UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 000-12139
INTELLIQUIS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
NEVADA (IRS Employer
(State or other jurisdiction of Identification No.)
incorporation or organization) 87-0630562
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352 WEST 12300 SOUTH #300 DRAPER, UTAH 84020
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code: (801) 990-2600
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 such filing requirements for the past 90 days.
[ X ] YES [ ] NO
As of June 30, 2001 the number of shares outstanding of the Registrant's Common Stock was 46,388,142.
Transitional Small Business Disclosure Format - (check one):
[ ] YES [ X ] NO
Intelliquis International Inc. and Subsidiary
Form 10QSB
For the Quarterly Period Ended June 30, 2001
PART 1 FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
INTELLIQUIS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31,
2001 2000
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ASSETS
Current Assets
Trade accounts receivable, net of allowance
for doubtful accounts of $13,000 and
$0, respectively $ 116,129 $ 21,229
Notes receivable 64,551 60,840
Inventory 120,280 130,287
Prepaid expenses and deposits 10,200 10,200
------------ ------------
Total Current Assets 311,160 222,556
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Property and Equipment, Net 100,168 115,529
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Other Assets
Intangibles, net of $115,101and $84,886
accumulated amortization, respectively 133,921 194,389
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Total Assets $ 545,249 $ 532,474
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Checks written in excess of cash in bank $ 3,395 $ 747
Accounts payable and accrued liabilities 805,902 689,010
Payable to related party 84,687 18,000
Short-term borrowings 1,843,246 1,854,406
Preferred stock dividends payable 201,536 141,700
------------ ------------
Total Current Liabilities 2,938,766 2,703,863
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Stockholders' Deficit
Preferred stock - $0.001 par value;
5,000,000 shares authorized;
1,800 shares issued and outstanding,
respectively 2 2
Common stock - $0.001 par value;
50,000,000 shares authorized;
46,388,142 and 38,221,475 shares issued
and outstanding, respectively 46,388 38,221
Treasury stock (20) (70)
Additional paid-in capital 8,850,089 8,579,929
Accumulated deficit (11,289,976) (10,789,471)
------------ ------------
Total Stockholders' Deficit (2,393,517) (2,171,389)
------------ ------------
Total Liabilities and Stockholders' Deficit $ 545,249 $ 532,474
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The accompanying notes are an integral part of these condensed
consolidated financial statements.
INTELLIQUIS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Six Months Ended
June 30,
-------------------------
2001 2000
----------- ------------
Sales $ 281,127 $ 969,658
Cost of Sales 40,551 199,548
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Gross Profit 240,576 770,110
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Expenses
Sales and marketing 218 430,287
General and administrative 545,978 471,098
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Total Expenses 546,196 901,385
----------- ------------
Operating (Loss) (305,620) (131,275)
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Other Income (Expense)
Interest expense (1,766) (52,447)
Interest income 3,712 20,476
Rental income 3,000 -
Bad debt (26,229) (136,730)
Settlement expense (113,766) (507,921)
----------- ------------
Other Expense, Net (135,049) (676,622)
----------- ------------
Net Loss (440,669) (807,897)
Preferred stock dividends (59,836) (59,836)
----------- ------------
Net Loss Attributable to Common
Shareholders $ 500,505 $ 867,733
=========== ============
Basic and Diluted Loss Per Common
Share $ (0.012) $ (0.025)
=========== ============
Weighted Average Number of Common
Shares Used in Per Share
Calculation 40,371,247 34,140,056
=========== ============
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The accompanying notes are an integral part of these condensed consolidated financial statements.
INTELLIQUIS INTERNATIONAL, INC.,
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months
Ended June 30,
---------------------
2001 2000
--------- ----------
Cash Flows From Operating Activities
Net loss $(440,669) $ (867,733)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 75,829 24,900
Expenses paid for by officer 24,768 -
Stock and options issued for services
performed 65,000 -
Stock issued in settlement of litigation 106,875 -
Changes in operating assets and liabilities:
Accounts receivable (94,900) 998,905
Other receivable (3,711) -
Prepaid expenses and deposits - (505,519)
Inventory 10,007 (39,009)
Accounts payable and accrued liabilities 116,892 (1,633,580)
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Net Cash Used In Operating Activities (139,909) (2,022,036)
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Cash Flows From Investing Activities
Principal payments on notes receivable - 483,391
Purchase of fixed assets - (251,259)
Increase in other assets - (1,091)
--------- -----------
Net Cash Used In Investing Activities - 231,041
--------- -----------
Cash Flows From Financing Activities
Checks written in excess of cash in bank 2,648 -
Proceeds from payable to related party 66,687 -
proceeds from issuance of stock 81,734 -
Deferred offering costs - (167,343)
Proceeds from short-term borrowings - 1,837,735
Principal payments on short-term borrowings (11,160) -
--------- -----------
Net Cash Provided By Financing Activities 139,909 1,670,392
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Net Increase (Decrease) in Cash - (120,603)
Cash at Beginning of Period - 264,395
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Cash at End of Period $ - $ 143,792
========= ===========
Supplemental Cash Flow Information
Interest paid $ 1,766 $ 44,574
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The accompanying notes are an integral part of these condensed consolidated financial statements.
NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS
Condensed Financial Statements - These financial statements are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States. These statements should be read in conjunction with the Company's December 31, 2000 Annual Report on Form 10-KSB. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying condensed consolidated financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying condensed consolidated financial statements for the six months ended June 30, 2001 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2001.
NOTE 2 - BUSINESS CONDITION
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered a significant loss from operations during the six months ended June 30, 2001 totaling $440,669. During the six months ended June 30, 2001, the Company had a net loss attributable to common shareholders of $500,505. Moreover, during the six months ended June 30, 2000 and 2001, the Company's operations used $(2,022,036) and $(139,909) of cash, respectively. At June 30, 2001, the Company had a working capital deficit of $2,627,606. These matters raise substantial doubt about the Company's ability to continue as a going concern. In the future, the Company must obtain additional financing to provide working capital for operations. Management is attempting to develop and market new products to finance its operations. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.
NOTE 3 - RELATED PARTY TRANSACTIONS
During the six months ended June 30, 2001, an officer and shareholder advanced the Company $84,687. There is no stated interest rate on the loan. The loan does not have any formal terms of repayment.
During the six months ended June 30, 2001, an officer and shareholder of the Company contributed his personal shares of the Company's stock to compensate employees. The shares were valued at the market price on the date of issuance. The total value of stock contributed to employees by the officer was $24,768 for the six months ended June 30, 2001. The transaction was accounted for as a capital contribution by the officer and shareholder.
NOTE 4 - STOCK OPTIONS
During June 2001, the Company issued options to purchase 1,666,667 shares of common stock of the Company at $0.015 per share. These options vested on the date granted and are exercisable for two |
years. The option shad an intrinsic value of $0 on the date granted and $33,333 was recognized as compensation expense on that date. The options had a fair value of $0.02 per share based on the Block- Scholes option pricing model with the following assumptions: risk free interest rate of 4.22 percent, volatility of 0 percent, expected dividend yield of 0 percent, and an expected life of two years. No options were exercised during the year ended June 30, 2001.
NOTE 5 - STOCKHOLDERS' EQUITY
Common Stock Issued for Litigation Settlement - In March and April, the Company agreed to pay On The Planet ("OTP") an additional 1,000,000 and 1,500,000 shares of common stock due to the decrease in the value of the Company's stock. The value of the shares issued was $106,875.
Common Stock Issued for Cash - During the six months ended June 30, 2001, the Company issued 5,166,667 shares of common stock for $77,500 or $0.015 per share.
Common Stock and Options Issued for Services - During the six months ended June 30, 2001, the Company issued 500,000 shares of common stock for $15,000 or $0.03 per share and stock options of $50,000 for services.
Expenses Paid by Officer of the Company - During the six months ended June 30, 2001, an officer of the Company contributed capital of $24,768 to pay for expenses of the Company.
Treasury Stock - During the six months ended June 30, 2001, the Company issued 50,000 shares of treasury stock for $4,235 or $0.015 per share.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Legal Contingencies - The Company has filed an action against the primary distributor of its products, through which it seeks to recover an amount in excess of $1,000,000. The claims of the Company arise from, inter alia, the failure of the distributor to properly account for the Company's product which were returned by retailers, thus resulting in debits to the Company's account in amounts which were greater than the price at which the Company invoiced products to the distributor. The distributor has answered the suit, and both parties have entered into binding arbitration. Due to the uncertainty in the outcome of this action, the Company valued against amounts receivable from this distributor during 2000. Any amount recovered from this action will be recognized in future periods.
A software licensor claims that the Company breached a license agreement which licensed certain software to the Company for inclusion in its products. The software licensor argues that because the license agreement was breached, the Company's license to make use of that software was terminated and thus, through continued sales, the Company infringed on the software licensor's copyright to that software. The Company has filed an answer in which it denies those allegations and will file a counterclaim through which it will seek to recover damages arising from certain defects in the software licensed. The software licensor is seeking to recover damages in an amount between $50,000 and $200,000. The Company has submitted a Notice of Claim to its insurer. The insurer, at this time, has neither admitted nor denied coverage. Counsel is not yet able to express an opinion as to the ultimate resolution of this dispute.
This same software licensor also seeks to recover damages allegedly arising from the breach of the license agreement, as discussed immediately above, and, in addition, has asserted claims purportedly arising under the California Business Practices Act for an interference with prospective economic advantage. The software licensor alleges that it is entitled to recover not less than $45,000 on its breach of contract claim. The Company has filed an answer denying the material allegations of the complaint and will file a counterclaim based on the defective software. The software licensor has not specified the damages which it seeks to recover on the remaining claims. Counsel, at this time, cannot express an opinion as to the ultimate resolution of this dispute.
One of the Company's distributors has asserted claims based on an open account for the shipment of the Company's products through which it seeks to recover $91,004. The Company has filed an answer, denying the material allegations of the complaint and has asserted a counterclaim through which it seeks to recover $300,000 as damages for the negligent destruction of certain products by agents of the distributor. This proceeding remains in the discovery stage of litigation. At this point it is not possible for counsel to express a firm opinion as to the ultimate resolution of this dispute.
Another distributor seeks to recover the sum of $44,943, allegedly owed for the packaging, shipping and distribution of software products produced by the Company. The Company has filed an answer |
and counterclaim through which it seeks to recover the sum of approximately $50,000. The claim of the Company arises from the shipment of packaged product by Onesource in an amount substantially in excess of the amount ordered by distributors and the consequent return of those products resulting in a cash reimbursement paid by the distributor and debited to the Company. Discovery is proceeding in this matter. Due to the uncertainty involved in the claim, counsel can offer no opinion as to the ultimate outcome.
A separate distributor seeks to recover $16,350 allegedly owed for printing services provided to the Company. The Company has filed an answer through which it denies that any amounts are owing to plaintiff. Discovery is now under way in this matter. Counsel is not able to express an opinion as to the ultimate outcome of this dispute.
A third party has filed a complaint seeking the recovery of $12,677 allegedly owed for telecommunication services. The Company has agreed to make monthly payment of $1,000 until the obligation is satisfied.
ROBI INVESTORS, LLC VS. INTELLIQUIS INTERNATIONAL, INC. Robi Investors, LLC, filed suit in the Unites States District Court for the Southern District of New York, seeking to recover damanges in the amount of $2,876,472.00 in connection with funding efforts provided in a prior year on behalf of the Company. Although the Company timely provided copies of the Summons and Complaint, along with payment of a retainer, to its prior counsel, an answer or other response to the Complaint was not submitted. The Company is presently engaged in negotiations with principals of Robi Investors for the purpose of resolving the case.
The Company is also the subject of certain legal matters, which it considers incidental to its business activities. It is the opinion of management, after discussion with legal counsel, that the ultimate disposition of these legal matters will not have a material impact on the consolidated financial condition or results of operations of the Company.
Item 2 Managements Discussion and Analysis
INTELLIQUIS INTERNATIONAL, INC. AND SUBSIDIARY
For the fiscal year 2001, the Company expects to continue to grow by realizing overseas growth in its current product lines. In relation, the Company anticipates to have income from operations for the remaining quarters. The income will be a result of increased sales due to new products and revisions. In addition, the Company is exploring other products that could be release during the remaining quarters, which could dramatically increase sales.
For the six months ended June 30, 2001, the Company reported an operating loss of $ 440,669 compared to operating loss of $ 867,733 in the corresponding period in 2000.
Six Months Ended June 30, 2001 and 2000
The Company's sales amounted to $ 281,127 for the first six months of 2001 which is a decrease of $ 688,531 from $ 969,658 for the same period in 2000. The Company's decrease in sales is primarily due to the decrease in sales of it products and litigation with its primary distributor. The Company expects sales to increase for the rest of the fiscal year due to the signing of new distributors both domestic and international, release of new products and new versions of existing products.
Cost of sales includes cost of goods sold, royalties paid to developers and the costs for maintaining technical support. The cost of sales totaled $ 40,551 for the six months ended June 30, 2001 compared to $ 199,548 for the same period in 2000. During the first six months of 2001 the Company had taken additional measures to reduce royalties and production labor. The Company anticipates that cost of sales will approach 20% of sales for the fiscal year 2001.
General and administrative expenses totaled $ 545,978 for the first three months ending June 30, 2001 and $ 471,098 for the same period in 2000. The Company anticipates general and administrative expenses as a percentage of sales to approximate 28% for the fiscal year 2001.
For the fiscal year 2001, the Company expects to continue to grow by realizing overseas growth in its current product lines and the demand for the new products released in April. In relation, the Company anticipates to have income from operations for the remaining quarters. The income will be a result of increased sales throughout the year due to new products and revisions and a reduction in production costs and overhead. In addition, the Company is exploring other products that could be release during the fourth quarter, which could increase sales.
For the six months ended June 30, 2001, the Company reported an operating loss of $ 305,620 compared to operating loss of $ 131,275 in the corresponding period in 2000.
Intelliquis International, Inc. ("the Company" or "Intelliquis") has become a republisher, marketer and supporter of Internet Year 2000 utility, reference and communication software products for the computer software retail market. The Company was incorporated as Leesburg Land and Mining Inc., June 21, 1983 in Colorado for the purpose of seeking out and developing a business opportunity. Effective December 31, 1998, the Company acquired all of the equity of Intelliquis LLC, a Utah Limited Liability Company, which then became a wholly owned subsidiary ("the Subsidiary") of the Company. During this same period the Company changed its corporate domicile to Nevada and changed its name to Intelliquis International, Inc. The Subsidiary was founded in August 1997 and organized in Utah in December 1997, as a Limited Liability Company. As a result of the acquisition of the Subsidiary, the controlling shareholders of the Subsidiary became controlling shareholders of the Company.
The Company built a position in the software market by first licensing fully tested software applications from independent software developers and then developing or acquiring a family of software applications. During the year 2000 The Company's changed its emphasis to Internet Utilities titles, but will offer software titles in reference, and communication programs both in the North American and International market. The software products are being marketed through traditional software distribution channels to retail outlets and the Internet's World Wide Web. Since the release of the Company's first software title in November 1997, the Company has grossed approximately $11 million in sales to date.
The Company has licensed and as current products, a total of seven software titles through the end of 2000 namely: Web Site Medic, TotalFax, Web Site Traffic Builder, Traffic Analyzer, Credit Builder, Mass-E-Mailer, and Cyber Surveillance. In the last quarter of 1997, the Company republished and released its first three titles (NetFax, Speed98 and Credit Builder). During 1998, Intelliquis released another three titles (TotalFax, Fix2000, and Web Site Traffic Builder).
In 1999, the Company purchased and redesigned Credit Builder and launched it as Credit Builder Deluxe. Intelliquis also released Cyber Surveillance during fourth quarter 1999.
Intelliquis announced the launch of two new titles at the beginning of 2000, Mass-E- Mailer and Web Site Traffic Analyzer (Traffic Meter). Mass-E-Mailer is a bulk e-mail message program that allows users to broadcast e-mails to multiple contact lists. Web Site Traffic Analyzer allows Webmasters and web site owners to track and monitor traffic patterns to and within their Internet sites. The Company offers Web Site Traffic Analyzer as a stand-alone product and has included the product with Web Site Traffic Builder in a suite of Internet products.
The Company developed and released it's own version of Web Site Traffic Builder in July of 2000. Traffic Builder is a program that submits web site information to the major search engines. With the availability of new and quality titles to license, the Company intends to release new titles on a regular basis in 2001 and beyond.
For 2001, the Company is expected to continue with its overseas growth in its current product lines. The Company established sales/fulfillment centers in England to handle sales in Europe. The Company has also signed agreements with a number of established international distributors in Spain, Netherlands, and the United Kingdom.
The Company has down-sized it number of employees but does not anticipate any production and/or sales facilities and personnel limitations to fulfill its goals for 2001 and beyond. The Company is also expanding its sales potential and presence by selling its products directly to consumers over the Internet, thus eliminating a significant overhead of wholesale and retail marketing through existing channels. During the year 2000 the Company built a specific Website for each of its major products. They are: www.websitetrafficbuilder.com, www.mass- emailer.com, www.trafficanalyzer.net and www.totalfax.net
ITEM 3 DESCRIPTION OF PROPERTY
The Company's headquarters are located at 352 West 12300 South,
Suite 300, Draper, Utah 84020. The main telephone number of the Company
is (801) 990-2600. The Company has a three-year lease of 3,900 square
feet of office space and 5,638 square feet of warehouse space. The
Company performs its own warehousing and fulfillment of all its
products.
The Company has licensed and released a total of five software titles namely, IntelliFix2000 (formerly Fix2000), TotalFax, Website Traffic Builder, Credit Builder, and Speed98. In the last quarter of 1997, the Company republished and released the first three titles (NetFax, Speed98 and Credit Builder). In the first quarter of 1998, Intelliquis released another two titles (TotalFax and Fix2000). Intelliquis' most recent title (Website Traffic Builder) was released in August 1998. With the availability of new and quality titles to license, the Company intends to release new titles on a re
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
1. Doren Rosenthal v. Intelliquis International, Inc., Superior Court, County of San Luis Obispo, State of California,Civil No. CV 991-124, Doren Rosenthal, a software programmer, has asserted claims against the Company alleging the breach of a licensing agreement, breach of contract, misappropriation of trade secrets and others. In response the Company filed a Demurrer, which was granted, in part. The Company not only has denied the claims asserted by Rosenthal but, based on its review of sale records, maintains that actual damages, if any, are in a nominal amount. This matter is still in the discovery stage. Because Rosenthal has requested damages in an unspecified amount, it is not possible to predict the amounts which might be awarded to him should he prevail on the asserted claims.
2. United Television, Inc. dba KTVX 4 Utah vs. Intelliquis, LLC,Third District Court, Salt Lake County, State of Utah Civil No. 000909917 In its Complaint, United Television, Inc. asserts a claim for payment in the amount of $5,848.67 purportedly owed for the broadcasting of advertising for Intelliquis International, Inc. (the "Company"). On February 7, 2001, United Television and the Company entered into a Stipulation through which the Company agreed to pay to United Television, Inc. the sum of $2,000.00 payable in two installments. Upon payment in full, this matter will be dismissed, with prejudice.
3. Onesource.com, Inc. vs. Intelliquis, LLC, Third District Court, Salt Lake County, State of Utah, Civil No. 000411165. Onesource.com seeks to recover the sum of $44,943.11, allegedly owed for the packaging, shipping and distribution of software products produced by the Company. The Company has filed an Answer and Counterclaim through which it seeks to recover the sum of approximately $50,000.00. The claim of the Company arises from the shipment of packaged product by Onesource in an amount substantially in excess of the amount ordered by distributors and the consequent return of those products resulting in a cash reimbursement paid by Onesource and debited to the Company. Discovery is proceeding in this matter. Counsel cannot now offer an opinion as to the ultimate outcome.
4. Elite Marketing, LC vs. Intelliquis, LLC, Fourth District Court, Utah County, State of Utah, Civil No. 000403243. Elite Marketing has asserted claims against the Company through which it seeks to recover $19,180.32, allegedly due as payment for the production of compact discs. Elite Marketing and the Company entered into a Stipulation and Settlement Agreement on March 14, 2001. That Agreement requires that the Company make two payments of $2000.00 to Elite Marketing for a total amount of $4,000.00. Upon receipt of payment in full by Elite Marketing, the Complaint in this matter will dismissed, with prejudice.
5. All West Communications vs. Intelliquis, LLC, Third District Court, Salt Lake County, State of Utah, Civil No. 000410898. All West Communications has filed a Complaint seeking the recovery of $12,677.21 allegedly owed for telecommunication services. The Company has filed an Answer denying the material allegations of the Complaint. Discovery has now commenced. Counsel cannot express an opinion as to the ultimate outcome of this dispute.
6. MCB Printing, Inc. dba Excell Graphics, Inc. vs. Intelliquis, et al., Fourth District Court, Utah County, State of Utah, Civil No. 000403250. In its Complaint, MCB Printing, Inc. seeks to recover $16,350.50 allegedly owed for printing services provided to the Company. The Company has filed an Answer through which it denies that any amounts are owing to plaintiff. Discovery is now under way in this matter. Counsel is not able to express an opinion as to the ultimate outcome of this dispute.
7. Cyberspace Headquarters, LLC vs. Intelliquis International, Inc., United States District Court, Central District of California, State of California Civil No. 00-12834 AHM. In this action Cyberspace Headquarters claims that the Company breached a License Agreement which licensed certain software to the Company for inclusion in its products. Cyberspace Headquarters argues that because the License Agreement was breached, the Company's license to make use of that software was terminated and thus, through continued sales, the Company infringed on the Cyberspace Headquarters copyright to that software. The Company has filed an Answer in which it denies those allegations and will file a Counterclaim through which it will seek to recover damages arising from certain defects in the software licensed from Cyberspace Headquarters. In a Rule 26(f) Report, Cyberspace Headquarters states that it will seek to recover damages in an amount between $50,000.00 and $200,000.00. The Company has submitted a Notice of Claim to its insurer, Evanston Insurance Company. Counsel is not yet able to express an opinion as to the ultimate resolution of this dispute.
8. MSAS Global Logistics, Inc. vs. Intelliquis, LLC dba Intelliquis International, Inc., Third District Court, Salt Lake County, State of Utah, Civil No. 00411518. In its Complaint, MSAS Global Logistics asserts claims based on an open account for the shipment of the Company's products through which it seeks to recover $91,004.21. The Company has filed an Answer, denying the material allegations of the Complaint and has asserted a Counterclaim through which it seeks to recover $300,000.00 as damages for the negligent destruction of certain products by agents of MSAS Global Logistics. This proceeding remains in the discovery stage of litigation. At this point it is not possible for counsel to express a firm opinion as to the ultimate resolution of this dispute.
9. Robi Investors, LLC vs. Intelliquis International, Inc., United Stated District Court, Southern District of New York, Case no. 00 CIV 9562(NRB)/Third District Court, Salt Lake County, State of Utah, Civil no. 016905005. Robi Investors, LLC, filed suit in the United States District Court for the Southern District of New York, seeking to recover damages in the amount of $2,876,472.00. Although the Company timely provided copies of the Summons and Complaint, along with payment of a retainer, to its prior counsel, an Answer or other response to the Complaint was not submitted. The Company is presently engaged in negotiations with principals of Robi Investors for the purpose of resolving the case.
10. Intelliquis International, Inc. vs. Ingram Micro, Third District Court, Salt Lake County, State of Utah, Civil no. 010902359. The Company has asserted claims against Ingram Micro, a distributor of the Company's products, through which it seeks an accounting of Ingram's financial records, specifically of amounts debited and credited to the Company's accounts. The Company claims that through accounting errors, Ingram Micro has failed to pay an amount in excess of One Million Dollars ($1,000,000.00) to the Company. The Company has also asserted claims for breach of the implied covenant of good faith and fair dealing, implied in the Distribution Agreement which it had with Ingram Micro. The Company seeks to recover actual damages in excess of One Million Dollars, plus punitive damages, plus all attorneys' fees and costs of court. Ingram Micro has filed an Answer and Counterclaim through it denies the material allegations of the Company's Complaint. Through its Counterclaim, Ingram Micro asserts claims for breach of contract and an accounting. Ingram Micro claims that its records indicate that it is owed the sum of $672,600.00 by the Company. The Company has submitted a Reply to Counterclaim through which it denies the material allegations of the Counterclaim and seeks an award of its attorney's fees incurred in the defense of that Counterclaim. Discovery has not yet commenced in this matter. However, the parties have agreed to an accelerated discovery and litigation schedule. It is anticipated that this matter will be settled following the preparation of reports by independent forensic accountants. Because this matter is in its early stages, the outcome is uncertain. There can be no assurance that the Company will be successful in the assertion of its claims or in the defense of the Counterclaim. In the event that Intelliquis is unsuccessful, the amount of potential damages which may be awarded is also uncertain.
ITEM 2. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None
ITEM 3. CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR PROVISION" OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
When used in this report, the words "believe," "plan,"
"anticipates,","expects" and similar expressions are intended to identify
forward looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended.
Such statements are subject to certain risks and uncertainties, including
those discussed below, that could cause actual results to differ materially
from those stated. All of these forward-looking statements are based on
estimates and assumptions made by management of the Company, which although
believed to be reasonable, are inherently uncertain and difficult to
predict.
There can be no assurance that the benefits or results anticipated in
these forward-looking statements will be achieved. The following important
factors, among others, could cause the Company's to no experience the
results contemplated in this report, or otherwise cause the Company's
results of operations to be adversely affected in the future: (i) the
Company's reliance on the sale of few products; (ii) the Company's
dependence on the ability of its distribution channels to market the
Company's products;
(iii) the Company's dependence on one major distributor for retail sales;
(iv) the Company's reliance on its Y2K software for a majority of revenues;
(v) the uncertainty of the potential impact of the Year 2000 on computer
systems; (vi) continued or increased competitive pressures from existing
competitors and new entrants; (vii) unanticipated costs related to the
Company's growth and operating strategies; (viii) loss of key members of
management; (ix) deterioration of general economic conditions; (x) loss of
customers or customer acceptance of Company products; (xi) unanticipated
problems or "bugs" in the Company's software products; and (xii) the
outcome of any litigation the Company may be involved in. Stockholders,
potential investors and other readers are urged to consider these factors
carefully in evaluating the forward-looking statements and are cautioned
not to place undo reliance on such forward-looking statements. Many such
factors are beyond the control of the Company.
The forward-looking statements made herein are only made as of the
date of the Form 10-QSB and the Company undertakes no obligation to
publicly update such forward-looking statements to reflect subsequent
events or circumstances.
ITEM 4. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is furnished with respect to the Company's Board of Directors and executive officers. There are no family relationship between or among any of the Company's directors or executive officers.
Directors and Executive Officers
The Company's management team consists of experienced professionals in the area of software licensing, marketing, sales, operation and financial strategies. The Company presently has a total of fourteen full-time and part-time contract workers as needs arise. In addition, there are contractual relationships with third party distribution companies and Asian and European partners to assist in software distribution and marketing. Messrs. Bernard Yaw, Blair Barrett, Mark Tippets and Say Thean Lim are the majority shareholders of the Company at this moment. Other directors will be added in the future.
The Board of Directors and executive officers of the Company as of date of this report are as follows:
Name Age (2000) Position with the Company
------------ ------- --------------------------
Mark Tippets 48 Director, President and CEO
Blair Barrett 45 Director, Vice President
of Operation
Douglas D. Cole 43 Director
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Following is a discussion of the business background of each director, President and executive officer. , Blair Barrett Mark Tippets is currently the only full-time officer of the Company. Other directors shall devote only such time as may be necessary to the Company's business and affairs.
Mark Tippets, was appointed as Director and Vice President of
Marketing and Sales of the Company since the acquisition of Intelliquis
LLC. He has served as Vice-President of Marketing and Business
Development of the Subsidiary, since its inception in December 1997. In
February of 2001 Mr. Tippets has assumed the role of President and CEO
until such time as a new President and CEO can be found. Prior to
joining the Company, Mr. Tippets has been associated with the computer
industry for seven years. Starting with Gazelle Systems as a customer
service representative, Mark worked his way into dealer sales. After a
year, Mark was promoted to a managerial position with the company's OEM
and Government Sales. During his final year at Gazelle in 1993, Mr.
Tippets' work accounted for half of the Company's sales. Mr. Tippets
then started a company called Channel Marketing in late 1993. Channel
Marketing is a marketer and distributor representative firm representing
many computer hardware and software companies. Channel's list of
clients includes AIWA America and CyberMedia, just to name a few.
ITEM 5. MARKET PRICE FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock has been traded on the OTC Electronic Bulletin Board under the symbol INTQ since February 5, 1999. Prior to February 5, 1999, there was no known public trading in the Company's Common Stock. In April 1999, the Company completed a forward stock split of one for three shares through a stock dividend.
As of June 30, 2001,there were 1093 stockholders of record.
The Company does not presently pay cash dividends on its Common Stock and anticipates that, for the foreseeable future, no cash dividends will be paid on its Common Stock.
ITEM 6 LIQUIDITY AND CAPITAL RESOURCES
Liquidity is a significant concern for the Company until it can generate adequate cash flows from operations, which are primarily dependent on the development, marketing and distribution of the Company's products. Management believes that continued financing will be needed to provide working capital for operations. In addition, the Company is continuing to expand into International markets including Canada, Europe and Latin America. However, the Company anticipates an increase in sales from both direct and the Internet for its web-site related software programs.
Blair Barrett was appointed as Director and Vice President of Operations of the Company since the acquisition of the Subsidiary. He served as Manager and President of the Subsidiary from its inception to January 1999. Mr. Barrett has approximately 17 years of experience in sales and marketing with computer hardware, software and high-tech companies. He has served as sales manager with FORA Inc. a venture capital funded start-up hardware company. He also helped manage a real estate VAR startup. Mr. Barret graduated from Brigham Young University with a Bachelor of Science degree in Finance in 1980.
Douglas Cole was appointed as Director of the Company since February 1999.
For the past twenty-two years, Mr. Cole has worked in the information
technology industry, with a focus on sales and marketing. He has
successfully completed numerous acquisitions and strategic partnerships
with various companies. He is currently a Director and Chairman of
NetAmerica, Inc., a Delaware company currently listed in the OTC
Bulletin Board (under the symbol of "NAMI"). NetAmerica is a company
engaged in the business of aggregating and offering dial-up and
dedicated Internet communication service access throughout the United
States and international centers. Mr. Cole is also a current member of
the Board of Directors of VR1, a privately-held Boulder, Colorado
company engaged in the business of Internet multi-player games, and
RedFish Telemetrix, a privately-held Irvine, California company engaged
in the business of long-distance optimization hardware. He has served
as the President and CEO of PolarCap, Inc., a privately held California
company. From 1995-1996 Mr. Cole served as President and CEO of
Starpress Inc. Starpress was acquired by Great Bear Technology Company,
a publicly held California company, where Mr. Cole was also the
President and CEO from 1992-1996. From 1985-1991 he served as
President, CEO and Executive Vice President of Insight Development
Corporation, a company engaged in the business of network printing
utilities for Hewlett Packard. From 1977-1978 he served as Vice
President of Sales and Marketing of The David Jamison Carlyle
Corporation. Mr. Cole graduated from the University of California,
Berkeley, in 1978 with a Bachelor of Arts degree in Social Science.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Intelliquis International, Inc.
By: Mark Tippets
By: /s/ Mark Tippets ---------------------- Dated: Sept 14, 2001 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons of behalf of the |
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE By: /s/ Mark Tippets President & CEO Sept 14, 2001 -------------------- Mark Tippets |