-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NeAGK4BV2SRhiAogMv1LbyjdodlUEmo3nPnOiVcVpf8gUD2ov5ZePwS1JFNc1iNe 3WI+lBKmIjbq/jMFFEl/0Q== /in/edgar/work/0000912057-00-049813/0000912057-00-049813.txt : 20001115 0000912057-00-049813.hdr.sgml : 20001115 ACCESSION NUMBER: 0000912057-00-049813 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ISA INTERNATIONALE INC CENTRAL INDEX KEY: 0001095133 STANDARD INDUSTRIAL CLASSIFICATION: [5961 ] IRS NUMBER: 411890229 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27373 FILM NUMBER: 765800 BUSINESS ADDRESS: STREET 1: 1601 E HIGHWAY 13 STREET 2: STE 100 CITY: BURNSVILLE STATE: MN ZIP: 55337 BUSINESS PHONE: 1800434319 MAIL ADDRESS: STREET 1: 204 CENTRAL AVE STREET 2: STE 111 CITY: FARIBAULT STATE: MN ZIP: 55021 10-Q 1 a2030878z10-q.txt FORM 10-Q - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 - ------------------------------------------------------------------------------- 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 September 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___ Commission File Number 0-27373 --------------------------------------------------- ISA INTERNATIONALE INC. (Exact name of registrant as specified in its charter) DELEWARE 41-1925647 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 1601 EAST HIGHWAY 13, SUITE 100 55337 BURNSVILLE, MINNESOTA (Zip Code) (Address of principal executive offices) (612) 736-0619 (Registrant's telephone number, including area code) --------------------------------------------------- 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. Yes X No ---- ----- ------------------------------------------- On November 14, 2000, there were 17,923,881 shares of the Registrant's common stock, par value $.0001 per share, outstanding. ISA INTERNATIONALE, INC. FORM 10-QSB SEPTEMBER 30, 2000 TABLE OF CONTENTS PART 1, FINANCIAL INFORMATION
PAGE NUMBER ITEM 1. FINANCIAL STATEMENTS Balance Sheets as of September 30, 2000 and December 31, 1999 3 Statements of Operations for the Three Months Ended September 30, 2000 And 1999 and the Nine Months Ended September 30, 2000 and 1999 4 Statements of Cash Flows for the Nine Months Ended September 30, 2000 And 1999 5 Notes to Financial Statements 6-7 ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 8-11 PART 2. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 12 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 12 ITEM 3. DEFAULTS UPON SENIOR SECURITIES 12 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12 ITEM 5. OTHER INFORMATION 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13 SIGNATURES 14 INDEX TO EXHIBITS
2 ISA INTERNATIONALE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Unaudited) September 30, 2000 December 31, 1999 ------------------ ----------------- ASSETS Current assets: Cash and cash equivalents .............................. $ 4,730 $ 260,807 Other current assets ................................... -- 286,000 ----------- ----------- Total current assets ................................. 4,730 546,807 Fixed assets: Property, plant and equipment, net of depreciation ..... 236,971 279,410 Deposits ................................................. 9,408 90,423 Noncurrent assets of discontinued operations ............. -- 45,421 =========== =========== TOTAL ASSETS ......................................... $ 251,109 $ 962,061 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable ....................................... $ 670,890 $ 147,913 Convertible debentures payable ......................... 1,591,640 986,000 Interest payable ....................................... 164,239 -- Other current liabilities .............................. 9,088 41,725 Net current liabilities of discontinued operations ..... -- 159,952 ----------- ----------- Total Current Liabilities ............................ 2,435,857 1,335,590 Deferred lease costs ..................................... 39,094 77,077 Security deposits ........................................ 14,908 14,908 ----------- ----------- Total liabilities .................................... 2,489,859 1,427,575 Shareholders' Equity (Deficit) Common stock ........................................... 1,502 1,438 $.0001 par value. Authorized 30,000,000 shares; issued and outstanding 15,023,881 and 14,382,215 shares at September 30, 2000 and December 31, 1999, respectively Additional paid in capital ............................. 3,058,368 2,566,032 Accumulated deficit .................................... (5,298,620) (3,032,984) ----------- ----------- Total shareholders' deficit .......................... (2,238,750) (465,514) =========== =========== TOTAL LIABILITIES AND SHAREHOLDERS EQUITY .............. $ 251,109 $ 962,061 =========== ===========
See accompanying notes to consolidated condensed financial statements 3 ISA INTERNATIONALE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Unaudited) (Unaudited) (Unaudited) THREE MONTHS ENDING NINE MONTHS ENDING September 30, September 30, September 30, September 30, 2000 1999 2000 1999 ------------- ------------- ------------- ------------- Net sales ......................................... $ -- $ -- $ -- $ 63,806 Cost of goods sold ................................ -- -- -- (48,046) ------------ ------------ ------------ ------------ Gross profit .................................... -- -- -- 15,760 Operating Expenses Selling and marketing ........................... -- -- -- 73,974 Engineering and programming .................... -- 41,977 122,699 683,264 Warehousing and shipping ........................ -- 60,629 -- 104,992 General and administrative ...................... 795,376 228,777 2,422,255 666,621 Depreciation .................................... 13,184 28,954 39,552 67,418 ------------ ------------ ------------ ------------ Operating loss ................................ (808,560) (360,337) (2,584,506) (1,580,509) Interest expense, net ........................... (55,622) 280 (128,788) 1,217 Other income, net ............................... 14,653 -- 56,104 -- ------------ ------------ ------------ ------------ LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES (849,529) (360,057) (2,657,190) (1,579,292) Income taxes .................................... -- -- -- -- LOSS FROM CONTINUING OPERATIONS ................... (849,529) (360,057) (2,657,190) (1,579,292) Discontinued Operations: Operating income, net of taxes .................. -- -- 9,405 63,771 Net income, after taxes on disposition .......... -- -- 382,149 -- ------------ ------------ ------------ ------------ Earnings from discontinued operations ............. -- -- 391,554 63,771 ------------ ------------ ------------ ------------ NET LOSS .......................................... $ (849,529) $ (360,057) $ (2,265,636) $ (1,515,521) ============ ============ ============ ============ Net income (loss) per share-basic and diluted Continuing operations ........................... $ (0.06) $ (0.03) $ (0.18) $ (0.11) Discontinued operations ......................... -- -- 0.03 0.00 Net loss ........................................ $ (0.06) $ (0.03) $ (0.15) $ (0.11) ============ ============ ============ ============ Average shares of common stock outstanding, basic and diluted ............................... 14,703,048 14,382,215 14,703,048 14,382,215 ============ ============ ============ ============
See accompanying notes to consolidated condensed financial statements 4 ISA INTERNATIONALE, INC. AND SUBSIDIARIES Consolidated Statement of Cash Flows (Unaudited)
(Unaudited) (Unaudited) NINE MONTHS ENDED NINE MONTHS ENDED September 30, 2000 September 30, 1999 ------------------ ------------------ CASH FLOWS FROM OPERATIONS: Loss from continuing operations ........................ $(2,657,190.00) $(1,579,292) Adjustments to reconcile loss from continuing operations to cash used in operations: Non-cash compensation related to stock option issuance 338,450 -- Depreciation and amortization ........................ 39,552 67,418 Amortization of deferred lease costs ................. (37,983) -- Changes in operating assets and liabilities Other current assets ................................. 286,000 -- Deposits ............................................. 90,000 89,518 Accounts payable ..................................... 522,977 89,270 Interest payable ..................................... 164,239 -- Other current liabilities ............................ (32,637) 7,510 -------------- ----------- Cash used in continuing operations ....................... (1,286,592) (1,325,576) Cash provided by discontinued operations ................. 270,291 11,611 -------------- ----------- Cash used in all operations .......................... (1,016,301) (1,313,965) -------------- ----------- CASH FLOWS FROM INVESTING ACITIVITIES Capital expenditures ................................... 2,705 (51,794) Proceeds from equipment sales .......................... 2,888 -- Discontinued operations ................................ 1,891 14,556 -------------- ----------- Cash used in investing activities .................... 7,484 (37,238) -------------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of convertible debentures ....... 605,640 -- Proceeds from issuance of common stock ................. 147,100 -- Proceeds from issuance of common stock warrants ........ -- 1,171,040 -------------- ----------- Cash provided by financing activities ................ 752,740 1,171,040 -------------- ----------- Net decrease in cash and cash equivalents ................ (256,077) (180,163) Cash and cash equivalents at beginning of period ......... 260,807 186,600 -------------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD ............... $ 4,730 $ 6,437 =========== ===========
See accompanying notes to consolidated condensed financial statements 5 ISA INTERNATIONALE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION In the Company's opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments, except as noted elsewhere in the notes to the condensed consolidated financial statements) necessary to present fairly its financial position as of September 30, 2000, and the results of its operations and cash flows for the nine months ended September30, 2000 and 1999. These statements are condensed and, therefore, do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The statements should be read in conjunction with the consolidated financial statements and footnotes included in the Company's Annual Report on Form 10KSB for the year ended December 31, 1999. The results of operations for the nine months ended September 30, 2000, are not necessarily indicative of the results to be expected for the full year. The financial statements of the Company at September 30, 2000 have not been reviewed either in part or in whole by the Company's independent auditors. In accordance with Regulation S-B, Rule 310(b), of the Securities and Exchange Commission, the lack of a review by the Company's independent auditors is a material matter that must be accordingly disclosed in these financial statements as of September 20, 2000. In the Company's opinion, the accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis and are a fair and reasonable presentation of the Company's financial position as of September 30, 2000 and the results of its operations for the nine months ended September 30, 2000. 2. NATURE OF BUSINESS ISA Internationale Inc.'s (the Company) strategy is to develop, produce, and broadcast home shopping programming nationally and internationally via satellite, cable, and the internet. During 1999, the Company commenced operations as a precious metal bullion and coin distributor. At September 30, 2000, the Company has discontinued these operations and have reported these operations within these financial statements as discontinued operations. In 2000, the Company changed the name of its wholly owned subsidiary from Internationale Shopping Alliance Incorporated to ShoptropolisTV.com. 3. NEW ACCOUNTING PRONOUNCEMENTS Statement of Financial Accounting Standards (SFAS) No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, (as amended by SFAS No. 137 with respect to effective date and SFAS No. 138 with respect to certain hedging activities) will be effective for the Company in January, 2001. SFAS 133 requires all derivatives to be recognized as assets and liabilities on the balance sheet and measured at fair value on a mark to market basis. The impact of adoption on the Company's financial statements has not yet been determined. In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 101 which provides the staff's views in applying accounting principles generally accepted in the United States of America to selected revenue recognition issues. As amended, SAB 101 is now effective no later than the fourth fiscal quarter of all fiscal years beginning after December 15, 1999. The Company will be required to adopt the guidance of this bulletin no later than the fourth quarter of 2000. The impact of adoption on the Company's financial statements has not yet been determined. 4. DISCONTINUED OPERATIONS On May 19, 2000, the Company completed a plan to dispose of its wholly owned subsidiary, International Strategic Assets, Inc. (the Subsidiary) through a sale to an individual who is an officer and director of the Company. The sale price was $175,000 and the assumption of all debt related to the operation of the Subsidiary as well as loans made to the Subsidiary. A gain of $382,149 was realized during the quarter ending June 30, 2000. All related assets of the discontinued operations have been separately reflected in these consolidated financial statements. 5. LIQUIDITY AND GOING CONCERN MATTERS The Company has incurred losses since its inception and, as a result, has an accumulated deficit of $5,298,620 at September 30, 2000. The Company's ability to continue as a going concern 6 depends upon successfully obtaining sufficient financing to maintain adequate liquidity and provide for capital expansion until such time as operations produce positive cash flow. The accompanying consolidated financial statements have been prepared on a going concern basis which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. The consolidated financial statements do not include any adjustments that might result if the Company was forced to discontinue its operations. The Company is currently being managed by one (1) remaining officer. In addition, the Company has suspended its development activities pending the resolution of its financial problems, which included the resolution of the default conditions that currently exist in the lease for its warehouse and office facilities and the payment of both interest and principal and interest due on convertible notes payable issued through September 30, 2000. The Company plans to obtain additional equity financing through the issuance of additional shares of common stock. There can be no assurance that such financing will be consummated. The Company was in default under the terms of the lease for its office and warehouse facility located in Eagan, Minnesota as the Company has not been able to make the monthly lease payment of $36,000 for the months of July through and including November, 2000. The Company is attempting to resolve this lease with its landlord. No provision has been made in these financial statements for any additional costs that may be incurred in the Company's attempt to resolve this problem, including but not limited to the liability that has now occurred for the payment of the full lease due under its related term. The Company has forfeited security lease deposits in the amount of $171,015 as of September 30, 2000. The forfeited deposits are reflected in these financial statements as additional rent expense, in addition to the normal monthly rent payments that have not been paid by the Company. The Company is also in default under the terms of the convertible notes payable in the full amount as the interest payments due therein have not been paid in any amount at September 30, 2000. Furthermore, there is no ability on the part of the Company to pay the interest in the future unless and until the Company can commence discussions with the note holders and successfully resolve, under terms satisfactory to the Company and the note holders, a resolution of the current default. In November, the Company commenced a financing arrangement wherein additional capital in the amount of $50,000 was obtained in exchange for 5,000,000 preferred convertible shares (3 1/2 for 1) and 2,900,000 common shares, for $30,000 and $20,000 in 12% secured convertible notes payable. Additional financing is contemplated for the Company, but such financing is not guaranteed and is contingent upon pending successful resolution of the Company's problems with various creditors. There is no assurance that the Company will be able to obtain any additional capital. 7 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD LOOKING STATEMENTS The information herein contains certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that such forward looking statements involve risks and uncertainties, including, without limitation, the Company's need to obtain significant additional working capital in order to pursue its business strategy, risks associated with developing a new business, a history of operating losses, unanticipated changes in costs of doing business and obtaining merchandise, changes in governmental regulations, increases in labor costs and employee benefits, competition and pricing, need for market acceptance of a new business concept, and general economic and market conditions, as well as other factors set forth in the Company's Annual Report on Form 10-KSB for the year ended December 31, 1999. Such risks and uncertainties may cause the Company's actual results, levels of activity, performance or achievements to be materially different from those future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Although the Company believes that the assumptions and expectations reflected in these forward looking statements are reasonable, any of the assumptions and expectations could prove inaccurate or may not be achieved, and accordingly there can be no assurance the forward looking statements included in this Form 10-QSB will prove to be accurate. In view of the significant uncertainties inherent in these forward looking statements, their inclusion herein should not be regarded as any representation by the Company or any other person that the objectives, plans, and projected business results of the Company will be achieved. Generally, such forward looking statements can be identified by terminology such as "may," "anticipate," "expect," "will," "believes," "intends," "estimates," "plans," or other comparable terminology. OVERVIEW The Company was incorporated in Delaware in 1989 under a former name, and was inactive at the time of its May 1998 reorganization through a merger with ShoptropolisTV.com, Inc., which is now a wholly-owned subsidiary of the Company. In connection with the merger, the former shareholders of this subsidiary acquired 89% of the outstanding common stock of the Company through a stock exchange in which the Company issued 11,772,600 shares of its common stock in exchange for all of the outstanding common stock of ShoptropolisTV.com, Inc. The merger was effected as a reverse merger for financial statement and operational purposes, and accordingly, the Company regards its inception as being the incorporation of ShoptropolisTV.com, Inc. on October 7, 1997. Through its wholly-owned subsidiary, ShoptropolisTV.com, Inc. (f/k/a Internationale Shopping Alliance Inc.) ("STV"), ISA Internationale Inc. (the "Company") was primarily engaged in the development of a multimedia home shopping network offering in-home shoppers a convenient electronic shopping experience through broadcast television, cable, satellite or the Internet, and featuring a broad variety of high-quality, moderately priced, unique consumer products. On June 8, 2000, in an effort to manage its remaining cash, the Company laid off 12 contract employees. Currently, the Company is being operated by one remaining officers. Further, the Company has suspended its development efforts pending the receipt of additional financing or capital. The Company is actively seeking a number of financing and strategic alternatives. 8 The Company incorporated a second wholly-owned subsidiary, International Strategic Assets, Inc., in March 1999, which was engaged in direct sales via outbound telemarketing of precious metals consisting of mainly gold and silver coins and bars. As of March 31, 2000, the Company had discontinued the operation of its precious metals business. On May 19, 2000, the Company and Ronald G. Wolfbauer executed and closed an Agreement for the Purchase of Corporate Stock (the "Purchase Agreement") pursuant to which the Company sold all of the outstanding common stock of its wholly-owned subsidiary, International Strategic Assets, Inc. Pursuant to the terms of the Purchase Agreement, the Company received a cash payment of $175,000 in payment of the full purchase price at the closing. The purchase price consisted of $75,000 for the purchase of approximately 43% of the outstanding common stock of International Strategic Assets, Inc. and $100,000 paid in connection with the subsequent redemption of the remaining 57% of the outstanding common stock of International Strategic Assets, Inc. The funds used for the payment of the redemption price were provided to International Strategic Assets, Inc. by Mr. Ronald Wolfbauer in the form of a loan which was funded prior to the purchase. Prior to the sale of the common stock of International Strategic Assets, Inc., Mr. Ronald G. Wolfbauer had served as a director of the Company and International Strategic Assets, Inc. On May 15, 2000, Mr. Wolfbauer resigned as a director of the Company. LIQUIDITY AND CAPITAL RESOURCES ISA has obtained its capitalization primarily through the sale of its equity securities to a limited group of private investors known to the management of ISA. Between the inception of ISA in 1997 through December 31, 1997, ISA raised $400,000 in cash through the sale of its common stock with accompanying warrants. In calendar year 1998, ISA raised an additional $833,376 in cash through sales of common stock and common stock with accompanying warrants. During a period from January through February 1999, ISA raised a total of $1,171,040 through the exercise of outstanding warrants by existing shareholders, of which $528,702 was in cash and $642,838 was in gold bullion and coins transferred to ISA. Such gold bullion and coins were immediately liquid to ISA, and have since been converted to cash. From September 1999 through September 2000, the Company raised $1,591,640 through the sale of convertible unsecured debentures. [As of September 30, 2000, the Company had current assets of approximately $4,730, consisting of $4,730 in cash. At the same time, the Company had $2,435,857 in current liabilities, consisting of $670,890 in accounts payable, $164,239 in interest payable, $9,088 in 9 current liabilities and $1,591,640 in convertible debentures payable. As such, the Company had a working capital deficit of $2,431,127 as of September 30, 2000. The Company's long term liabilities on September 30, 2000 consisted of deferred lease costs and security deposits of $54,002.] [The Company had no capital expenditures from its inception in October 1997 to yearend 1997. During the year ended December 31, 1998, the Company incurred capital expenditures totaling $434,614, primarily for data processing hardware and software systems, telemarketing and computer telephone equipment, and broadcast and studio equipment for the Company's home shopping TV network including extensive satellite uplink transmission equipment. During the year ended December 31, 1999, the Company incurred capital expenditures of $78,844 primarily for equipment for its precious metals sales and administrative offices in suburban Minneapolis/St. Paul.] In an effort to manage its remaining cash, the Company announced the layoff of 12 contract employees on June 8, 2000. Currently, the Company is being operated by [1] remaining officer. In addition, the Company has suspended its development efforts pending the receipt of additional financing and capital. The Company was in default under the terms of the lease for its office and warehouse facility located in Eagan, Minnesota as the Company has been unable to make the monthly lease payment of $36,000 for the months from July through November, 2000. The Company is also in default on its obligation to make the first of its semi-annual interest payments in the amount of $164,239 on certain convertible 12% debentures issued between September 1999 and September June 2000. As such, all of these notes have been classified as current liabilities as of September 30, 2000, as the Company is in default in accordance with their terms. The Company's current capital resources are not sufficient to supports its planned development and continuing operations. The Company will not be able to continue the development of its STV home shopping network and related website or commerce operations thereof unless the Company is able to raise substantial additional capital. Anticipated capital expenditures for the development and ultimate operation of the STV shopping network include equipment purchases and leases, leasehold improvements, salaries and wages and general working capital. [Currently, the Company estimates that approximately $8,000,000 of additional capital is necessary to commence and support the operation of the STV shopping network.] The Company is continuing to actively seek additional sources of debt or equity financing. If additional funds are raised through the sale and issuance of equity securities, our current stockholders may experience a significant dilution in their ownership of the Company. There can be no assurance that the necessary additional financing will be available to the Company on a timely basis, or that such capital will be available on terms favorable or acceptable to the Company. If the Company is unable to obtain sufficient financing or to generate funds from operations sufficient to meet its operating and development needs, the Company will be unable to implement its current plans, develop the STV content and format, or continue its operations. As a result of the Company's history of operating losses and its need for significant additional capital, the reports of the Company's independent auditors on the Company's consolidated financial statements for the years ended December 31, 1999 and 1998, and the notes to the condensed consolidated financial statements included in this Form 10-QSB, include an explanatory paragraph concerning the Company's ability to continue as a going concern. 10 INCOME TAX BENEFIT The Company has an income tax benefit from net operating losses of approximately $5,298,620at September 30,2000 which is available to offset any future taxable income. These carryforwards start to expire in 2013 None of this benefit was recorded in the accompanying financial statements as of September 30, 2000 and 1999. As a result of the Company's capital raising efforts, a change of control may occur for income tax purposes that may severely limit the Company's ability to utilize these net operating loss tax carryforwards. IMPACT OF INFLATION The Company believes that inflation has not had any effect on its development or operations since its inception in 1997. Furthermore, the Company does not believe inflation will have any material effect for the foreseeable future. In any event, the Company believes it can offset any future inflationary increases in the cost of goods and labor by increasing its sales and thereby improving its operating efficiencies through economies of scale. The Company is currently evaluating the possible divestiture of its precious metals business through a sale of such business or by other appropriate means. 11 PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company has been named as a defendent in a lawsuit alleging that two of the Company's former officers and its formerly owned subsidiary, International Strategic Assets, Inc., and the Parent Company itself, have caused damages in excess of $50,000 to the former employer of the Company's former two officers through the loss of confidential information. The Company believes the lawsuit is without merit. Accordingly, no provision for damages has been provided for in these financial statements. Item 2. Changes in Securities and Use of Proceeds The Company reports that 5,000 shares were issued for $6,850 during the quarter ended June 30, 2000. Further, there were 636,666 shares issued for $147,000 during the quarter ended September 30, 2000. Subsequent to September 30, 2000, there was 5,000,000 preferred shares, $.0001 par value, issued for $1,000, and 2,900,000 common shares issued for 29.000, as a part of a new capital financing arrangement commenced by the Company in November, 2000. Item 3. Defaults Upon Senior Securities The Company was in default with all of its convertible debentureholders at September 30, 2000. Interest payments on these notes has not been paid in the amount of $164,239. The Company does not currently have the financial ability to make the scheduled interest payments. Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None 12 Item 6. Exhibits and Reports on Form 8K (a) Exhibits. The exhibits to this quarterly report on Form 10-Q are listed in the exhibit index beginning on Page 12. (b) Form 8-K. None 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned thereinto duly authorized. ISA INTERNATIONALE, INC. By Jack T. Wallace --------------------- Jack T. Wallace Chief Executive Officer and President November 14, 2000. 14 EX-27 2 a2030878zex-27.txt EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED CONSOLIDATED BALANCE SHEET, STATEMENTS OF OPERATIONS AND CASH FLOWS AND ACCOMPANYING NOTES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 4,730 0 0 0 0 4,730 344,389 (107,418) 251,109 2,435,857 0 0 0 1,502 3,058,368 251,109 0 0 0 2,584,506 0 0 128,788 (2,657,190) 0 (2,657,190) 391,554 0 0 (2,265,636) (.18) (.18)
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