SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
March 31, 2000
Commission file number 333-51683
800america.com, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 87-0567884
- ------ ----------
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
1929 21st Avenue, Nashville, TN 37212
- ------------------------------- -----
(Address of principal executive offices) (Zip Code)
(800) 999-5048
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has be
subject to such filing requirements for the past 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.
There were 12,250,000 shares of common stock outstanding on May 5, 2000.
Transitional Small Business Disclosure Format
(Check one):
Yes ___ No X
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<TABLE>
<CAPTION>
Item 1. Financial Statements
800America. com, Inc.
Balance Sheet
March 31
Assets 2000 1999
------ ---- ----
<S> <C> <C>
Current Assets
Cash and Cash Equivalents $ 461,753 $ 1,943
Accounts Receivable 1,106,370 450
Allowance for Doubtful Account (139,000)
----------- -----------
Total Current Assets 1,429,123 2,393
----------- -----------
Property and Equipment
Equipment 516,865 16,050
Software 356,249
Auto 20,738
Subscriber Base 37,000
Original Web Site 10,000
----------- -----------
940,852 16,050
Accumulated Depreciation (141,128)
----------- -----------
Net Property and Equipment 799,724 16,050
Total Assets 2,228,847 18,443
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current Liabilities
Accounts Payable - Trade 21,639 25,268
Rebates Payable 431,771
Payroll Payable 17,409
Income Tax Payables 302,000
Other Notes Payable 7,500
Indebtedness to Related Party 2,248
----------- -----------
Total Current Liabilities 772,819 35,016
----------- -----------
Stockholders' Equity
Preferred Stock $0.001 Par Value
5,000,000 Shares Authorized 0 Issued
Common Stock $0.001 Par Value
700,000 Shares Issued and Outstanding 780
50,000,000 Shares Authorized
12,250,000 Shares Issued and Outstanding 12,250
Additional Paid in Capital 1,202,312 205,782
Retained Earnings 241,466 (223,135)
----------- -----------
Total Stockholders' Equity 1,456,028 (16,573)
----------- -----------
Total Liabilities and Stockholders' Equity (Deficit) $ 2,228,847 $ 18,443
=========== ===========
The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
</TABLE>
<PAGE>
800America. com, Inc.
Income statement
For the Three Months Ended March 31
2000 1999
---- ----
Revenue $ 2,390,824 $ 3,847
------------ ------------
Cost and Expenses
General, Selling and Administrative 160,031 19,527
Rebates to Customers 1,303,969
Advertising 335,688
Depreciation and Amortization 53,109 2,044
Bad Debts 73,000 2,500
Salaries 10,500
Consulting
------------ ------------
Total Operating Expense 1,925,797 24,071
------------ ------------
Operating Income (Loss) 465,027 (20,224)
------------ ------------
Other Income (Expenses)
Interest Income 2,155 2,500
Interest Expenses (713)
------------ ------------
Total Other Income (Expense) 2,155 1,787
------------ ------------
Net Income (Loss) Before Income Taxes 467,182 (18,437)
------------ ------------
Income Tax Expense 188,000 0
------------ ------------
Net Income (Loss) $ 279,182 $ (18,437)
------------ ------------
Basic Earnings Per Share Common Stock $ 0.02 $ (0.02)
Basic Weighted Average Common
Shares Outstanding 12,250,000 760,000
Diluted Earnings Per Share Common Stock $ 0.02
Diluted Weighted Average Common
Shares Outstanding 13,915,000
The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
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800America. com, Inc.
Change in Stockholders' Equity
For Three Months Ended March 31, 2000
Common Common Additional Total
Stock Stock Paid In Offering Retained Stockholders'
Shares Amount Capital Cost Earning Equity
------ ------ ------- ---- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1999 12,250,000 $ 12,250 $ 952,312 $ (37,716) $ 926,846
Additional Paid in Capital
January 14, 2000 250,000 250,000
Net Income for Three Months
Ended March 31, 2000 279,182 279,182
----------- ----------- ----------- ----------- ----------- -----------
Balance March 31, 2000 12,250,000 12,250 1,202,312 241,466 1,456,028
----------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 1998 700,000 700 31,800 (25,731) (204,696) (197,927)
Sale of Common Stock at $2.50 Per
Share Pursuant to Initial Public
Offering Net of Offering Cost 80,000 80 199,920 (4,707) 195,293
Service and Rent Contributed by
Corporate Office 4,500 4,500
Net Loss for the Three Months
Ended March 31, 1999 (18,439) (18,439)
----------- ----------- ----------- ----------- ----------- -----------
Balance March 31, 1999 780,000 $ 780 $ 236,220 $ (30,438) $ (223,135) $ (16,573)
----------- ----------- ----------- ----------- ----------- -----------
The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
</TABLE>
<PAGE>
800America. com, Inc.
Statement of Cash Flows
Three Months Ended March 31
2000 1999
---- ----
Cash Flows From Operating Activities
Net Income (Loss) $ 279,182 $ (18,437)
Adjustments to Reconcile Net Income
To Cash Used in Operating Activities
Deprecation and Amortization 53,109 2,044
Bad Debts 73,000
Accounts Receivable - Increase (577,568)
Prepaid Advertising - Decrease 121,600
Deposit on Equipment - Decrease 94,000
Accounts Payable - Decrease (Increase) 30,053 (16,941)
Other Current Liabilities - Decrease (15,966)
Rebates Payable - Increase 101,220
Income Tax Payable - Increase 188,000
--------- ---------
Net Cash Provided (Used) From Operating Activities 362,596 (49,300)
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Cash Flows From Investing Activities
Equipment Purchased (297,557) (1,244)
Software Purchased (245,850)
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Net Cash (Used) in Investing Activities (543,407) (1,244)
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Cash Flows From Financing Activities
Proceed From Issuance of Common Stock 200,000
Additional Paid In Capital - Increase 250,000 4,500
Offering Cost Incurred (4,708)
Payment of Notes Payable (150,000)
Loan From Stockholder 2,118
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Net Cash Used in Financing Activities 250,000 51,910
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Net Cash Increase (Decrease) 69,189 1,366
Beginning Cash Balance 392,564 577
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Ending Cash Balance $ 461,753 $ 1,943
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The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
<PAGE>
800America. com Inc.
Notes to Financial Statements
Note 1 - Significant Accounting Policies
Nature of Operations - 800America. Com, Inc. (A Nevada Corporation), is an
Internet Rebate Shopping Portal located in Nashville, Tennessee. The Internet
portal allows customers access to the web sites of stores from all parts of the
country ranging from some of the largest and best known stores to some of the
smaller regional stores. Each store offers subscribers a rebate on all purchases
ranging from three to ten percent based on each store's policy. Upon proof of
purchase from the subscriber, the company accrues and pays the rebate expense.
In turn, the selling store pays the company a commission ranging from five to
twenty percent depending on the store. The operations were developed during
February and March of 1999 by a related company and was then purchased by 800
America, Inc., (see Note 4 Capitalization of Assets - Related Parties).
Principles of Consolidation - The consolidated statement contains the accounts
of 800 America Inc. which was merged with and into World House Entertainment
Inc. which name has been changed to 800America. com, Inc., (see Note 2 Merger
With 800 America Inc.).
Cash and Cash Equivalents - The company's cash consist of unrestricted checking
and saving accounts. Cash equivalents are defined as short term instruments with
an original maturity date of three months or less. The company has no cash
equivalents at March 31, 2000 and 1999.
Accounts Receivable - The company has acquired accounts receivable balances of
$1,106,370 which consist primarily of discounts due from stores. A 12 1/2%
allowance for doubtful accounts has been established on the existing balance.
Customer Rebates Payable - Verified rebates due to subscribers amount to
$431,771.
Accounts Payable - Consist of normal trade accounts and amounts to $21,639 at
March 31, 2000 and $25,268 at March 31, 1999.
Income Taxes - The company accounts for income taxes under Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS109),
SFAS 109 is an asset and liability approach that requires the recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been recognized in the company's financial statements or tax
returns. In estimating future consequences, SFAS 109, generally considers all
expected future events other than enactments of changes in the tax law or rates.
Estimated income tax due at March 31, 2000 is $254,375 and for March 31, 1999 is
zero.
<PAGE>
Reconciliation of book income and taxable income:
March 31, 2000
--------------
Net Operating Income Before Income Tax $467,182
Provision For Doubtful Accounts 73,000
--------
Taxable Income $540,182
Income before income tax and provision for income tax expense from continuing
operations.
March 31, 2000
--------------
Income Before Taxes $467,182
Current Federal Income Tax 188,000
--------
Income After Taxes $279,182
Statutory and effective tax rates are the same.
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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from these estimates.
Other Comprehensive Income - There are no attributes of other comprehensive
income. Comprehensive income and net income are the same.
Property and Equipment/Depreciation - Property and equipment are recorded at
cost (see Note 4 Capitalization of Assets - Related Parties ) and depreciated on
the straight line basis over their estimated useful lives ranging from three to
five years. Depreciation for the three months ended March 31, 2000 is 453,109
and zero at March 31, 1999.
Operating Leases - Lease expense for the three months ended March 31, 2000 was
$3,200 and for three months ended March 31, 1999 was $1,500. The company has
leased new facilities at 1301 Mt. Juliet Road for $698 per month and increasing
7 1/2% in each of the next two years. The company as leased additional
facilities at 1929 21st street, Nashville for three years at $450 per month for
each year. The details for the new lease are as follows:
1301 Mt. Juliet Rd 1929 21st Street
Mt. Juliet Nashville, TN
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1st Year $8,376 $5,500
2nd Year 9,004 5,400
3rd Year 9,679 5,400
<PAGE>
Note 2 - Merger With 800 America Inc.
The company's merger qualified as a tax free reorganization and was accounted
for as a pooling of interest. World House Entertainment, Inc. is not a
significant component of the merger and will continue the on going operations of
800 America Inc. under the new name of 800America. Com, Inc. Ten million
(10,000,000) shares of common stock were issued to 800 America Inc.
stockholders' and one million nine hundred fifty thousand (1,950,000) shares
were issued to World House Entertainment, Inc. shareholders. The previously
outstanding shares of both corporations were canceled. Three hundred thousand
(300,000) shares were sold immediately after the merger for five hundred of
thousand dollars ($500,000).
Note 3 - Financial Instruments
Fair Value - The carrying value of cash accounts receivable, accounts payable,
and customer rebates approximates fair value.
Concentrations of Credit Risk - Financial instruments that potentially subject
the company to credit risk include cash on deposit at a financial institution in
the amount of $461,753 which is federally insured for up to $100,000 at march
31, 2000, which is represented by its cash in bank. The company has extended
unsecured credit to regular customers of $1,106,370 at March 31, 2000.The
company has additionally established an allowance for doubtful accounts of 12
1/2% against their receivables. The company does not require collateral to
support financial instruments subject to credit risk.
Note 4 - Capitalization of Assets
Related Parties
The merged company, 800 America Inc., acquired its beginning operations from a
related, Internet Web Guide, Inc. . Internet Web Guide, Inc. developed the web
site and collected income from subscribers and from stores. 800 America Inc. and
Internet Web Guide. Agreed that Internet Web Guide Inc. cost for developing the
web site was $10,000.
800 America Inc. entered into an agreement with Internet Web Guide Inc. to
purchase the web site and other assets from Internet Web Guide Inc. for the
approximate amount of income collected in the development period $127,000. The
purchase price was allocated as follows:
Equipment $ 70,000
Fixtures 10,000
Web Site 10,000
Subscriber Base 37,000
--------
Total $127,000
<PAGE>
Note 5 - Revenues Recognition
The company derives income from three sources. Individual subscribers (shoppers)
pay an annual subscription of ten dollars ($10), rental from stores comprising
the shopping portal ranging from fifty dollars ($50) to two hundred dollars
($200) per month and commissions from store sales. Revenues are accrued when
they become due.
Note 6 - Supplemental Cash Flow Information
March 31, March 31,
2000 1999
---- ----
Interest Paid 0 $713
Income Tax Paid 0 0
Note 7 - Non Cash Transaction
Office Space Contributed (Fair Value) 0 $4,500
Note 8 - Stock Option Plan
The company started a stock option plan (the Plan) which provide for the
granting of incentive stock options to all full time employees as well as o
qualified options to non employee directors and consultants. The Plan is
designed so that options under the Plan are granted at 100% of Fair Market Value
at date of Grant. The following summerize the options granted, exercised and
outstanding:
March 31, 2000 1999 1998
--------- ---- ---- ----
Options outstanding beginning of the quarter $1,650,000 0 0
Granted 0 0 0
Exercised 0 0 0
Options outstanding end of the quarter $1,650,000 0 0
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations.
General
The Company's primary business involves the operation of a shopping portal
web site. The Company derives revenue primarily from commission's earned from
retailers who are represented at the shopping site. The web site allows
customers access to over three hundred stores, including many nationally known
and recognized retailers. Until January 1, 2000, the Company allowed members who
paid a $10.00 annual membership fee to shop through the Company's web site and
offered such members a rebate of from 3% to 10% on purchases made through the
web site. As of January 1, 2000, the Company no longer charges an annual fee and
the customer is no longer entitled to a rebate on purchases made through the web
site. Customers who had paid the annual membership fee prior to January 1, 2000
are still entitled to rebates until their annual membership expires. The
Company's commission structure with its merchants and retailers whose stores are
represented at the Company's web site vary between 5% and 20%, and are based
upon the volume of sales. The Company had also charged a monthly rental fee of
between $50 and $200 per month to its on-line retailers for use of the Company's
site, but merchant resistance and the administrative burden compared to the
relatively insignificant rental income convinced the Company to terminate its
policy of charging rent to its retailers. The Company also devotes substantial
time and resources to, and derives significant revenues from, the publication of
an on-line family magazine by the name of "Internet Web Guide Magazine". The
Company currently has approximately 70,000 subscribers worldwide. On January 1,
2000, The Company lowered its annual subscription rate from $19.95 to $10.00.
In the quarter ended March 31, 2000, the Company also acquired
Rothmancloseouts.com, Inc., an on-line merchant that specializes in bulk
merchandise and closeouts. The Company has also recently introduced a new web
site, Steeplehouse.com that acts as an on-line auction house for high-end
merchandise and services, including art work, vintage cars and other
collectibles.
The following discussion, which compares the operating results, liquidity
and capital resources for the quarter ended March 31, 2000 with the quarter
ended March 31, 1999 reflects the fact that the Company changed its business in
July 1999 from a company providing trademark and copyright protection for the
Nashville music industry to an on-line shopping portal and on-line magazine. As
such, results of operations for these respective quarters are not comparable
because the business in which the Company was engaged in the quarter ended March
31, 2000 was substantially different from the comparable quarter ended March 31,
1999.
<PAGE>
Results of Operations
Quarter Ended March 31, 2000 Compared to Quarter Ended March 31, 1999.
- ----------------------------------------------------------------------
The Company had revenues of $2,390,824 for the quarter ended March 31, 2000
compared to revenues of $3,847 for the quarter ended March 31, 1999. Net income
for the quarter ended March 31, 2000 was $279,182 compared to a net loss of
$18,437 for the quarter ended March 31, 1999. The quarterly results of
operations were not comparable because of the completely different nature of the
business in which the Company was engaged in the respective quarters. Total
operating expenses for the quarter ended March 31, 2000 were $1,925,797,
resulting in operating income for the quarter of $465,027. Customer rebates
totaled $1,303,969 and represented approximately 68% of total operating
expenses. Other than customer rebates, the largest categories of costs and
expenses were advertising expenses of 335,688; general and administrative
expenses in the amount of $160,031, bad debt expenses in the amount of $73,000
and depreciation and amortization expenses of $53,109. Management expects that
advertising expenses will continue to increase in the quarter ending June 30,
2000 as the Company's television advertising campaign accelerates. Because of
the Company's limited operating history in the on line shopping business,
management cannot predict, based upon past performance, whether the above listed
cost and expense categories are relatively stable or subject to a substantial
degree of volatility. In particular, the bad debt expense category, while
stable, may change substantially as the Company gains experience in managing its
accounts receivable and as the stores who are represented in the Company's on
line shopping mall establish a payment history with the Company.
Management believes that both revenues and expenses of the Company are
likely to continue to increase during the remainder of the fiscal year ending
December 31, 2000. and into the next fiscal year as the full impact of the
Company's new on-line shopping business takes effect. Management is continuing
to recruit additional merchants to the approximately 300 that are already
represented on the Company's web site. The Company is also in the process of
mounting a major advertising campaign in certain select geographic areas and
expects that these advertising efforts will result in additional on-line members
and a corresponding increase in shopping volume.
Management expects its business to also grow because of new web sites it
has established which have the potential to expand the company's operations and
increase its revenues. For example, Steeplehouse.com, an on-line, high-end
auction site, commenced operations in April of 2000. The Company also expects to
generate additional revenues from Rothmancloseouts.com, a recently acquired site
specializing in closeout merchandise.
LIQUIDITY AND CAPITAL RESOURCES
Net cash produced from operating activities was $362,596 in the three
months ended March 31, 2000 compared to net cash used in operations of $49,300
for the three months ended March 31, 1999. Net cash used in investing activities
was $543,407 during the quarter ending March 31, 2000 compared to $1,244 in the
quarter ended March 31, 1999.
<PAGE>
The Company's cash and cash equivalents as of March 31, 2000 were $461,753.
At March 31, 2000, the Company had current assets of $1,429,123 and current
liabilities of $722,819, resulting in working capital at March 31, 2000 (current
assets less current liabilities) of $656, 304. At March 31, 2000, the Company's
only material financial obligation was a two year lease for use of a T-3 from
Bell South at a monthly rental rate of $12,800. This lease obligation was
incurred in order to increase the band width capacity of the Company's web
sites. Except for this lease obligation, the Company had no long term financial
obligations and no material long-term commitments or material commitments for
capital or operational expenditures.
The Company believes that its current capital resources and liquidity are
adequate for at least the next twelve months. Other than advertising and
promotional expenses, the Company does not have any plans for significant
capital or operating expenditures above its current level unless it determines
to develop additional web sites that could result in additional development
costs.
YEAR 2000 COMPLIANCE
The Company did not experience any material disruptions in its operations or
activities as a result of the so-called "Y2K Problem".
PART II OTHER INFORMATION
Item 1. Legal proceedings.
The Company is not a party to any pending or threatened legal proceedings.
Item 2. Changes in Securities and use of Proceeds.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other information
None.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27.1 Financial Data Schedule
(b) Reports of Form 8-K
None
SIGNATURES
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.
800america.com, Inc.
Date: May 4, 2000 /s/ Elie Rabi
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Elie Rabi
Chief Executive Officer
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 461,753
<SECURITIES> 0
<RECEIVABLES> 1,106,370
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,429,123
<PP&E> 940,852
<DEPRECIATION> (141,128)
<TOTAL-ASSETS> 2,228,847
<CURRENT-LIABILITIES> 772,819
<BONDS> 0
0
0
<COMMON> 12,250
<OTHER-SE> 2,228,847
<TOTAL-LIABILITY-AND-EQUITY> 2,390,824
<SALES> 2,392,979
<TOTAL-REVENUES> 0
<CGS> 1,852,797
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 73,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 467,182
<INCOME-TAX> 188,000
<INCOME-CONTINUING> 279,182
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 279,182
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
