UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(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, 2000
------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File No. 0-28407
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NETMAXIMIZER.COM, INC.
----------------------
(Exact name of Registrant as specified in its charter)
FLORIDA 65-0907899
------- ----------
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification Number)
4400 North Federal Highway, Suite 307, Boca Raton, FL 33431
-----------------------------------------------------------
(Address of principal executive office)
(Zip Code)
(561) 447-9330
--------------
Registrant's telephone number, including area code)
--------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of the issuer's Common Stock, $.001 par value,
as of November 14, 2000 was 39,223,006.
<PAGE>
NETMAXIMIZER.COM, INC.
INDEX
<TABLE>
<CAPTION>
Page
---------------
<S> <C>
Facing Sheet................................................................................. Cover Page
Index........................................................................................ i
Part I - Financial Information 1
Item 1. Financial Statements
Condensed Balance Sheets
September 30, 2000 and December 31, 1999....................................... 2
Condensed Statements of Operations
Three months ended September 30, 2000 and September 30, 1999; Nine months
ended September 30, 2000 and September 30, 1999 and cumulative from inception.. 3
Condensed Statements of Cash Flows
Nine Months ended September 30, 2000 and September 30, 1999 and cumulative
from inception................................................................. 4
Notes to Condensed Financial Statements............................................. 5-10
Item 2. Management's Discussion and Analysis of Financial Conditions and Results of
Operations................................................................. 11-13
Item 3. Quantitative and Qualitative Disclosures about Market Risk..................... 14
Part II - Other Information
Item 1. Legal Proceedings.............................................................. 14
Item 3. Defaults Upon Senior Securities................................................ 14
Item 4. Submission of Matters to a Vote of Security Holders............................ 14
Item 5. Other Information.............................................................. 14
Item 6. Exhibits and Reports on Form 8-K............................................... 14
Signature.................................................................................... 15
</TABLE>
i
<PAGE>
PART I - FINANCIAL INFORMATION
This Form 10-Q contains various forward-looking statements and information,
including under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations," that are based on management's beliefs as
well as assumptions made by and information currently available to management,
including statements regarding future economic performance and financial
condition, liquidity and capital resources and management's plans and
objectives. When used in this document, the words "expect," "anticipate,"
"estimate," "believe," and similar expressions are intended to identify
forward-looking statements. Such statements are subject to various risks and
uncertainties which could cause actual results to vary materially from those
stated. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated, expected or projected. Such risks
and uncertainties include the Company's ability to obtain needed inventory
financing on acceptable terms and to manage inventory, to meet potential
increases or decreases in demand, potential adverse customer reactions to
delivery delays including effects on existing and future orders; competitive
practices in the e-commerce industries, changing consumer preferences and risks
associated with consumer acceptance of doing business on the Internet, potential
delays or production problems associated with foreign sourcing of products and
the impact of pricing policies including providing premiums, discounts and
allowances, reliance on affinity groups, the ability of the Company to meet
existing financial obligations, and the Company's ability to obtain additional
capital to meet cash flow and working capital needs and to fund future
commitments and operations. Certain of these as well as other risks and
uncertainties are described in more detail in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999 and the Company's Registration
Statement on Form 10 filed under the Securities Exchange Act of 1934. The
Company undertakes no obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.
1
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS 2000 1999
----------- -----------
<S> <C> <C>
Current Assets:
Cash, including restricted cash of $1,272 and $683 $ 9,060 $ 39,055
Inventories 168,044 29,886
Prepaid expenses 183,462 --
----------- -----------
Total current assets 360,566 68,941
Property and Equipment 73,228 28,843
Web Site Design, Net 560,043 300,000
Other Assets 25,246 17,343
----------- -----------
Total assets $ 1,019,083 $ 415,127
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable and accrued liabilities $ 478,485 $ 123,790
Due to officer/stockholder 23,629 27,820
Note payable, other 4,696 --
----------- -----------
Total current liabilities 506,810 151,610
----------- -----------
Long-Term Debt:
Note payable, stockholder 318,005 150,000
Note payable, other 9,204 --
----------- -----------
327,209 150,000
----------- -----------
Commitments, Contingencies and Subsequent Events -- --
----------- -----------
Stockholders' Equity:
Common stock, $.001 par value; 75,000,000 shares authorized;
39,223,006 and 39,153,006 shares issued and outstanding, respectively 39,223 39,153
Additional paid-in capital 9,462,009 7,181,140
Deficit accumulated during the development stage (9,316,168) (6,141,804)
Deferred compensation -- (964,972)
----------- -----------
Total stockholders' equity 185,064 113,517
----------- -----------
Total liabilities and stockholders' equity $ 1,019,083 $ 415,127
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
2
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30, Cumulative
----------------------------- ----------------------------- from
2000 1999 2000 1999 Inception
------------ ------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Revenue $ 3,625 $ 1,424 $ 12,962 $ 1,424 $ 27,965
Direct Costs 4,978 2,373 12,762 2,373 22,322
------------ ------------ ------------ ------------ ------------
Gross Margin (1,353) (949) 200 (949) 5,643
------------ ------------ ------------ ------------ ------------
General and Administrative Expenses:
Stock options issued for services 321,658 -- 964,972 -- 6,468,293
Officer compensation 79,790 -- 243,000 -- 448,299
Other 726,123 56,631 1,966,592 62,587 2,405,219
------------ ------------ ------------ ------------ ------------
1,127,571 56,631 3,174,564 62,587 9,321,811
------------ ------------ ------------ ------------ ------------
Net Loss $ (1,128,924) $ (57,580) $ (3,174,364) $ (63,536) $ (9,316,168)
============ ============ ============ ============ ============
Net Loss Per Share - Basic and Diluted $ (0.03) $ -- $ (0.08) $ --
============ ============ ============ ============
Weighted Average Shares Outstanding 39,162,136 3,048,000 39,156,083 3,037,326
============ ============ ============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months
Ended September 30, Cumulative
-------------------------- from
2000 1999 Inception
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss $(3,174,364) $ (63,536) $(9,316,168)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 564,009 -- 618,764
Officer compensation -- -- 150,000
Options granted for services 964,972 -- 6,468,293
Common stock issued for services 200,000 -- 205,000
Changes in operating assets and liabilities:
Inventories (138,158) -- (168,044)
Prepaid expenses (194,537) -- (194,537)
Other assets (7,903) -- (25,246)
Accounts payable and accrued liabilities 354,695 38,719 478,485
----------- ----------- -----------
Net cash used in operating activities (1,431,286) (24,817) (1,783,453)
----------- ----------- -----------
Cash Flows from Investing Activities:
Expenditures for property and equipment (38,563) (7,186) (48,302)
Web site design costs (485,000) -- (485,000)
Other (4,191) (1,697) (230)
----------- ----------- -----------
Net cash used in investing activities (527,754) (8,883) (533,532)
----------- ----------- -----------
Cash Flows from Financing Activities:
Proceeds from long-term debt, related party 1,830,939 -- 1,980,939
Proceeds from sales of common stock 100,000 217,000 347,000
Repayments on long-term debt (1,894) -- (1,894)
----------- ----------- -----------
Net cash provided by financing activities 1,929,045 217,000 2,326,045
----------- ----------- -----------
Net Increase (Decrease) in Cash (29,995) 183,300 9,060
Cash, Beginning 39,055 -- --
----------- ----------- -----------
Cash, Ending $ 9,060 $ 183,300 $ 9,060
=========== =========== ===========
Non-Cash Investing and Financing Transactions:
Equipment purchased in exchange for debt $ 15,794
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared by the Company pursuant the rules and regulations of the
Securities and Exchange Commission ("SEC") and, in the opinion of
management, include all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of financial position,
results of operations and cash flows for the interim periods.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
the rules and regulations of the SEC. The Company believes that the
disclosures contained herein are adequate to make the information
presented not misleading. The statements of operations for the
three months and nine months ended September 30, 2000 are not
necessarily indicative of the results to be expected for the full
year. These unaudited financial statements should be read in
conjunction with the audited financial statements and accompanying
notes included in the Company's 1999 Annual Report on Form 10-K for
the year ended December 31, 1999.
The condensed financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business.
Recurring losses from operations and operating cash constraints are
potential factors which, among others, may indicate that the
Company will be unable to continue as a going concern for a
reasonable period of time. The independent auditors' report on the
December 31, 1999 financial statements stated that "... the
Company's recurring losses from operations and current cash
constraints raise substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty."
The financial statements do not include adjustments relating to the
recoverability and classification of recorded asset amounts, or the
amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The
Company's ability to continue as a going concern is dependent upon
its ability to generate sufficient cash flow to meet its
obligations on a timely basis and ultimately to attain profitable
operations.
5
<PAGE>
NOTE 1. SUMMARY OF BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Organization and Capitalization
The Company was incorporated under the laws of the state of Florida
on June 29, 1995 under the name RLN Realty Associates, Inc.
Initially the Board authorized 7,500 shares of $1.00 par value
common stock of which 5,000 shares were issued in exchange for
services in 1996. On June 9, 1998, the Company filed amended
Articles of Incorporation to change the par value to $.001 and
increase the authorized number of shares of common stock to
50,000,000 shares. On June 9, 1998, the Board of Directors
authorized a 200 for 1 stock split, which increased the issued and
outstanding shares to 1,000,000.
On March 1, 1999, the Articles of Incorporation were amended to
reflect the change in corporate name to "Netmaximizer.com, Inc."
On October 19, 1999, the Board of Directors authorized a 3 for 1
stock split, effective November 1, 1999, which increased the then
issued and outstanding shares to 39,153,006.
On April 10, 2000, the Articles of Incorporation were amended
increasing the total number of shares that the Company may issue to
77,000,000, consisting of 75,000,000 shares of common stock, par
value $.001 per share and 2,000,000 shares of "blank check"
preferred stock, par value $.001 per share.
The effect of all these actions has been reflected retroactively in
the accompanying financial statements.
Business
The Company is an Internet marketing and merchandising company that
sells an array of products via an e-commerce site. The Company
provides access to an e-commerce department stores primarily to
members of affinity groups such as churches, schools and unions.
Development Stage Enterprise
As described above, the Company was incorporated on June 29, 1995,
and, since that time, has been primarily involved in organizational
activities, developing a strategic plan for the marketing of its
products, and raising capital. Planned operations, as described
above, have not commenced to any significant extent. Accordingly,
the Company is considered to be in the development stage, and the
accompanying financial statements represent those of a development
stage enterprise.
6
<PAGE>
NOTE 1. SUMMARY OF BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Use of Estimates
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles. In
preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amount of assets
and liabilities as of the date of the balance sheet and operations
for the period. Although these estimates are based on management's
knowledge of current events and actions it may undertake in the
future, they may ultimately differ from actual results.
Net Loss Per Common Share
The Company computes earnings (loss) per share in accordance with
SFAS No. 128, "Earnings Per Share." This standard requires dual
presentation of basic and diluted earnings per share on the face of
the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator and
denominator of the diluted earnings per share computation.
Net loss per common share (basic and diluted) is based on the net
loss divided by the weighted average number of common shares
outstanding during the year.
The Company's potentially issuable shares of common stock pursuant
to outstanding stock options and warrants are excluded from the
Company's diluted computation, as their effect would be
anti-dilutive.
NOTE 2. PREPAID EXPENSES
Sales commission advances $ 105,387
Marketing presentation, net 77,525
Other 550
----------
$ 183,462
==========
The Company has made advances to salesmen against sales commissions to
be earned once sales commence. These advances are included in prepaid
expenses.
The Company developed a marketing presentation which is being used to
market the Company. The cost of the presentation, which is being
amortized over twenty-four months, is included in prepaid expenses.
NOTE 3. WEB SITE DESIGN
These costs consist of fees for a total of $835,000 paid to a
consultant, which is owned or controlled by a major stockholder, as
follows: $547,000 to be paid in cash and 56,655 shares of Company
common stock valued at the market value of such stock on the date of
issuance ($5.08 per share) or $288,000 (see Note 9).
7
<PAGE>
NOTE 3. WEB SITE DESIGN (Continued)
As of September 30, 2000, $53,100 of the amount due is accrued but
unpaid. Phase one of the web site was available for use on November 4,
1999, and the Company commenced amortizing the cost of phase one
($350,000) over an estimated useful life of fourteen months as of that
date. Phase two of the web site has not been placed in service as of
September 30, 2000 and, as a result, is not being amortized. The
Company will commence amortizing those costs when phase two is placed
in service.
As of September 30, 2000:
Phase One Phase Two Total
--------- --------- -----
Cost $350,000 $485,000 $835,000
Accumulated amortization 274,979 - 274,979
-------- -------- --------
Unamortized cost $ 75,021 $485,000 $560,021
======== ======== ========
NOTE 4. RELATED PARTY TRANSACTIONS
Long-Term Debt, Related Party
The Company issued a promissory note in the amount of $1,333,975 on
February 8, 2000 to a stockholder in exchange for cash. This note
bears interest at 9%, payable quarterly, with principal due
February 7, 2003. As of December 31, 1999, the Company had received
an advance of $150,000 against the total funds to be received in
consideration for the promissory note. The balance of $1,183,975
proceeds of the note payable was received by February 8, 2000.
In connection with the promissory note, the Company issued warrants
to purchase 681,987 shares of common stock at $15.00 per share, the
market price of the Company's common stock on the date of issuance
of the warrant. These warrants can be exercised at any time before
February 7, 2003.
The Company issued a promissory note in the amount of $646,964 on
July 21, 2000 to a stockholder in exchange for cash. This note
bears interest at 9%, payable quarterly, with principal due July
20, 2003. Prior to June 30, 2000, the Company received an advance
of $200,000 against the total funds to be received in consideration
for the promissory note. The balance of $446,964 proceeds of the
note payable was received by July 21, 2000.
In connection with the promissory note, the Company issued warrants
to purchase 321,932 shares of common stock at $16.50 per share, the
market price of the Company's common stock on the date of issuance
of the warrant. These warrants can be exercised at any time before
July 21, 2005.
The Company estimated the fair value of the warrants issued in
connection with the debt at the grant date by using the
Black-Scholes option-pricing model with the following
weighted-average assumptions; no dividend yield; an expected life
of three or five years; 100% expected volatility; and 6.00% risk
free interest rate.
8
<PAGE>
NOTE 4. RELATED PARTY TRANSACTIONS (Continued)
The total estimated fair value of the warrants exceeded the face
amount of the debt. As a result, the Company recorded a discount in
the amount of the face value of the notes ($1,980,939) and is
amortizing this discount as additional costs of financing over the
term of the promissory notes, three years.
Promissory note $1,980,939
Unamortized discount 1,662,934
----------
$ 318,005
==========
NOTE 5. STOCK OPTION PLAN
The Company has issued options to purchase a total of 7,809,600 shares
of common stock (3,631,296 to employees and 4,178,304 to consultants)
out of the shares of common stock provided for in the 1999 Employee
Stock Option Plan, at an exercise price of $2.00 per share, the price
at which the stock was trading as of the day of the grant of the
options (giving effect to the stock splits described in Note 1). These
options are for a term of five years and contain an anti-dilution
provision.
The fair value of the options granted to consultants in 1999 has been
recorded as a charge to operations in the accompanying financial
statements over the period in which they vest.
The following table summarizes information about options under the plan
which are outstanding at September 30, 2000.
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------- -------------------
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
Range of at Remaining Average at Average
Exercise September 30, Contractual Exercise September 30, Exercise
Prices 2000 Life Price 2000 Price
------ ---- ---- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C>
$2.00 7,809,600 4.5 $2.00 7,061,592 $2.00
===== ========= === ===== ========= =====
</TABLE>
7,061,592 options vested on October 1, 1999; the remainder vest October
1, 2000.
NOTE 6. COMMON STOCK
Sale of Units
On September 13, 2000 the Company entered into an agreement to
issue up to 1,000,000 units, comprised of one share of Company
common stock and one warrant, for $5.00 per unit. The warrant
entitles the holder to purchase one share of Company common stock
for $10.00 for a term of five years. During September 2000, the
Company received $100,000 for the purchase of 20,000 units.
9
<PAGE>
NOTE 6. COMMON STOCK (Continued)
Common Shares Issued in Exchange for Services
On September 18, 2000 the Board of Directors authorized the issuance of 50,000
shares of Company common stock as compensation for consulting services. These
shares were recorded as consulting expense in the accompanying financial
statements. The consulting expense was measured using the fair value of the
common shares issued, $200,000.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
We were incorporated in the State of Florida on June 29, 1995 under the name
"RLN Realty Associates, Inc." with an authorized share capital of 7,500 shares
of common stock with a $1.00 par value per share. On June 9, 1998, we filed
Articles of Amendment to amend our Articles of Incorporation to increase our
authorized share capital to 50,000,000 shares of common stock with a $.001 par
value per share. In addition to increasing our authorized capital, we authorized
a split of our 5,000 outstanding shares of common stock on a 200-for-one basis
effective on June 9, 1998. On February 26, 1999, David Saltrelli replaced the
sole board member and became our President. On March 1, 1999, we amended our
Articles of Incorporation to change our name to "Netmaximizer.com, Inc." to
reflect our new e-commerce focus, and Peter Schuster joined the board and became
our Secretary and Treasurer. March 1, 1999 also marks the beginning of the
development of our new business plan. On March 8, 1999, David Saltrelli and
Peter Schuster each purchased 2,430,000 shares of our common stock for cash at a
purchase price of $.001 per share (a total of $2,430 each) as part of the
private placement of 12,000,000 shares of our common stock. The remainder of the
12,000,000 shares offered during this placement were sold for cash at the same
purchase price of $.001 per share to accredited investors not affiliated with
Netmaximizer.com, Inc. On October 19, 1999, we authorized a split of our
13,049,170 then-outstanding shares of common stock on a 3-for-1 basis effective
as of November 1, 1999. On April 10, 2000 we filed an amendment to our Articles
of Incorporation increasing the total number of shares that we may issue to
77,000,000, consisting of 75,000,000 shares of common stock, par value $.001 per
share and 2,000,000 shares of "blank check" preferred stock, par value $.001 per
share. Our primary objective will be to provide an Internet e-commerce store
available to affinity groups which will provide products at reduced prices
coupled with incentives, paying a commission to the affinity group for each
purchase made by one of its members. During the next twelve months, we intend to
increase the number of affinity groups which become members of our Store.
Material Changes in Results of Operations
We remain a development stage company. As of September 30, 2000, the Company
continued organizational activities, the development of the strategic plan and
raising capital. Full operations, as defined by our strategic plan, have not
commenced. Prior to September, 1999, we had no active business operations and
therefore, no material or substantive transactions or results of operations. As
a result, no meaningful comparison can be made between our present operations
and our operations during the years ended December 31, 1994 to December 31,
1998.
Material Changes in Financial Condition
Our total assets were approximately $1,019,083 at September 30, 2000 compared
with $934,000 at June 30, 2000, and $533,324 at September 30, 1999. During this
third quarter, our inventory, property and equipment have remained relatively
constant. We have increased our prepaid expenses by: (i) paying an additional
$30,000 to complete the development of a comprehensive, on-line Power Point(TM)
presentation, and (ii) continuing prepayments against commission arrangements we
11
<PAGE>
have with some of our sales representatives. The combined effect was to reduce
our cash account. Our cash and short-term investments were approximately $9,060
at September 30, 2000, compared with $30,000 at June 30, 2000, and $181,358 at
September 30, 1999. Our current liabilities were $506,810 at September 30, 2000,
compared with $504,000 at June 30, 2000, and $36,283 at September 30, 1999. This
increase was principally the result of operating costs. For the nine months
ended September 30,2000, we had revenue from operations of $12,962, $3,625
during the third quarter, $5,055 during the second quarter, and $4,283 during
the first quarter. During the nine months ended September 30, 2000, we had no
significant active business operations. As a result, we had no material
transactions or results of operations that require a comparison to our
operations during the nine-month period ended September 30, 1999. Because we
have not begun actual operations as of this date, we consider these revenue
numbers to be immaterial. During the nine months ended September 30, 2000, we
incurred general and administrative expenses of $3,174,564, as compared to
approximately $62,587, for the nine months ended September 30, 1999. This was
incurred primarily in the continued development of an infrastructure to operate
the business pursuant to our business plan. The components of the expenses of
$3,174,564 are as follows: payroll, casual labor and related benefits $576,270;
professional fees $232,767; commissions $75,896; consulting fees $274,736; rent
$134,483; interest on promissory notes $412,223; amortization of web site design
costs $236,032; deferred compensation expense in connection with employee stock
options $964,972; telephone $75,582; office supplies $20,054; travel $61,900;
advertising $15,486; depreciation $9,972; equipment lease expense $12,411;
insurance costs $7,125; marketing costs $3,825; warehouse supplies $7,540; other
operating costs $53,290. With regard to the consulting fees noted in the
foregoing sentence, on September 18, 2000 our Board of Directors authorized the
issuance of 50,000 shares of our common stock as compensation for consulting
services. These shares were recorded as a part of the consulting expense
reported above, measured using the fair value of the common shares issued,
$200,000.
Liquidity and Capital Resources
During the period December 1, 1999, through March 31, 2000, we raised an
aggregate of $1,333,975 in a financing transaction that was begun on December 1,
1999 and completed on February 8, 2000. We received approximately $9,300 in cash
from our operations during the six-month period ending June 30, 2000. During the
period June 30, 2000, through September 30, 2000, we raised an additional
$746,964 in financing, and received approximately $3,625, in cash from our
operations during the nine months ended September 30, 2000. We have used net
cash of approximately $1,431,286, in operations primarily as a result of
operating losses and a build up of inventory. In addition we have incurred costs
of $485,000, in connection with phase two of our web site design.
As of September 30, 2000, we had approximately $9,060, in cash. We intend to
raise additional capital through additional sales of unregistered shares of our
common stock conducted under exemptions provided by the Securities Act or by the
rules of the SEC. We also intend to fund a portion of our inventory expansion by
using lines of credit, which may be secured by such inventory. There can be no
12
<PAGE>
assurance that we will be able to raise additional capital or obtain
line-of-credit financing on favorable terms and in the time required. If we are
unable to meet the requirements necessary to finance our inventory expansion,
our implementation plans could continue to be severely and adversely impacted,
and it is questionable whether we could continue as a going concern. We
anticipate that our cash requirements will continue to increase during the
remainder of calendar year 2000 and the beginning of calendar year 2001 as a
result of salaries, professional fees and related expenses associated with the
anticipated expansion of our operations. There can be no assurance that our
actual expenditures for such periods will not exceed our estimated operating
budget. Actual expenditures will depend upon a number of factors, some of which
are beyond our control, including, among other things, reliability of the
assumptions of management in estimating costs and timing, and the time expended
by professionals and consultants and fees associated therewith.
Recent Financing
The Company issued a promissory note in the amount of $646,964, on July 21,
2000, to a stockholder in exchange for cash. This note bears interest at 9%,
payable quarterly, with principal due on July 20, 2003. As of June 30, 2000, the
Company had received an advance of $200,000 against the total funds to be
received in consideration for the promissory note. The balance of $446,964
proceeds of the note payable was received by July 21, 2000. In connection with
the promissory note, the Company issued warrants to purchase 321,932 shares of
common stock at $16.50 per share, the market price of the Company's common stock
on the date of issuance of the warrant. These warrants can be exercised at any
time before July 21, 2005.
On September 13, 2000, we entered into an agreement to issue up to 1,000,000
units, comprised of one share of our common stock and one warrant, for $5.00 per
unit. The warrant entitles the holder to purchase one share of our common stock
for $10.00 for a term of five years. During September 2000, we received $100,000
for the purchase of 20,000 units.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
None.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
In January of 1999, the SEC granted approval to the NASD OTC Bulletin
Board Eligibility Rule 6530 which requires a company listed on the OTC Bulletin
Board to be a reporting company and current in its reports filed with the SEC.
As a result of this rule change, we filed a Registration Statement on Form 10 in
order to become a full reporting company. That Registration Statement became
effective on February 7, 2000. We cleared all comments from the SEC staff as of
June 1, 2000.
Item 6. Exhibits and Reports on Form 8-K
(a) Index and Exhibits
Exhibit No. Description
27 Financial Data Schedule.
(b)The following reports on Form 8-K have been filed by the Company during
the last quarter of the period covered by this report:
None
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 17, 2000
NETMAXIMIZER.COM, INC.
/s/David A. Saltrelli
----------------------------
David A. Saltrelli, President
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