<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment No. 1 to
FORM 10-QSB/A
(Mark One)
(X) QUARTERLY REPORT PURSUANT SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
( ) TRANSITION REPORT PURSUANT SECTION 13 OF 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-23365
SONICPORT.COM, INC.
(Exact name of small business as specified in its charter)
Nevada 84-1290152
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1641 20th Street, Santa Monica, CA 90404
(Address of principal executive offices)
(310) 828-1999
(Issuer's telephone number)
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 September 30, 2000: 26,789,426 shares of common stock, $0.0001 par
value.
Transitional Small Business Disclosure Format (check one) : Yes ( ) No (X)
<PAGE>
PART I
Page
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet 1 - 2
Consolidated Statements of Operations 3 - 4
Consolidated Statements of Cash Flows 5 - 7
Notes to Consolidated Financial Statements 8 - 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 12 - 13
PART II OTHER INFORMATION 14
(A) EXHIBITS - None
27 - Financial Data Schedule
(B) Reports on Form 8-K
<PAGE>
SONICPORT.COM, INC.
AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED
SEPTEMBER 30, 2000 AND 1999 (UNAUDITED)
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
Page
FINANCIAL STATEMENTS
Consolidated Balance Sheet 1 - 2
Consolidated Statements of Operations 3 - 4
Consolidated Statements of Cash Flows 5 - 7
Notes to Consolidated Financial Statements 8 - 11
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
ASSETS
CURRENT ASSETS
Accounts receivable $ 163,754
Due from related parties 56,521
Prepaid media 975,000
Prepaid expenses and other current assets 133,336
-----------
Total current assets 1,328,611
PROPERTY AND EQUIPMENT, net 1,332,670
OTHER ASSETS 48,064
-----------
TOTAL ASSETS $2,709,345
===========
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Book overdraft $ 37,254
Accounts payable 837,444
Accrued expenses 54,930
Interest payable 16,666
-------------
Total current liabilities 946,294
CONVERTIBLE PROMISSORY NOTES 250,000
-------------
Total liabilities 1,196,294
-------------
SHAREHOLDERS' EQUITY
Convertible preferred stock, $0.0001 par value
Series A
800,000 shares authorized
640,000 shares issued and outstanding
($2.50 liquidation preference; dividends
of $115,000 in arrears) 64
Series B
700,000 shares authorized
509,333 shares issued and outstanding
($0.75 liquidation preference; dividends
of $5,000 in arrears) 51
Common stock, $0.0001 par value
90,000,000 shares authorized
26,789,426 shares issued and outstanding 2,678
Common stock committed
424,875 shares 1,211,438
Additional paid-in capital 14,805,393
Deficit accumulated during the development stage (14,506,573)
-------------
Total shareholders' equity 1,513,051
-------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,709,345
=============
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
<TABLE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO SEPTEMBER 30, 2000 (UNAUDITED)
========================================================================================================
<CAPTION>
For the
For the For the Period from
Three Months Ended Six Months Ended July 20, 1998
September 30, September 30, (Inception) to
----------------------------- ----------------------------- September 30,
2000 1999 2000 1999 2000
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
REVENUES $ 306,751 $ 1,220 $ 534,825 $ 1,766 $ 534,825
COST OF REVENUES 655,367 - 1,887,383 - 1,887,383
------------- ------------- ------------- ------------- -------------
GROSS PROFIT (LOSS) (348,616) 1,220 (1,352,558) 1,766 (1,352,558)
------------- ------------- ------------- ------------- -------------
OPERATING EXPENSES
General and
administrative 719,635 1,347,094 2,288,824 2,156,999 9,247,012
Consulting - related
parties - - - 10,000 377,619
------------- ------------- ------------- ------------- -------------
Total operating
expenses 719,635 1,347,094 2,288,824 2,166,999 9,624,631
------------- ------------- ------------- ------------- -------------
LOSS FROM
OPERATIONS (1,068,251) (1,345,874) (3,641,382) (2,165,233) (10,977,189)
------------- ------------- ------------- ------------- -------------
OTHER INCOME
(EXPENSE)
Interest expense (6,752) (1,368,692) (15,630) (1,639,372) (3,592,463)
Interest income 3,873 1,117 10,664 3,631 29,066
Loss on disposition
of assets (7,857) - (7,857) - (7,857)
------------- ------------- ------------- ------------- -------------
Total other income
(expense) (10,736) (1,367,575) (12,823) (1,635,741) (3,571,254)
------------- ------------- ------------- ------------- -------------
LOSS BEFORE BENEFIT
FROM INCOME TAXES
AND EXTRAORDINARY
ITEM (1,078,987) (2,713,449) (3,654,205) (3,800,974) (14,548,443)
BENEFIT FROM INCOME
TAXES (203) - (203) - (203)
------------- ------------- ------------- ------------- -------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE>
<TABLE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO SEPTEMBER 30, 2000 (UNAUDITED)
=========================================================================================================
<CAPTION>
For the
For the For the Period from
Three Months Ended Six Months Ended July 20, 1998
September 30, September 30, (Inception) to
----------------------------- ----------------------------- September 30,
2000 1999 2000 1999 2000
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
LOSS BEFORE
EXTRAORDINARY ITEM $ (1,078,784) $ (2,713,449) $ (3,654,002) $ (3,800,974) $(14,548,240)
EXTRAORDINARY ITEM
Income from
forgiveness of
interest payable - - 41,667 - 41,667
------------- ------------- ------------- ------------- -------------
NET LOSS $ (1,078,784) $ (2,713,449) $ (3,612,335) $ (3,800,974) $(14,506,573)
============= ============= ============= ============= =============
BASIC AND DILUTED
LOSS PER SHARE
Loss before
extraordinary item $ (0.04) $ (0.12) $ (0.14) $ (0.17) $ (0.63)
Extraordinary item - - - - -
------------- ------------- ------------- ------------- -------------
Total basic and diluted
loss per share $ (0.04) $ (0.12) $ (0.14) $ (0.17) $ (0.63)
============= ============= ============= ============= =============
WEIGHTED-AVERAGE
COMMON SHARES
OUTSTANDING 28,852,129 22,814,571 26,742,548 22,170,661 22,943,710
============= ============= ============= ============= =============
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
<TABLE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO SEPTEMBER 30, 2000 (UNAUDITED)
====================================================================================================
<CAPTION>
For the
For the Period from
Six Months Ended July 20, 1998
September 30, (Inception) to
----------------------------- September 30,
2000 1999 2000
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,612,335) $ (3,800,974) $(14,506,573)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization of property and
equipment 32,266 73,293 75,438
Amortization 61,500 309,600 286,190
Loss on disposal of property and equipment 7,875 - 11,446
Interest charges on convertible promissory
notes - 1,258,220 2,761,377
Issuance of stock for services rendered - 140,000 534,252
Issuance of options for services rendered 16,750 458,563 1,111,845
Issuance of options as financing costs - 73,778 453,750
Issuance of options as compensation expense - - 17,500
Issuance of warrants as financing costs - - 73,778
Issuance of warrants for services rendered - - 27,450
Cashless exercise of stock options - - 75,754
(Increase) decrease in
Accounts receivable (163,754) - (163,754)
Deferred financing costs - (120,000) 266,685
Prepaid services - - (75,625)
Prepaid expenses and other current assets (87,969) (59,250) (133,336)
Other assets (3,135) - (50,314)
Increase (decrease) in
Accounts payable 368,076 26,687 795,469
Accrued expenses 6,578 3,578 115,930
Accrued interest (30,041) - 63,636
------------- ------------- -------------
Net cash used in operating activities (3,404,189) (1,636,505) (8,259,102)
------------- ------------- -------------
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
<TABLE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO SEPTEMBER 30, 2000 (UNAUDITED)
===============================================================================================
<CAPTION>
For the
For the Period from
Six Months Ended July 20, 1998
September 30, (Inception) to
--------------------------- September 30,
2000 1999 2000
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment $ (21,743) $ (167,654) $ (294,554)
Repayment of note receivable - 45,000 -
Cash received from related parties - 6,894 -
Repayments to related parties (59,562) (40,144) (49,627)
------------ ------------ ------------
Net cash used in investing activities (81,305) (155,904) (344,181)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Book overdraft 37,254 - 37,254
Proceeds from notes payable - - 370,000
Repayment of notes payable (355,000) (10,000) (370,000)
Proceeds from convertible promissory notes - 1,225,000 1,985,000
Proceeds from common stock 716,850 - 716,850
Proceeds from committed common stock - - 3,148,900
Stock issuance costs (104,195) - (482,771)
Proceeds from preferred stock 2,382,000 473,500 3,598,050
Payments on preferred stock (400,000) - (400,000)
------------ ------------ ------------
Net cash provided by financing activities 2,276,909 1,688,500 8,603,283
------------ ------------ ------------
Net decrease in cash and cash equivalents (1,208,585) (103,909) -
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,208,585 127,654 -
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ - $ 23,745 $ -
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
INTEREST PAID $ 15,630 $ 15,583 $ 116,760
============ ============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
6
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) AND
FOR THE PERIOD FROM JULY 20, 1998 (INCEPTION) TO SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
During the six months ended September 30, 2000, note holders converted $500,000
of convertible promissory notes and related finance charges totaling $60,000
into 224,000 shares of common stock.
During the six months ended September 30, 2000, the Company exchanged certain
shares of committed common stock for 2,463,095 shares of common stock valued at
$4,946,112.
During the six months ended September 30, 1999, the Company issued to the note
holders an additional 11,601 shares of common stock valued at $5,000.
During the six months ended September 30, 1999, the Company issued 340,000
shares of common stock valued at $330,000 to third parties for other services
rendered.
During the six months ended September 30, 1999, convertible promissory notes
payable totaling $150,000 were exchanged for 46,940 shares of the Company's
common stock.
During the six months ended September 30, 1999, the Company purchased 96 Points
of Presence in exchange for 300,000 restricted shares of the Company's common
stock valued at $1,125,000.
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
NOTE 1 - ORGANIZATION AND BUSINESS
Sonicport.com, Inc., based in Santa Monica, California, is an Internet
marketing and technology infrastructure company that specializes in
supporting cost-effective business-to-business and business-to-consumer
revenue-based marketing initiatives. Services of Sonicport.com, Inc.
include application service provider, software development, web
development and design, broadband hosting services, e-commerce
services, strategic marketing planning, creative development,
television production, media placement, and real-time ad-performance
auditing.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of
Sonicport.com, Inc. and its wholly owned subsidiary, Sonicport.com,
Inc. (the California corporation), (collectively, the "Company"). All
intercompany accounts and transactions have been eliminated.
Basis of Presentation
---------------------
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles for interim financial
information and with Regulation S-B. Accordingly, they 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 normal, recurring adjustments considered necessary
for a fair presentation have been included. The financial statements
should be read in conjunction with the audited financial statements and
notes thereto included in the Company's Annual Report on Form 10-KSB,
as amended, for the year ended March 31, 2000. The results of
operations for the six months ended September 30, 2000 are not
necessarily indicative of the results that may be expected for the year
ended March 31, 2001.
Going Concern
-------------
The Company has received a report from its independent auditors that
includes an explanatory paragraph describing the Company's uncertainty
to continue as a going concern. These consolidated financial statements
contemplate the ability to continue as such and do not include any
adjustments that might result from this uncertainty.
Revenue Recognition
-------------------
Revenue for internet membership fees are recognized at the completion
of each month. The Company provides an allowance for refunds based on
expected membership cancellations, credits, and charge-backs.
8
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Advertising Expense
-------------------
Advertising costs are charged to expense as incurred. For the six
months ended September 30, 2000, the Company recorded advertising
expense of $882,071.
NOTE 3 - CASH AND CASH EQUIVALENTS
The Company maintains cash balances at financial institutions located
in California. Accounts at each institution are insured by the Federal
Deposit Insurance Corporation up to $100,000. The Company did not have
any uninsured cash at September 30, 2000. The Company has not
experienced any losses in such accounts and believes it is not exposed
to any significant credit risk on cash and cash equivalents.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment at September 30, 2000 consisted of the
following:
Furniture and fixtures $ 75,654
Office equipment 101,934
Computer equipment 1,125,000
Leasehold improvements 99,026
-----------
1,401,614
Less accumulated depreciation and amortization 68,944
-----------
TOTAL $1,332,670
===========
Depreciation and amortization expense for the six months ended
September 30, 2000 and 1999 was $32,266 and $73,293, respectively. At
September 30, 2000, the computer equipment had not been put into
service, and therefore, no depreciation has been recorded.
NOTE 5 - SHAREHOLDERS' EQUITY
Stock Options
-------------
During the six months ended September 30, 2000, the Company issued
options to purchase 967,000 shares of the Company's common stock
pursuant to the 1999 Stock Option Plan.
9
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
NOTE 5 - SHAREHOLDERS' EQUITY (CONTINUED)
Convertible Preferred Stock - Series B
--------------------------------------
In August 2000, the Company issued 509,333 units in a private placement
for gross proceeds of $382,000. Each unit consisted of one share of its
voting Series B Convertible Preferred Stock (the "Series B") and a
warrant to purchase one share of the Company's common stock. There are
700,000 shares of Series B authorized with a par value of $0.0001. The
Series B has a liquidation preference of $0.75 per share and carries a
10% cumulative dividend payable on each March 1 and September 1. The
Company has the right to redeem the Series B at any time after issuance
at a redemption price of $0.83 per share, plus any accrued but unpaid
dividends. The Series B is convertible upon issuance into common stock
at $0.75 per share. The warrant entitles the holder to purchase one
share of the Company's common stock at $1.25 per share, which
represents 115% of the market value of the Company's stock at the
closing date.
Common Stock
------------
In August 2000, the Company converted 243,750 shares of common stock
committed valued at $975,000 into 694,691 shares of common stock valued
at $975,000. Per the original agreement, the Company was required to
issue 243,750 shares of common stock. As the stock price significantly
decreased, the Company was required to issue 450,941 additional shares
of common stock for the same amount of prepaid media services.
NOTE 6 - SUBSEQUENT EVENTS
In October 2000, the Company issued 133,666 units in a private
placement for gross proceeds of $100,250. Each unit consisted of one
share of the Series B and a warrant to purchase one share of the
Company's common stock. There are 700,000 shares of Series B authorized
with a par value of $0.0001. The Series B has a liquidation preference
of $0.75 per share and carries a 10% cumulative dividend payable on
each March 1 and September 1. The Company has the right to redeem the
Series B at any time after issuance at a redemption price of $0.83 per
share, plus any accrued but unpaid dividends. The Series B is
convertible upon issuance into common stock at $0.75 per share. The
warrant entitles the holder to purchase one share of the Company's
common stock at $1.25 per share, which represents 115% of the market
value of the Company's stock at the closing date.
10
<PAGE>
SONICPORT.COM, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000 (UNAUDITED)
================================================================================
NOTE 6 - SUBSEQUENT EVENTS (CONTINUED)
In November 2000, the Company issued 10,989 units in a private
placement for gross proceeds of $54,945. Each unit consisted of 10
shares of its common stock and a warrant to purchase one share of the
Company's common stock. There are 90,000,000 shares of common stock
authorized with a par value of $0.0001. The price is $0.50 per share.
The warrant entitles the holder to purchase one share of the Company's
common stock at $1.25 per share, which represents 166% of the market
value of the Company's stock at the closing date. There are a total of
2,000,000 units that will be sold, for a total gross proceeds of
$1,000,000.
11
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS: ALL FORWARD-LOOKING
STATEMENTS CONTAINED HEREIN ARE DEEMED BY THE COMPANY TO BE COVERED BY AND TO
QUALIFY FOR THE SAFE HARBOR PROTECTION PROVIDED BY THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. THE SHAREHOLDERS AND PROSPECTIVE SHAREHOLDERS
SHOULD UNDERSTAND THAT SEVERAL FACTORS GOVERN WHETHER ANY FORWARD - LOOKING
STATEMENT CONTAINED HEREIN WILL BE OR CAN BE ACHIEVED. ANY ONE OF THOSE FACTORS
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED HEREIN.
THESE FORWARD - LOOKING STATEMENTS INCLUDE PLANS AND OBJECTIVES OF MANAGEMENT
FOR FUTURE OPERATIONS, INCLUDING PLANS AND OBJECTIVES RELATING TO THE PRODUCTS
AND THE FUTURE ECONOMIC PERFORMANCE OF THE COMPANY. ASSUMPTIONS RELATING TO THE
FOREGOING INVOLVE JUDGMENTS WITH RESPECT TO, AMONG OTHER THINGS, FUTURE
ECONOMIC, COMPETITIVE AND MARKET CONDITIONS, FUTURE BUSINESS DECISIONS, AND THE
TIME AND MONEY REQUIRED TO SUCCESSFULLY COMPLETE DEVELOPMENT PROJECTS, ALL OF
WHICH ARE DIFFICULT OR IMPOSSIBLE TO PREDICT ACCURATELY AND MANY OF WHICH ARE
BEYOND THE CONTROL OF THE COMPANY. ALTHOUGH THE COMPANY BELIEVES THAT THE
ASSUMPTIONS UNDERLYING THE FORWARD - LOOKING STATEMENTS CONTAINED HEREIN ARE
REASONABLE, ANY OF THOSE ASSUMPTIONS COULD PROVE INACCURATE AND, THEREFORE,
THERE CAN BE NO ASSURANCE THAT THE RESULTS CONTEMPLATED IN ANY OF THE FORWARD -
LOOKING STATEMENTS CONTAINED HEREIN WILL BE REALIZED. BASED ON ACTUAL EXPERIENCE
AND BUSINESS DEVELOPMENT, THE COMPANY MAY ALTER ITS MARKETING, CAPITAL
EXPENDITURE PLANS OR OTHER BUDGETS, WHICH MAY IN TURN AFFECT THE COMPANY'S
RESULTS OF OPERATIONS. IN LIGHT OF THE SIGNIFICANT UNCERTAINTIES INHERENT IN THE
FORWARD LOOKING STATEMENTS INCLUDED THEREIN, THE INCLUSION OF ANY SUCH STATEMENT
SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE COMPANY OR ANY OTHER PERSON
THAT THE OBJECTIVES OR PLANS OF THE COMPANY WILL BE ACHIEVED.
12
<PAGE>
Overview of the Company's Business
Sonicport.com, based in Santa Monica, California, is an internet marketing and
technology infrastructure company that specializes in supporting cost-effective
business-to-business and business-to-consumer revenue-based marketing
initiatives. Through its various business units, Sonicport.com has pioneered a
new cost effective and measurable methodology to assist companies to build
revenues by acquiring and retaining paying customers. Services of Sonicport.com
include application service provider (ASP), software development, web
development and design, strategic alliances, broadband hosting services,
e-commerce services, transaction processing, technical support, customer
service, strategic marketing planning, creative development, television
production, media placement, and real-time ad-performance auditing.
Results of Operations
The Company recognized revenues of $306,752 for the three months ended September
30, 2000 as compared with $1,220 for the three months ended September 30, 1999.
Revenues for the six months ended September 30, 2000 were $534,826 as compared
with $1,766 for the six months ended September 30, 1999. In April, 2000 the
Company began operations of its Internet service provider which is why there
were no revenues for the corresponding period in the prior year.
The Company recognized cost of sales of $ 655,367 for the three months ended
September 30, 2000 as compared with $0 for the three months ended September 30,
1999. Cost of sales for the six months ended September 30, 2000 were $ 1,887,383
as compared with $ 0 for the six months ended September 30, 1999. In April, 2000
the Company began operations of its Internet service provider which is why there
were no cost of sales for the corresponding period in the prior year.
General and administrative expenses for the three months ended September 30,
2000 were $992,495 as compared with $1,347,094 for the three months ended
September 30, 1999. General and administrative expenses for the six months ended
September 30, 2000 were $2,561,684 as compared with $2,156,999 for the six
months ended September 30, 1999. The increase in general and administrative
expenses was due to the start up of operations of the Company's internet service
provider in April 2000. Prior to this, the Company did not have any revenue
generating operations.
Liquidity and Capital Resources
The Company is raising funds for working capital and further expansion of the
company's operations. During the quarter, the Company issued 509,333 units in a
private placement for gross proceeds of $382,000 and in October issued another
133,666 units for gross proceeds of $100,250. There are a total of 700,000 units
that will be sold, for total gross proceeds of $525,000.Each unit consisted of
one share of Series B preferred stock and a warrant to purchase one share of the
Company's common stock. The Company has the right to redeem the Series B at any
time after issuance at a redemption price of $0.83 per share, plus any accrued
but unpaid dividends. The Series B is convertible upon issuance into common
stock at $0.75 per share. The warrant entitles the holder to purchase one share
of the Company's common stock at $1.25 per share, which represents 115% of the
market value of the Company's stock at the closing date.
The Company has also issued 10,989 units in a second private placement for gross
proceeds of $54,945. There are a total of 2,000,000 units that will be sold, for
total gross proceeds of $1,000,000. Each unit consists of 10 shares of the
Company's common stock and a warrant to purchase one share of the Company's
common stock. The price is $0.50 per share. The warrant entitles the holder to
purchase one share of the Company's common stock at $1.25 per share, which
represents 166% of the market value of the Company's stock at the closing date.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
No legal proceedings of a material nature to which the Company is a party were
pending during the reporting period.
ITEM 2. Changes in Securities. None.
ITEM 3. Defaults upon Senior Securities. None.
ITEM 4. Submission of Matter to a Vote of Security Holders. None
ITEM 5. Other Information. None.
ITEM 6. Exhibits and Reports on Form 8-K. None
14
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on November 21, 2000.
SONICPORT.COM, INC.
By: /s/ Richard Shapiro
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Chief Financial Officer
