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
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OF 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:
18,700,000 SHARES OF COMMON STOCK, $0.001 PAR VALUE,
AS OF MAY 14, 2001
Transitional Small Business Disclosure Format (check one); Yes No X
----- -----
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I-TRACK, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1.- Balance Sheet-
March 31, 2001 (unaudited) ...................................3
- Statements of Operations (unaudited)
Three Months Ended March 31, 2001 and 2000, and Period
from Inception (March 8, 1999) to March 31, 2001 .............4
- Statements of Cash Flows (unaudited)
Three Months Ended March 31, 2001 and 2000, and Period
from Inception (March 8, 1999) to March 31, 2001 .............5
- Notes to Financial Statements ................................6
Item 2.- Management's Discussion and Analysis or Plan
of Operation .................................................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 ............................10
SIGNATURES ...................................................................11
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I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
MARCH 31, 2001
(UNAUDITED)
ASSETS
Current assets:
Cash $ 1,252
=====================
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Accounts payable $ 14,975
Operating advance - related party 26,500
---------------------
41,475
---------------------
Stockholders' deficit:
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,
18,700,000 issued and outstanding 18,700
Deficit accumulated during the development stage (58,923)
---------------------
$ 1,252
=====================
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 MONTHS FOR THE THREE MONTHS MARCH 8, 1999 (INCEPTION)
ENDED ENDED THROUGH
MARCH 31, 2001 MARCH 31, 2000 MARCH 31, 2001
---------------------- ------------------------- -------------------------
Revenue: $ - $ - $ -
---------------------- ------------------------- -------------------------
Costs and expenses:
General and administrative expenses 23,807 459 58,923
---------------------- ------------------------- -------------------------
Total costs and expenses 23,807 459 58,923
---------------------- ------------------------- -------------------------
Net (loss) $ (23,807) $ (459) $ (58,923)
====================== ========================= =========================
Per share information: Basic and fully diluted
Weighted average number of common
shares outstanding 18,700,000 18,700,000 18,700,000
====================== ========================= =========================
Net (loss) per common share $ (0.00) $ (0.00) $ (0.00)
====================== ========================= =========================
The accompanying notes are an integral part of the financial statements.
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I-TRACK, INC.
F/K/A AVL SYS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE PERIOD
FOR THE THREE MONTHS FOR THE THREE MONTHS MARCH 8, 1999 (INCEPTION)
ENDED ENDED THROUGH
MARCH 31, 2001 MARCH 31, 2000 MARCH 31, 2001
--------------------- ------------------------ ------------------------
Cash flows from operating activities:
Net (loss) $ (23,807) $ (459) $ (58,923)
Adjustments to reconcile net (loss) to
net cash used in operating activities:
Issuance of stock for services - - 1,200
Increase in accounts payable 14,080 - 14,975
--------------------- ------------------------ ------------------------
Net cash (used in) operating activities (9,727) (459) (42,748)
--------------------- ------------------------ ------------------------
Cash flows from investing activities:
Net cash provided by investing activities - - -
--------------------- ------------------------ ------------------------
Cash flows from financing activities:
Proceeds from operating advance - related party 6,500 - 41,500
Proceeds from issuance of stock - - 2,500
--------------------- ------------------------ ------------------------
Net cash provided by financing activities 6,500 - 44,000
--------------------- ------------------------ ------------------------
Net Increase (Decrease) in Cash (3,227) (459) 1,252
Beginning Cash 4,479 471 -
--------------------- ------------------------ ------------------------
Ending Cash $ 1,252 $ 12 $ 1,252
===================== ======================== ========================
Supplemental cash flow disclosures
Cash paid foIncome taxes $ - $ - $ -
===================== ======================== ========================
Interest $ - $ - $ -
===================== ======================== ========================
Noncash financing and investing activities:
Issuance of 15,000,000 shares of stock to satisfy debt $ - $ - $ 15,000
===================== ======================== ========================
The accompanying notes are an integral part of the financial statements.
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i-Track, Inc.
F/K/A AVL SYS International, Inc.
(A Development Stage Company)
Notes to the Financial Statements
For the Three Months Ended March 31, 2001
(Unaudited)
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.
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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 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 three months ended March 31, 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: MARCH 31, 2001 ECEMBER 31, 2000
Current Assets $1,252 $4,479
Total Assets $1,252 $4,479
Current Liabilities $41,475 $20,895
Stockholders' Deficiency $(58,923) $(16,416)
Working Capital Deficiency $(40,223) $(16,416)
STATEMENT OF LOSS DATA: THREE MONTH PERIOD ENDED
MARCH 31, 2001 MARCH 31, 2000
Revenues $0 $0
Net Loss $(23,807) $(459)
Net Loss per Share $(0.00) $(0.00)
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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 $58,923 through March 31, 2001. We have suffered losses
from operations and require additional financing. 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. These
factors raise substantial doubt about our ability to continue as a going
concern. 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 three months ended March 31, 2001, we had a net loss
of $23,807, as compared to $459 for the comparable 2000 period. The increased
loss for the current fiscal period is primarily due to our initial public
offering effort described below under "Additional Funding". We incurred
significant legal and accounting expenses in connection with the preparation and
filing of the registration statement.
LIQUIDITY AND FINANCIAL CONDITION
For the three months ended March 31, 2001, the statement of cash flows reflects
net cash used in operating activities of $9,727, which was partially offset by
net cash provided by financing activities of $6,500. For the three months ended
March 31, 2000, the only activity reflected was the net cash used of $459 for
operations. Our working capital deficiency increased to $40,223 from $16,416 at
December 31, 2000 due to the loss for the period. 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.
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ADDITIONAL FUNDING
On November 6, 2000, we filed a registration statement on Form SB-1 with the SEC
for an initial public offering of 2,500,000 units, 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. The units are being offered at $0.10 per unit, and each
warrant entitles the holder to purchase one share of common stock at the
exercise price of $0.50 per share, beginning anytime after the date of purchase
until twelve months after completion of the initial offering. If we are able to
sell all of the units in this offering, we believe the net proceeds of the
offering will be sufficient to fund our operations for at least the next twelve
months. If we are unable to sell all or a portion of the units, or obtain other
sources of financing when needed, we may be forced to cease operations and
abandon our business, and you may lose your entire investment.
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
initial public offering on Form SB-1.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
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.
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 N/A
to 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.
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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: May 14, 2001 By: /s/ Peter Fisher
-------------------------------------
Peter Fisher, Secretary
(Principal Financial Officer)
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