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
June 30, 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
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(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)
1929 21st Avenue, Nashville, TN 37212
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(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 12,450,000 shares of common stock outstanding on August 2, 2000.
Transitional Small Business Disclosure Format
(Check one):
Yes ___ No X
<PAGE>
Item 1. Financial Statements
800America. Com, Inc.
Balance Sheet
June 30, 2000 and 1999
Assets 2000 1999
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Current Assets
Cash and Cash Equivalents $ 457,535 $ 1,502
Accounts receivable 1,272,513
Less Allowance for Doubtful Accounts (139,000)
Prepaid Expenses 450
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Total Current Assets 1,591,048 1,952
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Property and Equipment
Equipment 665,125 14,005
Software 575,352
Auto 20,738
Subscriber Base 37,000
Original Web Site 10,000
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1,308,215 14,005
Less Accumulated Depreciation (167,321)
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Net Property and Equipment 1,140,894 14,005
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Other Investment - Rothman 200,000
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Total Assets 2,931,942 15,957
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Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable 30,633 9,442
Accrued Expenses 19,356 22,201
Rebates Payable 627,460
Income Tax Payable 355,000
Notes Payable 12,500
Stockholders Loan 2,248
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Total Current Liabilities 1,032,449 46,391
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Stockholders' Equity
Preferred Stock $0.001 Par Value
5,000,000 Shares Authorized 0 Issued 0 0
Common Stock $0.001 Par Value
780,000 Shares Issued and Outstanding 780
50,000,000 Shares Authorized
12,450,000 Shares Issued and Outstanding 12,450
Additional Paid in Capital 1,402,112 213,782
Retained Earnings 484,931 (244,996)
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Total Stockholders Equity 1,899,493 (30,434)
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Total Liabilities and Stockholders' Equity $ 2,931,942 $ 15,957
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The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
<PAGE>
<TABLE>
<CAPTION>
800America. Com, Inc.
Income Statement
Three Months and Six Months Ended June 30, 2000 and 1999
2000 2000 1999 1999
Three Six Three Six
Months Months Months Months
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues $ 3,188,641 $ 5,579,465 $ 1,547 $ 5,394
------------ ------------ ------------ ------------
Cost and Expenses
Rebates 2,209,441 3,513,410
Advertising 323,604 659,292
Depreciation and Amortization 26,193 79,302 2,045 4,089
Bad Debt 98,000 171,000 2,500
General and Administration 237,970 398,001 23,849 43,376
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Total Operating Expense 2,895,208 4,821,005 25,894 49,965
------------ ------------ ------------ ------------
Operating Income (Loss) 293,433 758,460 (24,347) (44,571)
Interest Income 3,032 5,187 2,500 5,000
Interest Expense (14) (727)
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Net Income (Loss) Before Income Tax 296,465 763,647 (21,861) 40,298
Income Tax Expense 53,000 241,000
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Net Income (Loss) $ 243,465 $ 522,647 ($ 21,861) ($ 40,298)
Basic earnings Per Share Common Stock $ 0.02 $ 0.04 ($ 0.03) ($ 0.05)
Basic Weighted Average Common
Shares Outstanding 12,350,000 12,250,000 780,000 780,000
Diluted Earnings Per Share Common Stock $ 0.02 $ 0.04 $ 0 $ 0
Diluted Weighted Average Common Stock 14,000,000 13,900,000 0 0
The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
</TABLE>
<PAGE>
800America. Com, Inc.
Statement of Cash Flows
Six Months Ended June 30,
2000 1999
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Cash Flows From Operating Activities
Net Income (Loss) $ 522,647 ($ 40,298)
Adjustments to Reconcile Net Income
To Cash Flows From Operating Activities
Depreciation and Amortization 79,302 4,089
Bad Debt Allowance - Increase 73,000
Accounts Receivable - Increase (743,711)
Accounts Payable - Increase (Decrease) 39,047 (17,901)
Rebates Payable - Increase 296,909
Accrued Expenses - Increase 1,947 (8,631)
Deposit On Equipment - Decrease 94,000
Income Tax Payable - Increase 241,000
Prepaid Advertising - Decrease 121,600
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Net Cash Provided (Used) From Operating Activities 725,741 (62,741)
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Cash Flows From Investing Activities
Equipment Purchase (445,817) (1,244)
Software Purchase (464,953)
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Net Cash Used In Investing Activities (910,770) (1,244)
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Cash Flows From Financing Activities
Proceeds From Issuance of Common Stock 200,000
Additional Paid In Capital 250,000 4,500
Notes Payable - Increase (Decrease) (145,000)
Capital Contributed by Shareholder 6,618
Payment of Offering Cost (1,208)
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Net Cash Provided By Financing Activity 250,000 64,910
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Net Increase (Decrease) in Cash and
Cash Equivalents 64,971 925
Beginning Balance 392,564 577
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Ending Balance $ 457,535 $ 1,502
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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 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 stores'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 company plans to phase out the rebate
feature.
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 Mergers)
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 June 30, 2000 and 1999.
Accounts Receivable - The company has acquired accounts receivable balances of
$1,272,513 which consist primarily of discounts due from stores. An allowance
for doubtful accounts has been established on the existing balance. The
directors wrote off $98,000 worth of accounts receivable in June 2000. There
were no bad debts for the quarter ended June 30, 1999.
Customer Rebates Payable - Verified rebates due to subscribers amount to
$431,771 for the June 30, 2000 quarter.
Accounts Payable - Consist of normal trade accounts and amounts to $30,633 at
June 30, 2000 and $9,442 at June 30, 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 al
expected future events other than enactments of changes in the tax law or rates.
Estimated income tax due at June 30, 2000 is $355,000 and for June 30, 1999 is
$0.
<PAGE>
Income before income tax and provision for income tax expense from continuing
operations.
June 30, 2000
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Income Before Taxes $296,465
Current Federal Income Tax 53,000
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Income After Taxes $243,465
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 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 June 30, 2000 is $26,193 and
zero at June 30, 2000.
Operating Leases - Lease expense for the three months ended June 30, 2000 was
$5,984 and for three months ended June 30, 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 has leased additional
facilities at 1929 21st street, Nashville for three years at $450 per month for
each year. The details for the new lese 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
Note 2 Mergers
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. An additional three hundred thousand (300,000) shares were sold
immediately after the merger for five hundred thousand dollars $500,000.
<PAGE>
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 $457,535 which is federally insured for up to $100,000 at June 30,
2000, which is represented by its cash in bank. The company has extended
unsecured credit to regular customers of $1,272,513 at June 30, 2000. The
company has additionally established an allowance for doubtful accounts of 11%
against their receivables. The company does not require collateral to support
financial instruments subject to credit risk. The company directly wrote off
$98,000 of accounts during the quarter.
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
period $127,000. The purchase price was allocated as flows:
Equipment $ 70,000
Fixtures 10,000
Web Site 10,000
Subscriber Base 37,000
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Total $127,000
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. Revues are accrued when they
become due.
Note 6 - Supplemental Cash Flow Information
June 30, 2000 June 30, 1999
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Interest Paid 0 $727
Income Tax Paid 0 0
<PAGE>
Note 7 - Non Cash Transaction
Office Space Contributed (Fair Value) 0 $6,000
Note 8 - Stock Option Plan
June 30, 2000 1999 1998
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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 several Internet
Web sites, the most significant of which is its shopping portal web site,
800america.com. The shopping site derives revenue primarily from commissions
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 new customers are 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.
In the quarter ended March 31, 2000, the Company also acquired
Rothmancloseouts.com, Inc., an on-line, business to business venture that
specializes in buying and selling general brand name and licensed closeout
merchandise. Rothmancloseouts.com allows buyers and sellers from around the
world to directly match and negotiate transactions electronically to purchase
closeout goods and merchandise. Management expects that revenues and earnings
from Rothmancloseouts.com will continue to increase in the third and subsequent
quarters and constitute a significant portion of the Company's total revenues
and earnings. Other Internet Web sites operated by the Company include
Steeplehouse.com, an on-line auction house featuring a large variety of luxury
items including paintings from Picasso to Warhol, and other high-end items such
as Persian rugs and classic cars. The Company also operates moneydrops.com, an
on-line game where visitors can earn money by clicking on links to different
advertisers; internetwebguide.com, an on-line magazine, and DoNotSmoke.com,
which is dedicated to preventing smoking and features medical videos.
The following discussion, which compares the operating results, liquidity
and capital resources for the quarter ended June 30, 2000 with the quarter ended
June 30, 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 a Company providing Internet Web sites for various
purposes. 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 June 30, 2000 was substantially different from the comparable quarter
ended June 30, 1999.
<PAGE>
Results of Operations
Quarter Ended June 30, 2000 Compared to Quarter Ended June 30, 1999.
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The Company had revenues of $3,188,641 for the quarter ended June 30, 2000
compared to revenues of $1,547 for the quarter ended June 30, 1999. Net income
for the quarter ended June 30, 2000 was $243,465 compared to a net loss of
$21,861 for the quarter ended June 30, 1999. The quarterly results of operations
were not comparable because of the completely different nature of the businesses
in which the Company was engaged in the respective quarters. Total operating
expenses for the quarter ended June 30, 2000 were $2,895,208, resulting in
operating income for the quarter of $293,433. Customer rebates for the quarter
ended June 30, 2000 totaled $2,209,441 and represented approximately 77% of
total operating expenses. The Company does not expect that customer rebates will
continue to be a material component of Company expense beginning January 1,
2001. The Company has instituted a policy of not paying rebates after that date.
Other than customer rebates, the largest categories of costs and expenses were
advertising expenses of $323,604; general and administrative expenses in the
amount of $237,970, bad debt expenses in the amount of $98,000 and depreciation
and amortization expenses of $26,193. Management expects that advertising
expenses will continue to increase in the quarter ending September 30, 2000 as
the Company's television advertising campaign continues to accelerate. General
and administrative expenses are also expected to increase with the hiring of
additional personnel and the development of additional web sites. Because of the
Company's limited operating history with its various web sites, 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.
Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999.
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Like the operating results for the three months ended March 31, 2000 and
March 31, 1999, the six month periods ended June 30, 2000 and 1999 respectively
are not comparable because the Company was engaged in entirely different
businesses during these periods. Revenues for the six months ended June 30, 2000
were $5,579,465 compared with $5,394 for the six months ended June 30, 1999. Net
income for the six months ended June 30, 2000 was $522,647, compared to a net
loss of $40,298 for the prior six-month period ended June 30, 1999. Total
operating expense for the six months ended June 30, 2000 was $4,821,005,
resulting in net income before taxes of $758,460. The largest categories of
operating expenses in the six months ended June 30, 2000 were customer rebates
in the amount of $3,513,410; advertising in the amounts of $659,292; general and
administrative expense in the amount of $398,001; bad debt expense in the
amounts of $171,000; and depreciation and amortization in the amount of $79,302.
In the six month period ended June 30, 1999, only general and administrative
expense in the amount of $43,376 were material. Management expects that
advertising as well as general and administrative expenses will continue to
increase as the Company expands its operations. However, all customer rebates
will end as of December 31, 2000 in accordance with the Company's policy adopted
as of January 1, 2000. While the Company expects some erosion in the Company's
shopping web site customer base as a result of this policy, customer loyalty to
the site as well as additional revenues from the Company's other web sites are
expected to offset any loss of business on the shopping web site.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided from operating activities was $725,741 in the six months
ended June 30, 2000 compared to net cash used in operations of $62,741 for the
six months ended June 30, 1999. Net cash used in investing activities was
$910,770 during the six months ended June 30, 2000 compared to $1,244 in the six
months ended June 30, 1999.
The Company's cash and cash equivalents as of June 30, 2000 were $457,535.
At June 30, 2000, the Company had current assets of $1,591,048 and current
liabilities of $1,032,449, resulting in working capital at June 30, 2000
(current assets less current liabilities) of $558,599. At June 30, 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.
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.
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other information
None.
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: August 4, 2000 /s/ Elie Rabi
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Elie Rabi
Chief Executive Officer
Principal Financial Officer
