U.S. SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(I) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Quarter Ended: Commission File Number:
June 30, 2000 000-24459
SSHOPS.COM, INC.
(Exact name of Registrant as specified in its charter)
UTAH 59-2159271
(State or other jurisdiction of (IRS Employer Identi-
incorporation or organization) fication Number)
115 NEWTOWN ROAD , PLAINVIEW, NY 11803
(Address of Principal Executive Offices) (Zip Code)
516 - 454 - 1577
(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 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
filing requirements for the past 90 days.
Yes_X_ No___
The number of shares of Common Stock, par value $ .01 per share,
outstanding as of July 31, 2000 is 8,997,160.
<PAGE>
SHOPSS. COM, INC.
INDEX TO FORM 10-QSB
June 30, 2000
PART I. Financial Information Page #
<TABLE>
<CAPTION>
<S> <C> <C>
Item 1. Financial Statements -
Balance Sheet
June 30, 2000 3
December 31, 1999
Statements of Operations
Three months ended June 30, 2000
Three months ended June 30, 1999 4
Statements of Operations
Six months ended June 30, 2000
Six months ended June 30, 1999 5
Statements of Cash Flows
Six months ended June 30, 2000
Six months ended June 30, 1999 6
Statement of Deficiency in Assets 7
Notes to Financial Statements 8-9
</TABLE>
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
SHOPPS.COM, INC
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
(unaudited) (audited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 29 $ 891
Accounts receivable 2,985 93,102
Inventory 93,405 121,081
Prepaid expenses 2,158 2,398
---------- -----------
Total Current Assets 98,576 217,472
PROPERTY AND EQUIPMENT,net of
Accumulated depreciation of
$74,841 and $58,063 77,001 96,872
ADVANCES RECEIVABLE- OSCM - 526,583
GOODWILL, net of accumulated amortization
of - and $32,560 - 618,637
OTHER ASSETS 3,899 12,781
---------- -----------
$ 179,477 $ 1,472,345
LIABILITIES AND DEFICEIENCY IN ASSETS
-------------------------------------
CURRENT LIABILITIES
Accounts payable and
accrued expenses $ 2,025,354 $ 979,659
Taxes payable 48,105 22,791
Customer deposits 183,245 8,691
Leases payable current portion 73,764 20,992
Bank payable - 585,763
Notes payable - related party 88,868 59,303
---------- ------------
Total Current Liabilities 2,419,335 1,677,199
LEASES PAYABLE - 57,862
DEFICIENCY IN ASSETS
Common stock, $.01 par value; 50,000,000
shares authorized, issued and outstanding
8,997,160 issued and outstanding 8,997 19,997
Paid in capital - 622,321
Accumulated deficit (2,248,856) (905,034)
----------- ---------
Total Deficiency in Assets (2,239,859) (262,716)
----------- ---------
$ 179,477 $ 1,472,345
=========== ===========
</TABLE>
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<PAGE>
SHOPSS.COMM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months ended
June 30, June 30,
2000 1999
----------- ---------
(unaudited) (unaudited)
<S> <C> <C>
REVENUE $ 61,869 $ 269,702
Cost of revenues (109,863) (227,648)
----------- -----------
GROSS PROFIT (47,994) 42,054
GENERAL AND ADMINISTRATIVE EXPENSES 91,796 51,317
WRITEOFF OF GOODWILL 586,077 -
---------- ----------
INCOME (LOSS) FROM OPERATIONS (725,867) (9,264)
OTHER INCOME (EXPENSE)
Interest expense (696) (700)
Gain on sales of securities - 3,975
Miscellaneous Income - 897
--------- ----------
Total other income (expense) (696) 4,171
--------- ----------
LOSS BEFORE PROVISION FOR TAXES (726,564) (5,093)
INCOME TAX PROVISION - -
--------- ----------
NET LOSS $ (726,564) $ (5,093)
Weighted average shares of common stock
Outstanding 14,497,160 12,000,000
Net earnings (loss) per share $ (0.05) $ (0.00)
========= ===========
</TABLE>
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<PAGE>
SHOPSS.COMM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C>
Six months ended
----------------------
June 30, June 30,
2000 1999
---------- ----------
(unaudited) (unaudited)
REVENUE $ 1,750,893 $ 714,760
Cost of revenues (1,616,077) (600,747)
------------ -----------
GROSS PROFIT 134,816 114,013
GENERAL AND ADMINISTRATIVE EXPENSES 596,231 90,643
WRITEOFF OF GOODWILL 586,077 -
------------ ------------
INCOME (LOSS) FROM OPERATIONS (1,047,492) 23,369
OTHER INCOME (EXPENSE)
Interest expense (6,101) (700)
Gain on sales of securities - 3,975
Miscellaneous Income - 897
------------ ------------
Total other income (expense) (6,101) 4,171
------------ ------------
LOSS BEFORE PROVISION FOR TAXES (1,053,594) 27,540
------------ ------------
INCOME TAX PROVISION - -
------------ ------------
NET LOSS (1,053,594) 27,540
============ ============
Weighted average shares of common stock 16,854,303 12,000,000
outstanding
Net earnings (loss) per share $ (0.06) $ (0.00)
============ ============
</TABLE>
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<PAGE>
SHOPSS.COM, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Six months June 30,
2000 1999
---------- -------------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITES:
Net income (loss) $ (1,053,594) $ 27,540
Adjustments to reconcile net income
(loss) to net cash used
operating activities:
Depreciation 19,871 4,972
Amortization 32,560 -
Writeoff of goodwill 586,077 -
Accounts receivable 90,117 (18,404)
Inventory 27,676 12,187
Prepaid expenses 240 -
Other assets 8,882 -
Accounts payable and accrued expensed 1,045,695 (28,518)
Taxes Payable 25,314 (15,789)
Customer deposits 174,554 -
---------- -------------
NET CASH PRVIDED BY OPERATIONS 957,392 (18,013)
---------- -------------
CASH FLOWS FROM INVETING ACTIVITIES
Purchase of capital expenditures - (1,937)
---------- -------------
CASH FLOWS USED IN INVESTING ACTIVITIES - (1,937)
---------- -------------
CASH PROVIDED BY FINANCING ACTIVITIES
Advances from OSCM (396,966) 66,196
Advances form factors - (34,311)
Loans receivable from stockholder - 18,179
Bank payable (585,763) -
Leases payable (5,090) -
Notes payable - related party 29,565 338
---------- -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES (958,254) (50,402)
---------- -------------
NET (DECREASE) INCREASE IN CASH (862) 30,453
CASH, beginning of the period 891 490
---------- -------------
CASH, end of the period $ 29 $ 30,943
========= =============
Supplemental disclosures of cash flow
information:
Interest paid $ 6,101 $ 700
========= =============
Taxes paid 10,850 -
========= =============
Stock cancellation for receivable $ 923,549 $
========= =============
</TABLE>
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<PAGE>
SHOPSS.COM, INC.
CONSOLIDATED STATEMENT OF DEFICIENCY IN ASSETS
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid In Accumulated Deficiency
------------ Capital Deficit In Assets
Shares Amount ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Balance as of
December 31,1999 19,997,160 $ 19,997 $ 622,321 $ (905,034) $ (262,716)
Stock cancellation
Cancellation
Agreement (11,000,000) (11,000) (622,321) (290,228) (923,549)
Net loss - - - (1,053,594) (1,053,594)
---------- --------- --------- ---------- -----------
Balance as of
June 30, 2000
(unaudited) 8,997,160 $ 8,997 $ 0 $(2,248,856) $(2,239,859)
========== ========= ========= ========== ===========
</TABLE>
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<PAGE>
SHOPSS.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of
SHOPSS.COM, INC. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and 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 adjustments considered necessary for a
fair presentation (consisting of normal recurring accruals) have been
included. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates. Operating results for expected for the six month period
ended June 30, 2000 are not necessarily indicative of the results that may
be expected for the year ending December 31, 2000. For further
information, refer to the financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1999. Per share data for the periods are based upon the
weighted average number of shares of common stock outstanding during such
periods, plus net additional shares issued upon exercise of options and
warrants.
NOTE 2 - WRITEOFF OF GOODWILL
On June 30, 2000, the Company determined that the refocus of their business
efforts to further develop the voice over internet telephone business has
impaired the unamortized goodwill recorded of $586,077 and therefore has
recorded a charge for such goodwill.
NOTE 3 - EQUITY TRANSACTIONS
On May 12, 2000, the Company signed an agreement with OSCM, OneStop.com,
Inc. ("OSCM") to cancel $923,549 of indebtedness owed by OSCM to the
Company for the return and cancellation of 11,000,000 shares of common
stock and the issuance of a warrant to purchase up to 3,000,000 shares of
common stock of the Company for $5.00 per share for a period of two years.
This new agreement also made clarifications as to certain terms of the
original Asset Purchase Agreement between OSCM and the Company.
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<PAGE>
NOTE 4 - LETTER OF INTENT
In June 2000, the Company signed a letter of intent to acquire all of the
outstanding common stock in AccessTel, Inc. from the shareholders of
AccessTel, Inc. (the "Shareholders"). The draft share exchange agreement
provides for the issuance of 15,591,480 shares of common stock to the
Shareholders for the purchase of AccessTel, Inc. The number of shares of
the Company issuable to the Shareholders is based upon the Shareholders
receiving 75% of the issued and outstanding stock of the Company on a fully
diluted basis after taking into account certain adjustments. To the extent
that the Company is required to issue any additional shares as a result of
the raising of working capital funds in a private placement to close
concurrently with the issuance of the shares to the Shareholders and
conversion of existing indebtedness to equity, the Shareholders will be
entitled to additional shares.
NOTE 5 - SUBSEQUENT EVENTS
The Company is currently in the process of negotiating the conversion of a
substantial portion of existing indebtedness to trade creditors for the
issuance of Preferred Stock. Certain inventory has also been negotiated to
be returned for the reduction of monies due to trade creditors.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is a discussion and analysis of the Company's financial
condition and the results of operations for the quarter ended June 30,
2000. It includes the past and present condition of the Company as well as
future expectations. Any statements regarding the future of the Company are
projections and not based on any guarantees of performance. Accordingly,
actual results may differ materially from those anticipated or expressed in
these statements.
Statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this document as well
as statements made in press releases and or statements that may be made by
the Company or by officers, directors, or employees of the Company acting
on the Company's behalf that are not statements of historical or current
fact constitute "forward looking statements" within the meaning of the
Private Securities Litigation
Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties, and other unknown factors that could cause
the actual results of the Company to be materially different from the
historical results or from any future results expressed or implied by such
forward-looking statements. In addition to statements which explicitly
describe such risks and uncertainties, readers are urged to consider
statements labeled with the terms "believes", "belief", "expects",
"intends", "anticipates", or "plans" to be uncertain forward-looking
statements. The forward looking statements contained herein are also
subject generally to other risk and uncertainties that are described from
time to time in the Company's reports and registration statements filed
with the Securities and Exchange Commission.
OVERVIEW
Immediately prior to October 27, 1999, the Company was an inactive public
company. Effective October 27, 1999 (the "Closing Date"), pursuant to an
Asset Purchase Agreement, the Company purchased from OSCM the following
assets: (a) an 80% ownership interest in CCM; (b) all rights to the option
to purchase the remaining 20% ownership interest in CCM; and (c) all assets
relating to the Shopss.com virtual shopping mall owned by OSCM, including,
all software,
websites and related technology, customers and customer lists, patents,
trademarks and trade names. In exchange for the Acquired Assets, the
Company issued to OSCM 12,000,000 shares (representing approximately 60% of
its outstanding shares after giving effect to the transaction) of its
Common Stock. The Company also agreed to assume the liabilities relating
to the Shopss.com business as recorded on the financial statements of OSCM
and the liabilities relating to the option of the stockholders of CCM to
require OSCM to purchase the remaining 20% interest in CCM. Pursuant to a
subsequent agreement in principle between the Company and OSCM (a) a
clarification was made to the effect that none of the assets relating to
the Shopss.com virtual shopping mall would include any of the assets or
liabilities relating to the virtual shopping mall operated by a subsidiary
of OSCM in Israel; (b) any obligation of the Company to pay cash for the
Acquired Assets was extinguished; and (c) the holdings of OSCM in the
Company were adjusted by reducing the number of shares of Common Stock
owned by OSCM from 12,000,000 shares to 1,000,000 shares with a warrant in
favor of OSCM to purchase
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<PAGE>
up to 3,000,000 additional shares of the Company's Common Stock and (d) the
Company agreed
to extinguish all liabilities owed by OSCM to the Company (approximately
$1.6 million). Immediately after the closing of the purchase of the
Acquired Assets, the Company effected a forward split of 5.435034 for one.
After the closing of the purchase of the Acquired Assets, the Company
relied on OSCM for a substantial portion of its working capital and
provided OSCM with computers and other equipment. In view of certain
financial difficulties experienced by OSCM, OSCM was unable to provide
working capital and also was unable to pay the Company for such equipment
which had been delivered to OSCM, or the OSCM recipient companies, by the
Company. Accordingly, as of the date of this Form 10Q, the Company is
insolvent and its ability to continue in business will depend on the
raising of additional capital, either in the form of debt or equity, or a
combination thereof. However, no assurance can be given that the Company
will be successful in raising additional capital or remaining in business.
Management of the Company believes that its ability to raise any capital
will be dependent upon the acquisition of complimentary businesses,
particularly in the telecommunications business. On June 9,2000 the Company
signed a Letter of Intent with AccessTel, Inc. a telecommunications company
specializing in Voice over Internet Protocol (VoIP) and broadband wireless
technology. Based upon this Letter of Intent, the Company is attempting to
raise initial capital as to continue operations on an interim basis in the
telecommunications business. The closing of the capital raise is contingent
on the closing of the acquisition of AccessTel, Inc. If the closing occurs,
the Company will be required to raise additional funds in the near future.
The description of the business set forth below is a description of the
business previously conducted by the Company after the Closing Date.
However, in view of the current financial condition of the Company, the
Company has ceased operations pending resolution of its financial
difficulties.
RESULTS OF OPERATIONS
Results of prior periods are not necessarily indicative of the results of
operations that can be expected for any future period and do not reflect
the current mix of the Company's operations. Because the Company, was not
engaged in the Website eCommerce business or telecommunications,
comparisons of historical results of operations may not be meaningful. The
Company has derived the majority of its revenues from the Web site sales
and the Phone-Ominal telephone services.
JANUARY 2000 TO PRESENT
The Company was financed by sales on its websites, sales of its telephony
service and financing from OSCM. Due to the financial difficulties of OSCM
arising from its Israeli operations financing from OSCM became unavailable.
As a result of the lack of working capital, the Company has ceased
operations and terminated all of its employees.
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<PAGE>
COMPARISON OF THE PERIOD ENDING JUNE 30, 1999 AND 2000.
Three Months Ended June 30, 2000 vs. Three Months Ended June 30, 1999.
Shopss.com, Inc
Sales for the three months ended June 30, 2000 were approximately $61,869
or a decrease of 78% from the $269,702 in sales for the period ended June
30, 1999. The decrease in sales is due to several factors including the
cessation of operations in _________ 2000.
Cost of sales as a percentage of sales decreased 52% for the period ended
June 30, 2000. This is primarily a result of the lower sales volume. The
negative cost of sales for the three-month period ended June 30, 2000 is
due to additional costs attributed to unfulfilled sales orders.
Selling, general and administrative (SG&A) expenses increased by 78% from
$51,317 during the three month period ending June 30, 1999 to $91,796
during the same period in 2000. The higher SG&A costs are attributed to the
"wind down" of operations from the prior highly active months as compared
to the previous quarter with substantially lower volume.
During the quarter ended June 30, 2000, the Company determined the goodwill
recorded from its prior acquisition was no longer recoverable and had been
impaired. Therefore a $586,077 charge to expense has been recorded to
reflect the writedown.
The loss from operations for the quarter ended June 30, 2000 was $725,867
which represents a difference of $716,603 from the loss from operations of
$9,264 for the quarter ending June 30, 1999 for the reasons as stated
above. Net loss was ($726,564) for the period ended June 30, 2000 compared
to ($5,093) for the three months ended June 30, 1999.
COMPARISON OF THE PERIOD ENDING JUNE 30, 1999 AND 2000.
Six Months Ended June 30, 2000 vs. Six Months Ended JUNE 30, 1999.
Shopss.com, Inc
Sales for the six months ended June 30, 2000 were approximately $1,750,893
or an increase of 145% from the $714,760 in sales for the period ended June
30, 1999. The increase in sales is due to several factors including a
significant rise in membership.
Cost of sales as a percentage of sales increased 169% for the period ended
June 30, 2000. This is primarily a result of the increase in memberships
that included a free pc. Gross profit as a percentage of revenue has
decrease from 16% to 8% for the same reason as stated above.
Selling, general and administrative (SG&A) expenses increased by 554% from
$90,643 during
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<PAGE>
the period ending June 30, 1999 to $596,231 during the same period in 2000.
During the quarter ended June 30, 2000, the Company determined the goodwill
recorded from its prior acquisition was no longer recoverable and had been
impaired; therefore a $586,077 charge to expense has been recorded to
reflect the writedown.
The loss from operations for the six ending June 30, 2000 was $1,053,594
which represents a difference of $1,070,861 from the income from operations
of $27,540 for the six months ending June 30, 1999 for the reasons as
stated above. Net loss was ($1,053,594) for the period ended June 30, 2000
compared to income $27,540 for the six months ended March 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000 the Company had a working capital deficit of $2,320,759 as
compared to a working capital deficit of $37,399 at June 30, 1999. The
increase in the working capital deficit was primarily due to the increase
in membership sales and product fulfillment for the website.
The Company has suffered a loss from operations of approximately $1,053,594
for the six months ended June 30, 2000 and had a working capital deficit of
$2,320,759. Subsequent to October 26, 1999, the Company had depended in
substantial part on assistance from OSCM in terms of working capital and
had provided OSCM with computers and other properties. Because of OSCM's
financial difficulty, OSCM has been unable to provide the Company with
working capital or to pay for a substantial amount of computers and other
products provided. In addition, because of issues pertaining to OSCM's
shopping mall in Israel, the Company incurred a substantial amount of
charge backs from its credit card issuer. As of the date of this Report,
the Company is insolvent and has essentially ceased operations. The Company
is actively seeking business opportunities to be placed into the corporate
umbrella of the Company. However, there can be no assurance that completion
of business opportunities will be successful. See Note 4.
PART II. OTHER INFORMATION
Item 3. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
caused this report to be signed on its behalf by the undersigned,
thereunto duly
authorized.
Dated: SEPTEMBER 7{TH}, 2000
SHOPSS.COM, INC.
By: /s/ GERARD M. CONCA
GERARD M. CONCA, CHAIRMAN OF THE
Board and Chief Executive
Officer
By: /s/ Michelle C. Miller
Michelle C. Miller, Executive Vice
President, Chief Financial
Officer
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