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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
- -
Act of 1934
For the fiscal quarter ended: March 31, 2000 or
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ____________________to__________________________
Commission file number: 0-21037
SoloPoint.com, Inc.
(Exact name of registrant as specified in its charter)
California 77-0337580
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
130B Knowles Drive
Los Gatos, CA 95032
(address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (408) 364-8850
Indicate by check mark whether the registrant (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 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 __
---
Indicate the number of shares outstanding of each of the issuer's class of
common ("Common Stock"), as of the latest practicable date.
Class Outstanding at May 12, 2000
Common Stock - no par value 4,988,329
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SoloPoint.com, Inc.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited)
Condensed Statements of Operations 3
three months ended March 31, 2000 and 1999
and the period March 26, 1993 (inception) through March 31, 2000
Condensed Balance Sheet 4
March 31, 2000
Condensed Statements of Cash Flows 5
three months ended March 31, 2000 and 1999
and the period March 26, 1993 (inception) through March 31, 2000
Notes to Condensed Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 13
Signature 14
</TABLE>
2
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PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS
SoloPoint.com, Inc.
(a development stage company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Period from
March 26, 1993
(inception)
Three months ended through
March 31 March 31
2000 1999 2000
---------- ---------- --------------
<S> <C> <C> <C>
Net revenues $ 189,762 $ 176,550 $ 3,255,548
Cost of sales 178,145 167,748 3,852,311
---------- ---------- ------------
Gross margin 11,617 8,802 (596,763)
Costs and expenses:
Research and development 300,692 180,353 6,665,485
Sales and marketing 91,085 158,394 4,508,565
General and administrative 273,239 235,207 6,298,736
---------- ---------- ------------
665,016 573,954 17,472,786
Loss from operations (653,399) (565,152) (18,069,549)
Interest income, net 20,617 120 218,646
---------- ---------- ------------
Net loss $ (632,782) $ (565,032) $(17,850,903)
Basic and diluted net loss per share $ (.13) $ (.27)
Shares used in computing basic
and diluted net loss per share 4,981,367 2,076,455
</TABLE>
See accompanying notes.
3
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SoloPoint.com, Inc.
(a development stage company)
CONDENSED BALANCE SHEET
ASSETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, 2000
--------------
<S> <C>
Current assets:
Cash and cash equivalents $ 338,856
Short term investments 795,615
Accounts receivable, net 222,504
Inventories 55,084
Other current assets 52,842
------------
Total current assets 1,464,901
Furniture and equipment, at cost:
Computers and software 297,466
Furniture and fixtures 286,843
Accumulated depreciation and amortization (549,123)
------------
35,186
Other non-current assets 37,997
------------
Total assets $ 1,538,084
Current liabilities:
Accounts payable $ 292,954
Accrued compensation 36,628
Notes payable, current portion 17,257
Deferred revenue 8,499
Other accrued liabilities 33,633
------------
Total current liabilities 388,971
Shareholders' equity:
Common stock 19,033,133
Deficit accumulated during the development
stage (17,884,020)
------------
Total shareholders' equity 1,149,113
------------
Total liabilities and shareholders' equity $ 1,538,084
</TABLE>
See accompanying notes
4
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SoloPoint, Inc.
(a development stage company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Period from
March 26, 1993
(inception)
Three months ended through
March 31 March 31
2000 1999 2000
---------------------- ------------
<S> <C> <C> <C>
Operating activities
Net loss $(632,782) $ (565,032) $(17,850,903)
Adjustments to reconcile net loss to net cash used in
operating activities:
Common stock, preferred stock, and options
issued for services 18,646 - 109,346
Preferred stock issued for interest payable - - 49,832
Provision for inventory - - 823,754
Depreciation and amortization 6,797 23,289 549,123
Changes in operating assets and liabilities (338,608) 81,523 (804,127)
--------- ---------- ------------
Net cash provided by (used in) operating activities (945,947) (460,220) (17,122,975)
Investing activities
Acquisitions of furniture and equipment (10,757) (7,503) (569,912)
Loan to shareholder - - (35,000)
Payment received from shareholder - - 1,500
Proceeds (purchase) of short-term investments (net) 668,285 (795,615)
Deposits and other assets - - (37,997)
--------- ---------- ------------
Net cash provided by (used in) investing activities 657,528 (7,503) (1,437,024)
Financing activities
Proceeds from convertible notes payable to shareholders - - 1,120,000
Proceeds from convertible notes payable - - 1,813,000
Proceeds from notes payable - - 191,496
Principal payments on capital lease obligations - (12,669) (166,976)
Proceeds from notes receivable from shareholders - - 157,500
Proceeds from sale of preferred stock, net of issuance costs - - 3,951,622
Issuance of common stock, net of repurchases and
issuance costs 4,913 - 11,832,213
--------- ---------- ------------
Net cash provided by (used in) financing activities 4,913 (12,669) 18,898,855
Net increase (decrease) in cash (283,506) (480,392) 338,856
Cash at beginning of period 622,362 1,005,845 -
--------- ---------- ------------
Cash at end of period $ 338,856 $ 525,453 $ 338,856
========= ========== ============
</TABLE>
See accompanying notes.
5
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SoloPoint, Inc.
(a development stage company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. General The condensed financial statements for the three month periods
ended March 31, 2000 and 1999 are unaudited but 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 condensed financial
statements should be read in conjunction with the financial statements and
notes thereto, together with management's discussion and analysis of
financial condition and results of operations, contained in the Company's
Form 10-KSB for the year ended December 31, 1999. The results of operations
for the three month period ended March 31, 2000 are not necessarily
indicative of the results to be expected for the entire fiscal year.
2. Earnings per share The Company computes net loss per share in conformity
with the Statement of Financial Accounting Standards No. 128 "Earnings per
Share," ("SFAS 128"). In accordance with SFAS 128, basic net loss per share
excludes dilutive common stock equivalents and is calculated as net income
(loss) divided by the weighted average number of common shares outstanding.
Diluted net income (loss) per share is computed using the weighted average
number of common shares outstanding and dilutive common stock equivalents
outstanding during the period. Common equivalent shares from stock options
and warrants (using the treasury stock method) are excluded from the
calculation of net loss per share as their effect is anti-dilutive.
3. Comprehensive Income As of January 1, 1998, the Company adopted Statement
of Financial Accounting Standards No. 130 "Reporting Comprehensive Income"
("SFAS 130"), which sets standards for reporting and displaying
comprehensive income and its components in a full set of general purpose
financial statements. Comprehensive income includes changes in the balances
of items that are reported directly in a separate component of
shareholders' equity on the balance sheet. The Company does not have any
items reported directly in a separate component of shareholders' equity and
therefore, the Company's comprehensive loss for the three month periods
ended March 31, 2000 and 1999 and for the period from March 26, 1993
(inception) through March 31, 2000 is equal to its reported net loss.
4. Segment Reporting Effective January 1998, the Company adopted Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 131 establishes
annual and interim reporting standards for an enterprise's operating
segments and related disclosures about its products, services, geographic
areas and major customers. The Company has determined that it operated in
only one segment. Based on the criteria of FAS 131, the Company identified
its operating committee as the chief decision-makers for the period ended
March 31, 2000. The Company's operating committee evaluated revenue
performance based on the one segment. Within the operating committee,
employee headcount and operating costs are managed by functional area
(i.e., general and administrative, research and development, and sales and
marketing) and only reviewed these metrics on a company-wide basis. Thus,
FAS 131 does not require any additional disclosures for either revenues or
costs. Accordingly, adoption of this Statement did not affect the Company's
financial statements.
5. Recently Issued Pronouncements In December 1999, the Securities and
Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101
"Revenue Recognition" ("SAB 101"), which provides guidance on the
recognition, presentation and disclosure of revenue in financial statements
filed with the SEC. SAB 101 outlines the basic criteria that must be met to
recognize revenue and provides guidance for disclosures related to revenue
recognition policies. Management believes that the Company's revenue
recognition policy is in compliance with the provisions of SAB 101 and
accordingly, the adoption of SAB 101 had no material effect on the
financial position or results of operations of the Company.
6. Major Customers During the quarter ended March 31, 2000, two customers
accounted for 94% of net revenue. Two customers during the quarter ended
March 31, 1999 accounted for 75% of net revenue.
6
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ITEM 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following section contains forward-looking statements that involve risks and
uncertainties, including those referring to the period of time the Company's
existing capital resources will meet the Company's future capital needs, the
Company's future operating results, the market acceptance of the products of the
Company, the Company's efforts to establish and maintain distribution partners,
the development of new products, and the Company's planned investment in the
marketing and distribution of its current products and research and development
with regard to future products. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including: the ability of the Company to obtain
additional funding, dependence on market acceptance of multifunction personal
communications management products; dependence on a limited number of customers;
lack of significant sales and distribution channels; the Company's ability to
timely develop new products; business conditions and growth in the personal
communications management industry and general economy; competitive factors,
such as rival providers of personal communications management products and
services and price pressures; compatibility with a wide variety of switching
configurations; reliance on sole source contract manufacturers and component
suppliers; dependence on a limited number of key personnel; rapid technological
changes; as well as other factors set forth elsewhere in this Form 10-QSB.
To date, SoloPoint's working capital requirements have been met through the sale
of equity and debt securities and relatively minimal revenues from product
sales. SoloPoint has sustained significant operating losses in every fiscal
period since inception and expects to incur substantial quarterly losses at
least through the end of calendar year 2000 and possibly longer. The Company
has insufficient cash to continue its operations beyond June 2000 at its
projected level of operations. SoloPoint's ability to continue as a going
concern is dependent upon it successfully raising additional equity or debt
financing and, ultimately, upon achieving profitable operations. However, we
cannot assure you that additional funding will be available to us on acceptable
terms, if at all, or that we will achieve profitable operations.
Results of Operations
Net Revenues
Since inception, the Company's focus has been on the design and development of
personal communications management solutions for communications-dependent
individuals. The Company introduced its first product at the end of March 1996.
The Company's products currently have a 30-day, unconditional, money-back
guarantee. We recognize revenue when our products are shipped, the 30-day money-
back guarantee period has lapsed, and the ability to collect is reasonably
assured. One major customer does not have this 30 day money back guarantee and
therefore revenues on sales to this customer are recognized upon shipment.
Allowances are provided for product returns based on estimated future product
returns, the timing of expected new product introductions and other factors.
These allowances are recorded as direct reductions of revenue and accounts
receivable.
Net revenue for the three months ended March 31, 2000, was $189,762 compared to
$176,550 for the three months ended March 31, 1999, an increase of 7.5%. The
increase in net revenues is mainly attributable to revenues from the ongoing
customer shipment of our S-310 Complete Call Manager product.
Cost of Sales
Cost of sales for the three months ended March 31, 2000 was $178,145, which was
94% of revenue as compared to $167,748 for the three months ended March 31, 1999
which was 95% for that period.
Operating Expenses:
Research and Development Expenses
Research and development expenses increased 67% in the three months ended March
31, 2000 to $300,692 as compared with expenses of $180,353 for the three months
ended March 31, 1999, mainly due to increased headcount for the three months
ended March 31, 2000 as well as an increase in development tools and material
associated with the prototype build of our anticipated future products. The
Company anticipates that research and development expenses will increase each
quarter from the level experienced in the first quarter of 2000 for the balance
of 2000.
7
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Sales and Marketing Expenses
Sales and marketing expenses declined in the three months ended March 31, 2000
to $91,085 as compared to expenses of $158,394 for the three months ended March
31, 1999 as a result of lower selling and promotion activity associated with the
Company's existing product line. We anticipate that sales and marketing
expenses will grow in future quarters from the level experienced in the first
quarter of 2000 as we increase marketing activities and efforts to expand
distribution of our anticipated future products.
General and Administrative Expenses
General and administrative expenses increased 16% in the three months ended
March 31, 2000 to $273,239 from $235,207 in the three months ended March 31,
1999. The increase is primarily due to an increase in our operating lease as
well as personnel expenses. We anticipate that general and administrative
expenses may grow modestly in absolute dollars as we add the infrastructure
necessary to accommodate expanded operations in support of our anticipated
future products.
Other Income (Expense)
Other income is comprised primarily of interest on cash and short-term
investment balances. Interest income (net) for the three months ended March 31,
2000 primarily reflects interest on short-term investment balances from the
completion of the private placement of our common stock in September of 1999, as
compared to interest income (net) for the three months ended March 31, 1999
which was near zero. The net proceeds from the private offering earned interest
through investment in high quality short-term investments. For the quarter ended
March 31, 2000 the Company recognized interest income of $21,746 offset by
interest expense of $1,129 as compared with interest income of $5,053 offset by
interest expense of $4,933 for the same period of the prior year.
Provision for Income Taxes
There was no provision for federal or state income taxes for the three month
period ending March 31, 2000, as the Company incurred a net operating loss. The
Company expects to incur a net operating loss for the year ending December 31,
2000. As a result, the net operating loss carry forwards will increase. At
December 31, 1999, SoloPoint.com had federal and state net operating loss
carryforwards of approximately $9,800,000 and $9,300,000 respectively. The
Company also had federal and state research and development tax credit
carryforwards of approximately $150,000 each. The net operating loss
carryforwards will expire at various dates beginning in 2000 through 2019, if
not utilized. The utilization of the net operating losses and credits may be
subject to a substantial annual limitation due to the ownership change
limitations provided by the Internal Revenue Code of 1986 (the "Code") and
similar state provisions. The annual limitation may result in the expiration of
net operating loss and tax credit carryforwards before utilization.
Liquidity and Capital Resources
As of March 31, 2000, the Company had cash, cash equivalents, and short-term
investments of $1,134,471 and working capital of $1,075,930 as compared to cash,
cash equivalents, and short-term investments of $525,453 and working capital of
$415,907 at March 31, 1999. We used cash of $945,947 in our operating activities
for the quarter ended March 31, 2000. During the quarter ended March 31, 2000
the Company's principal uses of cash were to fund the Company's working capital
requirements and net loss.
The Company expects to incur additional substantial losses at least through the
end of calendar year 2000. The Company will need to seek additional funding
during calendar 2000 in order to complete the Connectivity For Living product
development and enter the Internet broadband services market. There can be no
assurance that the Company will be able to raise such additional funding. In
the absence of receiving additional funding, the Company anticipates that its
existing capital resources and cash generated from operations, if any, will be
adequate to meet the Company's cash requirements through June 30, 2000 at its
anticipated level of operations. Failure to obtain funding would have a material
adverse effect on the Company's business, financial condition and results of
operations and could force management to curtail operations, shelve planned
development activities, lay off personnel, seek an acquisition partner or even
cease operations. As of March 31, 2000 the Company did not have any significant
commitments for capital or other expenditures.
SoloPoint's capital requirements depend on many factors including market
acceptance of its products, the amount of money it invests in research and
development of new and enhanced products, the amount of money it invests in
increased marketing and sales activities, the amount of inventory it carries as
well as other factors. The Company received a report from its independent
auditors on their audit of our financial statements as of December 31, 1999
8
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containing an explanatory paragraph that describes the uncertainty as to the
Company's ability to continue as a going concern due to its lack of sufficient
cash to meet its projected operating expenditures for the next twelve months.
As noted above, the Company will need to seek additional equity or debt
financing in 2000. The sale of additional equity or convertible debt securities
could result in additional dilution to the Company's shareholders. We cannot
assure you that financing will be available in amounts or on terms acceptable to
the Company, if at all.
Future Operating Results
Since its inception in 1993, the Company has incurred significant losses, has
had substantial negative cash flow, and has realized limited revenues. At March
31, 2000, the Company had an accumulated deficit of $17,884,020 and incurred an
operating loss of $653,399 for the three months ended March 31, 2000. The
Company expects to continue to incur substantial operating losses at least
through its fiscal year ending December 31, 2000.
Potential Fluctuations in Quarterly Results
The Company has experienced and expects to continue to experience fluctuations
in operating results. Fluctuations in operating results may result in volatility
in the price of the Company's common stock. Operating results may fluctuate as a
result of many factors, including:
. the volume and timing of orders received or product returns, if any,
during the period;
. the timing of commercial introduction of future products and
enhancements;
. competitive products and the impact of price competition on the
Company's average selling prices;
. product announcements by the Company and its competition;
. the Company's level of research and development and sales and
marketing activities;
Many of these factors are beyond the Company's control. In addition, due to the
short product life cycles that characterize the personal communications
management market, the Company's failure to introduce competitive new and
enhanced products in a timely manner would have a material adverse effect on the
Company's business, financial condition and results of operations.
The Company's operating and other expenses are relatively fixed in the short
term. As a result, variations in timing of revenues, if any, will cause
significant variations in quarterly results of operations. Notwithstanding the
difficulty in forecasting future sales, the Company generally must undertake its
sales and marketing and research and development activities and other
commitments months or years in advance. Accordingly, any shortfall in product
revenues, if any, in a given quarter may materially adversely affect the
Company's business, financial condition and results of operations due to the
inability to adjust expenses during the quarter to match the level of product
revenues, if any, for the quarter. In addition, the Company's sales expectations
are based entirely on its internal estimates of future demand. Due to these and
other factors, the Company believes that quarter to quarter comparisons of its
results of operations are not necessarily meaningful, and should not be relied
upon as indications of future performance.
Risk Factors
Going Concern Assumptions; Future Capital Needs Uncertain; No Assurance of
Future Financing
The Company has incurred cumulative net losses of $17,850,903 as of March 31,
2000 and has never achieved profitability. We expect to incur substantial
losses for the foreseeable future and may never become profitable. We also
expect to continue to incur significant capital expenditures and anticipate that
our expenses will increase substantially in the foreseeable future as we
increase our sales and marketing activities, acquire or develop new technology,
and develop and market our Connectivity For Living potential future product
line, implement additional internal systems and infrastructure, and hire
additional personnel. We also expect to experience negative operating cash flow
for the foreseeable future as we fund our operating losses and capital
expenditures. We will need to generate significant revenues to achieve and
maintain profitability. We cannot be certain that we will achieve profitability
in the future. Our failure to achieve or maintain profitability could negatively
impact the market price of our common stock.
The Company will require additional funding in 2000 in order to continue
operations. In the absence of receiving additional funding, the Company
anticipates that its existing capital resources and cash generated from
operations, if any, will be adequate to meet the Company's cash requirements
until June, 2000 at its anticipated level of
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operations. The Company's future capital requirements will depend upon numerous
factors, including the amount of revenues generated from operations and the
Company's level of operating expenses, none of which can be predicted with any
certainty. The Company intends to seek additional funding during the next three
months and will possibly seek additional funding after that time. There can be
no assurance that any additional financing will be available on acceptable
terms, if at all, when such financing is required. Moreover, if additional
financing is unavailable, the Company could be required to reduce or suspend its
operations, seek an acquisition partner or sell securities on terms that may be
highly dilutive or otherwise disadvantageous to investors.
Change in Product Direction; Emerging Market; Dependence on Market Acceptance of
Products; Lack of Adequate Marketing Resources
To date, the market for personal communications management products has
developed at a significantly slower rate than the Company had originally
anticipated. As a result, the Company is changing its product development
direction to develop products for the Internet broadband services market. If
the Internet broadband services market fails to grow or grows at a slower rate
than the Company currently anticipates, or if the Company fails to achieve
sufficient market penetration, the Company's business, financial condition and
results of operations will be materially adversely affected. Even if the market
for Internet broadband services does grow, there can be no assurance that the
Company's current products or any future Internet broadband services products,
including but not limited to its Connectivity For Living product line, which may
be introduced by the Company will achieve commercial acceptance within such a
market. Marketing newly introduced products such as those of the Company in a
developing market requires extensive financial resources and marketing efforts.
To date, the Company has not had sufficient financial resources to adequately
market its products and there can be no assurance that the Company will be able
to secure sufficient funds to enable the Company to adequately market its
products.
Discontinuation of Product Development in Personal Communications Management
Products; Future Revenue Dependent on New Product Development
The Company will fulfill all existing agreements for shipment and support of
existing personal communications management products; however, it does not
intend to continue to actively market and sell its existing product line.
Future revenue, if any, will be comprised of sales of the remaining inventory of
existing personal communications management products, as well as sales of the
Connectivity For Living product line currently under development. Any factors
adversely affecting the pricing of, demand for or market acceptance of these
products, including competition or technological change, could negatively affect
our results of operations. Factors that may affect the market acceptance of our
products, some of which are beyond our control, include the adoption of Internet
broadband services over competing technologies, the growth and changing
requirements of the market for Internet broadband services, the successful
development of our relationships with Internet service providers and Internet
content providers, the performance, quality, price and total cost of ownership
of our products and services, and the performance, quality, price, total cost of
ownership and availability of competing products and services. If we are not
successful in developing and marketing new and enhanced Internet broadband
services products that keep pace with technology and our customer's needs, our
operating results will suffer. The market for our products is new and emerging,
and is characterized by rapid technological advances, changing customer needs
and evolving industry standards. Accordingly, to realize our expectations
regarding our operating results, we depend on our ability to develop, in a
timely manner, new products that keep pace with developments in technology, meet
evolving customer requirements, and enhance our current product offerings and
deliver those products through appropriate distribution channels. Developing
new products and product enhancements requires significant additional
expenditures in research and development. We may not be successful in developing
and marketing, on a timely and cost-effective basis, either enhancements to our
products or new products that respond to technological advances and satisfy
increasingly sophisticated customer needs. If we fail to introduce new products,
or enhancements to existing products, our operating results will suffer. In
addition, if new industry standards emerge that we do not anticipate or adapt
to, our products could be rendered obsolete and our business could be harmed.
Risks Associated with Strategic Relationships
The Company believes that its future success, if any, will be largely dependent
on its ability to either sell its products to or enter into joint marketing
arrangements with Internet Service Providers (ISPs) and Internet Content
Providers in the United States. A failure by the Company to develop significant
relationships with Internet Service Providers or Internet Content Providers
would have a materially adverse effect on the Company's business and operating
results. Even if the Company is successful in establishing alliances or
relationships with ISPs, Internet Content Providers or other strategic partners,
there can be no assurance that such alliances or relationships will result in an
increase in the Company's distribution channels or product revenues or otherwise
provide any benefit to the Company. In addition, the strategic partners may be
in direct or indirect competition with the Company or among each other. The
presence of potential or actual conflicts of interest could materially adversely
affect the Company's
10
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relationships with potential strategic partners, which in turn could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Assessing future viability of the business; limited ability to forecast revenues
The Company is entering the new emerging market for Internet broadband services
which consequently may make it difficult for you to assess its future viability.
We cannot be certain that our business strategy will be successful. In
addition, because we have not yet begun commercial shipment of our Connectivity
For Living product line currently under development, and are planning on phasing
out the marketing and distribution of our existing personal communications
management product line, we may have limited insight into trends that may emerge
and affect our business. If we fail to respond to such trends and execute our
business strategy, our operating results will suffer. Because of our limited
operating history in the Internet Broadband Services market and because the
market for Internet Broadband Services is new and rapidly evolving, we may not
be able to forecast our quarterly revenues. A significant percentage of our
expenses, particularly salaries and rent, do not vary with our revenues. If we
experience a shortfall in revenues in relation to our expenses, we may be unable
to reduce our expenses quickly enough to avoid lower than anticipated quarterly
operating results. In addition, our expenses have increased, and will continue
to increase, with the anticipated growth in our business. We do not know whether
our revenues will grow rapidly enough to absorb these costs. As a result, our
quarterly operating results could fluctuate, and such fluctuation could cause
the market price of our common stock to decline. We do not believe that period-
to-period comparisons of our revenues and operating results are necessarily
meaningful. You should not rely on the results of any one quarter as an
indication of future performance.
Dependence on Limited Number of Customers
The Company expects that sales to relatively few customers will continue to
account for a significant percentage of the Company's revenues at least through
calendar year 2000. Substantially all of the Company's sales are made on a
purchase order basis, and none of the Company's customers has entered into an
agreement requiring them to purchase the Company's products. The loss of, or any
reduction in orders or returns of product from a current customer could have a
material adverse effect on the Company's business, financial condition and
results of operations in the near term.
The Company's ability to increase its sales will depend upon its ability to
develop and bring to market its Connectivity for Living potential future
products. The Company intends to continue marketing its current products as
long as there is existing demand, but does not intend to dedicate substantial
resources to the expansion of sales to existing or new customers for current
products. In the event that the Company is unsuccessful in developing and
marketing its Connectivity for Living product line, the Company's business,
financial condition and results of operations would be materially adversely
affected.
Forward-looking Statements
This Form 10-QSB contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Such forward-looking statements may be deemed to include
the Company's plans to enter the Internet broadband services market, establish
strategic alliances and business relationships, implement a multi-channel
distribution strategy, expend resources to create end-user demand and brand name
recognition and file additional patent applications. Such forward-looking
statements may also be deemed to include the Company's expectations concerning
factors affecting the market for its current products and any future personal
communications management products it may develop, including growth in the
personal communications management product marketplace, the dependence of mobile
individuals on the ability to manage business communications effectively in a
mobile environment and the shortcomings of commercially available personal
communications management products. Actual results could differ from those
projected in any forward-looking statements for the reasons detailed in the
other sections of this Form 10-QSB. The forward-looking statements are made as
of the date of this Form 10-QSB and the Company assumes no obligation to update
the forward-looking statements, or to update the reasons why actual results
could differ from those projected in the forward-looking statements.
Year 2000 Compliance
The Company experienced no disruptions in mission critical information
technology and non-information technology systems and thus believes those
systems successfully responded to the Year 2000 date change. The Company is not
aware of any material problems resulting from the Year 2000 issues, either with
its products, its internal systems, or the products and services of third
parties upon who we are dependent. The Company intends to
11
<PAGE>
continue monitoring its mission critical computer applications and those of its
suppliers and vendors throughout the year 2000 to ensure that any Year 2000
matters that may arise are addressed promptly.
12
<PAGE>
PART II. OTHER INFORMATION
- ---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) EXHIBITS
27 - Financial Data Schedule
b) Reports on Form 8-K
- None
13
<PAGE>
SIGNATURE
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.
Date: May 15, 2000 SoloPoint.com, Inc.
by: /s/Arthur G. Chang by: /s/Thomas J. Muise
- ---------------------- ----------------------
Arthur G. Chang Thomas J. Muise
President and CEO Chief Financial Officer
(Duly Authorized Officer) (Principal Accounting Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THE FISCAL QUARTER ENDED MARCH 31, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENT.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,134,471
<SECURITIES> 0
<RECEIVABLES> 361,885
<ALLOWANCES> 139,381
<INVENTORY> 55,084
<CURRENT-ASSETS> 1,464,901
<PP&E> 584,309
<DEPRECIATION> 549,122
<TOTAL-ASSETS> 1,538,084
<CURRENT-LIABILITIES> 388,971
<BONDS> 0
0
0
<COMMON> 19,033,133
<OTHER-SE> (17,884,020)
<TOTAL-LIABILITY-AND-EQUITY> 1,538,084
<SALES> 189,762
<TOTAL-REVENUES> 189,762
<CGS> 167,748
<TOTAL-COSTS> 665,016
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,129
<INCOME-PRETAX> (632,782)
<INCOME-TAX> 0
<INCOME-CONTINUING> (632,782)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (632,782)
<EPS-BASIC> (.13)
<EPS-DILUTED> (.13)
</TABLE>
