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 September 30, 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. 0-28549
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 21,313,334
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
Page 1
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets at September 30, 2000 (Unaudited).
Condensed Consolidated Statements of Operations (Unaudited) for the three
and nine months ended September 30, 2000 and 1999.
Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine
months ended September 30, 2000 and 1999.
Notes to Condensed Interim Consolidated Financial Statements (Unaudited)
at September 30, 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.
Page 2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
------------------
ASSETS
CURRENT ASSETS:
Cash $ 36
Deposits 103,188
------------------
TOTAL CURRENT ASSETS 103,224
PROPERTY AND EQUIPMENT, NET 97,173
OTHER 17,581
------------------
$ 217,978
==================
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Notes payable $ 376,623
Accrued interest 360,370
Advances from shareholder 490,599
Accounts payable 776,118
Payroll taxes payable 375,816
Other accrued expenses 304,678
------------------
TOTAL CURRENT LIABILITIES 2,684,204
COMMITMENTS AND CONTINGENCIES -
SHAREHOLDERS' DEFICIT:
Common stock 21,313
Additional paid-in capital 3,299,547
Accumulated deficit (5,787,086)
------------------
TOTAL SHAREHOLDERS' DEFICIT (2,466,226)
------------------
$ 217,978
==================
See accompanying notes to unaudited interim condensed consolidated financial
statements
Page 3
ILIVE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
THREE MONTHS ENDED SEPTEMBER 30, SIX MONTHS ENDED SEPTEMBER 30,
------------------------------- -----------------------------
2000 1999 2000 1999
------------------------------- -----------------------------
REVENUES: $ - $ - $ - $ -
----------------- ---------- -------------- ------------
EXPENSES:
Website development 38,807 - 199,386 -
General and administrative 276,412 - 945,440 -
Interest expense 88,842 - 234,409 -
----------------- ---------- -------------- ------------
404,061 - 1,379,235 -
----------------- ---------- -------------- ------------
LOSS FROM CONTINUING OPERATIONS (404,061) - (1,379,235) -
----------------- ---------- -------------- ------------
DISCONTINUED OPERATIONS:
Loss from operations of Chasen's
restaurant (7,809) - (487,302) -
Loss on disposal of restaurant
assets - - (267,320) -
----------------- ---------- -------------- ------------
NET LOSS $ (411,870) $ - $ (2,133,857) $ -
================= ========== ============== ============
BASIC AND DILUTED
NET LOSS PER SHARE:
Loss from continuing operations $ (0.03) $ - $ (0.09) $ -
Loss from discontinued operations (0.00) - (0.03) -
Loss on disposal of restaurant
assets - - (0.02) -
----------------- ---------- -------------- ------------
NET LOSS $ (0.03) $ - $ (0.14) $ -
================= ========== ============== ============
BASIC AND DILUTED
WEIGHTED AVERAGE SHARES 15,544,812 6,438,061 15,129,507 5,173,551
================= ========== ============== ============
See accompanying notes to unaudited interim condensed consolidated financial
statements
Page 4
ILIVE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
2000 1999
---------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,133,857) $ -
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 22,250 -
Loss on disposal of restaurant assets 267,320
Repayment of advances to related parties
through performance of services 86,000 -
Changes in assets and liabilities:
Inventories 48,795 -
Other assets 6,701 -
Accounts payable (136,811) -
Payroll taxes payable 138,000 -
Accrued interest 241,514 -
Other accrued expenses 216,582 -
---------------- -------------
Net cash used by operating activities (1,243,506) -
---------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Repayments of advances from related parties 416 -
Purchases of property and equipment (91,571) -
---------------- -------------
Net cash used by investing activities (91,155) -
---------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable (20,984)
Issuance of common stock 25,000 -
Proceeds from convertible note 814,048
Advances from shareholder 490,599 -
---------------- -------------
Net cash provided by financing activities 1,308,663 -
---------------- -------------
Net decrease in cash (25,998) -
CASH, BEGINNING OF PERIOD 26,034 -
---------------- -------------
CASH, END OF PERIOD $ 36 $ -
================ =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ - $ -
Franchise taxes $ - $ -
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Conversion of Debenture $ 1,500,000 $ -
================ =============
Issuance of shares for license $ 75,150 $ -
================ =============
Return of office furniture and related decrease
in liability $ 26,495 $ -
================ =============
See accompanying notes to unaudited interim condensed consolidated financial
statements
Page 5
ILIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 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.
Discontinued Operations
In April 2000, management closed Chasen's to the public and began operating the
restaurant for private parties only. In July 2000, operations of the restaurant
were permanently discontinued. The Company wrote off all its restaurant
operating assets (which consisted primarily of furniture, fixtures and
restaurant equipment), and inventory as of June 30, 2000. The remaining assets
of the restaurant as of September 30, 2000 consist of a liquor license and a
utility deposit. The remaining liabilities (all current) as of September 30,
2000 include notes payable, payroll taxes payable, vendor accounts payable and
accrued interest. The restaurant had revenues of $701,000 and $0 for the nine
and three month periods ended September 30, 2000, respectively.
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 and nine months ended
September 30, 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.
Page 6
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.com (OTCBB: LIVE) is an online entertainment media company that produces
its own branded shows, music and other original and sponsored entertainment. All
content will be filmed in broadcast quality and will be viewed in a combination
of free content, pay-per-view, and subscription based programming. Each show
will also leverage the Internets ability to facilitate the purchasing of
products and merchandise via e-commerce.
iLive.com believes that television on the Internet is the future and the key is
the ability to produce compelling content that can generate revenue. The Company
uses content and viewer participation to attract a diverse audience and retain
them on the site for extended periods of time. iLive's many channels focus on
specific areas of interest and allow viewers to access entertainment on demand.
The site connects viewers with several interactive entertainment communities
from sports, music, fashion, astrology, cooking, and magic, to iLive's own
original news and programming. through each of its channels, iLive plans to
offer its customers the opportunity to purchase a ticket to view various events
and content while providing its marketing partners with the ability to reach
focused segments of user specific demographics and lifestyle characteristics.
iLive's content also presents performers and entertainers profit-sharing
incentives to "self-promote" themselves on iLive.com. This provides the Company
with content at virtually no out of pocket expense, while providing an army of
individuals driving word of mouth traffic to the site on a daily basis.
Page 7
The Company's prior three month period ended September 30, 2000 is not
indicative of the Company's current business plan and operations. During the
three month period ended September 30, 2000 as well as the year ended December
31, 1999, the Company was building its infrastructure 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 seamlessly integrate
streaming media content and e-commerce in the context of a global branded
network. The Company's Web site as anticipated was launched in the third
quarter. As of September 30, 2000, the Company has not yet realized any
material revenues from its Web Site operations. Plans call for the Company to
continue to build content and implement a subscription based model later next
year. The Company also plans to introduce business to business services in the
first quarter next year that are expected to generate revenue as well as allow
advertisers to participate within the context of the site.
Page 8
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 September 30,2000 the $1,500,000 note was
converted by the holder into 6,000,000 shares of common stock.
As of September 30, 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 through a Private Placement 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 plan 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. The Company currently does
not have sufficient working capital to fund its anticipated capital expenditures
and will need to raise additional funds either though additional equity or debt
financings. 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. Failure to raise additional funds for the Company's planned
capital expenditures will have a material adverse effect on the Company's plan
of operations.
Page 9
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 currently involved in litigation for approximately $10,000. The
Company expects to have the matter settled quickly and believes that it will not
have any material adverse effects on it financial condition or results of its
operations.
ITEM 2 - CHANGES IN SECURITIES
On September 30, 2000, the Company issued 6,000,000 common shares of its
"restricted" common stock upon conversion by Street Capital of the Company's
previously issued $1,500,000 note. The issuance was an isolated transaction
involving a public offering pursuant to 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
None
Item 5 - Other Information
As of September 30, 2000 Anastasia Cronin, the Company's Chief Financial
Officer, and Director left the Company due to a family relocation. The Chief
Financial Officer vacancy has been temporarily filled by Scott Henricks, the
Company's President and Chief Executive Officer. Hirsh Wilck, the Company's
head of Miss World United States Operations has replaced her as a Director.
Item 6 - Exhibits
(A) EXHIBITS
27.1 Financial Data Schedule
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the period covered by this report.
Page 10
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.
By /s/ Scott Hendricks
----------------------------------
Scott Hendricks
President, CEO & CFO
Dated: November 16, 2000
Page 11