U. S. 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 December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
-------------- ------------------
Commission File No. 000-29994
ANYTHING INTERNET CORPORATION
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Colorado 84-1425882
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
3020 North El Paso, Ste. 103, Colorado Springs, Colorado 80907
---------------------------------------------------------------
(Address of Principal Executive offices)
(719) 227-1903
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
------- -------
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at January 31, 2000
----- -------------------------------
Common Stock, no par value 1,632,066
Convertible Class A Preferred, no par value 1,053,055
Transitional Small Business Disclosure Form (check one):
Yes No X
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ANYTHING INTERNET CORPORATION
TABLE OF CONTENTS
FORM 10-QSB
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements, Unaudited
Unaudited Consolidated Balance Sheets
at December 31, 1999 and December 31, 1998
Unaudited Consolidated Statement of Operations
for the three months ended December 31, 1999 and 1998
Unaudited Consolidated Statement of Cash Flow for the
three months ended December 31, 1999 and 1998
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis or
Plan of Operation
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibits
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
CONSOLIDATED BALANCE SHEET
ASSETS
December 31, December 31,
1999 1998
(unaudited) (unaudited)
-------------- --------------
<S> <C> <C>
Current assets:
Cash $ 65,149 $ 24,597
Accounts receivable 7,424 57,681
Inventory -0- 12,244
Prepaid expenses and other current assets 25,000 10,129
-------------- --------------
97,573 104,651
-------------- --------------
Furniture and fixtures:
Office furniture and equipment 67,561 45,996
Less accumulated depreciation (23,720) (6,630)
-------------- --------------
43,841 39,366
-------------- --------------
Other assets:
Software development costs, less
Accumulated amortization of
$27,905 and $10,372, respectively 47,184 43,354
Note receivable -0- 18,023
Deposits 2,641 1,380
-------------- --------------
49,825 62,757
-------------- --------------
$ 191,239 $ 206,774
============== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' DEFICIT
December 31, December 31,
1999 1998
(unaudited) (unaudited)
--------------- ----------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 494,594 $ 42,525
Accrued expenses 115,920 19,373
Notes payable - line of credit 52,996 66,366
Notes payable - related party 75,000 -0-
Prepaid sales -0- 10,130
--------------- ----------------
738,510 138,394
--------------- ----------------
Stockholders' equity:
Convertible Preferred Stock, Class A,
No par value; 10,000,000 shares authorized;
761,173 and no shares issued
and outstanding, respectively 372,840 -0-
Common stock, Class A, no par value;
50,000,000 shares authorized;
1,882,854 and 3,074,400 issued
and outstanding, respectively 511,360 231,000
Common stock subscribed (34,000 shares) 55,000 68,000
Stock subscription receivable (55,000) (68,000)
Accumulated deficit (1,431,471) (162,620)
--------------- ----------------
(547,271) 68,380
--------------- ----------------
$ 191,239 $ 206,774
=============== ================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
STATEMENT OF OPERATIONS
(unaudited)
Three Months - Six Months Ending -
Ending
December 31, December 31, December 31,
1999 1999 1998
-------------- -------------- --------------
<S> <C> <C> <C>
Sales $ 13,879 $ 583,628 $ 1,650,464
Cost of sales 5,484 593,022 1,574,773
-------------- -------------- --------------
Gross profit 8,395 (9,394) 75,691
Selling, general and
administrative expenses 549,171 783,934 213,548
(Loss) from operations (540,776) (793,328) (137,857)
Other income (expense):
Bad debt write-off (14,167) (14,167) -0-
Interest expense (6,356) (7,526) -0-
Income (loss) before provision for
income taxes (561,299) (815,021) (137,857)
Provision for income tax - - -
Net income (loss) (561,299) (815,021) (137,857)
============== ============== ==============
Net income (loss) per share
(basic and fully diluted) ($0.21) ($0.29) ($0.46)
============== ============== ==============
Weighted average number of common
shares outstanding 2,698,320 2,794,298 3,020,00
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
- Six Months Ending -
December 31, 1999 December 31, 1998
------------------- -------------------
<S> <C> <C>
Cash flows from operating
activities:
Net operating deficit ($815,021) ($157,414)
Adjustments to
Reconcile net loss to
net cash provided:
Depreciation and
Mortgage expense 8,861 10,021
Net changes in
Operating assets
And liabilities:
Accounts receivable 181,265 (42,534)
Inventories 8,091 -
Deposits 100 -
Other assets - (22,273)
Prepaid expenses (8,785)
Notes receivable - (18,023)
Accounts payable
and accrued
expenses 156,953 48,568
------------------- -------------------
Net cash used by
Operations (468,536) (181,655)
------------------- -------------------
Cash flow from investment
Activities:
Acquisition of office
Equipment (4,399) (31,535)
Software development
Costs incurred (7,584) (27,654)
------------------- -------------------
Net cash used by
Investment activities (11,983) (59,189)
Cash flow from financing
Activities:
Proceeds from borrowing 23,942 34,328
Bank reserve (22,051) -
Note receivable 18,023 -
Loan repayments - (25,000)
Sale of stock 524,300 194,000
Stock issued for board
of directors
compensation - 800
Net cash used by ------------------- -------------------
Financing activities 544,214 204,128
Net increase (decrease) 63,695
in cash (36,716)
Cash at beginning of the
Period 1,454 42,114
------------------- -------------------
Cash at end of the period $ 65,149 $ 5,398
=================== ===================
Supplemental schedule of
Non-cash financing
Transactions
Issuance of 20,000 common
Shares for board of
Directors compensation
Issuance of 125,000
Common shares for note
Repayment
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Anything Internet Corporation
Consolidated Statement of Stockholders' Equity
For the Period From October 1, 1999 to December 31, 1999
(Unaudited)
Common Stock Subscribed
Common Stock Preferred Stock -------------------------------
Class A Class A Stock Stock-
Number Number Subscription Number Accumulated Holders'
of Shares Amount of Shares Amount Receivable of Shares Amounts Deficit Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------- ---------- ------- -------- --------- ------- -------- ------------ ----------
Balance at September
30, 1999 3,048,900 $ 382,900 - $ - $(63,000) 31,500 $63,000 $ (870,172) $(487,272)
Purchase of stock
Warrants 1,000 3,000 3,000
Issuance for services
(Bill Kroske) 3,300 3,300 3,300
Issuance for services
(Donald Prosser) 5,000 5,000 5,000
Issuance for services
(Bill Kroske) 30,000 30,000 30,000
Issuance for services
(Donald Prosser) 35,000 35,000 35,000
Issuance for services
(Bill Kroske) 100,000 100,000 100,000
Issuance for services
(Karen Sebastiani) 7,000 7,000 7,000
Issuance for services
(Lawrence Stanley) 7,000 7,000 7,000
Issuance for services
(Bill Kroske) 25,000 25,000 25,000
Issuance for services
(Lawrence Stanley) 20,000 20,000 20,000
Issuance for services
(Robbie Blair) 50,000 50,000 50,000
Issuance for services
(John Lonnquist) 9,000 9,000 9,000
Issuance for marketing (110,000) 14,000 55,000 14,000
Private Placement (126,000) 63,000 125,000 125,000
Private placement (165,000) 82,500 60,000 60,000
Purchase of stock
subscriptions 4,000 8,000 8,000 (4,000) (8,000) 8,000
Retirement of common
shares and issuance of
preferred shares in
tender offer (1,121,346) (187,840) 560,673 187,840 -
Net loss for period (561,299) (561,299)
----------- ---------- ------- -------- --------- ------- -------- ------------ ----------
Balance at December 31, 1999
1,822,854 $ 511,360 761,173 $372,840 $(55,000) 27,500 $55,000 $(1,431,471) $(547,271)
=========== ========== ======= ======== ========= ======= ======== ============ ==========
</TABLE>
<PAGE>
ANYTHING INTERNET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(unaudited)
For the period from October 1, 1999 to December 31, 1999
NOTE 1: BASIS OF PRESENTATION:
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and do not include all of the information
and disclosures required by generally accepted accounting principles for
complete financial statements. All adjustments which are, in the opinion of
management, necessary for a fair presentation of the results of operations for
the interim periods have been made and are of a recurring nature unless
otherwise disclosed herein. The results of operations for such interim periods
are not necessarily indicative of operations for a full year.
NOTE 2: ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
Anything Internet Corporation ('Anything Internet", the "Company"), was
incorporated in the State of Colorado on August 15, 1997. The Company markets
and distributes computers and related accessory products by using the Internet
as the exclusive distribution channel. On August 28, 1998, Anything, Inc.
changed its name to Anything Internet Corporation, which was made effective
through an amendment to its Articles of Incorporation filed with the Secretary
of State of Colorado on August 31, 1998.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Income tax
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss
carryforwards and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
<PAGE>
Net income (loss) per share
The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon conversion of the Company's preferred
stock are not included in the computation if the effect of such inclusion would
be anti-dilutive and would increase the earnings or decrease loss per share.
Inventory
Inventory consists of consigned finished goods. Inventories are valued at the
lower of cost or market using the first-in, first-out (FIFO) method.
Property and equipment
Property and equipment are recorded at cost and depreciated under accelerated
methods over an estimated life of five to seven years.
Software development costs
It is the Company's policy to capitalize major software development activities
to reflect the value of the software over its anticipated useful life. The
Company amortizes this software over a three year period from the implementation
of the software.
Accounts receivable
The Company reviews accounts receivable periodically for collectability and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed necessary.
Products and services, geographic areas and major customers
Company sales were derived from marketing and distributing computers and related
products over the Internet, were to external customers, and were domestic. The
Company had no one major customer accounting for over 10% of its sales. The
Company's long term assets are all held domestically.
Revenue Recognition
The Company recognizes revenue when a product is shipped to customers either
from the Company's inventory or when shipped from distributors' warehouses
directly to the customer. The Company assumes title to the product when it is
shipped either to the Company or directly to the Company's customer.
NOTE 3. RELATED PARTY TRANSACTIONS
On December 31, 1998 the Company loaned Robert C. Schick, an officer, $18,023 at
a rate of 3% per annum. The note matures and is payable in full on December 31,
1999.
On June 16, 1999, the Company borrowed $75,000 from a related corporation with
an ownership interest in Anything Internet Corporation. The short-term loan was
made at a rate of 12% per annum, and comes due July 30, 2000.
<PAGE>
NOTE 4. LEASE COMMITMENT
Effective June 3, 1999, the Company extended its lease agreement for office
space in Colorado Springs, Colorado, and effective March, 1999, entered into a
lease agreement for office space in Tampa, Florida. Both leases are far a period
of twelve-months and can be renewed at terms and conditions to be established at
expiration date. Lease expense incurred for the year ended December 31, 1999 was
approximately $24,500. The remaining minimum future rental payments, all in
1999, are $20,000.
NOTE 5. LINES OF CREDIT
The Company has also established a $50,000 line of credit with US Bank of
Colorado Springs, Colorado. Payments are due on the 15th of each month and
interest accrues at the rate of 10.45% per annum. At December 31, 1999 the
Company's outstanding balance on this credit line was $52,158.
NOTE 6. INCOME TAXES
Deferred income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses. These loss
carryovers are limited under the Internal Revenue Code should a significant
change in ownership occur.
At December 31, 1999 the Company had approximately $1,425,000 of unused federal
net operating loss carryforwards, which begin to expire in the year 2019. A
deferred tax asset has been offset by 100% valuation allowance. The Company
accounts for income taxes pursuant to SPAS 109. The components of the Company's
assets and liabilities as follows:
<TABLE>
<CAPTION>
December 31,1999 December 31, 1998
------------------- --------------------
<S> <C> <C>
Deferred tax liability $ - $ -
Deferred tax asset arising from:
Net operating loss carryforwards 529,041 55,290
------------------- --------------------
529,041 55,290
Valuation allowance (529,041) (55,290)
------------------- --------------------
Net Deferred Taxes $ - $ -
The income tax (benefit) consists of the following:
Current:
Federal $ - $ -
State - -
------------------- --------------------
Deferred:
Federal ($464,646) ($50,412)
State (64,395) (4,878)
------------------- --------------------
($529,041) ($55,290)
</TABLE>
No difference exists between these amounts and amounts computed at federal and
state statutory rates. The net change in 1999 in the total valuation allowance
was $81,516.
<PAGE>
NOTE 7. STOCKHOLDERS' EQUITY
Common stock
The Company as of December 31, 1999 had 50,000,000 shares of authorized common
stock, no par value, with 2,302,079 shares issued and outstanding.
In May, 1998 an officer provided the company with $1,400 in cash and web page
design and development valued at $16,600. In August, 1998 the Company exchanged
1,950 shares of common stock for debt cancellation by an officer in the amount
of $10,500. Later in August, 1998, the Company retired all its 7,750 currently
outstanding shares, in addition to 4,200 retired earlier in the year, in
exchange for 500,000 shares of new Class A common stock. Also in August, 1998,
the Company purchased 200,000 Class A common shares of Banyan Corporation valued
at $40,000 in exchange for 1,000,000 Class A common shares of the Company. In
addition the Company issued 1,300,000 shares of Class A common stock for
management consulting, legal and investor relations services valued at $52,000
to parties unrelated to the Company or Banyan Corporation. In September, 1998,
the Company issued to the members of its Board of Directors 20,000 shares of
Class A common stock for services. In December, 1998 and January, 1999 the
Company sold 200,000 shares of Class A common stock for $200,000 in a private
placement. In January, 1999 the Company issued 20,400 common shares to directors
and others for compensation valued at $20,400. In November 1999 the Company
issued 291,300 shares to new officers, consultants and the new board of
directors for their services to implement the new business plan.
Warrants
As of December 31, 1999, the Company had 200,000 Common Stock Purchase Warrants
outstanding (the 'Warrants'), issued in conjunction with a private placement
completed in January, 1999. Each Warrant entitles the holder to purchase one
share of the Company's Class A common stock at an exercise price of $3.00 per
share through January 24, 2000, at which time the Warrants expire. The Company
may redeem the Warrants at a price of $0.01 per Warrant, at any time through
January 24, 2000 upon not less than 30 days, nor more than 60 days, prior
written notice, provided that the closing bid quotation for the common stock as
reported by any quotation service on which the common stock is quoted is at
least $4.00 for ten consecutive trading sessions ending on the two days prior to
the day on which notice is given. During the first quarter, 6,000 have been paid
for and issued. On January 21, 2000 the board of directors voted to extend the
Warrants forty-five days.
Stock options
As of December 31, 1999, the Company made a stock option award to directors and
others and adopted an employee stock benefit plan, which are described below.
The Company applies ADS Opinion 25 and related Interpretations in accounting for
stock options.
Accordingly, no compensation cost has been recognized for its stock option award
to directors and its employee stock benefit plan, nor was any compensation cost
charged against income under the award or plan in 1999. Had compensation cost
for the Company's stock option award and employee stock benefit plan been
determined based on the fair value at The grant dates for awards under the stock
option award and employee stock benefit plan consistent with the method of FASS
Statement 123, the Company's net income and earnings per share would have been
reduced to the pro forma amounts indicated below:
<PAGE>
<TABLE>
<CAPTION>
1999
------------
<S> <C> <C>
Net income (loss) As reported ($815,021)
Pro forma ($1,720,722)
Basic and fully diluted
earnings per share As reported ($0.29)
Pro form ($0.57)
</TABLE>
Stock option award
In August, 1998, the Company granted stock options, exercisable immediately
(except as noted below), to certain officers and directors as compensation for
services, to purchase common shares of the Company as follows:
<TABLE>
<CAPTION>
Amount Price/Share Expiration Date
<C> <C> <S>
500,000 $ 1 February 29, 2000
50,000 $ 40 April 1, 2002
25,000 $ 75 April 1, 2002
25,000 $ 100 April 1, 2002
*10,000 $ 3 March 31, 2003
70,000 $ 1 January 6, 2001
700,000 $ 1 October 20, 2002
#30,000 $ 1 November 23, 2001
*200,000 $ 1 November 23, 2004
@100,000 $ 1 November 23, 2005
<FN>
* Option vests over 3 years.
@ Option vests in years 4 and 5
# Option vests over 3 months
</TABLE>
Employee stock option plan
On June 4, 1999 the Company awarded stock options to four employees under an
employee stock option plan. 200,000 common shares were reserved under the plan,
which expires in June, 2007. Each employee received options to purchase 2,500
common shares (10,000 shares total). The options vest at 500 shares per year
per employee, beginning June 4, 2000, at an exercise price of $3 per share.
<PAGE>
A summary of the status of the Company's stock options as of December 31, 1999,
and changes during the year ending on that date is presented below:
<TABLE>
<CAPTION>
December 31, 1999
------------------------------
Weighted Avg.
Options Shares Exercise Price
- ---------------------------------- -------------- --------------
<S> <C> <C>
Outstanding at beginning of period - $ -
Granted 1,720,000 $ 4.67
Exercised - -
Forfeited - -
-------------- --------------
Outstanding at end of period 1,720,000 $ 4.67
Options exercisable at period end 1,393,333
Weighted average fair value of
Options granted during the
Period $ 1.25
</TABLE>
The following table summarizes information about stock options outstanding at
December 31, 1999.
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------ ----------------------
Weighted Avg. Weighted Weighted
Range of Number Remaining Avg. Number Avg.
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices at 12/31/99 Life Price at 12/31/99 Price
- ------------- ----------- ----------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
1.00-$100.00 1,720,000 21.75 months $ 4.67 1,393,333 $ 5.56
</TABLE>
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations
Three Months Ending December 31, 1999
The Company underwent a top-to-bottom review of its business plan during the
fiscal quarter ending December 31, 1999. Afterwards it began implementing
significant changes to its business model and management team.
Two officers and directors, J. Scott Sitra, President, Chief Executive Officer
and Director, and Cameron B. Yost, Secretary and Director, resigned from their
respective positions early in the quarter. Lawrence Stanley was appointed
interim co-President and CEO as well as to the Board; Karen Sebastiani was
appointed Secretary and to the Board.
After an exhaustive search, the Company appointed William Kroske, Ph.D. to the
positions of President, CEO and Director. Shortly thereafter the Company
appointed Donald Prosser to the positions of Chief Financial Officer and
Director.
Under the guidance of new management, the Company discontinued conducting
business as a low-cost, low-margin Internet retailer to focus on higher margin
products. As a result, revenues declined substantially during this transitional
quarter to $13,879. Gross profits were $8,395, and gross margins jumped to 60%.
Subsequently, the Company began development on a new web portal site,
www.anyreminder.com, which was introduced in late January 2000.
The new web portal is a free reminder service offered to all Internet users that
allows members to enter a variety of dates (ie. birthdays, anniversaries,
weddings). When a key date approaches, the member will automatically receive an
e-mail to remind them of the pending date and give them some suggestive gifts
that would be appropriate for the occasion.
The value of the new portal is in its low-cost ability to rapidly grow the
Company's customer database and respective demographic data. The database will
not be sold or "spammed" but used to further the Company's own high-margin
e-commerce efforts. The cost of building a customer database through offering
free service is substantially less than those previously implemented in the
Company's e-commerce efforts, plus it gives the Company the ability to generate
significant advertising revenue.
Six Months Ending December 31, 1999 Compared to Six Months Ending December 31,
1998
Net sales for the period ending December 31, 1999 were $583,628, a decrease of
65% over $1,650,454 for the same period a year ago. All of these sales were a
result of sales generated primarily through the Company's Internet storefronts
AnythingPC.com, AnythingMAC.com, AnythingUNIX.com and AnythingCoffee.com. The
decrease in sales was the result of the Company significantly altering its
business model and commencing those changes.
Gross profits for the period ending December 31, 1999 were ($9,394). This
represents an decrease in gross profits of 112% over $75,691 for the same period
a year ago. Gross profit margins decreased from 4.6% of sales to (1.6%) of
sales as a result of rapidly decreasing gross profit margins for non-specialty
Internet retailers.
Selling, general and administrative (SG&A) expenses for the period ending
December 31, 1999 were $783,934 which represents a 267% increase from $213,548
for the same period a year ago. Of these expenses, $549,776, or 70%, were
accrued during the fiscal quarter ending December 31, 1999 as a result of
changes made in the Company's business model and expenses incurred for
implementing these changes and developing the Company's new web portal,
www.anyreminder.com.
The net loss for the period ending December 31, 1999 amounted to ($815,021), or
($0.29) a share. This represents and increase of 491% compared to ($137,857),
or ($.46) a share, for the same period a year ago. The increase in net loss was
the result of taking one-time write-offs for bad debt, increased expenses
required to implement changes in the Company's business model, and new
development work on the Company's new web portal, www.anyreminder.com. There
were 1,632,066 shares issued and outstanding as of January 31, 2000.
Liquidity and Capital Resources
The Company's operations to date have concentrated on developing its Internet
storefronts, building brand recognition and a loyal customer following, and
securing the financing necessary to fund the development, operations and
expansion of its business.
As of December 31, 1999, the Company had $65,149 cash on hand, accounts
receivable of $7,424, and a receivable note of $55,000. The Company had several
supplier-based revolving lines of credit, including Tech Data, $150,000; Ingram
Micro, $150,000; Merisel, $65,000; and Pinacor, $5,000.
Net cash used by operating activities for the period ending December 31, 1999
totaled ($468,536) compared to ($171,950) for the same period a year ago. The
increase in negative cash flow is the result of the Company's increased spending
to change its business model and exiting the low-cost, low-margin Internet
e-commerce retailer business.
Net cash used by investing activities totaled ($11,983) for the period ending
December 31, 1999 compared to ($59,189) for the same period a year ago. The
decrease in investing activities was the result of reduced office equipment
acquisition costs and software development activities relating to the Company's
low-cost, low-margin Internet e-commerce storefronts.
Net cash provided by financing activities totaled $544,214 for the period ending
December 31, 1999 compared to $204,128. The cash provided for by financing
activities was generated primarily through the sale of restricted equity
securities.
The Company expects to continue making significant investments in the future to
support its overall growth. Currently, it is anticipated that ongoing
operations will be sufficiently financed from the net proceeds of the
anticipated exercise of the warrants the common stock that were registered this
year, cash on hand, accounts receivable, and from borrowing activities and sales
of debt and equity instruments. However, as indicated in the Company's most
recent financial statements available herein, while operating activities provide
some cash flow, the Company is currently cash flow negative. There can be no
assurances that the Company's ongoing operations will begin to generate a
positive cash flow or that unforeseen events may not require more working
capital than the Company currently has at its disposal.
Year 2000 Compliance
The Company did not experience any disruptions to its operations or computer
systems as a result of Year 2000.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
In the quarter ending December 31, 1999 the Company received $8,000 as
payment for common stock subscribed, but unpaid for, on January 26, 1999. The
price of the shares was $2.00 a share. For additional details see Item 26 of
the Company's registration statement on Form SB-2 filed with the Securities and
Exchange Commission on February 4, 1999.
On October 20, 1999, the Company granted J. Scott Sitra, the Company's
former President and CEO, options to purchase 700,000 shares of common stock at
$1.00 a share. The options were granted because Mr. Sitra was never paid a
salary or received any Company benefits, never claimed reimbursement for
out-of-pocket expenses, paid some of the Company's accounts payable directly
without seeking reimbursement, and agreed, for a limited period of time, to
assist with future SEC filings. The options vested immediately and expire three
years from the date of granting.
On October 20, 1999, the Company issued 7,000 shares of common stock valued
at $1 a share to Karen Sebastiani for becoming the Company's Secretary and
serving as a Director on the Board of Directors. This transaction was exempt
from registration under Section 4(2) of the Securities Act and Rule 144
thereunder. Stock issued under these exemptions carries certain resale
restrictions and the stock certificates bear restrictive legends.
On October 20, 1999, the Company issued 7,000 shares of common stock valued
at $1 a share to Lawrence Stanley for serving on the Board of Directors. This
transaction was exempt from registration under Section 4(2) of the Securities
Act and Rule 144 thereunder. Stock issued under these exemptions carries
certain resale restrictions and the stock certificates bear restrictive
legends.
On October 29, 1999, the Company issued 3,300 shares of common stock valued
at $1 a share to William Kroske, Ph.D., a business consultant, for services
rendered to the Company. This transaction was exempt from registration under
Section 4(2) of the Securities Act and Rule 144 thereunder. Stock issued under
these exemptions carries certain resale restrictions and the stock certificates
bear restrictive legends.
On November 11, 1999, the Company issued 55,000 shares of Convertible Class
A Preferred stock valued at $1 a share to a marketing and consulting firm. This
transaction was exempt from registration under Section 4(2) of the Securities
Act and Rule 144 thereunder. Stock issued under these exemptions carries
certain resale restrictions and the stock certificates bear restrictive
legends.
On November 15, 1999, the Company issued 30,000 shares of common stock
valued at $1 a share to William Kroske, Ph.D., a business consultant, for
developing and implementing a new marketing concept and web portal. This
transaction was exempt from registration under Section 4(2) of the Securities
Act and Rule 144 thereunder. Stock issued under these exemptions carries
certain resale restrictions and the stock certificates bear restrictive
legends.
On November 15, 1999, the Company issued 20,000 shares of common stock
valued at $1 a share to Lawrence Stanley for his accounting services and serving
as interim-President and Chief Executive Officer. This transaction was exempt
from registration under Section 4(2) of the Securities Act and Rule 144
thereunder. Stock issued under these exemptions carries certain resale
restrictions and the stock certificates bear restrictive legends.
On November 15, 1999, the Company issued 25,000 shares of common stock
valued at $1 a share to William Kroske, Ph.D., a business consultant, for
services rendered to the Company. This transaction was exempt from registration
under Section 4(2) of the Securities Act and Rule 144 thereunder. Stock issued
under these exemptions carries certain resale restrictions and the stock
certificates bear restrictive legends.
On November 15, 1999, the Company issued 50,000 shares of common stock
valued at $1 a share to Robbie Blair for services rendered to the Company in
relation to developing the new web portal, www.anyreminder.com. This
transaction was exempt from registration under Section 4(2) of the Securities
Act and Rule 144 thereunder. Stock issued under these exemptions carries
certain resale restrictions and the stock certificates bear restrictive
legends.
On November 23, 1999, the Company issued 82,500 shares of Convertible Class
A Preferred Stock in exchange for a $70,000 private investment into the Company.
This transaction was exempt from registration under Section 4(2) of the
Securities Act and Rule 144 thereunder. Stock issued under these exemptions
carries certain resale restrictions and the stock certificates bear restrictive
legends.
On November 23, 1999, the Company granted Steve Fischer, a business
consultant, options to purchase 30,000 shares of common stock at $1.00 a share.
The options vested at a rate of one-third per month from the date of issue and
expire three years from the date of granting.
On November 30, 1999, the Company issued 35,000 shares of common stock
valued at $1 a share to Don Prosser for becoming the Company's new Chief
Financial Officer. This transaction was exempt from registration under Section
4(2) of the Securities Act and Rule 144 thereunder. Stock issued under these
exemptions carries certain resale restrictions and the stock certificates bear
restrictive legends.
On November 30, 1999, the Company issued 100,000 shares of common stock
valued at $1 a share to William Kroske, Ph.D. for becoming the Company's new
President and Chief Executive Officer. This transaction was exempt from
registration under Section 4(2) of the Securities Act and Rule 144 thereunder.
Stock issued under these exemptions carries certain resale restrictions and the
stock certificates bear restrictive legends.
On November 30, 1999, the Company granted William Kroske, Ph.D, the
Company's President and CEO, options to purchase 200,000 shares of common stock
at $1.00 a share. The options vest over a period of three years, one-third a
year, and expire five years from the date of granting.
On November 30, 1999, the Company granted William Kroske, Ph.D, the
Company's President and CEO, options to purchase 100,000 shares of common stock
at $1.00 a share. Half of the options vest on the fourth year after the date of
granting and half of the options vest on the fifth year after the date of
granting. The options expire on the sixth year after the date of granting.
On December 6, 1999, the Company issued 5,000 shares of common stock valued
at $1 a share to Donald Prosser for serving as a Director on the Board of
Directors. This transaction was exempt from registration under Section 4(2) of
the Securities Act and Rule 144 thereunder. Stock issued under these exemptions
carries certain resale restrictions and the stock certificates bear restrictive
legends.
On December 6, 1999, the Company issued 63,000 shares of Convertible Class
A Preferred Stock in exchange for a $125,000 private placement into the Company.
This transaction was exempt from registration under Section 4(2) of the
Securities Act and Rule 144 thereunder. Stock issued under these exemptions
carries certain resale restrictions and the stock certificates bear restrictive
legends.
On December 6, 1999, the Company issued 9,000 shares of common stock valued
at $1 a share to John Lonnquist for services rendered as corporate legal
counsel. This transaction was exempt from registration under Section 4(2) of
the Securities Act and Rule 144 thereunder. Stock issued under these exemptions
carries certain resale restrictions and the stock certificates bear restrictive
legends.
Item 4. Submission of Matters to a Vote of Security Holders
On October 29, 1999 the Company held its Annual Shareholders meeting at its
headquarters located at 3020 North El Paso, Suite 103, Colorado Springs,
Colorado 80907.
At the meeting, J. Scott Sitra and Cameron B. Yost declined to accept their
nominations to the Board of Directors. Subsequently, a vote was held and
Directors Robert C. Schick and Alfred W. Delisle were reaffirmed to their
positions on the Board.
Shareholders also voted in favor of Ronald R. Chadwick, P.C., CPA to be the
Company's independent auditor for 1998 and 1999. There were 3,080,400 shares
and outstanding; 1,494,945 voted in all voting matters.
Robert C. Schick receive 1,478,030 votes for, zero votes against, and
16,915 votes abstained.
Alfred W. Delise received 1,478,030 votes for, zero votes against, and
16,915 votes abstained.
In the matter of ratifying Ronald R. Chadwick, P.C., CPA as the Company's
independent auditor, shareholders cast 1,494,256 votes for, 689 votes
against, and zero votes abstained.
The proxy statement circulated in accordance with Regulation 14A of the Exchange
Act is incorporated by reference to the Company's filing made on Schedule 14A on
October 8, 1999.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
--------
27.1 Financial Data Schedule
(B) Reports on Form 8-K
----------------------
The Company filed current reports on Form 8-K on October 22, 1999 and December
13, 1999.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Anything Internet Corporation
(Registrant)
Dated: February 14, 2000 By: /s/ William Kroske
-----------------------
William Kroske, Ph.D.
President and CEO
<PAGE>
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