UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 10-QSB/A
Amendment No 1
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
or
|_| TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ to _______
Commission File No. 0-22947
ADATOM.COM, INC.
----------------------------------
(Exact name of Small Business registrant in its charter)
Delaware 43-1771999
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
920 Hillview Court, Suite 190, Milpitas, CA 95035
- ------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number,: (408) 935-7979
Check whether the registrant (1) 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
ninety (90) days.
YES [X] NO [_]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of November 13, 2000 there were
18,413,877 shares outstanding of the Company's common stock.
1
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheet as of September 30, 2000.......................... 3
Statement of Operations for the quarter and nine months ended
September 30, 2000 and 1999 .................................... 4
Statement of Cash Flows for the nine months ended
September 30, 2000 and 1999 ................................... 5
Notes to the Financial Statements .............................. 6
Item 2. Management's Discussion and Analysis or Plan of Operations....7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................35
Item 2. Changes in Securities and Use of Proceeds ...................35
Item 6. Exhibits and Reports on Form 8-K .......................... 36
SIGNATURES ......................................................... 37
EXHIBITS............................................................E-1
2
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PART I. FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited)
<TABLE>
<CAPTION>
ADATOM.COM, INC.
BALANCE SHEET
(unaudited)
September 30, 2000
---------------------------
Current assets:
<S> <C>
Cash $ 813,000
Accounts receivable 3,000
Notes from receivable franchisee 8,000
Inventory 0
Prepaid expenses and other 1,000
---------------------------
Total current assets 825,000
Other assets:
Fixed assets net 680,000
Investment joint venture 500,000
Deposits 32,000
Organization expense, net 32,000
Web development costs, net 0
---------------------------
Total other assets 1,244,000
---------------------------
Total Assets $ 2,069,000
===========================
Current Liabilities:
Accounts payable $ 267,000
Accrued payroll liability 384,000
Current lease contracts payable and notes 63,000
Customer deposits 55,000
Accrued expenses 2,053,000
Note payable to officers 548,000
Restructuring Reserve 984,000
---------------------------
Total current liabilities 4,354,000
Long-term liabilities 0
Total liabilities 4,354,000
Equity
Preferred stock, $.01 par value; authorized 5,000,000 shares,
issued and outstanding - 1,200 shares 1,200,000
Common stock $.01 par value; 50,000,000 authorized; 184,000
18,428,877 issued; 18,413,877 outstanding
Paid in capital 20,323,000
Accumulated Deficit (23,960,000)
Common stock notes receivable (17,000)
Treasury Stock - at cost (15,000 shares) (15,000)
---------------------------
Stockholder Equity (2,285,000)
---------------------------
Total Liability and Stockholder Equity $ 2,069,000
===========================
</TABLE>
The accompanying notes are an integral part of these financial statements
3
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<TABLE>
<CAPTION>
ADATOM.COM, INC.
STATEMENT OF OPERATIONS
(unaudited)
Three Months Thee Months Nine Months Nine Months
Ended September Ended September Ended Ended
30, 2000 30, 1999 September 30, September 30,
2000 1999
------------------------------------------------------------------
Operation expenses:
<S> <C> <C> <C> <C>
Selling, general and administrative $683,000 $257,000 $1,752,000 $446,000
------------------------------------------------------------------
Loss from operations (683,000) (257,000) (1,752,000) (446,000)
Other income (expense)
Miscellaneous income (expense) 2,000 1,000 4,000 40,000
Interest expense, net 0 (1,000) 7,000 (33,000)
------------------------------------------------------------------
2,000 0 11,000 7,000
Loss before discontinued operations (681,000) (257,000) (1,741,000) (439,000)
Discontinued operations
Loss from discontinued operations 1,799,000 769,000 4,943,000 1,464,000
Loss on abandonment of discontinued operations 1,727,000 0 1,727,000 0
------------------------------------------------------------------
Total loss on discontinued operations 3,526,000 769,000 6,670,000 1,464,000
Net Loss ($4,207,000) ($1,026,000) ($8,411,000) ($1,903,000)
==================================================================
Basic and diluted loss per share
Loss per share from continuing operations ($0.09) ($0.05) ($0.16) ($0.08)
Loss per share from discontinued operations ($0.21) ($0.15) ($0.42) ($0.29)
Net Loss ($0.30) ($0.20) ($0.58) ($0.37)
Weighted average number of
common shares outstanding 17,007,829 5,174,582 15,981,167 5,174,582
</TABLE>
The accompanying notes are an integral part of these financial statements
4
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<TABLE>
<CAPTION>
ADATOM.COM, INC.
STATEMENT OF CASH FLOWS
(unaudited)
Nine Months Ended Nine Months
September 30, 2000 Ended
September 30,
1999
------------------------------------------
Cash flows from operating activities:
<S> <C> <C>
Net loss $ (8,411,000) $ (1,903,000)
Adjustments To reconcile net (loss) to net
Cash provided (used) by operating activities:
Depreciation and amortization 774,000 24,000
Decrease (increase) in operating assets
Accounts receivable 74,000 (55,000)
Inventory 240,000 (30,000)
Prepaid expenses and other 165,000 (40,000)
Increase (decrease) in operating liabilities
Accounts payable 626,000 416,000
Accrued Expenses 384,000 (27,000)
Customer deposits (146,000) 36,000
------------------ ----------------
Net cash used by operating activities (6,294,000) (1,579,000)
Cash flows from investing activities:
Investment Joint Venture (CPTC) (500,000) 0
Payments received on franchisee notes receivable 1,000 2,000
Acquisition of fixed assets (340,000) (85,000)
------------------ ----------------
Net cash provided (used by investing activities) (839,000) (83,000)
Cash flows from financing activities:
Proceeds from sales and issuance of stock 7,296,000 0
Proceeds from notes and contracts payable 0 1,290,000
Proceeds from shareholder 0 554,000
Net borrowings on line of credit 0 (51,000)
Net borrowings from officers / stockholders 541,000 (6,000)
------------------ ----------------
Net cash provided by financing activities 7,837,000 1,787,000
Net increase (decrease) in cash 704,000 125,000
Cash and restricted cash, beginning of period 109,000 91,000
------------------ ----------------
Cash and restricted cash, end of period $ 813,000 $ 216,000
================== ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during year for:
Interest 0 48,000
</TABLE>
The accompanying notes are an integral part of these financial statements
5
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ADATOM.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2000
(Unaudited)
ACCOUNTING POLICIES
Unaudited Interim Financial Information
The accompanying unaudited condensed financial statements have been
prepared in conformity with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and the
applicable rules of the Securities and Exchange Commission. Accordingly, the
financial statements do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the nine-month periods ended September 30, 2000
September 30, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2000. For further information, refer
to the financial statements and footnotes thereto included in the Company's
annual report on Form 10-KSB for the year ended December 31, 1999.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Legal Proceedings
From time to time Adatom.com, Inc. (the Company) is subject to legal
proceedings and claims in the ordinary course of business, including claims
alleging infringement of trademarks, copyrights and other intellectual property
rights. The Company currently is not aware of any such legal proceedings or
claims that it believes will have individually or in the aggregate a material
adverse effect on its business, prospects, financial condition or operating
results. Please see Part II Item 1.
6
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Net Loss Per Share
Net loss per share basic and diluted is calculated on the basis of the
loss applicable to common stockholders (sum of the net loss and preferred stock
dividends) divided by the weighted average number of common shares outstanding
during the period. Diluted net loss per share excludes the impact of stock
options and warrants, as the effect of their inclusion is antidilutive as of the
periods reported on.
Abandonment of B2C Business and Restructuring Costs
Adatom.com, Inc. has decided to restructure the Company to focus
exclusively on its international operations by attempting to leverage its China
partnerships. This restructuring emphasizes the development of the Company's
relatively new China business, while concurrently reducing expenditures related
to the B2C internet superstore (www.adatom.com) and the Company's B2B E-commerce
Solution Program (AESP). The superstore and AESP, which to date have been the
predominant revenue sources but have not been profitable, will be refocused
primarily to liquidate existing inventory, and thereafter will be available for
licensing by Adatom's international partners and others. The Company must
generate sufficient revenues from its China business to cover expenses even at
its reduced level. No assurance can be given that the change in the Company's
operations as described herein will generate sufficient revenues to make the
Company profitable.
The estimated cost of closing down the operation and the write off
assets associated with the discontinued operation have been accrued and
reflected as loss on abandonment of discontinued operations.
7
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Adatom.com, Inc. has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ADATOM.COM, INC.
Date: November 22, 2000
/s/ Richard S. Barton
-------------------------
By: Richard S. Barton
President and Chief Executive Officer
