U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number: 333-49388
I-TRACK, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 91-1966948
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3031 COMMERCE DRIVE, BUILDING B, FORT GRATIOT, MICHIGAN 48058
(Address of principal executive offices)
(810) 469-3500
(Issuer's telephone number)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the last practicable date:
21,200,000 SHARES OF COMMON STOCK, $0.001 PAR VALUE,
AS OF AUGUST 30, 2001
Transitional Small Business Disclosure Format (check one); Yes No X
----- -----
I-TRACK, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1.- Financial Statements
Balance Sheet -
June 30, 2001 (unaudited) ...................................3
- Statements of Operations (unaudited)
Three and Six Months Ended June 30, 2001 and 2000,
and Period from Inception (March 8, 1999)
through June 30, 2001 ........................................4
- Statements of Cash Flows (unaudited) Six Months Ended
June 30, 2001 and 2000, and Period
from Inception (March 8, 1999) through June 30, 2001 .........5
- Notes to Financial Statements ................................6
Item 2.- Management's Discussion and Analysis or Plan of
Operations ...................................................7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ...........................................10
Item 2. Changes in Securities .......................................10
Item 3. Defaults Upon Senior Securities .............................10
Item 4. Submission of Matters to a Vote of Security Holders .........10
Item 5. Other Information ...........................................10
Item 6. Exhibits and Reports on Form 8-K ............................11
SIGNATURES ...................................................................12
2
I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 2001
(UNAUDITED)
ASSETS
Current assets:
Cash $ 250,948
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,108
Operating advances - related parties 31,385
--------------
Total current liabilities 49,493
--------------
Stockholders' equity:
Preferred stock: 1,000,000 shares authorized,
$0.01 par value, none issued or outstanding -
Common stock: 50,000,000 shares authorized,
$0.001 par value, 21,200,000 issued and outstanding 21,200
Additional Paid in Capital 219,495
Deficit accumulated during the development stage (39,240)
--------------
201,455
--------------
$ 250,948
==============
The accompanying notes are an integral part of the financial statements.
3
I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE PERIOD
FOR THE THREE FOR THE THREE FOR THE SIX FOR THE SIX MARCH 8, 1999
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED (INCEPTION) THROUGH
JUNE 30, 2001 JUNE 30, 2000 JUNE 30, 2001 JUNE 30, 2000 JUNE 30, 2001
--------------- --------------- --------------- --------------- -------------------
Revenue: $ - $ - $ - $ - $ -
--------------- --------------- --------------- --------------- -------------------
Costs and expenses:
General and administrative expenses 4,055 4,018 4,124 4,477 39,240
--------------- --------------- --------------- --------------- -------------------
Total costs and expenses 4,055 4,018 4,124 4,477 39,240
--------------- --------------- --------------- --------------- -------------------
Net (loss) $ (4,055) $ (4,018) $ (4,124) $ (4,477) $ (39,240)
=============== =============== =============== =============== ===================
Weighted average number of
common shares outstanding 19,505,556 18,700,000 19,102,778 18,700,000 18,785,799
=============== =============== =============== =============== ===================
Net (loss) per common share $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.00)
=============== =============== =============== =============== ===================
The accompanying notes are an integral part of the financial statements.
4
I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE PERIOD
FOR THE SIX FOR THE SIX MARCH 8, 1999
MONTHS ENDED MONTHS ENDED (INCEPTION) THROUGH
JUNE 30, 2001 JUNE 30, 2000 JUNE 31, 2001
------------------ --------------- -------------------
Cash flows from operating activities $ 13,089 $ (3,277) $ (19,932)
------------------ --------------- -------------------
Cash flows from investing activities - - -
------------------ --------------- -------------------
Cash flows from financing activities
Proceeds from operating advance - related party 11,385 29,996 46,385
Offering costs (28,005) - (28,005)
Proceeds from issuance of stock 250,000 - 252,500
------------------ --------------- -------------------
Net cash provided from financing activities 233,380 29,996 270,880
------------------ --------------- -------------------
Net Increase in Cash 246,469 26,719 250,948
Beginning Cash 4,479 471 -
------------------ --------------- ------------------
Ending Cash $ 250,948 $ 27,190 $ 250,948
================== =============== ==================
The accompanying notes are an integral part of the financial statements.
5
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") for interim financial
information and Item 310(b) of Regulation S-B. They do not include all of the
information and footnotes required by GAAP for complete financial statements. In
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. For further
information, refer to the audited financial statements of the Company as of
December 31, 2000, including notes thereto, included in the Company's
Registration Statement on Form SB-1.
NOTE 2: EARNINGS PER SHARE
The Company calculates net income (loss) per share as required by SFAS No. 128,
"Earnings per Share." Basic earnings (loss) per share is calculated by dividing
net income (loss) by the weighted average number of common shares outstanding
for the period. Diluted earnings (loss) per share is calculated by dividing net
income (loss) by the weighted average number of common shares and dilutive
common stock equivalents outstanding. During the periods presented, common stock
equivalents were not considered, as their effect would be anti-dilutive.
NOTE 3: STOCKHOLDERS' EQUITY
During the three months ended June 30, 2001 the Company completed its Form SB-1
offering raising $250,000 net of $28,005 in offering expenses. The selling
agent, an officer and director of the Company, deposited the proceeds in an
affiliated company's bank account. Subsequent to June 30, 2001 the funds were
deposited into the Company's account on behalf of the affiliated company without
claim or recourse to the Company.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Unless the context otherwise requires, the terms "we", "our" and "us" refers to
i-Track, Inc.
CAUTION
Certain statements in this Quarterly Report on Form 10-QSB, our audited
financial statements for the fiscal year ended December 31, 2000 as filed in our
registration statement on Form SB-1, as well as statements made by us in
periodic press releases, oral statements made by our officials to analysts and
shareholders in the course of presentations about ourselves, constitute
"forward- looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties, and other factors that may cause the actual
results, performance or achievements of us to be materially different from any
future results, performance or achievements expressed or implied by the forward
looking statements. Such factors include, among other things, (1) general
economic and business conditions; (2) interest rate changes; (3) the relative
stability of the debt and equity markets; (4) competition; (5) the availability
and cost of our products; (6) demographic changes; (7) government regulations
particularly those related to automatic vehicle location industry; (8) required
accounting changes; (9) equipment failures, power outages, or other events that
may interrupt Internet communications; (10) disputes or claims regarding our
proprietary rights to our software and intellectual property; and (11) other
factors over which we have little or no control.
SELECTED FINANCIAL DATA
Our selected financial data for the six months ended June 30, 2001 shown below
is derived from our financial statements. The financial data derived from the
statements should be read in conjunction with our financial statements and the
notes included elsewhere in this report.
BALANCE SHEET DATA: JUNE 30, 2001 DECEMBER 31, 2000
Current Assets $250,948 $4,479
Total Assets $250,948 $4,479
Current Liabilities $49,493 $20,895
Stockholders' Equity (Deficiency) $201,455 $(16,416)
Working Capital $201,455 $(16,416)
STATEMENT OF LOSS DATA: SIX MONTH PERIOD ENDED
JUNE 30, 2001 JUNE 30, 2000
Revenues $0 $0
Net Loss $(4,124) $(4,477)
Net Loss per Share $(0.00) $(0.00)
7
OVERVIEW
We were incorporated in the state of Nevada on March 8, 1999 by AVL Information
Systems Ltd. and its principal officer and directors. AVL Information Systems
Ltd. is a Canadian public company that owns and licenses certain technology and
automatic vehicle location systems. On January 7, 2001, we entered into a
non-exclusive worldwide International Distribution Agreement with AVL
Information Systems Ltd. Under the agreement, we are licensed to market and
distribute an automatic vehicle location system called the Spryte System(TM).
The Spryte System(TM) integrates Global Positioning System technology,
cellular-wireless communications and the Internet to enable companies to
efficiently manage their mobile resources with location-relevant and
time-sensitive information. While there are several ways to transmit information
from a vehicle to a central location, we believe that the Spryte System(TM)
provides significant value to customers by reducing their costs of doing
business and increasing the productivity of their mobile resources.
We are in the development stage and have not generated any revenues. We have a
cumulative net loss of $39,240 through June 30, 2001. We have suffered losses
from operations and require additional financing. Our current financing needs
have been met by the recently completed public offering. Ultimately we need to
generate revenues and successfully attain profitable operations. The marketing
and distribution of the Spryte System(TM) may take years to complete and the
amount of resulting revenues, if any, is difficult to determine. Our previous
capital needs have been met by equity offerings, and we have issued common stock
in exchange for services rendered and funds advanced by related parties. There
can be no assurance that we will be able to market and distribute the Spryte
System(TM). Even if we are able to market and distribute the system, there is no
assurance that we will be able to generate revenues and attain profitable
operations.
RESULTS FROM OPERATIONS
We have a limited operating history. We incurred a net loss of $32,087 for the
year ended December 31, 2000, and had a net loss of $3,029 for the period ended
December 31, 1999. For the six months ended June 30, 2001, we had a net loss of
$4,124, as compared to $4,477 for the comparable 2000 period.
LIQUIDITY AND FINANCIAL CONDITION
For the six months ended June 30, 2001, the statement of cash flows reflects net
cash provided by operating activities of $13,089, and net cash provided by
financing activities of $233,380. The financing activities included our unit
offering and a related party loan. For the six months ended June 30, 2000, net
cash used in operating activities was $3,277, which was offset by related party
loans of $29,996. As a result of our unit offering, we have a working capital
surplus of $201,455. Since we have no source of revenue, our working capital
will be depleted by operating expenses and we will be dependent upon external
sources of cash.
8
ADDITIONAL FUNDING
On November 6, 2000, we filed a registration statement on Form SB-1 with the SEC
(file number 333-49388) for the offer and sale of 2,500,000 units, at a price
$0.10 per unit, with each unit consisting of one share of common stock and one
warrant to purchase one share of common stock. After several amended filings,
our registration statement was declared effective on April 10, 2001. Under a
prospectus dated April 11, 2001, we sold 2,500,000 Units for gross proceeds in
the amount of $250,000. We completed the offering on April 30, 2001. We did not
incur expenses in connection with underwriting discounts and commissions, or
finder's fees. The total amount of offering expenses were $28,005, with net
proceeds of $221,995.
Our selling agent, an officer and director of the company, deposited the gross
proceeds in an affiliated Company's bank account. In August 2001, the funds were
deposited into our bank account on behalf of the affiliated company without
claim or recourse to us. We have not used our net proceeds as of August 30,
2001. We believe the net proceeds will be sufficient to fund our operations for
at least the next twelve months.
PLAN OF OPERATION
At this time, we intend to establish relationships with a number of other
companies to accelerate the implementation of the distribution agreement and the
sale of the Spryte Systems(TM). We believe that our status as a U.S. publicly
traded company will assist us in establishing strategic alliances because of our
perceived level of credibility and access to capital in the U.S. markets. We
intend to establish relationships with existing companies engaged in the
automatic vehicle location industry, wireless carriers, manufacturers,
distributors, and Internet companies. We intend to create relationships and to
retain consultants and contractors with established connections in the
telecommunication and application service provider industries. We foresee that
compensation would be commission based. Depending upon the market acceptance of
the Spryte System(TM), we may hire employees in the foreseeable future.
We believe that establishing a network of alliances, while not a small task, can
be accomplished in a shorter period of time and at less cost than building a
comparable direct sales infrastructure. It is our priority to establish a
channel partner network in the U.S. and Canada, and recruit international
channel partners as opportunities present themselves.
We expect to generate revenues by selling the Spryte Systems(TM) at cost plus
margin. Under the distribution agreement, all orders are shipped common carrier
FOB destination, and we are required to pay 30% of the total order price the
time of ordering, 30% upon delivery of the order, and 40% within 30 days after
installation. We believe the amount of margin will vary depending on the time,
expense, and size of sale. We expect to realize revenues within the next three
months.
We do not expect to purchase any significant equipment during the next twelve
months, nor do we expect to hire a significant number of employees during that
time period. We expect to finance our objectives through the proceeds of our
unit offering.
9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
On November 6, 2000, we filed a registration statement on Form SB-1
with the SEC (file number 333-49388) for the offer and sale of
2,500,000 units, at a price $0.10 per unit, with each unit consisting
of one share of common stock and one warrant to purchase one share of
common stock. After several amended filings, our registration
statement was declared effective on April 10, 2001. Under a prospectus
dated April 11, 2001, we sold 2,500,000 Units for gross proceeds in
the amount of $250,000. We completed the offering on April 30, 2001.
We did not incur expenses in connection with underwriting discounts
and commissions, or finder's fees. The total amount of offering
expenses were $28,005, with net proceeds of $221,995.
Our selling agent, an officer and director of the company, deposited
the gross proceeds in an affiliated Company's bank account. In August
2001, the funds were deposited into our bank account on behalf of the
affiliated company without claim or recourse to us. We have not used
our net proceeds as of August 30, 2001. We believe the net proceeds
will be sufficient to fund our operations for at least the next twelve
months.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Regulation Consecutive
S-B Number Exhibit Page Number
2.1 Articles of Incorporation (1) N/A
2.2 Bylaws (1) N/A
2.3 Certificate of Amendment of Articles of Incorporation (1) N/A
10.1 Promissory Note dated August 20, 2000, in the amount of $15,000, payable to N/A
Peter Fisher (1)
10.2 International Distribution Agreement dated January 7, 2001 (2) N/A
------------------------
(1) Incorporated by reference from our Registration Statement on Form SB-1 filed on November 6, 2000, File
No. 333-49388.
(2) Incorporated by reference from our Registration Statement on Form SB-1/A-1 filed on January 17, 2001,
File No. 333-49388.
b) Reports on Form 8-K: None.
11
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
I-TRACK, INC.
(Registrant)
Date: September 6, 2001 By: /s/ Barbara M. Castanon
------------------------------------
Barbara M. Castanon, President
(Principal Financial Officer)
12