UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
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 Number: 0-26093
SITE2SHOP.COM, INC.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 88-0382813 (State or other jurisdiction of incorporation or
organization) (IRS E.I.N.)
2001 West Sample Road, Suite 101, Pompano Beach, Florida 33064
(Address of principal executive offices) (Zip Code)
(954) 969-1010
(Registrant's telephone number, including area code)
Not applicable
Former name former address and former fiscal year, if changed since last report)
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 been subject to such filing requirements for the past 90 days.
Yes X No ___
As of October 31, 1999, the registrant had a total of 12,479,702 common shares
outstanding.
<PAGE>
SITE2SHOP.COM, INC. and Subsidiaries
Index to Form 10-QSB
September 30, 1999
PART I. FINANCIAL INFORMATION
Page
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Condensed Balance Sheets at December 31, 1998 and September 30, 1999 3
Condensed Consolidated Statements of Operations for the nine months
and three months ended September 30, 1998 and September 30, 1999 4
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 1998 and September 30, 1999 5
Notes to Condensed Consolidated Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis or Plan of Operation 9 - 12
PART II. OTHER INFORMATION
Item 2. Changes in Securities 13
Item 5. Other Matters 13
Item 6. Exhibits and Reports on Form 8-K 13
2
<PAGE>
<TABLE>
SITE2SHOP.COM, INC. and Subsidiaries
Condensed Consolidated Balance Sheets
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
(Audited) (Unaudited)
Assets
Current assets:
<S> <C> <C>
Cash and cash equivalents........................................... $ 41,802 $ 1,274,925
Accounts receivable, net of allowance for doubtful accounts
of $429,118 at December 31, 1998 and $43,335 at
September 30, 1999 ................................................ 634,052 1,471,566
Inventory .......................................................... -- 40,265
Prepaid and other current assets ................................... 136,423 220,040
----------- -----------
Total current assets ........................................ 812,277 3,006,796
Equipment and leasehold improvements, net ............................ 306,178 688,492
Note receivable- related party ........................................ 87,000 97,000
Other assets .......................................................... 30,995 153,409
----------- -----------
Total assets ......................................... $ 1,236,450 $ 3,945,697
=========== ============
Liabilities and stockholders' deficit Current liabilities:
Bank overdraft ..................................................... $ 89,098 $ --
Accounts payable and accrued expenses .............................. 295,427 838,619
Deferred income taxes payable ...................................... 924,000 1,142,000
Capital lease obligations- current portion ......................... 29,134 209,118
Deferred revenue ................................................... 2,640,378 2,931,847
----------- -----------
Total current liabilities ................................ 3,978,037 5,121,584
Capital lease obligations ............................................. 20,465 5,633
Stockholders' deficit:
Common stock, $.001 par value:
Authorized 150,000,000 shares; Issued and outstanding,
11,391,400 at December 31, 1998 and 12,479,702 shares
at September 30, 1999 ............................................. 11,391 12,480
Additional paid-in capital ......................................... 305,233 1,589,863
Accumulated deficit ................................................ (3,078,676) (2,783,863)
----------- -----------
Total stockholders' deficit ..................................... (2,762,052) (1,181,520)
----------- -----------
Total liabilities and stockholders' deficit ...................... $ 1,236,450 $ 3,945,697
=========== ===========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE>
<TABLE>
SITE2SHOP.COM, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
------------------ ------------------
1998 1999 1998 1999
----------- ----------- ------------- ------------
<CAPTION>
<S> <C> <C> <C> <C>
Net revenues ........................... $ 4,573,933 $ 7,375,220 $ 2,360,595 $ 2,534,292
Cost of revenues ....................... 1,075,005 1,680,076 415,382 615,394
----------- ----------- ----------- -----------
Gross margin ........................... 3,498,928 5,966,606 1,945,213 1,918,898
Selling expenses ....................... 1,485,852 2,186,316 812,155 911,907
General and administrative expenses .... 2,675,320 3,022,889 1,678,514 1,354,501
----------- ----------- ----------- -----------
4,161,172 5,209,205 2,490,669 2,266,408
----------- ----------- ----------- -----------
Operating income (loss) ................ (662,244) 485,939 (545,456) (347,510)
Income taxes (benefit) ................. 239,000 218,000 267,000 (114,000)
----------- ----------- ----------- -----------
Net income (loss) ...................... $ (901,244) $ 267,939 $ (812,456) $ (233,510)
============ =========== =========== ===========
Net income (loss) per share- basic ..... $ (0.09) $ 0.02 $ (0.07) $ (0.02)
============ =========== ========== ===========
Net income (loss) per share- diluted ... $ (0.09) $ 0.02 $ (0.07) $ (0.02)
============ =========== ========== ===========
Weighted average number of shares
outstanding- basic ................. 10,489,481 12,130,681 11,382,976 12,479,702
========== ========== ========== ==========
Weighted average number of shares
outstanding- diluted ................ 10,489,481 12,283,611 11,382,976 12,479,702
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE>
<TABLE>
SITE2SHOP.COM, INC. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine months ended September 30,
-------------------------------
1998 1999
------------ ------------
Operating activities
<S> <C> <C>
Net income (loss) ................................................ $ (901,244) $ 267,939
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization..................................... 65,585 95,660
Provision for deferred income taxes (benefit) .................... 239,000 218,000
Stock options issued for service ................................. -- 68,750
Amortization of deferred compensation ............................ -- 87,231
Changes in operating assets and liabilities:
Accounts receivable ............................................. 355,519 (837,514)
Inventory ....................................................... -- (40,265)
Prepaid expenses and other current assets ...................... (29,375) (7,642)
Other assets .................................................... (5,712) (41,777)
Accounts payable and accrued expenses ........................... (44,240) 543,192
Deferred revenue ................................................ 247,528 291,469
---------- ----------
Net cash provided by (used in) operating activities ............... (70,119) 645,043
---------- ----------
Investing activities
Capital expenditures .............................................. (79,846) (244,124)
Note receivable- related party .................................... -- (10,000)
---------- ----------
Net cash used in investing activities ............................. (79,846) (254,124)
---------- ----------
Financing activities
Proceeds from sale of common stock ................................ 250,000 1,000,000
Bank overdraft .................................................... -- (89,098)
Repayment of capital lease obligations ........................... (37,930) (68,698)
---------- ----------
Net cash provided by financing activities ......................... 212,070 842,204
---------- ----------
Net increase (decrease) in cash and cash equivalents .............. 62,105 1,233,123
Cash and cash equivalents, beginning of period .................... 87,903 41,802
---------- ----------
Cash and cash equivalents, end of period .......................... $ 150,008 $ 1,274,925
========== ==========
Supplemental disclosures of cash flow information Cash paid during the period
for:
Interest ....................................................... $ 7,364 $ 5,675
========== ==========
Taxes .......................................................... $ 2,495 $ 1,531
========== ==========
Non-cash financing activities:
Common stock issued for acquisition ............................ $ 1,366 $ --
=========== =========
Common stock issued for future services ........................ $ -- $ 243,844
=========== =========
Reacquisition of common stock .................................. $ -- $ 26,875
=========== =========
Capitalized equipment lease- related party ..................... $ -- $ 233,850
=========== =========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
<PAGE>
SITE2SHOP.COM, INC. and Subsidiaries
Notes to Condensed Consolidated Financial Statements
(Unaudited)
September 30, 1999
1. BASIS OF PRESENTATION AND OPERATIONS
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and in accordance with the instructions to Form 10-QSB and
Items 303 and 310(b) of 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 (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. Operating results for the nine-month
period ended September 30, 1999 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1999. For further
information, refer to the financial statements and footnotes thereto included in
the Site2Shop.Com, Inc. ("Site2Shop.Com" or the "Company") and Tricom Pictures &
Productions, Inc. ("Tricom") respective audited financial statements for the
year ended December 31, 1998.
On February 9, 1999, the Company entered into an agreement to merge with
Tricom, a privately held Florida corporation engaged in the marketing,
production and distribution of television programming, into a wholly owned
subsidiary. The stockholders of Tricom, three of whom are the Executive Officers
of the Company and owned 71% collectively of the common stock of the Company
(85% of Tricom) and five (remaining) stockholders collectively owned 5.6% of the
common stock of the Company (15% of Tricom). Under the terms of the agreement,
the Tricom stockholders exchanged their shares at a ratio of 100,000 to 1 for a
total of 10 million shares. As a result of the merger, the former Tricom
stockholders owned 96.8% of the shares of common stock of the Company and the
transaction is considered to be a reverse acquisition whereby Tricom is
considered to be the accounting acquirer. As both companies were under common
control, the combination of the two companies is deemed to be a purchase and
accounted for "as if" pooling of interests, whereby the combined assets and
liabilities are recorded on an historical basis. Accordingly, the Unaudited
Consolidated Statement of Operations for the nine months ended September 30,
1998 reflect the operations of Tricom for the nine months then ended and the
operations of the Company for the period of July 1, 1998 through September 30,
1998 as the Company did not engage in operations until such time. The audited
Consolidated Balance Sheet as of December 31, 1998 has been restated to reflect
the combined balance sheets of both companies as of December 31, 1998 and giving
effect to the issuance of 10 million shares of Common Stock of the Company as of
January 1, 1998.
2. SIGNIFICANT EVENTS
During the period of January 15, 1999 through April 6, 1999, the Company
issued 1,000,800 shares of common stock to 29 investors for gross proceeds of
one million dollars in connection with an offering pursuant to Rule 504 of
Regulation D of the Securities Act of 1933 as amended.
6
<PAGE>
SITE2SHOP.COM, INC. and Subsidiaries
Notes to Condensed Consolidated Financial Statements- Continued
(Unaudited)
September 30, 1999
2. SIGNIFICANT EVENTS- (Continued)
On April 1, 1999, the Company issued options to the Executive Officers and
nine employees (as an incentive to remain with the Company) to purchase 850,000
shares of common stock of the Company. The options (800,000) issued to the
Executive Officers vested upon issuance and were issued at an exercise price
equal to the fair market value at the time of grant. The options (50,000) issued
to the employees vest upon completion of 24 months of continuous service from
date of grant and were issued at an exercise price of less than fair market
value on the date of grant. The compensation expense recorded on the date of
grant approximated $68,000. All options expire on March 31, 2004.
During the period of April 6, 1999 through April 18, 1999, the Company
issued 100,000 shares of its common stock, in aggregate, to two attorneys and
two consultants for services to be rendered over a period ranging from one to
four years from the respective dates of issuance. The aggregate market value of
the issued shares based on the fair market value on the date of issuance was
$244,000.
3. RELATED PARTY TRANSACTIONS
As of February 1, 1999, the Company advanced $97,000 to a company which is
67% owned by two Executive Officers of the Company at 8% per annum. Payments
commence on August 1, 1999 and for 59 consecutive months thereafter, with the
full principal payment due with the last interest payment.
On September 1, 1999, the Company entered into an agreement to lease
$234,000 of television production equipment from a Corporation owned by two
executive officers of the Company. The lease is for a period of one year,
requiring monthly payments of $18,582 (inclusive of interest at 13.5% per annum
and sales tax). The Company may prepay the purchase of the equipment for its
residual value at the end of the lease of $23,400.
4. RECAPITALIZATION
On February 23, 1999 the Company affected a 1 for 10 reverse stock split.
All outstanding shares and per share amounts included in the accompanying
financial statements have been retroactively adjusted to reflect the reverse
stock split.
5. SEGMENT INFORMATION
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", which supersedes SFAS No. 14, "Financial Reporting for Segments of
a Business Enterprise", establishes standards for the way that public companies
report information about operating segments in annual financial statements and
requires reporting of selected information about operating segments in interim
financial statements issued to the public. It also establishes standards for
disclosures regarding products and services, geographic areas and major
customers. SFAS No. 131 defines operating segments as components of a company
about which separate financial information is available that is regularly
evaluated by management in deciding how to allocate resources and in assessing
performance. The Company believes it operates in one business and operating
segment and that adoption of SFAS No. 131 will not have a material impact on the
Company's financial statements.
7
<PAGE>
SITE2SHOP.COM, INC. and Subsidiaries
Notes to Condensed Consolidated Financial Statements- Continued
(Unaudited)
September 30, 1999
6. NET INCOME PER SHARE
Net income per share has been computed by dividing net income by the
weighted average number of shares of common stock outstanding and common stock
equivalents (diluted) outstanding during the periods, retroactively adjusted for
the reverse stock split.
7. SUBSEQUENT EVENT
On October 10, 1999 the Company issued options to the Executive Officers
and 69 employees (as an incentive to remain with the Company) to purchase
1,442,635 shares of common stock of the Company. The options vested upon
completion 24 months of employment from the date of grant and were issued at an
exercise price equal to the fair market value at the time of grant. All options
expire on October 9, 2005.
8
<PAGE>
SITE2SHOP.COM, INC. and Subsidiaries
PART I. ITEM 2- MANAGEMENT'S DISCUSSION and ANALYSIS or PLAN of OPERATIONS
SEPTEMBER 30, 1999
(UNAUDITED)
The following discussion of the results of the operations and financial
condition of Site2Shop.Com, Inc. ("Site2Shop.Com" and the "Company") should be
read in conjunction with Site2Shop.Com's Unaudited Condensed Consolidated
Financial Statements and Notes thereto included elsewhere in this report, the
Company's Audited Consolidated Financial Statements and Notes thereto for the
year ended December 31, 1998 and Tricom Pictures & Productions, Inc.'s
("Tricom") Audited Financial Statements and the Notes thereto for the year ended
December 31, 1998.
Overview
The Company is engaged in the marketing, production and distribution of
television programs. The Company produces both educational half-hour television
programs through its wholly owned subsidiary, Tricom and half-hour shop-at-home
television programming through the Site2Shop.com TV program of its Site2Shop TV,
Inc. ("Site2Shop") subsidiary. All programs are distributed to national
audiences through a combination of any and all of the following: ABC affiliates,
NBC affiliates, CBS affiliates, FOX affiliates, UPN affiliates and WB affiliates
(collectively "network affiliates"), independent television stations and
targeted cable networks. Products and services featured on the Site2Shop.com TV
program are also sold through the Company's website, other e-commerce websites
and the Company's retail store at the Pompano Square Mall, Pompano Beach,
Florida.
Part of the Company's strategy is to grow through the opening of new
offices domestically and the expansion of the number of distribution
opportunities for the participants on the Company's television programs. The
Company's continued growth may place a strain on the Company's management,
operational, financial and other resources. The Company's expansion and growth
plans will depend on its ability to identify appropriate targets and markets and
obtain the necessary financing to bring these plans to fruition. Further, the
success of the Company's efforts will depend on its ability to identify these
opportunities, attract highly qualified personnel, reduce redundancy and manage
geographically dispersed operations. There can be no assurances that the Company
will be successful in its plans of operational expansion nor the management of
such growth.
Results of Operations
COMPARISION of the NINE MONTHS ENDED SEPTEMBER 30, 1999 TO THE NINE MONTHS
ENDED SEPTEMBER 30, 1998.
The nine months ended September 30, 1999 reflect the consolidated
operations of the Company inclusive of the operations of Tricom since January 1,
1999 as a result of the merger of the two common controlled entities in
9
<PAGE>
February 1999. The nine months ended September 30, 1998 reflect the operations
of Tricom since January 1, 1998 and the Company's operations for the three month
period ended September 30, 1998 as the Company did not commence significant
operations until July 1, 1998.
Net Revenues in 1999 were $7,375,000, an increase of $2,801,000 or 61.2%
over the same period in 1998. The increase is attributable to an increase in
shop-at-home television revenues of $4,220,000, $148,000 of internet product
sales and $19,000 of retail store sales, for the period and a decline in
educational television revenues ($1,586,000) as a result of Tricom's commitment
of effort, manpower and resources to the production of Site2Shop's television
programming. At September 30, 1999, the Company's backlog (signed contracts for
which the Company has not performed any services and customer payment has yet to
be received) totaled $1,529,000 as compared to $791,000 at September 30, 1998.
Cost of Revenues increased to $1,680,000, or 56.3% and decreased to 22.8%
of net revenues in 1999 from $1,075,000 and 23.5% of net revenues in 1998. The
increase in expenses are attributable to an increase in television airtime
($155,000) and talent ($24,000) in order to meet the production requirements of
shop-at-home television programming. Additionally, the Company incurred expenses
in 1999 totaling $205,000, which primarily related to the cost of products
(featured on shop-at-home television programming) sold on the internet and the
Company's retail store.
Selling Expenses were $2,186,000 during 1999, an increase of $700,000 from
1998. Selling expenses in 1999 were 29.6% of net revenues as compared to 32.5%
in 1998. Shop-at-home television programming selling expenses in 1999 increased
by $958,000 as a result of establishing a sales infrastructure necessary to
develop and generate sales. Educational television programming expenses
decreased by $258,000 as a result of the decline in the number of educational
television programming contracts written in 1999.
General & Administrative Expenses were $3,023,000 during 1999, an increase
of $348,000 from 1998. These expenses constituted 41.0% of net revenues in 1999
as compared to 58.5% in 1998. Incremental shop-at-home television programming
expenses for 1999 totaled $249,000, primarily consisting of salaries and wages
and professional and other fees incurred inherent with being a public
corporation ($100,000).
COMPARISION of the THREE MONTHS ENDED SEPTEMBER 30, 1999 TO THE THREE MONTHS
ENDED SEPTEMBER 30, 1998.
Net Revenues in 1999 were $2,534,000, an increase of $174,000 or 7.4% over
the same period in 1998. The increase is attributable to an increase in
shop-at-home television programming revenues of $1,302,000, $53,000 from
internet product sales and $6,000 from retail store sales for the period and an
decrease in revenues at Tricom ($1,187,000) as a result of a commitment of
effort, manpower and resources to the production of shop-at-home television
programming.
Cost of Revenues increased to $615,000, or 48.2% and increased to 24.3% of
net revenues in 1999 from $415,000 and 17.6% of net revenues in 1998. The
increase in expenses are attributable to an increase in salary and wages
($50,000), television airtime ($17,000) and talent ($42,000) at Tricom in order
to meet the production requirements of shop-at-home television programming.
Additionally, expenses which are primarily related to the cost products
(featured on shop-at-home television programming) sold on the internet and the
Company's retail store totaled $39,000.
10
<PAGE>
Selling Expenses were $912,000 during 1999, an increase of $100,000 from
1998. Selling expenses in 1999 were 36.0% of net revenues as compared to 34.4%
in 1998. Selling expenses associated with shop-at-home television programming in
1999 were $311,000 as a result of establishing a sales infrastructure necessary
to develop and generate sales.
General & Administrative Expenses were $1,355,000 during 1999, a decrease
of $324,000 from 1998. These expenses constituted 53.4% of net revenues in 1999
as compared to 71.1% in 1998. Incremental shop-at-home television expenses for
1999 totaled $255,000, primarily consisting of salaries and wages ($114,000) and
professional and other fees incurred inherent with being a public corporation
($32,000). Additionally, officers' compensation ($474,000) and educational
television programming expenses ($105,000) decreased in 1999.
Liquidity and Capital Resources
The nine months ended September 30, 1999 reflect the consolidated cash
flows of the Company inclusive of the operations and cash flows of Tricom since
January 1, 1999 as a result of the merger of the two common controlled entities
in February 1999. The nine months ended September 30, 1998 reflect the
operations and cash flows of Tricom since January 1, 1998 and the operations and
cash flows of the Company, for the three months ended September 30, 1998 as the
Company did not commence significant operations until July 1, 1998.
The Company generated $645,000 from operating activities in 1999 as opposed
to utilizing $70,000 during the same period in 1998. The increase in 1999 is
attributable to net income of $268,000 (as opposed to a net loss of $901,000 in
1998), an increase in deferred income taxes payable ($218,000), accounts payable
($543,000) and deferred revenues ($291,000) offset by an increase in accounts
receivable ($838,000). Cash used in financing activities totaled $254,000 in
1999 and $80,000 in 1998 primarily as a result of capital expenditures relating
to the upgrade of computer hardware and software in order to promote operating
efficiency and addressing Year 2000 compliance. Cash generated by financing
activities in 1999 totaled $842,000 whereas cash provided in 1998 totaled
$212,000. During the period of January 15, 1999 through April 6, 1999, the
Company issued 1,000,800 shares of common stock to 29 investors for gross
proceeds of one million dollars in connection with an offering pursuant to Rule
504 of Regulation D of the Securities Act of 1933 as amended. Cash used in
financing activities in 1999 was for the repayment of a net bank overdraft of
($89,000) and repayment of capital lease obligations ($69,000).
Although the Company had a working capital deficiency of $2,115,000 and a
stockholders' deficit of $1,182,000 at September 30, 1999, the Company believes
that cash and cash equivalents and cash generated from its current level of
operations to be sufficient to meet its working capital requirements over the
balance of the current year. The Company continues to seek opportunities for
growth either through the opening of new offices, enhancing and / or increasing
production capacity, acquisitions, additional distribution channels of its
shows' participants products and services and any and all combinations thereof,
and in connection therewith, may seek to raise cash in the form of equity, bank
debt or other debt financing, or may seek to issue stock as consideration for
acquisition targets.
Year 2000 Compliance
The Company continues to address the impact of the Year 2000 issue upon its
business. The Year 2000 issue is the result of computer hardware and software
programs designed to use two digits rather than four digits to define the
applicable year. If not corrected, certain computer applications may fail or
create erroneous results at the year 2000.
11
<PAGE>
The Company has performed a comprehensive review of its computer systems to
identify those systems which could be adversely affected by the Year 2000 issue.
The Company presently believes that with modifications and/or upgrading to
existing hardware and software and conversion to new software, the Year 2000
problem will not pose a significant operational problem for the Company's
computer systems as modified, upgraded and converted. Additionally, the Company
is in the process of communicating with suppliers, customers, financial
institutions and others with whom it conducts business transactions to assess
whether they are Year 2000 compliant. At this time, the company has not found
nor is aware of any material deficiencies in any significant customer's,
vendor's or financial institution's computer operations.
The Company replaced substantial portions of its computer hardware and
software during 1999, as it integrated operations of Tricom. To date, the
Company has spent $148,000 toward evaluating, modifying, upgrading and
converting existing computer hardware and software and anticipates that the
total expenditure associated with the Year 2000 issue will approximate $160,000.
Costs to address Year 2000 issues with third parties have not been estimated,
though the Company expects that a substantial portion of such costs would be
borne by the respective parties.
The Company has completed testing of all modifications, upgrades and
conversions. Based on the results to-date of the Company's review and the
modifications, upgrades and conversions already undertaken, management does not
believe that the Year 2000 issue will have a materially adverse impact on the
Company's operations, liquidity or financial condition nor is a contingency plan
warranted at this time. However, under a "worst case scenario", an interruption
of telecommunications services for an extended period of time could impede the
Company from garnering new business, thus having a material adverse effect on
the Company's operations and financial condition.
Statement Regarding Forward-Looking Statements.
This Quarterly Report includes "forward-looking statements" within the
meaning of Section 27A of the Exchange Act which represent the Company's
expectations or beliefs concerning future events that involve risks and
uncertainties, including but not limited to the demand for the Company's
products and services and the costs associated with such goods and services. All
other statements other than statements of historical fact included in this
Quarterly Report including, without limitation, the statements under
"Management's Discussion and Analysis or Plan of Operation" and elsewhere in
this Quarterly Report, are forward-looking statements. While the Company
believes that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct.
12
<PAGE>
PART II. OTHER INFORMATION
Item 2. Changes in Securities
During the period of January 15, 1999 through April 6, 1999, the Company
issued 1,000,800 shares of common stock to 29 investors for gross proceeds of
one million dollars in connection with an offering pursuant to Rule 504 of
Regulation D of the Securities Act of 1933 as amended.
During the period of April 6, 1999 through April 18, 1999, the Company
issued 100,000 shares of its common stock, in aggregate, to two attorneys and
two consultants for services to be rendered over a period ranging from one to
four years from the respective dates of issuance. The aggregate market value of
the issued shares based on the fair market value on the date of issuance was
$244,000.
Item 5. Other Information
On February 23, 1999 the Company affected a 1 for 10 reverse stock split to
all shareholders of record as of February 22, 1999.
On April 1, 1999, the Company issued options to the Executive Officers and
nine employees (as an incentive to remain with the Company) to purchase 850,000
shares of common stock of the Company. The options (800,000) issued to the
Executive Officers vested upon issuance and were issued at an exercise price
equal to the fair market value at the time of grant. The options (50,000) issued
to the employees vest upon completion of 24 months of continuous service from
date of grant and were issued at an exercise price of less than fair market
value on the date of grant. The compensation expense recorded on the date of
grant approximated $68,000. All options expire on March 31, 2004.
On October 10, 1999 the Company issued options to the Executive Officers
and 69 employees (as an incentive to remain with the Company) to purchase
1,442,635 shares of common stock of the Company. The options vested upon
completion 24 months of employment from the date of grant and were issued at an
exercise price equal to the fair market value at the time of grant. All options
expire on October 9, 2005.
Item 6. Exhibits and Reports on Form 8-K
None
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf by the
undersigned, thereunto duly authorized.
Site2Shop.Com, Inc.
(Registrant)
/s/ Mark Alfieri /s/ Mark Weicher
Mark Alfieri Mark Weicher
President Chief Financial Officer
Dated: November 8, 1999
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
ART. 5 FDS FOR 3RD QUARTER 10-QSB
</LEGEND>
<CIK> 0001066849
<NAME> jn#diy4e
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 1,274,925
<SECURITIES> 0
<RECEIVABLES> 1,514,901
<ALLOWANCES> (43,335)
<INVENTORY> 40,265
<CURRENT-ASSETS> 3,006,796
<PP&E> 1,071,355
<DEPRECIATION> (382,863)
<TOTAL-ASSETS> 3,945,697
<CURRENT-LIABILITIES> 5,121,584
<BONDS> 5,633
0
0
<COMMON> 12,481
<OTHER-SE> (1,194,000)
<TOTAL-LIABILITY-AND-EQUITY> 3,945,697
<SALES> 7,375,220
<TOTAL-REVENUES> 7,375,220
<CGS> 1,680,076
<TOTAL-COSTS> 5,056,992
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 146,538
<INTEREST-EXPENSE> 5,675
<INCOME-PRETAX> 485,939
<INCOME-TAX> 218,000
<INCOME-CONTINUING> 267,939
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 267,939
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
