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 June 30, 2001
[ ] 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)
3960 WILSHIRE BLVD., SUITE 406
LOS ANGELES, CALIFORNIA 90010
(Address of Principal Executive Offices) (Zip Code)
(213) 252-1090
(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 July 31, 2001
- ----------------------------------- -----------------------------
Common Stock, $0.001 par value 21,313,147
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 June 30, 2001 (Unaudited).
Condensed Consolidated Statements of Operations (Unaudited) for the three
and six months ended June 30, 2001.
Condensed Consolidated Statements of Cash Flows (Unaudited) for the six
months ended June 30, 2001.
Notes to Condensed Interim Consolidated Financial Statements (Unaudited)
at March 31, 2001.
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)
JUNE 30,
2001
------------
ASSETS
CURRENT ASSETS
Accounts receivable. . . . . . . . . . . . . . . . . . $ 48,000
Other. . . . . . . . . . . . . . . . . . . . . . . . . 1,692
------------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . 49,692
EQUIPMENT, NET OF ACCUMULATED DEPRECIATION OF $28,748. . 89,191
BEAUTY PAGEANT RIGHTS. . . . . . . . . . . . . . . . . . 100,150
OTHER. . . . . . . . . . . . . . . . . . . . . . . . . . 3,400
------------
$ 242,433
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Notes payable. . . . . . . . . . . . . . . . . . . . . $ 490,123
Accounts payable . . . . . . . . . . . . . . . . . . . 806,020
Accrued interest . . . . . . . . . . . . . . . . . . . 188,313
Accrued interest - related party . . . . . . . . . . . 233,554
Accrued payroll and related taxes. . . . . . . . . . . 400,816
Other accrued expenses . . . . . . . . . . . . . . . . 315,684
------------
Total current liabilities. . . . . . . . . . . . . . 2,434,510
------------
NOTE PAYABLE - STOCKHOLDER . . . . . . . . . . . . . . . 127,292
------------
COMMITMENTS AND CONTINGENCIES. . . . . . . . . . . . . . -
STOCKHOLDERS' DEFICIT
Common stock, $.001 par value; 100,000,000 shares
authorized, 24,343,147 shares issued and outstanding 24,343
Additional paid-in capital . . . . . . . . . . . . . . 4,866,787
Accumulated deficit. . . . . . . . . . . . . . . . . . (7,210,499)
------------
Total stockholders' deficit. . . . . . . . . . . . . (2,319,369)
------------
$ 242,433
============
The accompanying notes are an integral part of these financial statements
ILIVE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
--------------------------- -------------------------
2001 2000 2001 2000
---- ---- ---- ----
REVENUES . . . . . . . . . . . . . . $ 48,000 $ - $ 48,000 $ -
COSTS AND EXPENSES
Cost of sales. . . . . . . . . . . 4,950 - 4,950 -
Website development and hosting. . 26,545 27,799 146,799 160,579
General and administrative . . . . 36,315 446,819 239,073 652,778
Depreciation expense . . . . . . . 5,900 15,718 11,309 16,250
Interest . . . . . . . . . . . . . 10,000 55,735 34,962 79,334
Interest - related party . . . . . 59,420 28,133 69,372 66,233
------------ ------------ ------------ ------------
LOSS FROM CONTINUING
OPERATIONS . . . . . . . . . . . . (95,130) (574,204) (458,465) (975,174)
------------ ------------ ------------ ------------
LOSS FROM DISCONTINUED
OPERATIONS (NO TAX EFFECT). . . . - (423,697) - (746,813)
------------ ------------ ------------ ------------
NET LOSS . . . . . . . . . . . . . . $ (95,130) $ (997,901) $ (458,465) $(1,721,987)
============ ============ ============ ============
BASIC AND DILUTED LOSS PER SHARE
Loss from continuing operations. . $ (0.00) $ (0.04) $ (0.02) $ (0.06)
============ ============ ============ ============
Loss from discontinued operations. $ - $ (0.03) $ - $ (0.05)
============ ============ ============ ============
Net loss . . . . . . . . . . . . . $ (0.00) $ (0.07) $ (0.02) $ (0.11)
============ ============ ============ ============
BASIC AND DILUTED WEIGHTED AVERAGE
NUMBER OF SHARES OUTSTANDING. . . . 22,082,598 15,313,147 21,699,999 15,230,317
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements
ILIVE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
FOR SIX MONTHS ENDED JUNE 30,
-----------------------------
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss . . . . . . . . . . . . . . . . . . . . $(458,465) $(1,721,987)
Adjustments to reconcile net loss to net cash
used by operating activities:
Loss from discontinued operations . . . . . . - 267,320
Embedded interest . . . . . . . . . . . . . . 42,420
Depreciation. . . . . . . . . . . . . . . . . 11,309 16,250
Repayment of advances through performance of
services . . . . . . . . . . . . . . . . . . . . - 86,000
Change in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . (48,000) -
Other assets. . . . . . . . . . . . . . . . . (5,092) 43,351
Accrued interest. . . . . . . . . . . . . . . 19,952 152,515
Accrued interest - related party. . . . . . . 41,545
Accrued payroll . . . . . . . . . . . . . . . 25,000 -
Accounts payable. . . . . . . . . . . . . . . (17,171) (280)
Other accrued expenses. . . . . . . . . . . . (12,555) 354,581
---------- ------------
Net cash used by operating activities. . . (401,057) (802,250)
---------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment . . . . . . . (9,801) (118,066)
Repayments from stockholder . . . . . . . . . . . - 416
---------- ------------
Net cash provided by investing activities (9,801) (117,650)
---------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of notes payable. . . . . . . . . . . . - (20,984)
Proceeds from issuance of debt. . . . . . . . . . - 814,048
Advances from stockholder . . . . . . . . . . . . 275,858 250,913
Repurchase and retirement of common stock . . . . (25,000) -
Issuance of common stock . . . . . . . . . . . . 160,000 25,000
---------- ------------
Net cash provided by financing activities. 410,858 1,068,977
---------- ------------
Cash used by discontinued operations. . . . . . . . - (156,377)
---------- ------------
Net decrease in cash. . . . . . . . . . . . . . . . - (7,300)
CASH, BEGINNING OF PERIOD . . . . . . . . . . . . . - 26,034
---------- ------------
CASH, END OF PERIOD . . . . . . . . . . . . . . . . $ - $ 18,734
========== ============
SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Acquisition of license for common stock . . . $ - $ 75,150
========== ============
Conversion of debt to equity. . . . . . . . . . $ 761,250 $ -
========== ============
CASH PAID FOR
Interest. . . . . . . . . . . . . . . . . . . . . $ - $ -
========== ============
Income taxes. . . . . . . . . . . . . . . . . . . $ - $ -
========== ============
The accompanying notes are an integral part of these financial statements
ILIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2001
1. BASIS OF PRESENTATION
- -- -----------------------
The accompanying condensed consolidated financial statements include the
accounts of iLive, Inc., ("iLive"), its wholly owned subsidiaries, Society of
Economic Assurance, Inc. ("SEA") and 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. 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 restaurant had revenues of $684,352 for the three month
period ended March 31, 2000.
On February 17, 2000 the Company acquired 100% of the outstanding shares of
Society of Economic Assurance, Inc. ("SEA"), a Nevada public shell by issuing
200,000 shares of its common stock. The Company elected to have SEA become the
successor issuer, pursuant to Rule 12g-3(a) of the general Rules and Regulations
of the Securities and Exchange Commission for reporting purposes under the
Securities Exchange Act of 1934. For accounting purposes, the SEA acquisition
was treated as a recapitalization. From its inception, SEA has been inactive,
has operated no business, and held no assets or liabilities.
Management plans to focus the Company as an online entertainment media entity
producing branded shows, music and other sponsored entertainment. All content
will be viewed in a combination of free, pay per view, and subscription
programming. Each show will also utilize the Internet to facilitate the
purchasing of merchandise through e-commerce. The Company's first event was the
Miss Beverly Hills Beauty Pageant, held
1. BASIS OF PRESENTATION (CONTINUED)
- -- ------------------------------------
October 15, 2000. Future pageants and other similar entertainment events should
generate revenues, not only from ticket sales, but also from corporate
sponsorship, merchandise sales and pay-per-view internet broadcasting.
2. 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 six months ended June
30, 2001, 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, 2000 included in
the Company's Form 10-KSB.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL OVERVIEW
iLive, Inc. ("iLive" or the "Company") is a broadband streaming media company.
iLive assists companies in the development of online entertainment and content.
In addition, the Company produces online pay-per-view content for its own
customers. Currently, iLive has produced in excess of 250 episodes viewable on
the Internet. In doing so, the Company has developed expertise in online
editing and encoding. iLive's experience also provides it with the ability to
help companies develop video coverage of their products and services on the
Internet. iLive has a crew of trained professionals that are able to go out on
location to shoot and produce video content. The content is then brought back
to the Company's office in Los Angeles, where it is digitally edited then
encoded and posted on the Internet for viewing.
iLive is currently developing a business to consumer model that focuses on
online entertainment. ilive produces a wide array of shows from Celebrity
homes, behind the scenes episodes, how to instructional videos and classic
television episodes. The Company will also assist others in distributing their
unique content via the iLive Peer-to-Peer marketing pay-per-view model.
RESULTS OF OPERATIONS FOR THE COMPANY
THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000.
REVENUES: Revenues totaled $48,000 for the three months ended June 30, 2001 as
compared to no revenue for the three months ended June 30, 2000. During the
period ended June 30, 2001 the Company successfully launched its
business-to-business services division providing filming, editing and encoding
solutions for third parties.
COST OF SALES: Cost of Sales totaled $4,950 for the three months ended June 30,
2001 and were comprised solely of direct labor costs. The Company did not
generate revenue for the three months ended June 30, 2000 and therefore did not
incur a cost of sales. As a percentage of total revenue, cost of sales was
10.3% for the period ended June 30, 2001 resulting in gross margins of 89.7%.
The cost of sales will vary significantly from project to project but the
Company aims to consistently challenge and keep the cost of sales to a minimum.
GENERAL AND ADMINISTRATIVE EXPENSES: General and Administrative expenses
totaled $36,315 (75.6% of revenues) and $446,819 for the three months periods
ended June 30, 2001 and June 30, 2000 respectively. G&A expenses for the period
ended June 30, 2001 were comprised of $13, 249 (36%) in legal fees, $4,325
(12%) in accounting fees and $15,000 (41%) of executive salaries. G&A expenses
for the three months ended June 30, 2000 were comprised of $285,095 (64%) in
consulting expenses, $43,889 (9.8%) for legal and $49,175 (11%) in accounting
fees. The large decrease in consulting was due to the downsizing of operations
as the Company continues to refine its focus to work exclusively as an Internet
Company. The resulting decrease in legal and accounting expenses can be
attributed to the increased costs incurred in the period ended June 30, 2000
related to the divesture of the Company's restaurant operations.
SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000.
REVENUES: Revenues totaled $48,000 for the six months ended June 30, 2001 while
the Company had no revenue for the six months ended June 30, 2000. During the
period ended June 30, 2001 the Company successfully launched its
business-to-business services division as previously discussed.
COST OF SALES: Cost of Sales totaled $4,950 for the six months ended June 30,
2001 and were comprised solely of direct labor costs. The Company did not
generate revenue for the six months ended June 30, 2000 and therefore did not
incur a cost of sales. As a percentage of total revenue, cost of sales was
10.3% for the period ended June 30, 2001 resulting in gross margins of 89.7%.
The cost of sales will vary significantly from project to project but the
Company aims to consistently challenge and keep the cost of sales to a minimum.
GENERAL AND ADMINISTRATIVE EXPENSES: General and Administrative expenses
totaled $239,073 and $652,778 for the six month periods ended June 30, 2001 and
June 30, 2000 respectively. G&A expenses for the period ended June 30, 2001
were comprised of $27,289 (11%) in legal fees, $18,300 (7.6%) in accounting
fees, $141,898 (59%) in consulting fees and $30,000 (12.5%) of executive
salaries. G&A expenses for the six months ended June 30, 2000 were comprised of
$291,557 (45%) in consulting expenses, $55,586 (8.5%) for legal and $68,725
(10.5%) in accounting fees. The large decrease in consulting was due to the
downsizing of operations as the Company continues to refine its focus to work
exclusively as an Internet Company. The resulting decrease in legal and
accounting expenses can be attributed to the increased costs incurred in the
period ended June 30, 2000 related to the divesture of the Company's restaurant
operations.
ASSETS AND LIABILITIES: Assets decreased from $281,316 for the period ended
June 30, 2000 to $242,433 for the period ended June 30, 2001. The resulting
decrease in assets was a result of discontinued operations and the depreciation
of equipment. Liabilities decreased from $3,835,672 for the period ended June
30, 2000 to $2,434,510 for the period ended June 30, 2001. The resulting
decrease in total liabilities can be attributed to the conversion of a note
payable from Street Capital, Inc. to equity.
LIQUIDITY AND CAPITAL RESOURCES: On October 1, 2000 the Company issued a
convertible note of up to $1,500,000 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, 2002. The note is convertible at any time given
15days notice at the holders election into a maximum of 6,000,000 shares of the
Company's common stock at $0.25 per share. As of June 30, 2001 the Company has
borrowed $978,542 against the note.
CAPITAL EXPENDITURES: The Company expended $26,545 in the three months ended
June 30, 2001 to further develop the Company's website.
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 which it believes could
have a materially adverse effect on its financial condition or results of
operations.
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
(A) EXHIBITS
None
(B) REPORTS ON FORM 8-K
None
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: August 14, 2001