<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 to
FORM 10-Q/A
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 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. 000-26799
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UBRANDIT.COM
--------------
(Exact name of registrant as specified in its charter)
Nevada 87-0381646
------ ----------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
2053 San Elijo Ave. Cardiff by the Sea, CA
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(Address of principal executive offices)
92007
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(Zip Code)
(858) 350-9566
----------------
(Registrant's telephone number,
including area code)
Former Address
12626 High Bluff Dr. Ste. 200 San Diego, CA 92130
(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 at least the past 90 days.
YES |X| NO |_|
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at July 31, 2000
----- -------------------------------
Common Stock $0.001 par value 12,167,333
This Quarterly Report on Form 10-Q/A ("Form 10-Q/A") is being filed as
Amendment No. 1 to the Registrant's Quarterly Report on Form 10-Q for the
nine-month period ended June 30, 2000 filed with the Securities and Exchange
Commission on August 21, 2000 ("Form 10-Q") for the purpose of making amendments
to (1) the Condensed Consolidated Statement of Operations (with respect to the
1999 average weighted shares outstanding and the earnings per share), (2) Note 1
Basis of Presentation and (3) Management Discussion and Analysis with respect to
the description of the net loss for the nine months ended June 30, 2000.
1
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UBRANDIT.COM
INDEX
PART I - FINANCIAL INFORMATION Page
------------------------------ ----
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at June 30, 2000
and September 30, 1999 (restated) 3
Condensed Consolidated Statement of Operations for the nine
months ended June 30, 2000 and June 30, 1999 4
Condensed Consolidated Statement of Operations for the three
months ended June 30, 2000 and June 30, 1999 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended June 30, 2000 and June 30, 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
Item 3. Quantitative and Qualitative Disclosure About Market Risk 9
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings 10
Item 2. Changes in Securities and Use of Proceeds 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Exhibit Index 12
CAUTIONARY NOTE ON FORWARD LOOKING STATEMENTS
This Quarterly Report contains certain forward-looking statements that
involve risks and uncertainties. These forward-looking statements are not
historical facts but rather are based on current expectations, estimates and
projections about our industry, our beliefs and assumptions. We use words such
as "anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates" and variations of these words and similar expressions to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and other factors,
some of which are beyond our control, are difficult to predict and could cause
actual results to differ materially from those expressed or forecasted in the
forward-looking statements. You should not place undue reliance on these
forward-looking statements included or otherwise incorporated in this Quarterly
Report, which reflect our management's view only on the date of filing of this
report. We undertake no obligation to update these statements to reflect events
or circumstances that occur after the filing date of this Quarterly Report or to
reflect the occurrence of unanticipated events.
2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
---------------------
<TABLE>
Ubrandit.com
Condensed Consolidated Balance Sheets
<CAPTION>
June 30, September 30,
2000 1999
(unaudited) (restated)
--------------- ---------------
ASSETS
<S> <C> <C>
Current Assets
Cash $ 4,201,631 $ 5,613,922
Accounts receivable 1,076 7,290
Prepaid expenses 60,306 20,750
Deposits 47,700 11,872
Inventory 49,540 -
--------------- ---------------
Total current assets 4,360,253 5,653,834
Other Assets
Property and equipment, net 407,252 150,567
Core technology, net 385,540 456,790
Goodwill, net 1,794,889 594,354
--------------- ---------------
$ 6,947,934 $ 6,855,545
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 133,055 $ 53,188
Accrued expenses 72,231 18,214
Current portion of lease payable 16,926 5,129
--------------- ---------------
Total current liabilities 222,212 76,531
Other Liabilities
Leases payable, net of current portion 31,956 8,859
Stockholders' equity
Common stock, $0.001 par value,
25,000,000 shares authorized;
12,167,333 shares issued and outstanding 12,167 11,738
Additional paid in capital 9,411,433 7,857,262
Subscription receivable - (51,000)
Accumulated deficit (2,729,834) (1,047,845)
--------------- ---------------
Total stockholders equity 6,693,766 6,770,155
--------------- ---------------
$ 6,947,934 $ 6,855,545
=============== ===============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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<TABLE>
Ubrandit.com
Condensed Consolidated Statements of Operations
(unaudited)
<CAPTION>
Three months Three months Nine months Nine months
ended ended ended ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
(restated) (restated)
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues $ 356,471 $ 13,952 $ 473,782 $ 20,616
Cost of sales 297,922 206,062 707,621 433,994
-------------- -------------- -------------- --------------
Gross profit (loss) 58,549 (192,110) (233,839) (413,378)
Selling, general and administrative 639,335 87,465 1,364,154 183,189
Depreciation and amortization 118,592 28,169 262,119 45,102
-------------- -------------- -------------- --------------
Loss from operations (699,378) (307,744) (1,860,112) (641,669)
Interest income 53,808 8,513 181,449 8,513
Interest expense (2,596) (557) (3,326) (742)
-------------- -------------- -------------- --------------
Net loss $ (648,166) $ (299,788) $ (1,681,989) $ (633,898)
============== ============== ============== ==============
Net loss per common share,
basic and diluted $ (0.05) $ (0.03) $ (0.14) $ (0.11)
============== ============== ============== ==============
Weighted average number of
shares, basic and diluted 11,996,586 10,014,242 11,824,103 5,845,150
============== ============== ============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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<TABLE>
Ubrandit.com
Condensed Consolidated Statements of Cash Flows
(unaudited)
<CAPTION>
Nine Months Nine Months
ended ended
June 30, June 30,
2000 1999
(restated)
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,681,989) $ (633,898)
Adjustments to reconcile net loss to net cash
used in operations:
Depreciation & Amortization 262,119 45,102
Compensation expense related to debt conversion - 262,000
Changes in operating assets and liabilities,
net of effects of acquisition:
Accounts receivable 6,214 (995)
Subscription receivable 51,000 -
Prepaid expenses (39,556) (19,288)
Deferred offering costs - 6,000
Deposits (5,081) (11,872)
Organizational costs - (1,000)
Accounts payable 87,474 (3,276)
Accrued expenses 45,300 48,030
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Net cash used in operating activities (1,274,519) (309,197)
-------------- --------------
Cash flow from investing activities:
Purchases of property and equipment (121,935) (90,991)
Payment for business acquisition (195,792) -
Cash acquired in business combination - 18,653
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Net cash used in investing activities (317,727) (72,338)
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Cash flow from financing activities:
Repayments of capital lease obligations (6,045) -
Proceeds from exercise of options 186,000 -
Net proceeds from issuance of common
stock, net of issuance costs - 1,962,013
-------------- --------------
Net cash provided by financing activities 179,955 1,962,013
-------------- --------------
Increase (decrease) in cash (1,412,291) 1,580,478
Cash, beginning 5,613,922 2,400
-------------- --------------
Cash, ending $ 4,201,631 $ 1,582,878
============== ==============
See accompanying notes to condensed consolidated financial statements.
</TABLE>
5
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Ubrandit.com
Notes to Condensed Consolidated Financial Statements
June 30, 2000
NOTE 1. BASIS OF PRESENTATION
The accompanying condensed consolidated balance sheet at June 30, 2000, and the
condensed consolidated statements of operations and cash flows for the three and
nine months ended June 30, 2000 and 1999 are unaudited and have been prepared by
Ubrandit.com (the "Company"), pursuant to the rules and regulations of the
Security and Exchange Commission. 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 such
rules and regulations, although the Company believes that the disclosures
included herein are adequate to make the information presented not misleading.
The unaudited condensed financial statements reflect all adjustments, consisting
of normal recurring adjustments, which are, in the opinion of management,
necessary to fairly state the financial position as of June 30, 2000 and the
results of operations and cash flows for the related interim periods ended June
30, 1999. The results of operations for the nine months ended June 30, 2000 are
not necessarily indicative of the results that may be expected for the year
ending September 30, 2000 or any other period.
The accounting policies followed by the Company and other information contained
in the notes to the Company's financial statements filed on February 2, 2000 as
part of the Company's Transition Report on Form 10-K/A for the nine months ended
September 30, 1999. This quarterly report should be read in conjunction with
such transition report.
Certain reclassifications have been made to the September 30, 1999 financial
statements to be consistent with the June 30, 2000 presentation.
Note 2. EARNINGS (LOSS) PER COMMON SHARE
Basic earnings (loss) per share are computed by dividing earnings available to
common shareholders by the weighted average number of common shares outstanding
during the periods. Diluted earnings per share reflect per share amounts that
would have resulted from the dilutive potential effect of common stock
instruments.
Note 3. ACQUISITION OF CLICKSMART.COM. INC.
Effective April 30, 2000, the Company acquired certain assets of Clicksmart.com.
Inc. pursuant to the terms of an Asset Purchase Agreement. The purchase price of
the acquisition included the issuance of 300,000 shares of the Company's common
stock, with a fair market value of $1,368,600, and a cash payment of $195,792.
The acquisition has been accounted for using the purchase method of accounting
and the assets acquired were recorded at their estimated fair values at the date
of the acquisition. The cost in excess of the net assets acquired was $1,329,265
which is being amortized on a straight-line basis over the estimated useful life
of seven years.
Note 4. OPTIONS TO PURCHASE COMMON STOCK
During the three months ended June 30, 2000, the Company granted options to
employees to purchase 72,500 shares of common stock, pursuant to the 1999 Stock
Option and Incentive Plan. The exercise prices equal the closing stock price of
the Company's common stock at the date of grant which range from $3.75 to $2.75
per share. In addition, pursuant to the terms of an employment agreement, the
Company granted options outside the plan to purchase 160,000 shares of common
stock at an exercise price of $2.75, which approximates fair market value, and
an option to purchase 100,000 shares of common stock under the 2000 Stock Option
Plan after shareholder approval is obtained.
6
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Item 2. Management's Discussion and Analysis or Plan of Operations.
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RECENT EVENTS
In April, Ubrandit.com formed the wholly owned subsidiary Ubrandit ISP marking
Ubrandit.com's entry into the ISP (Internet Service Provider) business sector.
Operating out of our new offices in Salt Lake City, Utah, Ubrandit ISP provides
"private labeled" entry into the ISP sector for businesses and affinity groups
of virtually any size and scope. For a one-time base setup fee of $12,500, a
Ubrandit ISP client is able to operate as a complete Internet access provider
via its own unique brand and identity. In addition to the setup fee,
Ubrandit.com has the ability to earn revenue on the monthly Internet access
services provided to the client for resale to end consumers. The ISP program is
exclusively private labeled to each individual client and delivered "turnkey"
and "ready for marketing" enabling the client to offer a premier Internet access
service to customers in more than 2,800 US and Canadian cities.
Also in the past fiscal quarter Ubrandit.com acquired ClickSmart.com, an
Internet content and services company. ClickSmart.com specializes in special
interest video and book eCommerce, direct response print marketing, database
management, and order processing/fulfillment services to hundreds of leading
magazine publishers and content Web sites. Management believes that the
combination of the two companies presents many opportunities for enhanced
product offerings and online traffic integration and expansion.
On July 10, Ubrandit.com signed an agreement with Citadel Communications Corp.
(Nasdaq: CITC), under which the Web properties of 183 Citadel radio stations
will utilize Ubrandit.com's eCommerce platform, JungleJeff.com. Under the
agreement, all of Citadel's 183 radio station Web properties will be integrated
with a transparently branded version of Ubrandit.com's million-plus title music,
book, video, and DVD eStore. Ubrandit.com will earn revenue on all sales
generated by Citadel's branded eStores.
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999
REVENUES. The Company's revenues for the three months ended June 30,
2000 were $356,471 as compared to $13,952 for the quarter ended June 30, 1999,
an increase of $342,519 or 2,455%. This increase was primarily due to the
contribution of 70% of the third quarter revenues by newly acquired
Clicksmart.com. Inc.
GROSS PROFIT (LOSS). The Company recorded a gross profit of $58,549 for
the quarter ended June 30, 2000 as compared to a gross loss of $192,110 for the
same period in 1999. The increase in gross profit was primarily due to an
increase in the Company's overall business in the third quarter and significant
revenues from newly acquired Clicksmart.com. Inc. which carries higher gross
margins.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expenses increased by 631% to $639,335 for the three months ended
June 30, 2000 from $87,465 for the same period in 1999. The increase was
primarily due to the Company's continued growth and expansion, increased
administrative payroll costs, accounting and legal fees in connection with
public company expenses and other expenses associated with running the newly
formed ISP division.
DEPRECIATION AND AMORTIZATION EXPENSE. For the three months ended March
31, 2000, depreciation and amortization costs were $118,592, as compared to
$28,169 for the same period in 1999. The increase was due to amortization of
core technology and goodwill recorded from the acquisition of Clicksmart.com.
Inc.
7
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INTEREST INCOME. For the three months ended June 30, 2000, interest
income increased to $53,808 as compared to the interest income of $8,513 for the
same period in 1999. The increase in interest income was due to interest earned
on increased cash balances received from equity offerings.
NET LOSS. Net loss for the three months ended June 30, 2000 was
$648,166 or 182% of revenues as compared to $299,788 or approximately 2,149% for
the same period in 1999. The increase in net loss was primarily due to the
Company's overall expansion and increased operating expenses. Net loss as a
percentage of revenues decreased by 1,967% primarily due to significant revenues
from newly acquired Clicksmart.com. Inc. which carries higher gross margins.
Nine Months Ended June 30, 2000 Compared to Nine Months Ended June 30, 1999
REVENUES. The Company's revenues for the nine months ended June 30,
2000 were $473,782 as compared to $20,616 for the quarter ended June 30, 1999,
an increase of $453,166 or 2,198%. This increase was primarily due to the
contribution of 52% of total revenues by newly acquired Clicksmart.com. Inc.
GROSS PROFIT (LOSS). The Company reported a gross loss of $233,839 for
the quarter ended June 30, 2000 as compared to a gross loss of $413,378 for the
same period in 1999. The increase in gross profit was primarily due to an
increase in the Company's overall business in the third quarter and significant
revenues from newly acquired Clicksmart.com. Inc. which carries higher gross
margins.
SELLING, GENERAL AND ADMINISTATIVE EXPENSE. Selling, general and
administrative expenses increased from by 645% to $1,364,154 for the nine months
ended June 30, 2000 from $183,189 for the same period in 1999. The increase was
primarily due to the Company's continued growth and expansion, increased
administrative payroll costs, accounting and legal fees in association with
Securities and Exchange Commission filings and other expenses associated with
running the newly formed ISP division.
DEPRECIATION AND AMORTIZATION EXPENSE. For the nine months ended June
30, 2000, depreciation and amortization costs were $262,119, as compared to
$45,102 for same period in 1999. The increase was due to amortization of core
technology and goodwill recorded from the acquisition of Clicksmart.com. Inc.
INTEREST INCOME. For the nine months ended June 30, 2000, interest
income increased to $181,449 as compared to $8,513 for the same period in 1999.
The increase in interest income was due to interest earned on increased cash
balances received from equity offerings.
NET LOSS. Net loss for the nine months ended June 30, 2000 was
$1,681,989 or approximately 355% of revenues as compared to $633,898 or
approximately 3,075% of revenues for the same period in 1999. The increase in
net loss was primarily due to the Company's overall expansion and increased
operating expenses. Net loss as a percentage of revenues decreased by 2,682%
primarily due to significant revenues from newly acquired Clicksmart.com. Inc.
which carries higher gross margins.
8
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LIQUIDITY AND CAPITAL RESOURCES
At present, the Company is generating revenue only on a limited basis. The
Company's main source of funds has been the sale of the Company's equity
securities in private placements. Through June 30, 2000, the Company has issued
9,541,333 shares of its Common Stock for approximately $6,568,659, after
deduction of offering expenses. The Company had $4,201,631 in cash at June 30,
2000, the date of its unaudited financial statements for the third quarter of
this fiscal year. The Company currently is using these funds mainly to develop
and market the Company's destination and branding Web sites, its co-branding and
private label technology, and to fund certain ongoing general and administrative
expenses. The Company generates revenue on a limited basis from its e-commerce
destination site JungleJeff.com, its branded book, music and video store Web
sites, and its Internet Service Provider private label program. The Company
expects to generate material revenue from operations as the Company's program to
increase the market awareness of its branded products continues to build over
the next two fiscal quarters. Further, if the Company realizes revenue from
branding, advertising, sponsorship fees, and custom programming, said revenue
will be subject to all of the risks of a new enterprise in a very competitive
industry and may not yield any profit for the Company.
The Company expects that its present cash reserves are sufficient to finance its
operating capital requirements at projected rates for a period of approximately
21 months following the filing date of this Quarterly Report. Thereafter, the
Company will depend on operating revenue to finance its continuing operations.
The Company will also endeavor to secure additional sources of equity or debt
financing to satisfy its capital needs. The Company has no commitment at this
time for any such additional capital and may be unable to raise the additional
capital necessary to support its operations.
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
----------------------------------------------------------
The Company does not own financial instruments that are subject to
market risk.
9
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
None.
Item 2. Changes in Securities and Use of Proceeds.
------------------------------------------
Pursuant to the terms of an Asset Purchase Agreement with
Clicksmart.com. in May 2000, the Company issued 200,000 shares to
Clicksmart.com, Inc. and 100,000 shares to Digital Courier Technologies, Inc. of
its $.001 par value Common Stock valued at $4.56 per share in exchange for the
net assets of Clicksmart.com, Inc., a Nevada Corporation in reliance on the
exemptions from registration available under Section 4(2) and Regulation D of
the Securities Act of 1933.
Between May and June 2000, the Company issued 129,000 shares of its
common stock upon the exercise of certain stock options, at exercise prices
ranging from $0.75 to $1.50.
Between May and June 2000, the Company issued incentive stock options
to four employees to purchase an aggregate of 72,500 shares of common stock
pursuant to the Company's 1999 Stock Option and Incentive Plan. The options are
exercisable at $3.75 to $2.75 per share.
In June 2000, pursuant to the terms of an employment agreement
with Peter Huemiller, the Company granted options not subject to the 1999 Stock
Option and Incentive Plan to Mr. Huemiller to purchase 160,000 shares of common
stock at an exercise price of $2.75, with 60,000 options to vest on June 1, 2001
and 100,000 shares to vest June 1, 2002. Mr. Huemiller is also to be granted
options to purchase 100,000 shares of common stock under the 2000 Stock Option
Plan after shareholder approval is obtained with said options to be granted and
priced at market at the time of approval of said plan and to vest on June 1,
2002, said options were granted in reliance on the exemptions from registration
available pursuant to Section 4(2) and Regulation D of the Securities Act of
1933.
Item 3. Defaults upon Senior Securities.
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
None.
Item 5. Other Information.
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(1) Exhibits:
Reference is made to the Exhibit Index.
(2) Reports on Form 8-K:
The Company filed a report on Form 8-K on May 30, 2000 to
report the change in registrant's certifying accountant.
10
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SIGNATURES
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.
Registrant:
UBRANDIT.COM
Dated: August 21, 2000 By /s/ Jeff Phillips
-------------------------
Jeff Phillips
President, CEO, Chairman
Dated: August 21, 2000 By /s/ Roger C. Royce
-------------------------
Roger C. Royce
Chief Operating Officer
11
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EXHIBIT INDEX
Exhibit
No. Description of Exhibits
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2.1 Agreement and Plan of Reorganization for the Acquisition of all of the
Outstanding Shares of Common Stock of Global Investors Guide by
Ubrandit.com (1)
3.1 Ubrandit.com Articles of Incorporation and amendments (1)
3.2 Ubrandit.com By-laws (1)
3.3 Registrant's Restated Bylaws (2)
4.1 Specimen of Common Stock Certificate (2)
10.1 1999 Stock Option and Incentive Plan (1)
10.2 Form of Incentive Stock Option Agreement (1)
10.3 Form of Non-Statutory Stock Option Agreement (1)
10.4 Information Distribution Agreement with S&P Comstock dated as of
January 16, 1998 (1)
10.5 Database License Agreement with Baker & Taylor, Inc. dated as of
January 1, 1999 (1)
10.6 Computer Software License Agreement with Townsend Analytics, dated
April 21, 1998 (1)
10.7 License Agreement with Muze Inc. [undated] (1)
10.8 Agreement with Communications Corporations of America, dated April 3,
2000 (3)
10.9 Agreement with White Knight Broadcasting, dated April 20,2000 (3)
10.10 Agreement with Clicksmart.com, Inc., dated effective May 4, 2000.*
10.11 Agreement with Citadel Broadcasting Company, dated July 1, 2000.*
11.1 Statement of Computation of per share earnings (reference is made to
the Statement of Operations included in the Financial Statements filed
herewith
21.1 Subsidiary of Registrant Global Investment Guide, Inc. Articles of
Incorporation (1)
21.2 Subsidiary of Registrant Global Investment Guide, Inc. By-laws (1)
27.1 Financial Data Schedule *
------------------
* Filed herewith.
(1) Previously filed with the Securities and Exchange Commission on the
Company's Registration Statement on Form 10.
(2) Previously filed with the Securities and Exchange Commission on the
Company's Registration Statement on Form 8-A.
(3) Previously filed with the Securities and Exchange Commission on the
Company's Fiscal 2000 2nd Quarter Report on Form 10-Q.
12
