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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period 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 No. 000-24199
ABSOLUTEFUTURE.COM
(Exact name of registrant as specified in its charter)
NEVADA 88-0306099
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(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
10900 N.E. 8th Street, Bellevue, Washington 98004
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(Address of principal executive offices)
(425) 462-6210
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(Registrant's telephone number including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 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 __.
---
At May 15, 2000, 21,318,000 shares of common stock of the Registrant were
outstanding.
Transitional small business disclosure format: Yes ____ No X .
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INDEX
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PART I: FINANCIAL INFORMATION
<TABLE>
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Page
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Item 1. Financial Statements............................................................................. 1
Condensed Consolidated Balance Sheets........................................................ 1
Condensed Consolidated Statements of Operations.............................................. 2
Condensed Consolidated Statements of Cash Flows.............................................. 3
Notes to Condensed Consolidated Financial Statements......................................... 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................................. 6
Liquidity and Capital Resources.............................................................. 8
Risk Factors and Cautionary Statements....................................................... 8
PART II: OTHER INFORMATION
Item 1. Legal Proceedings................................................................................ 9
Item 2. Changes in Securities............................................................................ 9
Item 3. Defaults upon Senior Securities.................................................................. 9
Item 4. Submission of Matters to a Vote of Security Holders.............................................. 9
Item 5. Other Information................................................................................ 9
Item 6. Exhibits and Reports on Form 8-K................................................................. 9
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ABSOLUTEFUTURE.COM
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, 2000 and December 31, 1999
<TABLE>
<CAPTION>
March 31, December 31,
Assets 2000 1999
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<S> <C> <C>
Current assets:
Cash $ 57,072 $ 1,681
Accounts receivable 25,860 --
Prepaid expenses 7,970 17,053
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Total current assets 90,902 18,734
Property and equipment, net 70,957 63,261
Intangible assets, net of accumulated amortization of $21,501 at March 31, 2000
and $10,834 at December 31, 1999 106,499 117,166
Restricted cash 70,277 70,277
Deposits 7,906 7,906
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Total assets $ 346,541 $ 277,344
============= ==============
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Bank overdraft $ -- $ 28,784
Accounts payable 68,065 87,540
Accrued liabilities 73,461 53,223
Current portion of note payable -- 45,000
Loans payable to stockholders 19,562 226,315
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Total current liabilities 161,088 440,862
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Notes payable to stockholders 4,860 350,000
Note payable -- 170,000
Other long-term obligation -- 63,000
Stockholders' equity (deficit):
Preferred stock, $0.001 par value. Authorized 10,000,000 shares;
issued and outstanding no shares. -- --
Common stock $0.001 par value. Authorized 50,000,000 shares;
issued and outstanding 21,318,000 shares at March 31, 2000 and 14,400,000
shares at December 31, 1999 21,318 14,400
Additional paid-in capital 4,972,130 788,913
Stock subscriptions receivable (301,000) (501,000)
Deferred stock compensation (6,964) (7,964)
Accumulated deficit (4,504,079) (1,038,875)
Cumulative comprehensive loss (812) (1,992)
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Total stockholders' equity (deficit) 180,593 (746,518)
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Total liabilities and stockholders' equity (deficit) $ 346,541 $ 277,344
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</TABLE>
See accompanying notes to condensed consolidated financial statements.
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ABSOLUTEFUTURE.COM
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations and Comprehensive Loss
Quarters ended March 31, 2000 and 1999
<TABLE>
<CAPTION>
Quarter Ended
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March 31, March 31,
2000 1999
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<S> <C> <C>
Revenues $ 65,460 50,973
Cost of revenues 52,882 43,378
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Gross profit 12,578 7,595
General, administrative and business development expenses, including
stock compensation expense of $2,303,900 in the 2000 period 2,641,839 112,140
Research and development 25,771 --
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Loss from operations (2,655,032) (104,545)
Interest expense, net of interest income of $63 in 2000 and
$66 in 1999 6,937 11,002
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Loss before extraordinary item $ (2,661,969) (115,547)
Extraordinary item - loss on extinguishment of debt 803,235 --
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Net loss (3,465,204) (115,547)
=================== ======================
Basic and diluted loss per share before extraordinary item $ - 0.13 - 0.04
Basic and diluted loss per share from extraordinary item - 0.04 0.00
------------------- ----------------------
Basic and diluted net loss per share - 0.17 - 0.04
=================== ======================
Weighted average shares used to compute basic and diluted net loss 20,329,714 3,000,000
per share
Comprehensive loss:
Net loss $ (3,465,204) (115,547)
Foreign currency translation adjustment 1,180 207
------------------- ----------------------
Comprehensive loss $ (3,464,024) (115,340)
=================== ======================
</TABLE>
See accompanying notes to condensed consolidated financial statements
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ABSOLUTEFUTURE.COM
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
Quarters ended March 31, 2000 and 1999
<TABLE>
<CAPTION>
Quarter ended
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March 31, March 31,
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,465,204) (115,547)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 18,490 5,238
Common stock issued for services and under consulting
agreements 2,303,900 --
Loss on extinguishment of debt 803,235
Amortization of deferred compensation and discount on notes
payable to stockholders 2,180 138
Changes in certain assets and liabilities:
Accounts receivable (25,860) (32,793)
Prepaid expenses and other current assets 9,083 3,136
Accounts payable (19,475) 26,958
Accrued liabilities 20,238 30,903
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Net cash used in operating activities (353,413) (81,967)
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Cash flows from investing activities:
Purchases of property and equipment (15,519) (44,057)
Purchase of short-term investment, representing restricted cash -- (70,277)
Other -- (3,384)
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Net cash used in investing activities (15,519) (117,718)
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Cash flows from financing activities:
Bank overdraft (28,784) --
Proceeds from (payment of) notes payable (246,893) 79,086
Collections of stock subscriptions receivable 700,000 --
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Net cash provided by financing activities 424,323 79,086
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Increase (decrease) in cash 55,391 (120,599)
Cash at beginning of period 1,681 152,188
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Cash at end of period $ 57,072 31,589
================= ==================
Supplemental cash flow information - cash paid during the period
for interest $ 7,000 1,440
================= ==================
Supplemental schedule of non-cash investing and financing activities:
Common stock subscription receivable $ 500,000 --
Common stock issued in connection with issuance of notes payable 520,000
Common stock issued in connection with settlement of other long-term
obligation 63,000
================= ==================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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ABSOLUTEFUTURE.COM
Notes to Condensed Consolidated Financial Statements
(Information for the three months ended March 31, 2000 is unaudited)
NOTE 1 - Summary of Significant Accounting Policies
a. Description of Business
AbsoluteFuture.com is the surviving corporation resulting from the May 1999
merger of Corporate Tours & Travel, Inc. (CTTI) and Absolut Future Tech, Inc.
(Tech). For financial reporting purposes, the merger was treated as a
recapitalization of Tech, with Tech as the acquiror of CTTI. The historical
financial statements of AbsoluteFuture.com are those of Tech.
AbsoluteFuture.com and subsidiaries (Company) is an information technology
service provider that has developed core competencies in complex
Internet/intranet solutions. The Company's area of expertise is primarily
e-commerce. The Company's services are generally performed on a contract basis
to organizations with complex information technology operations. The Company was
incorporated in November 1998 and has offices in Bellevue, Washington and
Vancouver, British Columbia. The Company left the development stage in the first
quarter of 1999.
b. Basis of Presentation
The unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the disclosure information and notes required to be
presented for complete financial statements. The accompanying condensed
consolidated financial statements include all adjustments which are, in the
opinion of management, necessary for a fair presentation of the results for the
interim periods presented.
The condensed consolidated financial statements and related disclosures
have been prepared with the presumption that users of the interim financial
information have read or have access to the audited financial statements for the
preceding fiscal year. Accordingly, these financial statements should be read in
conjunction with the audited consolidated financial statements and the related
notes thereto included in the Company's 1999 Annual Report on Form 10-KSB as
filed with the Securities and Exchange Commission on April 14, 2000.
The consolidated financial statements include the accounts of
AbsoluteFuture.Com and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
The Company was formed as Corporate Tours & Travel, Inc. (CTTI), a
Nevada corporation, on September 23, 1993. Absolut Future Tech Inc. (Tech) was
formed as a Nevada corporation on November 16, 1998 to engage in software
development and consulting.
In May 1999, CTTI purchased all of the outstanding capital stock of
Tech for 3,000,000 shares of common stock. Shortly afterwards, the officers and
directors of CTTI resigned and CTTI sold an additional 4,000,000 common shares
for $40,000 to a group substantially comprised of the former stockholders of
Tech. Upon completion of the purchase, CTTI was renamed AbsoluteFuture.com, and
representatives of Tech assumed the officer and directors positions of
AbsoluteFuture.com.
The transaction was accounted for as a purchase of CTTI by Tech
followed by a recapitalization. CTTI had net liabilities of $4,060, consisting
of accounts payable at the time of the transaction. Because CTTI had no
operations historically and was a shell company, the purchase did not result in
goodwill and the assumption of liabilities resulted in a reduction of additional
paid-in capital.
Tech had 10,000,000 common shares outstanding at the time of the
purchase. The common shares presented herein are those of CTTI, now renamed
AbsoluteFuture.com. Transactions involving the common stock of Tech prior to the
purchase have been restated to adjust the number of shares by a conversion ratio
of 3:10 in order to reflect the number of CTTI common shares
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received by holders of Tech common shares resulting from the recapitalization.
The operating results for CTTI have been included in the Company's
operations from the acquisition date only. Therefore, the comparative statements
of operations for the quarter ended March 31, 2000 provide prior year comparison
to Absolut Future Tech Inc. for the prior year period, as the aforementioned
purchase and recapitalization had not yet occurred as of March 31, 1999. Pro
forma information has not been presented as it would not be meaningful given the
insignificance of CTTI's financial statement balances for the three months ended
March 31, 1999.
c. Net Loss Per Share
Basic loss per share (EPS) is computed based on weighted average shares
outstanding and excludes any potentially dilutive securities. Diluted EPS
reflects potential dilution from the exercise or conversion of securities into
common stock or from other contracts to issue common stock. The capital
structure of the Company includes common stock options and common stock
warrants. At March 31, 2000, there were options outstanding to purchase 531,000
shares of common stock of the Company with exercise prices ranging from $0.60 to
$1.85. Also outstanding at March 31, 2000 were 1,250,000 warrants to purchase
the common stock of the Company with an exercise price of $0.45 per share. At
March 31, 1999, there were no options or warrants outstanding. The assumed
conversion and exercise of these securities have been excluded from the
calculation of diluted EPS as their effect is anti-dilutive.
d. Stockholders' Equity
During the quarter ended March 31, 2000 the Company entered into
several transactions involving the issuance of common stock. In January 2000
shares were issued in satisfaction of commitments made during 1999. The price
per share reflected the price of the stock on the date of the original
commitments. The issuances were as follows:
Number
of Shares Consideration Total Value
--------- ------------- -----------
200,000 For Technology $63,000
180,000 For Services 41,400
2,288,000 Note Conversion 851,160
In addition, the Company sold 1,250,000 shares to a group of investors in
exchange for a stock subscription receivable in the amount of $500,000, of which
$200,000 had been collected as of March 31, 2000. The Company also issued
3,000,000 shares to the same investor group in exchange for consulting services
to be rendered over the twelve months ending December 2000 for total value,
determined using the average of the high and low trading prices during the five
trading days prior to the filing of an S-8 registration statement relating to
the shares on January 20, 2000, of $2,262,500. The cost of these consulting
services was expensed in its entirety during the quarter ended March 31, 2000,
as there were no vesting restrictions on the shares and management does not
believe future services will be rendered during the remainder of the contract
term. See discussion of these consulting contracts in Item 2, Management's
Discussion and Analysis of Financial Condition and Results of Operations. The
total value of shares issued for services during the quarter ended March 31,
2000 was $2,303,900, which is the sum of the $2,262,500 and the $41,400 per the
table above.
Of the 2,288,000 shares issued for note conversions (see table, above),
1,540,000 shares were issued in exchange for the extinguishment of notes payable
in the amount of $350,000. On the date that the Company entered into a
commitment to enter into this transaction, the price of the Company's stock was
$.23c.
Included in the 2,288,000 shares issued for note conversions (see table,
above) was the issuance of 748,000 shares in exchange for extinguishment of a
note payable in the amount of $170,000. On the date this transaction was agreed
to, the price of the Company's stock was $.67 per share, resulting in a
valuation of $501,160, or $331,160 more than the face amount of the note being
extinguished. In addition, warrants to purchase 1,250,000 shares of stock at
$.45 per share expiring January 13, 2002 were issued to the noteholder, with a
value using the Black-Scholes option pricing model of $472,075, assuming
volatility of 78% and no dividends on common stock. The total excess amount over
the face amount of the note of $803,235 was recorded as an extraordinary item,
loss on extinguishment of debt, during the three month period ended March 31,
2000.
During the quarter ended March 31, 2000, the Company collected $500,000 on
the stock subscription receivable that was outstanding as of December 31, 1999.
e. Liquidity
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The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern.
The Company has incurred cumulative losses of $4,504,079 through March 31,
2000 and had a working capital deficit of $70,186 as of March 31, 2000.
Management recognizes that in order to meet the Company's capital requirements,
additional financing will be necessary. The Company is evaluating alternative
sources of equity financing to improve its cash position and is undertaking
efforts to raise capital.
f. Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities. SFAS No. 133
establishes a new model for accounting for derivatives and hedging activities
and supersedes and amends existing accounting standards and is effective for
fiscal years beginning after June 15, 2000. SFAS No. 133 requires that all
derivatives be recognized in the balance sheet at their fair market value, and
the corresponding derivative gains or losses be either reported in the statement
of operations or as a component of other comprehensive income depending on the
type of hedge relationship that exists with respect to such derivative. The
Company does not expect the adoption of SFAS No. 133 will have a material impact
on its consolidated financial statements.
In December 1999, the United States Securities and Exchange Commission
(SEC) released Staff Accounting Bulletin (SAB) No. 101, Revenue Recognition in
Financial Statements, which must be adopted by the Company by June 30, 2000. SAB
No. 101 provides guidance on revenue recognition and the SEC staff's views on
the application of accounting principles to selected revenue recognition issues.
The Company does not expect that the adoption of SAB No. 101 will have a
material effect on its consolidated financial statements.
In March 2000, the Financial Accounting Standards Board Issued
Interpretation No. 44 (FIN No. 44), Accounting for Certain Transactions
Involving Stock Compensations, an interpretation of APB Opinion No. 25. FIN No.
44 will be effective July 1, 2000. However, certain of the conclusions included
in the interpretation apply to events occurring after December 15, 1998 or
January 12, 2000. The December 15, 1998 effective date applies prospectively
after July 1, 2000 to the accounting treatment for modifications to the exercise
prices of stock option awards occurring after December 15, 1998 and for the
definition of an employee for purposes of determining eligibility to apply APB
No. 25 and related interpretations to accounting for stock option grants to such
persons where the grant occurred after December 15, 1998. Management does not
believe the adoption of FIN No. 44 will have a material impact on Company's
financial position or results of operations.
g. Geographic segment information
Revenues and expenses of the Canadian operation during the quarters
ended March 31, 2000 and 1999 were not significant.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Three Months Ended March 31, 2000 and March 31,
1999
Total revenues for the quarter ended March 31, 2000 ("2000") increased 28%
to $65,460 from $50,973 realized in the first quarter ended March 31, 1999
("1999"). The revenues were all related to consulting services provided, and
reflect increases in this activity in 2000 compared to 1999.
Gross profit as a percentage of net sales was 19% for the 2000 period
compared to 15% for the 1999 period. The change in the Company's gross margin
can be attributed primarily to increased consulting billings relative to the
labor costs of consultants.
Total operating expenses increased approximately 2,279% to $2,667,610 for
the 2000 period from $112,140 for the comparable 1999 period. As a percentage of
net sales, total operating expenses increased to 4,075% for the 2000 period from
220% for the 1999
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period. The increase in operating expenses primarily relates to increased
staffing costs and the $2,303,900 cost of stock issued in exchange for
consulting services during the first quarter of 2000 (see discussion below).
The Company realized a net loss of $3,465,204 in the quarter ended March
31, 2000, or $0.17 basic loss per share, compared to a net loss of $115,547
realized in the 1999 period, or $.04 basic loss per share. The 2000 net loss
includes $803,235 ($0.04 per share) loss on extinguishment of debt, which was
recorded as an extraordinary item in the period (see note 1d above).
The Company is focusing on the development of SafeMessage, its secure
messaging system. In March 2000, the Company filed two patent applications on
key elements of the SafeMessage technology. The Company plans to have a "Beta"
test version of SafeMessage available by the end of May 2000, with a full
commercial launch in the third quarter of 2000.
The Company plans to devote substantial effort to the full commercial
launch of SafeMessage and its marketing. The Company intends to seek further
equity funds to finance the commercial launch.
The Company now employs 10 people. Four persons devote the majority of
their time to SafeMessage, two provide consulting services and four have
administrative responsibilities.
Certain consulting contracts, referred to above and in recent SEC filings
on Form S-8 (filed December 10, 1999, and January 20, 2000) and in the 1999 Form
10-KSB, have failed to result in services rendered per the terms of the
contracts, and the Company has taken as an expense in the first quarter of
fiscal year 2000, the value of the shares issued per the terms of the contracts.
Per Form S-8 filed December 10, 1999 with the Securities and Exchange
Commission (see Commission File No. 00024199), the Company registered 1,100,000
shares of common stock at a proposed offering and maximum price of $0.25 per
share and proposed maximum aggregate offering price $275,000. These shares were
reported in the Form S-8 as compensation of "Commonwealth Partners NY, LLC," New
York, NY, for "marketing, advertising design and model/spokesperson services for
registrants products." The Form S-8 included as Exhibit 4 a copy of the
"consulting agreement" with Commonwealth Partners, which set forth additional
services to be provided by them during a 12-month period ending in December
2000, to be compensated for by the 1,100,000 shares of stock registered and
further compensated by monthly payments of $7,000, payable $2,500 in cash and
$4,500 in restricted common shares of the Company. To date, the services
rendered pursuant to that consulting agreement with Commonwealth Partners NY,
LLC, have included the introduction of the Company to various investors, who
have committed to stock subscription payments totaling $1,000,000, of which
$850,000 has been received as of May 10, 2000 and have also included the
introduction of other business possibilities and advice of a general nature. No
monthly invoices have been received from Commonwealth Partners for monthly
services rendered since the agreement date of December 10, 1999, and Company
management has present reason to doubt any additional services will be provided
pursuant to the agreement. The Company has not located any documents, other than
the "consulting agreement" itself, showing any evidence or commitment of further
work intended to be performed in the future. The $275,000 value of this stock
issuance was recorded as an expense in 1999.
Per Form S-8 filed January 20, 2000 with the Securities and Exchange
Commission (see Commission File No. 00024199), the Company registered a total of
3,000,000 shares of common stock at a proposed offering and maximum price of
$0.74 per share and proposed maximum aggregate offering price $2,220,000 (for
accounting purposes, the shares were valued at $2,262,500, which is the average
of the high and low trading prices during the five trading days prior to the
filing of the S-8). These shares were reported in the Form S-8 as compensation
pursuant to "The Consultant Compensation Plan" for services to be rendered by
four consultants: Galton Scott & Goulett, Inc., Middleton, NY (to receive
"Engagement Fee" of 650,000 shares); Dottenhoff Financial Ltd., c/o Monesh
Bakashi, Esq., Middleton, NY (to receive "Engagement Fee" of 700,000 shares);
Berkshire Capital Partners, Inc., c/o of Monesh Bakashi, Esq., Middleton, NY (to
receive "Engagement Fee" of 800,000 shares); and Zimenn Importing and Exporting
Inc., c/o of Monesh Bakashi, Esq., Middleton, NY (to receive "Engagement Fee" of
850,000 shares). The January 20, 2000 Form S-8 included as Exhibits 4.1, 4.2,
4.3, and 4.4 copies of the "consulting agreements" with each of the respective
entities, and each consulting agreement set forth the specific services to be
provided by the respective consultant during a 12-month period ending January
12, 2001. To date, there have been no services rendered pursuant to each of
those four consulting agreements, and Company management has present reason to
doubt any additional services will ever be provided pursuant to the agreements.
The Company has not located any documents, other than the "consulting
agreements" themselves, showing any evidence or commitment of work intended to
be performed in the future.
The Company's Form 10-KSB, filed with the SEC for the fiscal year ended
December 31, 1999, made reference to the
7
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above four consulting arrangements to begin in 2000 and the issuance of the
3,000,000 shares of common stock. Relevant to the 10-KSB for fiscal year ended
December 31, 1999, by Press Release and SEC Form 8-K filed May 1, 2000, the
Company notified the public as stated above, that there have been no services
rendered pursuant to each of those four consulting agreements, that no documents
have been located by the Company, other than the consulting agreements
themselves, showing any evidence of work intended to be performed in the future,
and Company management has present reason to doubt any additional services will
ever be provided pursuant to the agreements.
Company management is investigating its alternatives with respect to these
matters and appropriate action, if any.
Liquidity and Capital Resources
For the three month period ended March 31, 2000, cash used by operating
activities was $353,413. Cash was decreased by the net loss of $3,465,204,
offset by the non-cash expense of issuing shares for services in the amount of
$2,303,900, loss on extinguishment of debt of $803,235 and other minor changes
in current assets and liabilities along with depreciation expense. Cash used in
investing activities of $15,519 was for the purchases of property and equipment.
Cash provided by financing activities of $424,323 was from collections of stock
subscriptions receivable of $700,000 reduced by payments on notes payable of
$246,893 and reductions of the bank overdraft of $28,784. For the three month
period ended March 31, 2000, cash and cash equivalents increased by $55,391.
For the three month period ended March 31, 1999, cash used by operating
activities was $81,967. Cash was decreased by the net loss of $115,547 offset by
net changes in current assets and liabilities along with depreciation expense.
Cash used in investing activities of $117,718 was for the purchases of property
and equipment in the amount of $44,057, additions to short term investments of
$70,277 and other investing activities of $3,384. Cash provided by financing
activities of $79,086 was from additions to notes payable. For the three month
period ended March 31, 1999, cash and cash equivalents decreased by $120,599.
At March 31, 2000, the Company had a working capital deficit of
$70,186. The Company's present working capital is not expected to adequately
meet the Company's needs for the remainder of 2000.
Using proceeds from the December 1999 and January 2000 stock sales, the
Company plans to further develop and begin the marketing of the SafeMessage
product. The Company is focused on the development and commercialization of
SafeMessage and related products, as well as the pursuit of corporate partners
and potential acquisition candidates. The primary future needs for capital are
for continued research, development and marketing of products and funding to
support strategic acquisitions. Working capital requirements may vary depending
upon numerous factors including the progress of research and development,
competitive and technological advances, market acceptance of the Company's
products and other factors. The Company anticipates operating with approximately
20 employees by the end of 2000.
Subsequent to the March 31, 2000, the Company collected $150,000 of stock
subscriptions receivable. Management believes that further increases in capital
will be necessary to fund future activities. Potential sources of liquidity
include loans from existing stockholders and others, as well as additional sales
of common stock.
Additional funds will be required to continue operations and, over the
longer term, substantial additional funds will be required to maintain and
expand research and development activities and to further commercialize, with or
without corporate partners, any of the Company's proposed products. In addition,
substantial funds may be required to support strategic acquisitions. No
assurance can be given that satisfactory funding can be arranged on a timely
basis to meet the future needs of the Company or that future revenues and
profits will be sufficient to reduce the Company's long-term funding
requirements.
Risk Factors and Cautionary Statements
Forward-looking statements in this report are made pursuant to the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. The Company wishes to advise readers that actual results may differ
substantially from such forward-looking statements. Forward-looking statements
involve risks and uncertainties including but not limited to, continued
acceptance of the Company's products in the marketplace, competitive factors,
potential changes in the budgets of federal and state agencies, compliance with
current and possible future FCC or environmental regulations, and other risks
detailed in the Company's periodic report filings with the Securities and
Exchange Commission.
8
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On November 30, 1999, the Company filed a lawsuit in the Superior Court of
Washington for King County against Sergei Sheinblum, and his wife alleging
breach of an agreement to assist in the development of the Company, conversion
and unjust enrichment arising out of personal use and/or retention of Company
property and funds, and misrepresentation and tortuous interference with a
business expectancy. Mr. Sheinblum's wife is a shareholder in the Company. The
lawsuit seeks damages in an amount to be proven at trial, but expected to exceed
$100,000, and injunctive relief prohibiting further conduct detrimental to the
Company. The lawsuit is currently pending.
Item 2. Changes in Securities and Use of Proceeds
This Item is not applicable to the Company.
Item 3. Defaults upon Senior Securities
This Item is not applicable to the Company.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the quarter ended March 31, 2000.
Item 5. Other Information
This Item is not applicable to the Company.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibit
Exhibit 27.1 Financial Data Schedule
9
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SIGNATURES
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.
ABSOLUTEFUTURE.COM
------------------
10900 N.E. 8/th/ Street
Bellevue, WA 98004
Date: May 15, 2000 By /s/ Brian P. Abeel
-------------- ------------------
Brian P. Abeel
Chief Financial
Officer
Date: May 15, 2000 By /s/ Graham Andrews
-------------- -------------------
Graham Andrews
President and Chief
Executive Officer
10
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