<PAGE>
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 September 30, 2000
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 0-26381
WATTAGE MONITOR INC.
(Name of Small Business Issuer as Specified in Its Charter)
NEVADA 86-0882633
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1100 KIETZKE LANE, RENO, NEVADA 89502
(Address of Principal Executive Offices)
(775) 327-6000
(Issuer's Telephone Number, Including Area Code)
(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 November 17, 2000, 13,421,520 shares of common stock of the issuer
were outstanding.
Transitional Small Business Disclosure Format (check one): Yes / / No /X/
<PAGE>
WATTAGE MONITOR INC.
QUARTERLY REPORT ON FORM 10-QSB
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I -FINANCIAL INFORMATION...............................................................3
ITEM 1. FINANCIAL STATEMENTS.............................................................3
NOTES TO FINANCIAL STATEMENTS............................................................6
ITEM 2. PLAN OF OPERATION...............................................................12
PART II -OTHER INFORMATION.................................................................14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............................14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................................14
SIGNATURES.................................................................................16
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
WATTAGE MONITOR INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
September 30, 2000
<TABLE>
<CAPTION>
(UNAUDITED)
-----------
ASSETS
CURRENT ASSETS
<S> <C>
Cash and cash equivalents $ 64,439
Accounts receivable, net 10,105
Prepaid expenses 88,478
-----------------
Total current assets 163,022
-----------------
PROPERTY AND EQUIPMENT, NET 1,044,080
-----------------
OTHER ASSETS
Software licenses 15,000
Patents and trademarks 40,095
Deposits 11,262
-----------------
Total other assets 66,357
-----------------
$ 1,273,459
-----------------
-----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 487,040
Accrued liabilities 70,198
-----------------
Total current liabilities 557,238
-----------------
COMMITMENTS -
-----------------
STOCKHOLDERS' EQUITY
Preferred stock, Series B, convertible; $0.01 par value,
5,000,000 shares authorized, 2,625,000 shares
issued and outstanding 26,250
Common stock, $0.01 par value, 25,000,000 shares
authorized, 13,421,520 shares issued and
outstanding 134,216
Additional paid-in capital 11,527,574
Deficit accumulated during the development stage (10,971,819)
-----------------
Total stockholders' equity 716,221
-----------------
$ 1,273,459
-----------------
-----------------
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE>
WATTAGE MONITOR INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
CUMULATIVE
THREE MONTHS ENDED NINE MONTHS ENDED FROM INCEPTION
SEPTEMBER 30, SEPTEMBER 30, (JULY 1, 1997) TO
1999 2000 1999 2000 SEPTEMBER 30, 2000
---------------- ---------------- ---------------- --------------- ----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUE $ - $ 9,838 $ - $ 16,289 $ 16,289
OPERATING EXPENSES
Telecommunications $ 171,990 $ 203,600 $ 600,341 $ 605,830 $ 1,736,506
System development 190,208 205,339 469,196 694,543 1,840,947
Marketing 159,993 245,329 514,539 664,589 1,802,413
General and administrative 321,791 423,988 1,024,751 1,195,838 3,518,966
Depreciation and amortization 40,997 86,834 84,009 253,914 448,158
---------------- ---------------- ---------------- --------------- ----------------
Net loss from operations (884,979) (1,155,252) (2,692,836) (3,398,425) (9,330,701)
---------------- ---------------- ---------------- --------------- ----------------
OTHER INCOME (EXPENSE)
Interest expense (12,750) - (1,298,360) - (1,824,297)
Interest and dividend income 18,717 13,399 55,102 80,346 198,498
Gain (loss) on disposal of assets - - - - (15,319)
---------------- ---------------- ---------------- --------------- ----------------
5,967 13,399 (1,243,258) 80,346 (1,641,118)
---------------- ---------------- ---------------- --------------- ----------------
NET LOSS $ (879,012) $ (1,141,853) $ (3,936,094) $ (3,318,079) $ (10,971,819)
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
LOSS PER COMMON SHARE $ (0.08) $ (0.09) $ (0.38) $ (0.25) $ (1.13)
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 11,296,719 13,421,520 10,414,042 13,405,316 9,677,114
---------------- ---------------- ---------------- --------------- ----------------
---------------- ---------------- ---------------- --------------- ----------------
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
WATTAGE MONITOR INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
CUMULATIVE
FROM INCEPTION
NINE MONTHS ENDED SEPTEMBER 30, (JULY 1, 1997) TO
1999 2000 SEPTEMBER 30, 2000
-------------------- ------------------ ------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,936,094) $ (3,318,079) $ (10,971,819)
----------------- ----------------- -----------------
Adjustments to reconcile net loss to
net cash used in operating activities:
Write off of software license - - 184,875
Loss on disposal of assets - - 15,319
Amortization of discount on debt 1,265,000 - 1,760,000
Depreciation and amortization 84,009 253,914 448,158
Changes in:
Accounts receivable - (10,105) (10,105)
Prepaid expenses (39,896) (58,822) (88,477)
Other assets (12,359) (15,966) (51,732)
Accounts payable (16,882) 57,217 245,718
Accrued liabilities 25,151 23,162 70,199
Accrued interest 31,724 - 62,580
----------------- ----------------- -----------------
Total adjustments 1,336,747 249,400 2,636,535
----------------- ----------------- -----------------
Net cash used in operating activities (2,599,347) (3,068,679) (8,335,284)
----------------- ----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (471,996) (423,605) (1,465,737)
----------------- ----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred offering costs 48,670 - -
Issuance of membership units - - 1,399,710
Issuance of notes payable to related parties 500,000 - 1,729,000
Acquisition of Wattage Monitor, Inc. 2,819,284 - 2,819,284
Common stock issued 707,366 - 707,366
Series B preferred stock warrants exercised 2,625,000 - 3,500,000
Stock options exercised 5,100 - 14,100
Payments on notes payable to related parties (304,000) - (304,000)
----------------- ----------------- -----------------
Net cash provided by
financing activities 6,401,420 - 9,865,460
----------------- ----------------- -----------------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 3,330,077 (3,492,284) 64,439
Cash and cash equivalents beginning of period 137,688 3,556,723 -
----------------- ----------------- -----------------
Cash and cash equivalents end of period $ 3,467,765 $ 64,439 $ 64,439
----------------- ----------------- -----------------
----------------- ----------------- -----------------
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Software license agreement and development
costs included in accounts payable $ - $ - $ 373,129
----------------- ----------------- -----------------
----------------- ----------------- -----------------
Notes payable converted to common stock $ 1,000,000 $ - $ 1,487,580
----------------- ----------------- -----------------
----------------- ----------------- -----------------
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
WATTAGE MONITOR INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF ACCOUNTING POLICIES AND NATURE OF BUSINESS
1. ORGANIZATION AND NATURE OF BUSINESS
The Company was organized by its members on July 1, 1997 in Delaware.
The Company is a development stage enterprise and provides electrical rate
information to commercial and residential consumers nationwide. Revenue is
anticipated to come primarily from referral fees and commissions charged to
electricity suppliers who offer their products and services through the Company.
On February 26, 1999, Wattage Monitor Inc. (a Nevada corporation) acquired all
of the membership units of the Company. For accounting purposes, the acquisition
is treated as a recapitalization with the Company as the acquirer (a reverse
acquisition). Pro forma information is not presented since the acquisition is
not a business combination. The financial statements give retroactive effect to
the conversion of members' equity into common stock to reflect the
recapitalization.
2. INTERIM FINANCIAL STATEMENTS
The accompanying financial statements for the nine month period ended
September 30, 2000 and 1999 are unaudited. In the opinion of management, all
adjustments, consisting of normal recurring adjustments necessary for a fair
presentation of the Company's financial position and results of operations for
such periods have been included. The accompanying unaudited financial statements
should be read in conjunction with the Company's audited financial statements
for the year ended December 31, 1999 included in Form 10-KSB. The results for
the nine months ended September 30, 2000 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2000, or for any
other period.
3. CASH EQUIVALENTS
The Company considers all short-term investments with original
maturities of ninety days or less to be cash equivalents.
4. DEPRECIATION AND AMORTIZATION
Depreciation and amortization sufficient to relate the cost of
depreciable assets to operations over their estimated service lives is provided
using the straight-line method of depreciation.
5. SOFTWARE LICENSE AND DEVELOPMENT COSTS
The Company has entered into several software license agreements to
enable customers to access information and order services provided via the
internet. Some of these agreements require the Company to pay an annual
maintenance fee. Additionally, the Company incurs software development costs to
tailor such software to its specific requirements. Such customization costs when
internally incurred or purchased from third parties are capitalized until the
project is substantially complete and ready for its intended use. License and
development costs are amortized straight-line over three years while maintenance
fees are charged to expense ratably over the contract period. Periodically,
management evaluates the estimated useful life of intangible assets based on
projected future undiscounted cash flows. The Company intends to provide its
information services principally over the internet through both licensed and
custom software.
6
<PAGE>
WATTAGE MONITOR INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE A - SUMMARY OF ACCOUNTING POLICIES AND NATURE OF BUSINESS - (CONTINUED)
6. PATENTS AND TRADEMARKS
The Company has filed for a patent relating to its computer-based
system and methods for collecting and providing information regarding the
electric power industry and available electric supply options. The Company has
also applied for trademarks to limit the use by others of WM, Wattage Monitor,
Kilowatt Monitor and Watt Monitor. During the nine months ended September 30,
2000, the Company received certificates of registration from the U.S. Patent and
Trademark Office for WM and Wattage Monitor. Patent and trademark expenses will
be amortized on the straight-line method over fifteen years.
7. ADVERTISING
The Company expenses advertising costs as incurred.
8. USE OF ESTIMATES
In preparing these financial statements in conformity with generally
accepted accounting principles, management is required to make estimates and
assumptions. These affect the carrying value of the Company's assets and
liabilities, revenues and expenses during the reporting period and disclosures
relating to contingent assets and liabilities. Actual results may differ from
these estimates.
9. CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to credit
risk consist primarily of cash and cash equivalents. The Company maintains its
cash in bank deposit accounts which, at times, may exceed federally insured
limits. The Company believes it is not exposed to any significant credit risk
related thereto.
10. INCOME TAXES
The Company, through February 26, 1999, was not subject to income tax.
Income was taxed directly to its members. Accordingly, no provision has been
made for federal income tax. Further, because losses incurred have been reported
by the members, no operating losses are available to offset future income.
After February 26, 1999, the Company provides for income taxes based
upon income reported for financial reporting purposes. Certain charges to
earnings will differ as to timing from those deducted for tax purposes. The tax
effect of those differences will be recorded as deferred income taxes. At
September 30, 2000, the Company has a deferred tax asset of $2,200,000 resulting
from a net operating loss for the period February 27, 1999 through September 30,
2000. The Company has provided for a valuation allowance of $2,200,000 at
September 30, 2000.
7
<PAGE>
WATTAGE MONITOR INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE A - SUMMARY OF ACCOUNTING POLICIES AND NATURE OF BUSINESS - (CONTINUED)
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
Management believes the fair value of financial instruments
approximates their carrying amounts.
12. DEFERRED OFFERING COSTS
Costs associated with the recapitalization are deferred to the period
in which the recapitalization occurs.
13. DISCOUNT ON DEBT
Costs incurred in connection with the issuance of debt are amortized
over the expected life of the debt. The beneficial conversion feature has been
accounted for as additional paid-in capital and associated unamortized discount
on debt recorded as a component of stockholders' equity.
14. LOSS PER SHARE
Loss per common share is computed based upon the weighted average
shares outstanding giving retroactive effect of common shares issued to members
of WattMonitor LLC upon completion of the recapitalization. Convertible equity
instruments are not considered in the calculation of net loss per share as their
inclusion would be antidilutive at September 30, 1999 and 2000.
NOTE B - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
2000 LIVES
------------------- -------------
<S> <C> <C>
Furniture and equipment $276,077 5-7 years
Software 1,176,566 3 years
-------------------
1,452,643
Less accumulated depreciation
and amortization (408,563)
-------------------
$1,044,080
===================
</TABLE>
8
<PAGE>
WATTAGE MONITOR INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE C - STOCKHOLDERS' EQUITY (DEFICIT)
In January 1999, Watt Monitor LLC sold 37,777 membership units.
On February 26, 1999, Wattage Monitor Inc. (a Nevada corporation)
acquired all of the equity (membership units) of WattMonitor LLC. For accounting
purposes, the acquisition is treated as a recapitalization with the Company as
the acquirer (a reverse acquisition). Pro forma information is not presented
since the acquisition is not a business combination. The members exchanged their
membership units for 7,550,450 shares of common stock (approximately 72% of the
outstanding common stock) of Wattage Monitor Inc. In addition, each member,
other than the controlling members, was entitled to acquire such number of
shares of common stock at $1.00 per share as necessary to maintain the same
ownership percentage in Wattage Monitor Inc. as such member held in the Company.
In connection with this right, 657,366 shares were issued. Also, in connection
with the recapitalization, all employees exchanged their contingent membership
interests for stock options to purchase 918,000 shares of Wattage Monitor Inc.
exercisable at $1.00 per share.
Certain stockholders of Wattage Monitor Inc. advanced approximately
$500,000 in January 1999, which, along with $500,000 advanced in 1998, were
converted into 2,750,000 shares of common stock in 1999. In October 1999, notes
payable and accrued interest of $487,580 were converted to 325,054 shares of
common stock.
In connection with its recapitalization, Wattage Monitor Inc. issued
1,000,000 shares of Series A 6% Convertible Preferred Stock for $3,000,000. The
Series A 6% Preferred Stock accrues dividends at 6% per annum, payable annually,
commencing on February 26, 2000. The dividend at the option of the Company may
be paid in common stock. Each share of Series A 6% Preferred Stock is
convertible into one share of common stock. Such shares convert: (1) upon the
exercise of the warrant to purchase Series B Preferred Stock; (2) upon Wattage
Monitor Inc. raising $5,000,000 in an offering of common stock at $1.00 per
share or greater; or (3) at the option of the holder. In connection with the
issuance of the Series A 6% Preferred Stock, each purchaser received one Series
B warrant to purchase 3.5 shares of Series B Preferred Stock at $1.00 per share
exercisable 181 days after closing through December 15, 1999 or within 30 days
of a notice of a sale of at least $7,000,000 in equity securities of Wattage
Monitor Inc. for each share of Series A 6% Preferred Stock purchase.
During the year ended December 31, 1999, 1,000,000 Series B warrants
were exercised to purchase 3,500,000 shares of Series B Convertible Preferred
Stock at $1.00 per share. Each share of Series B Preferred Stock is convertible
into one share of common stock. In January 2000, 875,000 shares of the Series B
Preferred Stock were converted into common stock. Upon exercise of the warrants
the Series A Convertible Preferred Stock was converted to 1,000,000 shares of
common stock.
In the event of liquidation, the Series A and B Preferred stock ranks
senior to all of the common stock. The preferred stockholders shall be entitled
to receive an amount equal to the sum of the original issue price and any
accrued but unpaid dividends.
9
<PAGE>
WATTAGE MONITOR INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE C - STOCKHOLDERS' EQUITY (DEFICIT) - (CONTINUED)
In connection with the merger, a warrant was issued to the holder of
250,000 shares of preferred stock which represents the right to purchase 100,000
shares of common stock at $1.00 per share. Also, warrants to purchase 449,999
shares of common stock at $1.50 per share are outstanding. These warrants were
issued in connection with notes payable to related parties which were repaid
during the year ended December 31, 1999.
NOTE D - CONTINGENT MEMBERSHIP INTERESTS/STOCK OPTIONS
Contingent membership interests in an LLC are similar to stock options
in a corporation. Pursuant to a formal plan, the Board granted various employees
and other individuals contributing to the success of the organization,
contingent membership interests. In conjunction with the reverse acquisition of
Wattage Monitor Inc., all such contingent membership interests were exchanged
for stock options under Wattage Monitor Inc.'s incentive stock option plan. The
plan allows for 2,500,000 shares of common stock to be granted. In the three
months prior to the reverse acquisition, Wattage Monitor issued employee stock
options totaling 370,000 exercisable at $1.00 per share. Compensation expense
related thereto is immaterial.
The Company has adopted the disclosure-only provisions of SFAS No. 123,
ACCOUNTING FOR STOCK-BASED COMPENSATION, but applies Accounting Principles Board
Opinion No. 25 and related interpretations in accounting for stock options.
Presented below is a summary of the status of the Company's stock
options and the related transactions.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
PRICE
--------------
<S> <C> <C>
BALANCE AT DECEMBER 31, 1999 980,150 1.54
Granted 299,000 1.64
Forfeited/expired (66,500) 1.67
-------------
BALANCE AT SEPTEMBER 30, 2000 1,212,650
=============
</TABLE>
10
<PAGE>
WATTAGE MONITOR INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
NOTE E - EMPLOYEE BENEFIT PLANS
The Company adopted a 401(k) retirement plan (the "Plan") effective
January 1, 1998, which provides for employee salary deferrals limited to 25% of
a participant's compensation and discretionary Company contributions. The Plan
year ends on December 31st. The Plan covers employees who have completed one
month of service and have attained the minimum age requirement, as defined in
the Plan.
NOTE F - LEASE COMMITMENTS
The Company leases its office space and certain computer equipment
under operating leases, which expire through 2003. The Company has options to
extend the leases for additional lease periods. The leases require monthly
rental payments totaling approximately $20,620.
11
<PAGE>
Certain statements in this Form 10-QSB, including information set forth
under Item 2 "Plan of Operation" constitute or may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Act"). We desire to avail ourselves of certain "safe harbor"
provisions of the Act and are therefore including this special note to enable us
to do so. Forward-looking statements included in this Form 10-QSB or hereafter
included in other publicly available documents filed with the Securities and
Exchange Commission, reports to our stockholders and other publicly available
statements issued or released by us involve known and unknown risks,
uncertainties, and other factors which could cause our actual results,
performance (financial or operating) or achievements to differ from the future
results, performance (financial or operating) achievements expressed or implied
by such forward-looking statement. Such future results are based upon
management's best estimates based upon current conditions and the most recent
results of operations.
ITEM 2. PLAN OF OPERATION
As of November 17, 2000, we had approximately $39,000 of cash in our
accounts. This cash is the result of interim financing arrangements made
between October 26, 2000 and November 15, 2000 with our officers, directors
and major shareholders or entities controlled by them. The aggregate
principal of all such loans is $272,000 at a 12% interest rate and 20%
warrant coverage. In addition, Mr. Alderson has deferred all of his salary
payments and expense reimbursement for the past two months.
We recently entered into a non-binding term sheet in connection with the
sale of shares of our common stock in a private placement transaction. Under
the terms of the term sheet, we may sell equity securities with an aggregate
purchase price of approximately $7 million. All of the loans and advances
described in the immediately preceding paragraph are expected to be repaid
from the proceeds received from the private placement. There can be no
assurance that this transaction nor any sale of our equity securities can be
completed either on the terms currently contemplated or on other terms
acceptable to us.
Our goal is to be the preeminent electricity information and switching
transaction service in the competitive electricity market. We derive our
revenue principally from electricity suppliers for presenting consumers with
information about electric rates and allowing consumers to order electricity
from their chosen supplier. We also make our industry leading electricity
news and information available to partner web sites via a data-feed, and
expect to share the sales commissions and any advertising revenue these
partner sites generate. Finally, we provide electric market research, a
newsletter and consumer surveys on a fee and subscription basis to electric
utilities and others interested in this industry. We began to generate
revenue during the first quarter of 2000, and although revenue has grown in
both the second and third quarters of 2000, the total revenue generated
during the nine-month period ended September 30, 2000 is not significant.
From our inception, we thought and still believe there are three
requirements necessary to prove our business model:
1. Creation of the Wattage Monitor information system;
2. Demonstration that consumers use the Wattage Monitor service; and
3. Electricity supplier participation.
With our success enrolling suppliers - a total of 28 competitive
electricity suppliers in the first quarter of 2000 - we believe we have
successfully demonstrated our ability to achieve each of these requirements.
Now the challenge is to scale our business as competition spreads to
additional states to capitalize on our market leading position.
The first step in scaling our business was to secure a strong market
share of participating suppliers in each of the regulated utility territories
in each of the states with active (more than one or two suppliers)
competition: California, New Jersey, New York and Pennsylvania. Through the
third quarter of 2000, our market share - defined as the percentage of
competitive offers in a territory that are available for switching through
our system - was greater than 44% in all cases, as much as 100% in some
cases, and averaged approximately 70%.
While establishing and maintaining market share remains an on-going focus,
the natural next step in scaling our business is to generate switching activity
through our service, thereby growing our principal revenue stream. Leveraging
our relationships with competitive suppliers, we executed several
market-specific initiatives in the third quarter of 2000. With the majority of
our activities implemented in the volatile San Diego, California market, we
executed 801 revenue generating transactions (both orders and lead referrals),
with 43% of those transactions occurring in September.
12
<PAGE>
Plan of Operation
Assuming the completion of an equity financing arrangement, we expect
monthly expenditures during the next year to remain consistent at roughly
$400,000 as we continue to scale our business. For the quarter ended
September 30, 2000, monthly expenditures averaged approximately $388,000.
After adjusting to include capitalized payroll-related development costs and
exclude depreciation/amortization and financing-related costs, our monthly
expenditures averaged approximately $380,000 for the quarter just ended.
Current monthly expenditures (as adjusted) are approximately $97,000 for
system development, $90,000 for marketing to suppliers, $68,000 to operate
our toll free telephone service and $125,000 for general and administrative
expenses. Of these amounts approximately $90,000, $50,000, $0 (these services
are contracted to a third party) and $40,000, respectively, are for salaries
of our employees.
Assuming the completion of an equity financing agreement, we expect to
operate for the next twelve months principally as follows:
- We expect to maintain current information about electric rates and
services in all states with active competition among suppliers.
- We expect to offer Internet access and telephone service through our
1-888-WATTAGE toll free number for the entire year, the cost of which
is included in the monthly expenditures discussed above.
- We expect to implement market-specific initiatives (including local
programs affecting a single city, locality or regulated utility
service territory) and consumer-segment-specific initiatives to
increase switching activity through our service.
- We expect to realize increasing revenue from offering our service.
- We expect to continue to actively market our service to suppliers
through our direct sales force.
- We expect to expand and refine our information system, including the
projected Q1-2001 launch of Wattage Monitor v3.0, which will provide
greater transaction flexibility and more efficient implementation of
web site partnering and data-exchange opportunities.
- We expect to actively pursue co-branding opportunities to increase the
exposure of our service.
- In sum, we expect to execute an equity financing transaction and
utilize those funds to scale our business, capitalize on our market
leading position and establish a growing and increasingly
predictable revenue stream.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On September 22, 2000, the Company mailed proxy statements with ballots
to its stockholders of record on September 8, 2000.
The stockholders approved an amendment to the Amended and Restated
Articles of Incorporation to increase the total number of shares of common
stock which the Company shall have the ability to issue by twenty-five million
to fifty million shares. The following consents were received as of October
11, 2000 when the Certificate of Amendment was filed with the Nevada
Secretary of State.
<TABLE>
<CAPTION>
Approve % Approve Disapprove % Disapprove Abstain % Abstain
------- --------- ---------- ------------ ------- ---------
<S> <C> <C> <C> <C> <C> <C>
7,307,316 54.44% - - - -
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
(b) Reports on Form 8-K.
The Company filed a Current Report on Form 8-K dated September
28, 2000 to report, under Item 5, that preliminary meetings
were held with potential investors regarding a private
placement offering and under Item 7, to furnish the Private
Placement Memorandum and the potential investor presentation
materials.
14
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE
------- ----------------
<S> <C>
27 Financial Data Schedule.
</TABLE>
15
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
WATTAGE MONITOR INC.
Date: November 20, 2000 By: /s/ Gerald R. Alderson
----------------------
Gerald R. Alderson
President, Chief Executive Officer and
Principal Financial Officer
16
