0001050502-01-500453.txt : 20011010
0001050502-01-500453.hdr.sgml : 20011010
ACCESSION NUMBER: 0001050502-01-500453
CONFORMED SUBMISSION TYPE: 10QSB
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20010630
FILED AS OF DATE: 20011004
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: INSTANET INC
CENTRAL INDEX KEY: 0001134765
STANDARD INDUSTRIAL CLASSIFICATION: CALCULATING & ACCOUNTING MACHINES (NO ELECTRONIC COMPUTERS) [3578]
IRS NUMBER: 841575085
STATE OF INCORPORATION: CO
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10QSB
SEC ACT: 1934 Act
SEC FILE NUMBER: 333-56250
FILM NUMBER: 1752118
BUSINESS ADDRESS:
STREET 1: 26 WEST DRY CREEK CIRCLE SUITE 600
CITY: LITTLEXON
STATE: CO
ZIP: 80120
BUSINESS PHONE: 3037949450
10QSB
1
instanet601.txt
10QSB
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 2001
Commission file number: 333-56250
INSTANET, INC.
(Name of Small Business Issuer in its charter)
Colorado 84-1575085
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
26 West Dry Creek Circle, Suite 600
Littleton, Colorado 80120
(Address of principal executive offices)
(Zip Code)
(303) 794-9450
(Issuer's telephone number, including area code)
Indicate by check mark whether the Issuer (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 periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
------- -------
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date.
Common Stock, $.001 Par Value, 1,350,000 shares as of June 30, 2001.
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements.
INSTANET, INC.
(a Development Stage Company)
Balance Sheet
Assets
June 30, 2001
-------------
Current assets
Cash $ 6,684
--------
Total current assets
Deferred offering costs 66,229
--------
Total assets $ 72,913
========
Liabilities and Stockholders' Equity
Notes payable $ 45,000
--------
Total liabilities 45,000
--------
Commitments
Stockholders' equity
Preferred stock, authorized 5,000,000 shares,
$.001 par value; none issued or outstanding $ --
Common stock, authorized 50,000,000 shares,
$.001 par value; 1,350,000 shares issued and
outstanding 1,350
Additional paid-in capital 28,650
Accumulated deficit (2,087)
--------
Total stockholders' equity 27,913
--------
Total liabilities and stockholders' equity $ 72,913
========
INSTANET, INC.
(a Development Stage Company)
Statements of Operations
For the Period
For the Three from January 9, 2001
Months Ended (Inception) through
June 30, 2001 June 30, 2001
------------- ------------------
Revenues $ -- $ --
Expenses 87 2,087
----------- -----------
Net loss $ (87) $ (2,087)
=========== ===========
Earnings (loss) per share - basic and diluted $ -- $ --
=========== ===========
Weighted average shares outstanding 1,350,000 1,350,000
=========== ===========
INSTANET, INC.
(a Development Stage Company)
Statement of Stockholders' Equity
For the Period from January 9, 2001 (Inception) through June 30, 2001
Common Stock Additional Total
-------------------------- Paid-In Retained Stockholders'
Shares Amount Capital Earnings Equity
--------- --------- --------- --------- ---------
Balance, January 9, 2001 -- $ -- $ -- $ -- $ --
(Inception)
Issuance of stock for cash 1,350,000 1,350 28,650 -- 30,000
Net loss -- -- -- (2,087) (2,087)
--------- --------- --------- --------- ---------
Balance, June 30, 2001 1,350,000 $ 1,350 $ 28,650 $ (2,087) $ 27,913
========= ========= ========= ========= =========
INSTANET, INC.
(a Development Stage Company)
Statements of Cash Flows
For the Period from
For the Three January 9, 2001
Months Ended (Inception) through
June 30, 2001 June 30, 2001
------------- -------------
Cash flows from operating activities
Net loss $ (87) $ (2,087)
-------- --------
Net cash used by operating activities (87) (2,087)
-------- --------
Cash flows from financing activities
Deferred offering costs (5,062) (66,229)
Proceeds from note payable 10,000 45,000
Proceeds from issuance of common stock -- 30,000
-------- --------
Net cash provided by financing activities 4,938 8,771
-------- --------
Net increase (decrease) in cash (4,851) 6,684
Cash, beginning of period 1,833 --
-------- --------
Cash, end of period $ 6,684 $ 6,684
======== ========
Note 1 - Organization and Summary of Significant Accounting Policies
--------------------------------------------------------------------
Instanet, Inc. (the "Company"), Nevada corporation, was incorporated in January
2001. The Company is organized for the purpose of providing market extensions,
including on the internet, for an electronic cash transmission system developed
and owned by an outside company.
The Company is a development stage company that has not had any revenue from
operations since inception. The Company is in the process of obtaining
additional equity from a public offering. There is no assurance that the Company
will generate revenue or earn profit in the future.
The financial statements are unaudited and reflect all adjustments (consisting
only of normal recurring adjustments), which are, in the opinion of management,
necessary for a fair presentation of the financial position and operating
results for the interim periods. The unaudited financial statements contained
herein should be read in conjunction with the financial statements and notes
thereto contained in the Company's Form SB-2 filing. The results of operations
for the interim periods presented are not necessarily indicative of the results
for the entire fiscal year ending December 31, 2001.
Stock Options/Warrants
----------------------
The Company applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"), and related interpretations in accounting
for all stock option plans. Under APB 25, no compensation cost has been
recognized for stock options granted to employees as the option price equals or
exceeds the market price of the underlying common stock on the date of grant.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), requires the Company to provide pro forma
information regarding net income as if compensation cost for the Company's stock
option plans had been determined in accordance with the fair value based method
prescribed in SFAS 123. To provide the required pro forma information, the
Company estimates the fair value of each stock option at the grant date by using
the Black-Scholes option-pricing model.
Note 3 - Commitments
--------------------
Master Agency Agreement
-----------------------
In February 2001 the Company entered into a Master Agency Agreement with Key
Com, Inc. ("Key Com") which developed, and now operates under the trade name
XTRAN, an electronic system for transferring funds from one location to another.
Currently, XTRAN initiates funds transfer from approximately 200 remittance
locations in New York and Florida and electronically transfers the funds to any
of the 2,100 payout locations in Jamaica, Mexico and Central America.
Under the Master Agency Agreement with Key Com, the Company obtained the
exclusive right to originate funds transfers from the Company's Web site to any
payout location, which accepts XTRAN funds transfers. Currently XTRAN has payout
locations in Jamaica, Mexico and Central America. Under the agreement the
Company will receive a fee of 15% of the fee charged the customer by XTRAN to
complete the funds transfer.
The Master Agency Agreement also entitles the Company to obtain on a
non-exclusive basis remittance locations for XTRAN anywhere in the world on a
non-exclusive basis. In such event, the Company is entitled to 9% of the fee
charged by XTRAN for payouts outside the U.S. and 5% of XTRAN's fee for payouts
within the U.S. The Company is also entitled to a fixed fee of $225 for each
remittance location established on behalf of XTRAN, and a $3,000 monthly fee,
cancelable by Key Com on 30 days notice, to assist Key Com in developing new
Florida remittance locations.
Note 4 - Stock Option Plan
--------------------------
In February 2001, the Company adopted the 2001 Stock Option Plan (the "Plan"),
which provides for the grant to employees, officers, directors and consultants
of options to purchase up to an aggregate of 250,000 shares of common stock,
consisting of both incentive stock options and non-qualified options. For
options granted to an employee owning shares of common stock possessing more
than 10% of the total combined voting power of all classes of the Company's
common stock, the option price shall not be less than 110% of the fair market
value of the common stock, on the date of grant. The incentive stock options
granted under the Plan cannot be exercised more than ten years from the date of
grant except that incentive stock options issued to 10% or greater stockholders
are limited to five-year terms. The Plan provides for a three-year vesting
period. The Company has granted 100,000 options under the Plan to an executive
officer, and 25,000 options to an employee, exercisable at $.25 per share. No
compensation expense was recognized in the financial statements as the exercise
price was in excess of the fair market value of the Company's stock on the date
of grant.
Summarized information relating to stock options is as follows:
Weighted Average
Exercise Price
Options of Options
------- ----------
Outstanding and exercisable -
January 9, 2001 (Inception) --
Granted 125,000 $ 0.25
Exercised --
-------
Outstanding June 30, 2001 125,000 $ 0.25
=======
The weighted average remaining contractual life for all options outstanding as
of June 30, 2001 is 4.67 years.
Had compensation cost for stock-based compensation been determined based on the
fair value or the grant date consistent with the method of SFAS 123, the
Company's net income and earnings per share would not have been reduced due to
the fair value of grants to employees had no fair value based upon calculating
the fair value utilizing the Black-Scholes option pricing model with the
following assumptions: expected life of 5 years, 0% volatility, risk free
interest rate of 5.5%, and a 0% dividend yield.
Note 5 - Accounting Standards Not Yet Adopted
---------------------------------------------
In June 2001 the Financial Accounting Standards Board issued FASB
Statements 141 and 142. These statements, among other items, deal with the
accounting for business acquisitions and intangible assets including goodwill.
The Company will be adopting these accounting pronouncements on January 1, 2002.
Among other items, these new standards will change the accounting for
amortization of goodwill expense and the impairment of goodwill in a manner
different than they have been in the past. The Company does not believe that the
implementation of these statements will have any significant impact upon its
financial statements.
Item 2. Management's Discussion And Analysis or Plan of Operation.
Results of Operations.
Three Months Ended June 30, 2001.
The Company commenced operations on January 9, 2001. From January 9, 2001
through June 30, 2001, we reported no revenue. Our expenses were limited to
costs incurred in connection with entering into our agreement with Key Com and
preparing our prospectus. All of our expenses were paid for in cash.
We intend to focus our limited cash resources on completing our Web site in
order to begin soliciting fees for funds transfers and obtaining remittance
locations for XTRAN transactions, which will earn us location fees and
commissions for funds transfers originating from these locations. We do not
intend to conduct research and development beyond completing our Web site and we
have no commitments to purchase plants or equipment or add employees.
Liquidity and Capital Resources.
To date we have not generated any revenue from operations. Funds used in
our organizational activities were provided in the form of a $30,000 equity
investment and $45,000 in loans both from our two stockholders which we used to
prepay $65,000 of the expenses incurred in filing the SB-2 Registration Form
(the "Offering"). The loans are evidenced by promissory notes bearing interest
at 12% per annum and are due the earlier of completion of the Offering or June
30, 2002. There are no agreements among officers, directors or shareholders to
loan us additional funds in the future.
We expect to need additional funds to finance the further development of
our funds transfer business. However, there can be no assurance that such funds
will be available to us or that adequate funds for our operations, whether from
debt or equity financings, will be available when needed or on terms
satisfactory to us. Our failure to obtain adequate additional financing may
require us to delay or curtail some or all of our business efforts. Any
additional equity financing may involve substantial dilution to our
then-existing stockholders.
PART II. OTHER INFORMATION.
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
Reports on Form 8-K: During the three months covered by this report, the
Company filed no reports on form 8-K.
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 thereto duly authorized.
Date: October 4, 2001 INSTANET, INC.
(Registrant)
/s/ Earnest Mathis, Jr.
-----------------------
Earnest Mathis, Jr.
Chief Executive Officer, Chief Financial Officer
(Principal Accounting Officer) and Director