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UNITED STATES OMB APPROVAL
SECURITIES AND EXCHANGE COMMISSION ------------------------
Washington, D.C. 20549 OMB Number:3235-0416
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FORM 10-QSB Expires: April 30,2003
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Estimated average burden
hours per response: 32.0
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(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______ to ______.
Commission file number: 0-17978
XPEDIAN, INC.
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(Exact name of small business issuer as specified in its charter)
FLORIDA 59-2720096
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(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
6230 Fairview Road, Suite 102, Charlotte, North Carolina 28210
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(Address of principal executive offices)
(704) 364-2066
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(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report.)
36,450,430 shares of common stock, par value $.01 per share, were outstanding at
March 17, 2001.
Transitional Small Business Disclosure Format (Check one): Yes[__] No[__]
XPEDIAN, INC.
AND SUBSIDIARIES
FORM 10-QSB
INDEX
PAGE
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements (unaudited)
Balance Sheet - December31, 2000 (unaudited) 1
Statements of Loss - Three and Six Months ended
December 31, 2000 and 1999 (unaudited) 2
Statements of Cash Flows - Three and Six Months
ended December 31, 2000 and 1999 (unaudited) 3
Notes to Financial Statements 4
Item 2 - Management's Discussion and Analysis or Plan of Operation 4-6
PART II- OTHER INFORMATION
Item 1 - Legal Proceedings 7
Item 2 - Changes in Securities 7
Item 3 - Defaults Upon Senior Securities 7
Item 4 - Submission of matters to a Vote of Securities Holders 7
Item 5 - Other Information 7
Item 6 - Exhibits and reports on Form 8-K 7
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
The financial statements in response to this item are as follows:
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XPEDIAN, INC.
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Balance Sheet - Unaudited
December 31, 2000
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 150
Common stock held in escrow 30
Note receivable - consultant 79,789
Advances to related parties 105,300
Prepaid technology support fees, current portion 37,500
Other advances 32,268
Deposits 2,773
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TOTAL CURRENT ASSETS 257,810
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PROPERTY AND EQUIPMENT, net of accumulated depreciation 38,124
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OTHER ASSETS
Software licensing agreement 644,370
Prepaid technology support fees, long-term portion 18,750
Security deposits 1,935
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TOTAL OTHER ASSETS 665,055
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TOTAL ASSETS $ 960,989
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 159,778
Bank overdraft 490
Accrued liabilities 211,146
Advances from officer 13,917
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TOTAL CURRENT LIABILITIES 385,331
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STOCKHOLDERS' EQUITY
Common stock, $.0001 par value, 100,000,000 shares
authorized, 36,450,430 shares issued and outstanding 3,718
Additional paid-in capital 13,307,951
Accumulated deficit (12,735,951)
Treasury stock, at cost (60)
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TOTAL STOCKHOLDERS' EQUITY 575,658
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 960,989
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The accompanying notes are an integral part of this financial statement.
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XPEDIAN, INC.
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Statements of Loss - Unaudited
Six Months Three Months
Ended December 31, Ended December 31,
2000 1999 2000 1999
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EXPENSES
Consulting, professional
and administrative fees $ 402,199 $1,194,770 $ 214,458 $ 798,426
General and administrative 138,252 31,493 92,502 25,909
Travel and entertainment 18,453 1,700 4,224 46
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TOTAL EXPENSES 558,904 1,227,963 311,184 823,581
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OTHER INCOME (LOSS)
Interest 3,809 - 1,880 -
Loss on marketable securities (44,997) - - -
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TOTAL OTHER INCOME (LOSS) (41,188) - 1,880 -
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LOSS BEFORE INCOME TAX BENEFIT (600,092) (1,227,963) (309,304) (823,581)
Income tax benefit - - - -
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NET LOSS $ (600,092) $(1,227,963) $ (309,304) $ (823,581)
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Basic and diluted weighted
average shares outstanding 36,021,044 27,125,711 36,130,511 31,202,885
Net loss per share,
basic and diluted $ (0.02) $ (0.05) $ (0.01) $ (0.03)
================================================================================
The accompanying notes are an integral part of this financial statement.
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XPEDIAN, INC.
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Statements of Cash Flows
Six Months
Ended December 31,
2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (600,092) $(1,227,963)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities:
Common stock issued for services 305,200 1,147,500
Depreciation 5,777 -
Realized loss on sales of trading securities 44,997 -
Increase in accounts payable 109,863 30,556
Increase in bank overdraft 490 -
Increase in accrued interest receivable (3,750) -
Increase in prepaid fees (56,250) (7,976)
Proceeds from sales of trading securities 249,891 -
Increase in accrued liabilities 62,993 -
Increase in advances from officer 7,611 -
Decrease in margin loan to purchase
trading securities (98,094) -
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NET CASH PROVIDED BY OPERATING ACTIVITIES 28,636 (57,883)
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CASH FLOWS FROM INVESTING ACTIVITIES
Advances from (to) related parties (99,747) 71,100
Acquisition of software license - (15,000)
Contribution to capital 12,000 -
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NET CASH USED IN FINANCING ACTIVITIES (87,747) 56,100
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NET DECREASE IN CASH AND CASH EQUIVALENTS (59,111) (1,783)
CASH AND CASH EQUIVALENTS - BEGINNING 59,261 1,904
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CASH AND CASH EQUIVALENTS - ENDING $ 150 $ 121
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SUPPLEMENTAL DISCLOSURES:
Interest received $ 59 $ -
Interest paid $ 822 $ -
Income taxes paid $ - $ -
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SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:
Common stock issued for services $ 305,200 $ -
Common stock issued for software license agreement$ - $ 644,370
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The accompanying notes are an integral part of this financial statement.
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XPEDIAN, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 1999
NOTE 1. BASIS OF PRESENTATION
We have prepared the accompanying unaudited financial statements in accordance
with generally accepted accounting principles for interim financial information,
the instructions to Form 10-QSB and item 310 (b) of Regulation SB. Accordingly,
they do not include all the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of our management, all adjustments (consisting of normal recurring accruals)
considered necessary for fair presentation have been included. For further
information, refer to the financial statements and footnotes included in the our
Form 10-KSB for the year ended June 30, 2000, that we have previously filed with
the Securities and Exchange Commission.
NOTE 2. LOSS PER SHARE
Basic and diluted net loss per share was computed based on the weighted average
number of shares of common stock outstanding during the periods.
NOTE 3. GOING CONCERN
Our financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business. We have suffered recurring losses.
This factor raises doubt about our ability to continue as a going concern
without achieving profitable operations or an infusion of capital or additional
financing. The financial statements do not include any adjustments that might be
necessary should we be unable to continue as a going concern.
NOTE 4. RECEIVABLES, ADVANCES AND ACCRUED LIABILITIES
Management and the board of directors are currently investigating and evaluating
the collectibility of the receivables and advances reported, and believe they
will ultimately be collected. Accrued liabilities include accrued compensation,
which the board of directors may reduce, if they believe such a reduction is
warranted.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
This Quarterly Report on Form 10-QSB (the "Report") contains forward looking
statements concerning, among other things, our expected future revenues,
operations and expenditures, competitors or potential competitors, and licensing
and distribution activity. These forward-looking statements are identified by
the use of terms and phrases such as "anticipate," "believe," "could,"
"estimate," "expect," "intent," "may," "will," "plan," "predict," "potential,"
and similar terms and phrases, including references to assumptions. These
statements are contained in each part of this report and any documents
incorporated by reference.
These forward-looking statements represent our expectations, but actual results
could differ materially from those anticipated by the forward looking statements
due to a number of factors, including;
(i) limited operating history;
(ii) need for financing;
(iii) dependence upon a single employee;
(iv) reliance on a single license;
(v) compliance with law;
(vi) lack of sales;
(vii) reliance of revenue growth upon economic conditions;
(viii)competition;
(ix) control by majority shareholder;
(x) absence of dividends;
(xi) government regulation of the Internet; and
the other risks and uncertainties described elsewhere in this report and in our
Annual Report on Form 10-KSB for the fiscal year ended June 30, 2000, under the
caption, "Factors Affecting Future Operating Results" under Item 2. -
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
We are under no obligation to revise or publicly release the results of any
revision to these forward-looking statements. Readers should carefully review
the risk factors described in other documents the Company files from time to
time with the Securities and Exchange Commission ("SEC").
The following discussion and analysis provides information, which our management
believes is relevant to an assessment and understanding of our results of
operations and financial condition. This discussion should be read in
conjunction with financial statements and notes appearing elsewhere in this
report.
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MANAGEMENT CHANGES AND DIRECTION
We are attempting to dramatically reduce operating expenses and overhead in an
effort to reduce operating costs. At the same time, we are seeking to recover
all outstanding notes and claims for damages.
In connection with our revitalization, on March 5, 2001, we announced that Clyde
Aycock has assumed the executive positions of president and chairman of our
board of directors. Mr. Aycock is a seasoned corporate executive with 32 years
of commercial banking experience, including the opening of a new Federally
Chartered bank and bringing a failing institution back to sound, profitable
operation.
Mr. Aycock succeeds Dale K. Chapman, who tendered his resignation as president,
CEO and board member. Our board of directors accepted his resignation effective
immediately.
We caution that we are in a precarious position, in that our license agreement
signed by former management has constantly been under threat of revocation, for
fraud and misrepresentation by former management. As a condition to his
acceptance of the position of president, by Mr. Aycock, at a minimum, required
that prior to April 30, 2001, that CCG consider revising the license agreement
and expand the territory of the license agreement, to at least the four
remaining states (Alabama, Georgia, Mississippi and Tennessee) covered under the
existing agreement.
Consistent with the initiation of its revitalization plans, we will make a
serious commitment to producing revenue for the third fiscal quarter.
Pursuant to a meeting of the Board of Directors, we are initiating a
revitalization plan that will embody a complete commitment to producing revenue
for at least a part of this fiscal year. We are concentrating all of our
energies and resources on our primary business objective - online Interactive
and Intelligent Interview(tm) technologies for:
Online Estate Planning
Digital Forms
Electronic Documents
Document Automation
ASP Hosting
Automated Delivery Requests
We are embarking on a new more focused pursuit of our primary business
objectives consistent with the August 2, 1999, license agreement with Commerce
Capital Group LLC.
Additionally, James H. Feeney has resigned as a member of the board of directors
for personal reasons. Feeney's contributions to the board have provided
invaluable insight and direction and he will be missed.
James Kelly has also resigned as a member of the board of directors. Mr. Kelly
stated that he would consider returning to the board at a later date upon
certain conditions. Mr. Kelly's contributions and insights into niche markets
has been valuable, he will also be missed.
We face difficult challenges in restoring investor confidence and marketing and
deploying our business plan, but given the uniqueness of the product and the
fact that there is no direct or comparable competition, we look forward to the
opportunity. We fully intend to pursue new investment capital and expect to
start producing operating revenue before the end of the second calendar quarter.
We are confident in the quality and viability of our product. We fully expect
that our products and services are going to be among the hottest items on the
Internet. In the very near future, we believe that the general markets will
rebound and as financial and legal professional usage of our sites increases we
will be the primary, if not the only source for this technology. In the future,
we will have the ability to develop applications for financial, banking and
legal representatives who will work online with their individual clients,
providing estate and financial services otherwise not available via the
Internet.
As the direct benefactor of sophisticated Web-based technology, we are devoting
all of our resources to the marketing, education and expansion of applications
coming available through the developments of our licensor. We are endeavoring to
resolve a wide variety of complex business applications that generally involve
one to many, one-on-one, in-person interviews. We believe that we have
technology that enhances production, and increases the efficiency of the sales
cycle for a variety of business applications such as: certain dynamic banking,
insurance, legal document, contract, application, loan, real estate, due
diligence and marketing demographic situations. The use of this technology can
provide users with a wide variety of features that enhance their customer
relations, provides more accurate and concise report generation and information
management while lowering costs.
The user experience with this technology is context sensitive and dynamically
drives output to suit the individual's personal needs and objectives. As in the
case of estate planning, we differentiate ourselves from our natural competition
by simplifying the process into a quiet confidential experience free of outside
influences or involvement. This concern cuts across every age bracket, race,
profession and income level, and since approximately 85 to 90 percent of the
U.S. population does not have even a simple will to plan their estate, we expect
that this marketplace has the potential to be very lucrative.
5
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2000, cash and cash equivalents were $105 as compared with
$59,261 at June 30, 2000. We had a deficit in working capital of $108,771 at
December 31, 2000, as compared to positive working capital of $177,691 at June
30, 2000.
We reported losses for the quarter ended December 31, 2000 of $309,304, and will
continue to incur operating losses until our Internet estate planning business
realizes significant revenues. We have also experienced significant losses from
past operations. We originally had anticipated that our websites and insurance
activities would begin producing revenue during the fiscal quarter ended June
30, 2000, and further revised our timetable to realize a small amount of revenue
from operations during the fiscal quarter ended December 31, 2000. However, due
to concerns over the viability of our imminent breach of the license agreement
of August 2, 1999, continued delays in product launch we are forced us to revise
that estimate to 2001. We may continue to experience losses as we continue to
develop and implement sales and advertising strategies promoting our financial
services products. Our management anticipates that losses should decrease as
time passes due to product sales and resulting revenues.
We will be funding our current expansion into domestic business-to-business
Internet businesses from funds that we derived from equity financing with
outside sources. As we begin to generate revenues, we intend to use
both operating revenues and external sources to fund the future expansion.
However, there can be no assurance that outside financing will be available or
that future revenues will be generated in sufficient amounts or that additional
funds will not be required for the continued expansion of operations. We
intend to meet our short-term and long-term liquidity needs through
additional financing from outside sources. There can be no assurance that we
will achieve profitability or positive cash flow. If we are not
successful in raising sufficient funds, we may be required to limit the scope of
our proposed expansion into domestic business-to-business internet services.
As of the quarter ended December 31, 2000, we had advanced $90,000 toward our
previously announced acquisition of Global Vision, Inc., however, effective
March 1, 2001, we have terminated our relationships with Global - Vision, Inc.
and MCC Insurance.
RESULTS OF OPERATIONS
Six months and quarter Ended December 31, 2000, compared to six months and
quarter Ended December 31,1999
Expenses have continued to decrease. The Company reported $558,904 during the
six months ended December 31, 2000 compared to $1,227,963 during the six months
ended December 31, 1999. During the quarter ended December 31, 2000 expenses
were $311,184 as compared to $388,608 during the quarter ended December 31,
1999. This decrease is primarily due to the significant decreases in consulting
fees. The expenses reported for the quarter ended December 31, 1999, were almost
entirely made up of fees paid with Company stock registered via an S-8
registration filed on July 29, 1999, and from which the Company received no
future benefit. The expenses reported for the quarter ended December 31, 2000,
are also made up almost entirely of fees paid with Company stock registered via
an S-8 registration on September 13, 2000. However, the majority of these fees
were paid for consulting services/contracts, which will provide services for the
Company over the next two years. However, General and Administrative Expenses
and Travel and Entertainment expenses have increased as a result of increased
advertising and marketing efforts.
Other Income (Loss) for the six months ended December 31, 2000, changed from
$1,880 to $(41,188), but were unchanged for the quarter. Interest earnings
during the six months were $3,809, but were offset by $44,997 in losses on
marketable securities owned by the Company.
Net losses for the six months and quarter decreased from $1,227,963 to $600,092
for the six months and from $330,650 to $309,304 for the quarter. This was
primarily due to the decrease in expenses for those periods as discussed above.
Net Loss Per Share (Basic and Diluted) decreased from $.05 during the six months
ended December 31, 1999, to $.02 during the six months ended December 31, 2000,
and remained unchanged at $.01 during the respective quarters. In the quarter
ended December 31, 1999, the decrease in Net Loss Per Share was due to the
significant increase in issued shares as a result of the license agreement with
Commerce Capital Group, LLC. The issuance of options and S-8 shares for related
parties and consulting services over the last twenty months, and 1,650,000
shares that were issued by former management upon the closing of the August 2,
1999 license agreement, constitute a substantial dilution ratio of 25%. In the
six months ended December 31, 2000, the decrease in Net Loss Per Share was due
to significant decreases in expenses. We will continue our efforts to cut
operating costs and expenses.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We have been told that certain investors in a private placement of our stock
will be filing a request for arbitration to rescind the transaction. As of March
21, 2001, we have not received any official filings seeking the arbitration. We
intend to vigorously defend our position in this matter. We believe we have
sufficient meritorious defenses to any such claims.
Item 2. Changes in Securities
During the quarter ended there were changes due to the issuance of shares
pursuant to a Form S-8 registration statement.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Securities Holders
No matters were submitted to a vote.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
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 by the
undersigned thereunto duly authorized.
XPEDIAN, INC.
By: /s/ Clyde Aycock
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Name: Clyde Aycock
Title: President
Date: March 21, 2001
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