internet as well as the opportunity to market their products
through the Company's Web site. Artists will also have the opportunity to have
video of their performances played over iLive's Web site.
The Company's prior three month period ended March 31, 1999 is not indicative of
the Company's current business plan and operations. During the three month
period ended March 31, 1999 as well as the year ended December 31, 1998, the
Company was inactive and had no revenues. In September 1999, the Company
acquired Asia Pacific, as previously discussed in the Company's prior filings.
Asia Pacific's principal asset consisted of a 64% interest in 246 LLC dba
Chasen's Restaurant. The Company had intended to utilize Chasen's as a forum
for its Internet related entertainment operations.
However, losses from the Company's Chasen's restaurant operations exceeded the
Company's expectation. Due to Chasen's negative cash flow and increased net
loss, Management has decided to discontinue any further investment into 246 LLC
and to either reorganize or divest its restaurant operations. As a result, the
Company incurred a one time charge of $1,603,622 representing the impairment of
long-lived assets associated with the closing of Chasen's. The Company has
decided to focus its efforts on the development of its Internet operations.
PLAN OF OPERATIONS FOR THE COMPANY'S WEB SITE ILIVE.COM.
The Company's goal for its Internet operations is to build and operate an
entertainment Web site featuring new musical artists and to market those
artists' music and related items on its proposed Web site. The Company's Web
site was launched in a Beta (test) format on January 15, 2000. The Company
anticipates that the site will open for full operations in June 2000. As of
March 31, 2000, the Company has not yet realized any material revenues from its
Web Site operations.
Liquidity & Capital Resources
On September 7, 1999, the Company raised $500,000 through the sale of 10,000,000
shares of the Company's "restricted" Common Stock at a price of $0.05 per share
and $1,500,000 through debt financing in the form of a $1,500,000 convertible
note (the "Note"). Pursuant to the terms of the Note, the Company is required
to repay the principal amount of $1,500,000 with 12% interest on or before March
7, 2001. The note is convertible, at anytime given 15 day's notice at the
holder's election, into a maximum of 6,000,000 shares of the Company's Common
Stock at $0.25 per share. As of May 15, 2000, the Company has expended
approximately $2,000,000 towards development of its business plan and continued
operations, with none of its original financing remaining. The Company
currently does not have sufficient funds to fund ongoing operations and is
currently in negotiations for additional debt financing to fund its immediate
needs. No assurances can be given however, that the Company will be successful
in securing such additional debt financing. Failure to secure such funds will
have a material adverse effect on the Company's results of operations.
The Company intends to obtain additional financing through the sale of its
Common Stock and plans on initiating a Private Placement for $5,000,000 through
the sale of its restricted Common Stock, including warrants to purchase
additional shares of the Company's Common Stock. However, there can be no
assurances that the Company will be able to complete the Private Offering.
Failure to complete the Private Offering may have a material adverse effect on
the Company's results of operations.
Additionally, a slower than expected rate of acceptance of the Company's Web
site, or lower than expected revenues generated from the Company's Web site,
would materially adversely affect the Company's liquidity. The Company may need
additional capital sooner than anticipated. The Company has no commitments for
additional financing, and there can be no assurances that any such additional
financing would be available in a timely manner or, if available, would be on
terms acceptable to the Company. Furthermore, any additional equity financing
could be dilutive to our then-existing shareholders and any debt financing could
involve restrictive covenants with respect to future capital raising activities
and other financial and operational matters.
Capital Expenditures
The Company's anticipated capital expenditures for the year ending December 31,
2000 are expected to consist of development costs for the Company's Web site.
The Company expects to expend approximately an additional $1,500,000 towards
ongoing development of its Web site. The Company also expects to expend
approximately $75,000 towards purchase of additional computer equipment needed
for the planned expansion of its intended Web site.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company may from time to time be involved in various claims, lawsuits,
disputes with third parties, actions involving allegations of discrimination, or
breach of contract actions incidental to the operation of its business. The
Company is not currently involved in any such litigation that it believes could
have a materially adverse effect on its financial condition or results of
operations.
ITEM 2 - CHANGES IN SECURITIES
On February 22, 2000, the Company issued an aggregate of 45,000 shares of its
"restricted" Common Stock to four accredited individuals in exchange for the
exclusive rights to the Miss Beverly Hills, Miss Teen Beverly Hills, Mrs.
Beverly Hills, and Mr. Beverly Hills beauty pageants. The issuance was an
isolated transaction not involving a public offering pursuant to Section 4(2) of
the Securities Act of 1933.
On February 29, 2000, the Company acquired 100% of the outstanding shares of
Society of Economic Assurance, Inc., a Nevada corporation ("SEA") by issuing
200,000 shares of its restricted common stock. The issuance was an isolated
transaction not involving a public offering pursuant to section 4(2) of the
Securities Act of 1933.
In February 2000, the Company initiated a private offering of up to $500,000
worth of the Company's "restricted" Common Stock including warrants to purchase
additional shares of the Company's Common Stock (a "Unit"). As of May 15, 2000,
the Company has sold 5,000 Units shares resulting in net proceeds of $25,000.
The issuances were offered without general solicitation or advertising to
unrelated accredited investors under Rule 506 of Regulation D and Section 4(2)
of the Securities Act of 1933.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to the security holders for a vote during the period
covered by this report
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
27.1 Financial Data Schedule
(B) REPORTS ON FORM 8-K
On March 6, 2000, the Company filed a Current Report on Form 8-K dated February
29, 2000 reporting its acquisition of Society of Economic Assurance, a Nevada
corporation.
SIGNATURES
In accordance with 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.
ILIVE, INC.
(Registrant)
Date: June 5, 2000
By /s/ Scott Hendricks
------------------------
President & CEO