U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
(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, 2005.
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[ ] Transition Report under Section 13 or 15(d)of the Exchange Act For the
Transition Period from ________ to ___________
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Commission File Number: 000-50095
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IT&E International Group
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(Exact name of small business issuer as specified in its charter)
Nevada 77-0436157
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
505 Lomas Santa Fe Drive, Suite 200, Solana Beach CA 92075
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(Address of principal executive offices) (zip code)
Issuers telephone number: 858-366-0970
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or 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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the Registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Common Stock, $0.001 par value per share, 70,000,000 shares authorized,
19,083,330 issued and outstanding as of March 31, 2005. Preferred Stock, $0.001
par value per share, 5,000,000 shares authorized, 2,000,000 issued
and outstanding, and 820,000 to be issued subject to shareholder approval, as of
March 31, 2005.
Traditional Small Business Disclosure Format (check one)
Yes [ ] No [X]
1
Explanatory Note
IT&E International Group (the "Company") is filing this Amendment on Form
10-QSB/A to its quarterly report on Form 10-QSB for the three months ended March
31, 2005 that was originally filed on May 13, 2005 (the "Original Form 10-QSB")
to restate its financial statements for the three months ended March 31, 2005 to
reflect that the Company has determined that the item "Cash-restricted" in the
amount of $2,522,922 reflected on the balance sheet as a current asset does not
fall within the definition of an "asset" under generally accepted accounting
principles ("GAAP") since the restricted cash was under the sole dominion and
control of Laurus Master Fund, Ltd. In addition, the item "Long-term convertible
note payable, less current portion" reflected on the balance sheet has been
correspondingly reduced by $2,500,000 because the Company has also determined
that the portion of the proceeds from the issuance of such convertible
promissory note that was placed in the restricted account does not fall within
the definition of "liability" under GAAP. This restatement also impacts the
Statements of Operations, the Statements of Stockholders' Equity, and the
Statements of Cash Flow for the three months ended March 31, 2005, as interest
income of $16,060 had previously been recorded, along with excess interest
expense of $49,618 on the restricted proceeds, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Footnote 4 to the
financial statements included herein have been amended to reflect the foregoing.
While this Amendment does not update any other information contained in the
Original Form 10-QSB, for the convenience of the reader, this Amendment amends
in its entirety the Original Form 10-QSB. This Amendment continues to speak as
of the date of the Original Form 10-QSB, and the Company has not updated the
disclosure contained herein to reflect any events that have occurred after that
date.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements................................. 3
Balance Sheet (unaudited)............................ 4
Statements of Operations (unaudited)................. 5
Statements of Cash Flows (unaudited)................. 6
Notes to Financial Statements........................ 7-8
Item 2. Management's Discussion and Analysis of Plan
of Operation........................................ 9
Item 3. Controls and Procedures.............................. 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................... 16
Item 2. Changes in Securities and Use of Proceeds............ 16
Item 3. Defaults upon Senior Securities...................... 16
Item 4. Submission of Matters to a Vote
of Security Holders................................. 16
Item 5. Other Information..................................... 16
Item 6. Exhibits and Reports on Form 8-K...................... 16
Signatures...................................................... 17
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
As prescribed by Item 310 of Regulation S-B, the independent auditor has
reviewed these unaudited interim financial statements of the registrant for the
three months ended March 31, 2005. The financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim period presented. The unaudited
financial statements of registrant for the three months ended March 31, 2005,
follow.
3
IT&E INTERNATIONAL GROUP
BALANCE SHEETS
BALANCE SHEETS
March 31,
2005
(Unaudited) December 31,
(restated) 2004
(restated)
----------- ------------
Assets
Current assets
Cash $ 824,304 $ 402,779
Accounts receivable, net of allowance for
doubtful accounts of $75,000 2,309,555 2,644,501
Unbilled revenue 335,853 133,398
Prepaid and other current assets 182,907 77,175
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Total current assets 3,652,619 3,257,853
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Fixed assets, net 308,586 313,435
Loan fees, net 734,863 807,144
Deposits 28,881 33,724
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$ 4,724,949 $ 4,412,156
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 469,718 $ 596,189
Accrued payroll and employee benefits 634,944 322,300
Current portion of capital lease obligations 3,164 3,089
Current portion of convertible note payable 916,663 666,667
Accrued interest and fees owed on note payable 238,808 16,458
Deferred rent 28,738 30,293
Other accrued liabilities 70,834 4,600
----------- -----------
Total current liabilities 2,362,869 1,639,595
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Long-term capital lease obligations,
less current portion 15,456 16,015
Long-term convertible note payable,
less current portion 1,583,337 1,833,333
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3,961,662 3,488,945
Stockholders' equity
Common stock, $0.001 par value,
70,000,000 shares authorized,
19,083,330 shares issued and outstanding 19,083 19,000
Preferred stock, $0.001 par value,
5,000,000 shares authorized, 2,000,000
issued and outstanding 2,000 2,000
Additional paid-in capital 925,957 863,540
Retained earnings (183,753) 38,673
----------- -----------
763,287 923,213
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$ 4,724,949 $ 4,412,156
========== ===========
The accompanying notes are an integral part of these financial statements.
4
IT&E INTERNATIONAL GROUP
STATEMENTS OF OPERATIONS
(Unaudited)
STATEMENTS OF OPERATIONS
For the three months ended
March 31,
-----------------------
2005 2004
(restated)
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Service revenue $ 4,446,580 $ 3,145,018
Reimbursement revenue 98,346 60,662
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Total revenue 4,544,926 3,205,680
Cost of revenue 3,014,611 1,997,354
Reimburseable out-of-pocket expenses 98,346 60,662
------------ ------------
Gross profit 1,431,969 1,147,664
Operating Expenses:
General and administrative expenses 814,189 511,603
Sales and marketing expenses 230,682 256,047
Depreciation expense 17,148 4,968
Officer salaries 185,462 98,752
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Total operating expenses 1,247,481 871,370
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Net operating income 184,488 276,294
Other income (expense):
Interest expense (50,721) (21,686)
Loan fee amortization (72,281) -
Fees on long-term debt (221,412) -
Non-cash financing costs (62,500) -
Other income (expense) - 14,490
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Total other income (expense) (406,914) (7,196)
Income (loss) before provision for income taxes (222,426) 269,098
Provision for state income taxes - -
------------ ------------
Net income (loss) $ (222,426) $ 269,098
============ ============
Weighted average number of
common shares outstanding 19,022,221 11,000,000
============ ============
Net income per share - basic and fully diluted $ (0.01) $ 0.02
============ ============
The accompanying notes are an integral part of these financial statements.
5
IT&E INTERNATIONAL GROUP
STATEMENTS OF CASH FLOW
(Unaudited)
STATEMENTS OF CASH FLOWS
For the three months ended
March 31,
---------------------
2005 2004
(restated)
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Cash flows from operating activities
Net income (loss) $ (222,426) $ 269,098
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation expense 17,148 4,968
Amortization of loan fees 72,281 -
Deferred rent (1,555) -
Stock issued for financing costs 62,500 -
Changes in assets and liabilities:
Accounts receivable 334,946 (541,883)
Unbilled revenue (202,455) -
Prepaid and other current assets (105,732) -
Accounts payable (126,471) 237,541
Accrued payroll and employee benefits 312,644 78,540
Accrued interest and fees owed on a note payable 222,350 -
Other current liabilities 66,235 12,490
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Net cash provided by operating activities 429,465 60,754
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Cash flows from investing activities
Purchase of fixed assets,
including internal-use software (12,299) (156,576)
Deposits 4,843 (1,450)
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Net cash (used) by investing activities (7,456) (1,450)
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Cash flows from financing activities
Proceeds from line of credit, net - 143,000
Payments on capital lease obligations (484) -
Distributions to shareholders - (3,700)
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Net cash provided(used)by financing activities (484) 139,300
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Net increase in cash and cash equivalents 421,525 42,028
Cash and cash equivalents, beginning of period 402,779 173,236
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Cash and cash equivalents, end of period $ 824,304 $ 215,264
=========== ============
Supplemental disclosures:
Interest paid $ 48,680 $ -
=========== ===========
Income taxes paid $ - $ -
=========== ===========
The accompanying notes are an integral part of these financial statements.
6
IT&E INTERNATIONAL GROUP
NOTES TO RESTATED CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS
In this discussion, the terms "Company", "we", "us", and "our", refer to IT&E
International Group and subsidiaries, except where it is made clear otherwise.
We are a life sciences service organization focused on providing our clients
with project-based consulting services in the areas of FDA regulatory
compliance, data management, biometrics and clinical validation throughout the
clinical trials lifecycle. Our services range from recruitment of patients for
clinical trials and providing skilled personnel to assist with managing clinical
trials, to providing enterprise software solutions and training to manage data
to ensure FDA compliance. We also provide validation services for new
pharmaceutical manufacturing facilities. We serve a variety of clients,
including those in the private industry, public institutions, research
facilities and the government.
We were incorporated in the State of Nevada in 2002 as Clinical Trials
Assistance Corporation. In April 2004, we merged with IT&E International, Inc.
and changed our name to IT&E International Group.
2. BASIS OF PRESENTATION
Correction of an Error
We have previously issued our consolidated financial statements for the three
months ended March 31, 2005 and are now correcting these financial statements to
reflect that we have determined that the item "Cash-restricted" in the amount of
$2,522,922 reflected on the balance sheet as a current asset does not fall
within the definition of an "asset" under generally accepted accounting
principles ("GAAP") since the restricted cash was under the sole dominion and
control of Laurus Master Fund, Ltd. In addition, the item "Long-term convertible
note payable, less current portion" reflected on the balance sheet has been
correspondingly reduced by $2,500,000 because the Company has also determined
that the portion of the proceeds from the issuance of such convertible
promissory note that was placed in the restricted account does not fall within
the definition of "liability" under GAAP. This correction also impacts the
Statements of Operations, and the Statements of Cash Flow for the three months
ended March 31, 2005, as interest income of $16,060 had been previously
recorded, along with accrued interest payable of $88,073 on the restricted
proceeds. These corrections also include the flow through effect of corrections
that were made to our financial statements for the year ended December 31, 2004.
The net impact for the three months ended March 31, 2005 is a reduction of the
net loss of $33,558. Footnote 4 to the financial statements included herein has
been amended to reflect the foregoing. In addition a reclassification of $820
was made between preferred stock and additional paid-in capital to correct for
fully paid Series A preferred stock issued in excess of the number of Series A
preferred stock authorized. These shares require shareholder authorization
before they can be issued.
The effects on our previously issued March 31, 2005 financial statements are
summarized as follows:
Balance Sheet as of March 31, 2005
Previously Increase
Reported (Decrease) Restated
----------------- -------------------- ----------------
Cash - restricted $2,522,922 $(2,522,922) $ -
Total Current Assets 6,175,541 (2,522,922) 3,652,619
Total Assets 7,247,871 (2,522,922) 4,724,949
Current Liabilities 2,450,942 (88,073) 2,362,869
Long-term convertible note payable, less 4,083,337 (2,500,000) 1,583,337
current portion
Total Liabilities 6,549,735 (2,588,073) 3,961,662
Stockholders' Equity:
Preferred Stock 2,820 (820) 2,000
Additional Paid-in Capital 925,137 820 925,957
Net Loss
(255,984) 33,558 (222,426)
----------------- -------------------- ----------------
Total Liabilities and
Stockholders' Deficit 7,247,071 (2,522,122) 4,724,949
Statement of Operations for the Three Months Ended March 31, 2005
Previously Increase
Reported (Decrease) Restated
----------------- -------------------- ----------------
Interest Income $ 16,060 $ (16,060) $ -
Interest Expense (100,339) 49,618 (50,721)
Net Loss (255,984) 33,558 (222,426)
The consolidated interim financial statements included herein, presented in
accordance with United States generally accepted accounting principles and
stated in US dollars, have been prepared by us, without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although we believe
that the disclosures are adequate to make the information presented not
misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
consolidated interim financial statements be read in conjunction with our
consolidated financial statements for the year ended December 31, 2004 and the
notes thereto. We have followed the same accounting policies in the preparation
of these consolidated interim reports.
Results of operations for the interim periods are not indicative of annual
results. Certain amounts in the 2004 financial statements have been reclassified
to conform to the presentation of the 2005 financial statements.
7
IT&E INTERNATIONAL GROUP
NOTES TO RESTATED CONSOLIDATED FINANCIAL STATEMENTS
3. FIXED ASSETS
During the quarter ended March 31, 2005, we had $12,299 of fixed asset
additions.
Depreciation expense totaled $17,148 and $4,968 for the three months ended March
31, 2005 and 2004, respectively.
4. CONVERTIBLE DEBT
We have outstanding a $5,000,000 secured convertible term note to Laurus Master
Fund, Ltd ("Laurus"). $2.5 million of these funds were placed into a restricted
cash account and is under the sole dominion and control of Laurus as security
for our obligations. The cash related to the restricted account has not been
recorded as an asset on our balance sheet, nor has the amount of the secured
convertible note that corresponds to the amount in the restricted account been
recorded as a liability on our balance sheet since such funds are under the sole
dominion and control of Laurus. Such restricted cash does not fall within the
definition of an "asset" under generally accepted accounting principles ("GAAP")
nor does the amount of the secured note that corresponds to the amount of cash
in the restricted account fall within the definition of "liability" under GAAP.
During the quarter, as a result of not meeting the requirement of causing the
registration statement covering the shares of our common stock into which the
principal and interest under the Note are convertible to become effective, we
have incurred fees of approximately $221,000. During April 2005, Laurus released
$500,000 of the restricted funds to pay these fees, along with the accrued
interest owed on those funds. The remaining $267,000 will be used for general
operating procedures. The minimum monthly principal repayment of $100,000 began
on May 1, 2005 and will continue through the October 18, 2007 maturity date.
We recorded interest expense of approximately $51,000 for the three months ended
March 31, 2005 related to this convertible note, and approximately $22,000 for
the three months ended March 31, 2004 related to a bank line of credit that was
paid off with the proceeds of the Laurus note.
5. STOCKHOLDER'S EQUITY
During March 2005, 83,330 shares of common stock were issued to SBI USA as
payment for investment banking consulting services valued at $62,500.
8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information discussed below is derived from the Financial Statements
included in this Form 10-QSB for the three months ended March 31, 2005, and
should be read in conjunction therewith. Our results of operations for a
particular quarter may not be indicative of results expected during subsequent
quarters or for the entire year.
Company Overview
----------------
We are a life sciences service organization focused on providing our clients
with project-based consulting services in the areas of FDA regulatory
compliance, data management, biometrics and clinical validation throughout the
clinical trials lifecycle. Our services range from recruitment of patients for
clinical trials and providing skilled personnel to assist with managing clinical
trials, to providing enterprise software solutions and training to manage data
to ensure FDA compliance. We also provide validation services for new
pharmaceutical manufacturing facilities. We serve a variety of clients,
including those in the private industry, public institutions, research
facilities and the government. We are managed in one reportable segment.
Our contracts are primarily time and materials contracts that recognize revenue
as hours are worked based on the hourly billing rates for each contract.
We incur out-of-pocket costs in excess of contract amounts. These out-of-pocket
costs are generally reimbursable by our customers. We include out-of-pocket
costs as reimbursement revenues and reimbursable out-of-pocket expenses in the
Statements of Operations.
Cost of revenue consists of compensation and related fringe benefits for our
project-related staff, as well as for externally contracted personnel. Sales and
marketing expenses consist of compensation and related fringe benefits for sales
and marketing personnel, along with their out-of-pocket costs, as well other
costs such as advertising and trade shows. General and administrative expenses
consist of compensation and related fringe benefits for administrative
personnel, outside professional costs, facility costs and other costs.
Our industry continues to be dependent on the research and development efforts
of pharmaceutical and biotechnology companies as major customers, and we believe
this dependence will continue. The loss of business from any of our major
customers could have a material adverse effect on us.
9
Our client list includes such well-known pharmaceuticals and biotechnology
companies as Eli Lilly, Novartis, Chiron, Pfizer, Bristol-Myers Squibb, Glaxo
Smith Kline, Abbott, Schering-Plough, Amgen, Baxter, Aventis Pasteur, Wyeth,
Vaxgen, Boston Scientific and Genentech. We are in the process of seeking other
businesses to acquire so that we can expand our operations. The analysis of new
business opportunities and evaluation of new business strategies will be
undertaken by or under the supervision of our Board of Directors. In analyzing
prospective acquisition opportunities, management will consider, to the extent
applicable, the available technical, financial and managerial resources of any
given business venture. We will also consider the nature of present and expected
competition; potential advances in research and development or exploration; the
potential for growth and expansion; the likelihood of sustaining a profit within
given time frames; the perceived public recognition or acceptance of products,
services, trade or service marks; name identification; and other relevant
factors.
We will analyze all relevant factors and make a determination based on a
composite of available information, without reliance on any single factor. The
period within which we will decide to participate in a given business venture
cannot be predicted and will depend on certain factors, including the time
involved in identifying businesses, the time required for us to complete our
analysis of such businesses, the time required to prepare appropriate
documentation and other circumstances.
Though the overall outlook for our continued financial growth remains very
positive as our pipeline for new customers remains solid, our results of
operations are subject to volatility due to a variety of factors. The
cancellation or delay of contracts and cost overruns could have short-term
adverse affects on the financial statements. Fluctuations in the ability to
maintain large customer contracts or to enter into new contracts could hinder
our long-term growth. In addition, our aggregate backlog, consisting of signed
contracts and letters of intent, is not necessarily a meaningful indicator of
future results. Accordingly, no assurance can be given that we will be able to
realize the service revenues included in our backlog.
We will continue to move ahead on the execution of our strategic plans to raise
additional capital to be used to make further strategic acquisitions in the
coming quarters, positioning IT&E for a leadership position in our industry.
10
Results of Operations
---------------------
Service Revenues
Service revenues for the first quarter ended March 31, 2005, were $4.4 million,
an increase of 41.4% from the same quarter last year of $3.2 million. This is
the second consecutive quarter that we have achieved same quarter revenue growth
in excess of 40%. Service revenue for this quarter also represents an increase
of 10.3% from the $4 million service revenue earned during the fourth quarter of
2004. This increase in revenue is a result in our change in sales strategy to
target major pharmaceutical and biotechnology customers. We also expanded our
services to clients supporting the U.S. Government's Bio Defense initiatives by
assisting companies that are producing needed vaccines for anti-terrorism
measures. In addition, we have secured renewals and extensions of major
initiatives within existing clients, such as Schering-Plough, Pfizer, Novartis,
GlaxoSmithKline, Baxter Pharmaceutical, Aventis Pasteur, Bayer, Wyeth Global,
Genentech, Chiron, Amgen, Boston Scientifc and VaxGen.
Reimbursement Revenues
Reimbursable out-of-pocket revenues fluctuate from period to period, primarily
due to the level of service activity in a particular period. Reimbursement
revenues increased 62% to $98,000 in the first quarter of 2005 from $61,000 in
the same quarter of 2004.
Operating Expenses
Cost of revenues increased approximately $1.0 million, or 51%, to $3.0 million
in the first quarter of 2005 from $2.0 million during the first quarter of 2004.
Gross profit as a percentage of service revenues were 32.2% for the first
quarter of 2005 as compared to 36.5% during the same period in 2004. During the
quarter we earned lower margins than in 2004 as a result of servicing contracts
in which we initially took lower margins to secure selected new business. We are
working to improve these margins by way of controlling the cost of providing our
contractors to the customer.
General and administrative expenses increased by approximately $303,000, or 59%,
to $814,000 during the first quarter of 2005 as compared to $512,000 during the
first quarter of 2004. This increase is primarily the result of increased costs
associated with being a public company that we did not have in 2004, as well as
costs incurred to add depth to our management team, and for outside consultants
to assist us with our merger and acquisition strategy. We expect these costs to
continue during the second quarter and throughout 2005 as we continue to grow as
a public entity and move ahead with our strategy of seeking follow-on investors
to support our acquisition strategy.
Sales and marketing expenses decreased by $25,000, or 10%, to $231,000 in the
first quarter of 2005 from $256,000 during the first quarter of 2004.
11
Depreciation and amortization expense increased to $17,000 in 2005 from $5,000
in 2004. The increase is due to our beginning to depreciate our developed
internal-use software during the first quarter of 2005.
Officer salaries increased to $185,000 in 2005 from $99,000 in 2005, an increase
of 87%. During 2004, the cash situation was such that the officers did not pay
themselves on a regular basis in order to pay other company commitments.
Other Income (Expense)
Interest expense increased to approximately $51,000 during the first quarter of
2005 from $22,000 during the same period of 2004. This increase is the result of
moving from a $1.5 million bank line of credit to the $5 million
convertible note with Laurus. No interest has been accrued on the $2.5 million
of restricted funds as it is not due unless such funds are released for our use.
Loan fee amortization was approximately $72,000 for the first quarter of 2005.
The loan fee costs were incurred related to the $5 million convertible note with
Laurus.
During the first quarter of 2005, we incurred fees to Laurus as a result of not
meeting the requirement of causing the registration statement covering the
shares of our common stock into which the principal and interest under the note
are convertible to become effective. During April 2005, Laurus released $500,000
of the restricted funds to pay these fees, along with the accrued interest on
those funds. In addition, the requirement to have the registration statement
become effective was extended to June 15, 2005 before any additional fees are
incurred.
During the first quarter of 2005, we issued 83,330 shares of our common stock to
SBI USA as payment for investment banking consulting services valued at $62,500.
Liquidity and Capital Resources
-------------------------------
Cash and cash equivalents increased by approximately $422,000 for the three
months ended March 31, 2005. At March 31, 2005, cash and cash equivalents
amounted to approximately $824,000.
Accounts receivable at March 31, 2005 was $2.3 million, net of an allowance for
doubtful accounts of $75,000, as compared to accounts receivable at December 31,
2004 of $2.6 million, net of an allowance for doubtful accounts of $75,000. The
decrease was due primarily to increased activity in bringing our accounts
receivable more current. We review our outstanding receivables on a monthly
basis to determine collectibility, and we believe that maintaining our allowance
at $75,000 is proper due the number of well-established customers that we are
servicing.
12
Unbilled revenues are receivables recognized as revenue for which invoices have
not been sent to customers. At March 31, 2005, unbilled revenues were
approximately $336,000.
Need for Additional Funding
---------------------------
With our current contract backlog and sales pipeline of in excess of $20.0
million, and our current cash and accounts receivables balance, we believe that
we have adequate resources to fund our operations through 2005. There can be no
assurance that market conditions will permit us to raise sufficient funds for
strategic acquisitions or that additional financing will be available when
needed or on terms acceptable to us.
Total Current Assets at March 31, 2005 were approximately $3.7 million as
compared to approximately $3.3 million as of December 31, 2004.
Total Current Liabilities at March 31, 2005 were approximately $2.4 million as
compared to approximately $1.6 million at December 31, 2004. This increase is
primarily the result of an increase in accrued payroll and employee benefits,
and an increase in the current portion owed on the note payable to Laurus since
principal payments begin on May 1, 2005.
Total Liabilities at March 31, 2005 were approximately $4.0 million as compared
to $3.5 million at December 31, 2004. Of the amount due at March 31, 2005,
approximately $2.7 million was due to Laurus.
We anticipate that our cash requirements will continue to increase as we
continue to expend substantial resources to build our infrastructure, develop
our business plan and expand our sales and marketing network operations,
customer support and administrative organizations. We currently anticipate that
our available cash resources and cash generated from operations will be
sufficient to meet our presently anticipated working capital and capital
expenditure requirements for the next twelve months. If we are unable to
maintain profitability, or seek further expansion, additional funding will
become necessary. No assurances can be given that either equity or debt
financing will be available.
Employees
---------
At March 31, 2005, IT&E employed 90 employees. These employees represent the
following employment mix for the company: 10% administration, 7% recruiting, 6%
sales, and 77% contract service providers. Additionally, we utilize the services
of approximately 30 outside consultants who work as independent contractors.
13
Market For Company's Common Stock
(i) Market Information
----------------------
Our common stock is traded on the OTC Bulletin Board under the symbol "ITER."
There has been limited trading activity in the common stock. There are no
assurances trading activity will take place in the future for our common stock.
We did not repurchase any of our shares during the first quarter of 2005.
(ii) Dividends
--------------
Holders of common stock are entitled to receive such dividends as the board of
directors may from time to time declare out of funds legally available for the
payment of dividends. No dividends have been paid on our common stock, and we do
not anticipate paying any dividends on our common stock in the foreseeable
future.
Forward-Looking Statements
--------------------------
This Form 10-QSB includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-QSB which address activities, events or developments which we expect or
anticipate will or may occur in the future, including such things as future
capital expenditures (including the amount and nature thereof), finding suitable
merger or acquisition candidates, expansion and growth of our business and
operations, and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by us in light of
our experience and our perception of historical trends, current conditions and
expected future developments, as well as other factors we believe are
appropriate in the circumstances.
However, whether actual results or developments will conform with our
expectations and predictions is subject to a number of risks and uncertainties,
general economic market and business conditions; the business opportunities (or
lack thereof) that may be presented to and pursued by us; changes in laws or
regulation; and other factors, most of which are beyond our control.
14
This Form 10-QSB contains statements that constitute "forward-looking
statements." These forward-looking statements can be identified by the use of
predictive, future-tense or forward-looking terminology, such as "believes,"
"anticipates," "expects," "estimates," "plans," "may," "will," or similar terms.
These statements appear in a number of places in this Registration and include
statements regarding the intent, belief or current expectations of the Company,
our directors or our officers with respect to, among other things: (i) trends
affecting our financial condition or results of operations for our limited
history; (ii) our business and growth strategies; and, (iii) our financing
plans. Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may differ materially from those
projected in the forward-looking statements as a result of various factors.
Factors that could adversely affect actual results and performance include,
among others, our limited operating history, potential fluctuations in quarterly
operating results and expenses, government regulation, technological change and
competition.
Consequently, all of the forward-looking statements made in this Form 10-QSB are
qualified by these cautionary statements and there can be no assurance that the
actual results or developments anticipated by us will be realized or, even if
substantially realized, that they will have the expected consequence to or
effects on the Company or our business or operations. We assume no obligations
to update any such forward-looking statements.
Item 3. Controls and Procedures
As of the end of the period covered by this report, we Company conducted an
evaluation, under the supervision and with the participation of the principal
executive officer and principal financial officer, of our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation, the
principal executive officer and principal financial officer concluded that our
disclosure controls and procedures are effective to ensure that information
required to be disclosed by us in reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms. There
was no change in our internal control over financial reporting during our most
recently completed fiscal quarter that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
15
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
We are not a party to any legal proceedings.
ITEM 2. Changes in Securities and Use of Proceeds
During the first Quarter ending March 31, 2005, the Registrant issued 83,330
restricted common shares to SBI, USA as fees for investment banking consulting
services. The restricted shares will not be registered under the Securities Act
of 1933, as amended (the "Act") and will be issued in the reliance upon the
exemption from registration provided by section 4(2) of the Act, on the basis
that the issuance of these shares do not involve a public offering.
ITEM 3. Defaults upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
During the quarter ended, no matters were submitted to our security holders.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Title of Document
-----------------------------------------------
31.1 Certifications of the Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
31.2 Certifications of the Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
32.1 Certifications of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
32.2 Certifications of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350 as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
(b) Reports on Form 8-K, during the Quarter ended March 31, 2005.
We did not file any Current Reports during the Quarter ended March 31, 2005.
16
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
IT&E International Group
------------------------
(Registrant)
Dated: October 25, 2005 By: /s/ Peter Sollenne
---------------- ------------------------------
Peter R. Sollenne
Chief Executive Officer
Director
Dated: October 25, 2005 By: /s/ Kelly Alberts
---------------- ------------------------------
Kelly Alberts
President/COO
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.
IT&E International Group
Dated: October 25, 2005 By: /s/ Peter Sollenne
---------------- -------------------------------
Peter R. Sollenne
Chief Executive Officer
Director
Dated: October 25, 2005 By: /s/ Kelly Alberts
---------------- -------------------------------
Kelly Alberts
President/COO
17