UNITED STATES
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 MARCH 31, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to _______________
Commission File Number: 0-27862
REALITY INTERACTIVE, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 80-0028196
- ------------------------ -------------------------------------
State of Incorporation I.R.S. Employer Identification Number
2200 Phoenix Tower
3200 Southwest Freeway
Houston, TX 77027
(Address of principal executive offices)
713-521-0221
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity. As of March 31, 2002 - 2,124,916 shares of Common Stock
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
REALITY INTERACTIVE, INC.
INDEX
Page
Number
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets...................................................... 3
Statements of Operations............................................ 4
Statements of Stockholders' Equity (Deficit)........................ 5
Statements of Cash Flows............................................ 6
Notes to Financial Statements....................................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 8
Part II. OTHER INFORMATION
Item 1. Legal Proceedings ............................................ 9
Item 2. Change in Securities and Use of Proceeds...................... 9
Item 3. Defaults Upon Senior Securities............................... 9
Item 4. Submission of Matters to a Vote of Security Holders........... 9
Item 5. Other Information............................................. 9
Item 6. Exhibits and Reports on Form 8-K.............................. 9
SIGNATURES ............................................................10
2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
REALITY INTERACTIVE INC.
BALANCE SHEET
MARCH 31, 2002 AND DECEMBER 31, 2001
March 31 December 31
2002 2001
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash $ 266 $ 266
Other current assets 0 0
----------- -----------
Total current assets 266 266
----------- -----------
$ 266 $ 266
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 8,867 $ 8,867
Accrued liabilities 0 0
----------- -----------
Total current liabilities 8,867 8,867
----------- -----------
Stockholders' deficit:
Common stock, $.001 par value, 100,000,000 shares
authorized, 2,124,916 and 124,916 shares issued
and outstanding 2,125 125
Additional paid-in capital 15,809,891 15,731,891
Accumulated deficit (15,820,617) (15,740,617)
----------- -----------
Total stockholders' deficit (8,601) (8,601)
----------- -----------
$ 266 $ 266
=========== ===========
See accompanying notes to financial statements.
3
REALITY INTERACTIVE, INC.
STATEMENTS OF OPERATIONS
FOR THE 3 MONTH PERIOD ENDED MARCH 31, 2002 AND 2001
(Unaudied)
March 31 March 31
2002 2001
---------- ---------
Cost of revenues $ 0 $ 0
---------- ---------
Gross profit 0 0
---------- ---------
Operating expenses:
General and administrative 80,000 4,493
---------- ---------
Total operating expenses 80,000 4,493
---------- ---------
Loss from operations (80,000) (4,493)
---------- ---------
Gain on sale of intellectual property 0 0
Interest income 0 18
---------- ---------
Total other income (expense) 0 18
---------- ---------
Net loss $ (80,000) $ (4,475)
=========== =========
Basic and diluted loss per share $ (0.04) $ (0.00)
=========== =========
Weighted average common shares outstanding 2,124,916 4,677,407
=========== =========
See accompanying notes to financial statements.
4
REALITY INTERACTIVE, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE PERIOD ENDED MARCH 31, 2002
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit Total
--------- -------- ----------- ------------ ----------
Balance - December 31, 1999 46,774 $ 47 $15,433,419 $(15,407,200) $ 26,266
Net loss -- -- -- (38,730) (38,730)
--------- -------- ----------- ------------ ----------
Balance - December 31, 2000 46,774 47 15,433,419 (15,445,930) (12,464)
Common stock issued for consulting services 11,475 11 98,539 98,550
Common stock sold in a private placement 66,667 67 199,933 200,000
Net loss -- -- -- (294,687) (294,687)
--------- -------- ----------- ------------ ----------
Balance - December 31, 2001 124,916 125 15,731,891 (15,740,617) (8,601)
Common stock sold S-8 options 2,000,000 2,000 78,000 80,000
Net loss (80,000) (80,000)
--------- -------- ----------- ------------ ----------
Balance - March 31, 2002 (Unaudited) 2,124,916 $ 2,125 $15,809,891 $(15,820,617) $ (8,601)
========= ======== =========== ============ ==========
See accompanying notes to financial statements.
5
REALITY INTERACTIVE, INC.
STATEMENTS OF CASH FLOWS
FOR THE PERIOD ENDED MARCH 31, 2002 AND 2001
(Unaudited)
March 31 March 31
2002 2001
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (80,000) $ (4,475))
Adjustments to reconcile net loss to cash
flows from operating activities:
Common stock issued for consulting services 0 0
Gain on disposal of intellectual property 0 0
Changes in operating assets and liabilities:
Other current assets 0 0
Accounts payable 0 0
Accrued liabilities 0 0
---------- ---------
Net cash used by operating activities (80,00) (4,475)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock 80,000 0
---------- ---------
Net cash from financing activities 80,000 0
---------- ---------
Net cash provided (used) during period 0 (4,475)
Cash, beginning of period 266 7,620
---------- ---------
Cash, end of period $ 266 $ 3,145
========== =========
See accompanying notes to financial statements.
6
REALITY INTERACTIVE, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2002
1. Organization and Status
Reality Interactive, Inc. (the "Company") was incorporated in Minnesota on
May 24, 1994 for the purpose of developing technology-based knowledge
solutions for the corporate marketplace.
On April 30, 1999, the Company ceased business operations and terminated
all remaining employees. This action was necessary in light of the
Company's liquidity needs and lack of revenue opportunities.
On December 31, 2001, the Company executed a Subscription Agreement and
Letter of Investment Intent (the "Investment") with International Venture
Capital and Advisory, Inc. (the "Investor"), whereby the Investor agreed to
purchase 66,667 shares of the Company's common stock at a price of $3.00
per share. As a result of the Investment, the Investor owns 53.37% of the
Company's issued and outstanding common stock. The Company used the
proceeds of the Investment to pay its outstanding liabilities and accrued
expenses.
On January 23, 2002, Reality Interactive, Inc. was incorporated in the
State of Nevada as a wholly-owned subsidiary of the Company. On January 23,
2002, the Company was merged into Reality Interactive, Inc., a Nevada
corporation (the "Surviving Company"). Prior to the merger, there were
12,491,574 shares outstanding of the Company. Upon completion of the
merger, shareholders of the Company were entitled to exchange one share of
the Company for one share of the Surviving Company. On January 24, 2002,
the Surviving Company effected a 1:100 reverse stock split and
re-authorized 100,000,000 shares of common stock having a par value of
$.001 per share and 5,000,000 shares of preferred stock having a par value
of $.001 per share. As of February 1, 2002, the Surviving Company's new
trading symbol is RLTI. Accordingly, all references to the number of shares
of common stock and to per share information in the financial statements
have been adjusted to reflect the reverse stock split on a retroactive
basis.
On February 15, 2002, the Surviving Company filed an S-8 Registration
Statement with the Securities and Exchange Commission to register 5,000,000
shares of common stock, $.001 par value. On February 27, 2002, an option
for 2,000,000 shares of common stock was exercised and issued pursuant to
the option agreement between the company and its employees.
The balance of the Common Stock will be issued by the Surviving Company
pursuant to its Stock Incentive Plan, which has been approved by the Board
of Directors of the Surviving Company. The Stock Incentive Plan is hoped to
provide a method whereby current employees and officers and non employee
directors and consultants may be stimulated and allow the Surviving Company
to secure and retain highly qualified employees, officers, directors and
non employee directors and consultants, thereby advancing the interests of
the Surviving Company, and all of its shareholders.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation.
The following presentation of management's discussion and analysis of the
Company's financial condition and results of operation should be read in
conjunction with the Company's financial statements and notes contained herein
for the three months ended March 31, 2002 and 2001.
GENERAL
Reality Interactive, Inc. (the "Company") was incorporated on May 24, 1994
for the purpose of developing technology-based knowledge solutions for the
industrial marketplace. On April 30, 1999, the Company ceased business
operations, sold substantially all of its assets and terminated all of its
employees. Management of the Company believes this action was necessary in light
of the Company's liquidity needs and lack of short-term revenue opportunities.
Since April 30, 1999, the Company has been exploring potential uses of its
public shell. Until a suitable acquisition candidate can be found for the public
shell, the Company intends to comply with all SEC reporting requirements in
order to maintain its status as a public company. On February 1, 2002, the
Company acquired all of the issued and outstanding shares of Bright Europe Tech,
Inc. and Faster Cash ATM, Inc. The future business of the Company will be from
operating gaming and lottery concessions and from operating automated teller
machines in Eastern Europe.
RESULTS OF OPERATIONS
REVENUES. Revenues were $0 for both the quarters ended March 31, 2002 and 2001.
This resulted because of the Company's decision to cease its business operations
effective April 30, 1999.
COST OF REVENUES. Cost of revenues were $0 for both the quarters ended March 31,
2002 and 2001. This resulted because of the Company's decision to cease business
operations effective April 30, 1999.
OPERATING EXPENSES. The Company's operating expenses for the quarter ended March
31, 2002 were $80,000, compared to operating expenses of $4,475 for 2001.
Operating expenses for 2001 relate primarily to costs incurred to maintain a
small administrative office in addition to the costs related to maintaining a
fully reporting status with the Securities and Exchange Commission. Operating
expenses for the quarter ended March 31, 2002 relate to consulting services,
significant legal costs, costs incurred to maintain a small administration
office, costs related to maintaining company and costs associated with resolving
certain outstanding corporate issues.
The Company expects that it will continue to incur general and
administrative expenses for the year 2002 as it continues to maintain a small
administrative office, pursues opportunities for its public shell and maintains
its status as a fully reporting company with the Securities and Exchange
Commission.
8
INTEREST INCOME. The Company's interest income was $0 for the quarter ended
March 31, 2002 compared to interest income of $18 for the quarter ended March
31, 2001. Interest income consisted entirely of interest earned on short-term
investments.
NET LOSS. Net loss for the quarter ended March 31, 2002 was $80,000, compared to
a net loss of $4,475 for 2001. Since the Company has ceased business operations,
it does not expect to incur additional substantial losses in 2002, except for
expenses relating to the operation of a small office, pursuing opportunities for
its public shell and SEC public filing requirements.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents were $266 as of March 31, 2002,
compared to $3,145 as of March 31, 2001 which was partially offset by the sale
of stock and the payment of stock for certain consulting services. This decrease
in cash was due primarily to the net loss from operations for the year ended
December 31, 2001.
The Company has sufficient cash balances to allow it to meet its minimal
operating expenditures for the current year. Therefore, the Company's ability to
fund future operations is dependent on the Company's identifying a suitable
acquisition candidate or receive proceeds from shareholder loans or the sale of
its common stock. Without the foregoing, the Company will be unable to continue
as a going concern.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Change in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
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
None
(b) Reports on Form 8-K
None
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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 thereunto duly authorized.
REALITY INTERACTIVE, INC.
By: /s/ Brian Koehn
-----------------------------
Brian Koehn
Chief Executive Officer and
Chief Financial Officer
Date: June 5, 2002
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