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 MARCH 31, 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 number: 0-26975
PREFERENCE TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Nevada 88-0417949
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
333 North Ranch Drive, Suite 810
Las Vegas, Nevada 89106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (702) 648-6400
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 ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the numbers of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
At May 1, 2000, there were 28,650,964 shares of the Registrant's $.001
Par Value Common Stock outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Preference Technologies, Inc.
(A Development Stage Company)
Balance Sheet
Assets
March 31, 2000 December 31, 1999
(unaudited) (audited)
Current assets
Cash and cash equivalents $ 2,047,586 $ 32,791
Notes receivable 15,709 14,700
Subscription receivable 15,560
------------ ------------
Total current assets 2,078,855 47,491
Furniture & equipment, net 815,889 637,276
Other assets 67,756 67,756
------------ ------------
Total assets $ 2,962,500 $ 752,523
============ ============
Liabilities and Stockholders Equity
Accounts payable & accrued expenses $ 636,406 $ 770,912
------------ ------------
Total current liabilities 636,406 770,912
Stockholders equity
Common Stock @ $.001 par Value
Authorized 200,000,000
Issued and outstanding
28,650,964 and 26,413,052, respectively 28,651 26,413
Additional paid-in capital 14,012,692 8,315,941
Deficit accumulated during development stage (11,715,249) (8,360,743)
------------ ------------
Total stockholders equity 2,326,094 (18,389)
------------ ------------
Total liabilities and stockholders equity $ 2,962,500 $ 752,523
============ ============
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
Preference Technologies, Inc.
(A Development Stage Company)
Statement of Operations
3 months Ended February 3, 1999
March 31, 2000 (Inception) to
March 31, 1999
Selling, general and
administrative expenses $ 3,367,267 $ 386,477
------------ ------------
Loss from operations (3,367,267) (386,477)
Other income (expense):
Misc. income 236 0
Interest income 12,525 0
Forgiveness of debt 0 81,822
Financing expense 0 (1,557,335)
------------ ------------
Total other income (expense) 12,761 (1,475,513)
------------ ------------
Net loss ($ 3,354,506) ($ 1,861,990)
============ ============
Basic loss per share ($0.12) ($0.07)
============ ============
Diluted loss per share ($0.12) ($0.07)
============ ============
Weighted average shares outstanding 27,532,008 25,098,048
============ ============
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
Preference Technologies, Inc.
(A Development Stage Company)
Statement of Cash Flows
3 months Ended February 3, 1999
March 31, 1999 (Inception) to
March 31, 2000
Cash flows from operating activities:
Net loss ($3,354,506) ($1,861,990)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 66,094 26,738
Increase from common stock issued for services 0 100,000
Financing expense from issuing warrants 0 693,000
Compensation expense for issuing below
market options 501,842 0
Compensation expense for issuing
stock options 864,335
(Increase)/Decrease in notes receivables (16,568) (2,806,300)
Increase/(Decrease) in accounts payable (134,506) 267,639
(Increase)/Decrease in prepaids 0 67,147
Increase/Decrease in deposits 0 (51,509)
----------- -----------
Net cash used in operating activities (2,937,644) (2,835,234)
----------- -----------
Cash flows from investing activities:
Purchase of furniture and equipment (244,707) (56,766)
----------- -----------
Net cash used in investing activities: (244,707) (56,766)
----------- -----------
Cash flows from financing activities:
Proceeds from private placement of
common stock 5,977,693 2,892,000
Offering costs (800,547) 0
----------- -----------
Net cash flows provided by financing activities 5,197,146 2,892,000
----------- -----------
Net increase in cash and cash equivalents $ 2,014,795 $ 0
Cash and cash equivalents, beginning of period 32,791 0
----------- -----------
Cash and cash equivalents, end of the period $ 2,047,586 $ 0
=========== ===========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
PREFERENCE TECHNOLOGIES, INC.
(formerly STOCKUP.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
- --------------------------------------------------------------------------------
NOTE 1 - GENERAL
The accompanying financial statements and footnotes have been condensed
and therefore do not contain all disclosures required by generally
accepted accounting principles. The interim financial data are unaudited;
however, in the opinion of Preference Technologies, Inc. (the "Company"),
the interim data include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement of results for the
interim period. Results for the interim periods are not necessarily
indicative of those to be expected for the full year.
NOTE 2 - DESCRIPTION OF BUSINESS
Preference Technologies, Inc. (the "Company") was incorporated in Nevada
in February 1999 under its former name StockUp.com, Inc. Effective
February 23, 2000, StockUp.com, Inc. officially changed its name to
Preference Technologies, Inc.
The Company is developing second-generation Internet technology(TM)
products that will be licensed to other websites and distributed to
end-users. The Company's products offer the end user increased levels of
customization and interactivity. Websites deploying the technology will
benefit from increased traffic, enhanced user retention, and the ability
to build targeted aggregate marketing profiles of users.
Courtleigh Capital, Inc. ("Courtleigh"), a Kansas corporation and a
publicly traded corporation, was first incorporated under the name ANCR,
Inc. on July 30, 1985 under the laws of the State of Colorado. ANCR, Inc.
became an inactive shell corporation, and on July 23, 1997 changed its
name to CEA Lab, Inc. Furthermore, on October 16, 1995, CEA Lab, Inc.
reincorporated in the State of Kansas and subsequently changed its name to
Courtleigh Capital, Inc. In February 1999, Courtleigh subsequently changed
its name to StockUp.com, Inc. and reincorporated in the State of Nevada.
On December 30, 1998, Marketing Direct Concepts, Inc. ("MDC"), a Nevada
corporation, entered into an Asset Purchase and Escrow Agreement, whereby
it sold assets and liabilities, valued at $368,178, to the Company in
exchange for 18,000,000 shares of Courtleigh's common stock.
Courtleigh had minimal assets and liabilities at the date of the
acquisition and did not have operations prior to the acquisition.
Therefore, no pro forma information is presented.
5
<PAGE>
PREFERENCE TECHNOLOGIES, INC.
(formerly STOCKUP.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
- --------------------------------------------------------------------------------
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
---------------------
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles that contemplate
continuation of the Company as a going concern. Negative cash flows from
operations during the three months ended March 31, 2000 and the period
from February 3, 1999 (inception) to March 31, 1999 was $2,937,644 and
$2,835,234 respectively. These factors raise substantial doubt about the
Company's ability to continue as a going concern.
Recovery of the Company's assets is dependent upon future events, the
outcome of which is indeterminable. Successful completion of the Company's
development program and its transition to the attainment of profitable
operations is dependent upon the Company achieving a level of sales
adequate to support the Company's cost structure. In addition, realization
of a major portion of the assets in the accompanying balance sheet is
dependent upon the Company's ability to meet its financing requirements
and the success of its plans to sell products. The financial statements do
not include any adjustments relating to the recoverability and
classification of recorded asset amounts or amounts and classification of
liabilities that might be necessary should the Company be unable to
continue in existence.
In addition to the capital raised as of March 31, 2000 through private
equity offerings, the Company is currently negotiating with certain
investors about raising additional capital through private placement
offerings. Unless the Company raises additional funds, either by debt or
equity issuances, management believes that its current cash on hand will
be insufficient to cover its working capital needs until the Company's
sales volume reaches a sufficient level to cover operating expenses.
The information included in this Form 10-Q should be read in conjunction
with Management's Discussion and Analysis and financial statements and
notes thereto included in Preferences Technologies, Inc.'s Form 10-K.
Advertising
-----------
The Company expenses advertising costs as incurred. Advertising costs for
the three months ended March 31, 2000 and the period from February 3, 1999
(inception) to March 31, 1999 was $382,274 and $13,719 respectively.
Net Loss per Share
------------------
For the periods, the Company adopted SFAS No. 128, "Earnings per Share."
Basic loss per share is computed by dividing loss available to common
stockholders by the weighted-average number of common shares outstanding.
6
<PAGE>
PREFERENCE TECHNOLOGIES, INC.
(formerly STOCKUP.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
- --------------------------------------------------------------------------------
Diluted loss per share is computed similar to basic loss per share except
that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common
shares had been issued and if the additional common shares were dilutive.
For the periods from February 3, 1999 (inception) to March 31, 1999 and
the three months ended March 31, 2000, the Company incurred a net loss;
therefore, basic and diluted loss per share is the same.
Stock Split
-----------
On February 23, 2000, the Company effected a two-for-one stock split of
its common stock. All share and per share data have been retroactively
restated to reflect this stock split.
Concentrations of Credit Risk
-----------------------------
The financial instrument which potentially subjects the Company to
concentrations of credit risk is cash. The Company places its cash with
high quality financial institutions, and at times it may exceed the
Federal Deposit Insurance Corporation $100,000 insurance limit. As of
March 31, 2000, uninsured portions held at the financial institutions
aggregated to $2,058,737.
NOTE 4 - STOCKHOLDERS EQUITY
During the three months ended March 31, 2000, the Company received the
balance of two private offerings of common stock made in December. Net of
offering costs, the Company received $5,197,147 for 2,237,912 shares of
common stock.
As of December 31, 1999, the number of shares of common stock outstanding
totaled 26,413,052. As of the March 31, 2000, common stock shares
outstanding totaled 28,650,964.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSES OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS RELATING TO FUTURE EVENTS AND
FUTURE PERFORMANCE OF THE COMPANY WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
INCLUDING, WITHOUT LIMITATION, STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS,
BELIEFS, INTENTIONS OR FUTURE STRATEGIES THAT ARE SIGNIFIED BY THE WORDS
7
<PAGE>
"EXPECTS," "ANTICIPATES," "INTENDS," "BELIEVES" OR SIMILAR LANGUAGE. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH FORWARD-LOOKING
STATEMENTS. THE CAUTIONARY STATEMENTS MADE IN THIS DOCUMENT SHOULD BE READ AS
BEING APPLICABLE TO ALL RELATED FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR
IN THIS DOCUMENT. ALL FORWARD- LOOKING STATEMENTS INCLUDED IN THIS DOCUMENT ARE
BASED ON INFORMATION AVAILABLE TO THE COMPANY ON THE DATE HEREOF, AND THE
COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY FORWARD LOOKING STATEMENTS. THE
COMPANY CAUTIONS INVESTORS THAT ITS BUSINESS AND FINANCIAL PERFORMANCE ARE
SUBJECT TO SUBSTANTIAL RISKS AND UNCERTAINTIES. IN EVALUATING THE COMPANY'S
BUSINESS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET
FORTH BELOW UNDER THE CAPTION "RISK FACTORS" IN ADDITION TO THE OTHER
INFORMATION SET FORTH HEREIN.
Overview
The Company was incorporated in Nevada in February 1999 and is developing
second-generation Internet technology products. The Global Information Gateway
(GIG) is the Company's first product. The GIG aggregates news and other
information customized to the users preference and delivered to the desktop in
real time. The Corporation Information Gateway (CIG) is a branded version of the
Global Information Gateway. By deploying the CIG, companies create a two-way
communication link and establish a permanent presence on the user's desktop. The
CIG provides business to business (B2B) and business to consumer (B2C) marketing
solutions.
From its inception to date, the Company has incurred costs associated with the
development and launch of its products, probable markets, and business. The
Company has established relationships with information providers that increase
the quality and marketability of the Company's products. While there is no
assurance, management believes that the Company's products will commence
generating revenues during the second quarter of 2000.
The Company has historically financed its operations to date through the sale of
its common stock. Since inception through March 31, 2000, the company issued
28,650,964 shares of its common stock. The Company raised $2.9 million, net of
offering costs, from four accredited investors as follows: (i) February 1999
("the February Offering") - Issuance of 2,666,664 shares of common stock in
exchange for $900,000; and (ii) Issuance of options under Rule 506 of Regulation
D, promulgated under Section 4 (2) of the Securities Act of 1933, to acquire
units comprised of 2,400,000 shares of common stock, and 1,200,000 warrants
exercisable at $1.25 per share, and options to acquire 581,672 shares of common
stock at an aggregate exercise price of $31,250 in exchange for $2.3 million
cash. The February 1999 Offering was conducted under Rule 504. It provided the
necessary seed capital to commence implementation of the Company's business
plan. 2,400,000 of these shares are currently restricted and subject to a demand
registration rights as of January 1, 2000. The 2,400,000 shares and the shares
underlying the 1,200,000 warrants are subject to reasonable underwriter trading
restrictions in the event of a public offering. The investors holding these
securities are also entitled to anti-dilution rights in the event the Company
issues stock at less than $1.25 per share.
8
<PAGE>
In June 1999, the Company entered into a private placement agreement to offer up
to $12,000,000 worth of shares of common stock for 4,000,000 shares. The Company
extended the minimum offering of $600,000 through October 31, 1999, for which
the minimum was timely met. The Company is also issuing two warrants for every
six shares of common stock to investors that provide a minimum of $18,000 at an
exercise price of $5 per share with a two-year term. The shares underlying these
warrants shall be subject to piggy-back registration rights. Institutional
investors shall receive the same type and number of warrants, except the
exercise price shall be $5 per share. The Company shall pay to each
broker-dealer warrants to purchase shares equal to 10% of the Company's common
stock sold by such broker-dealer with an exercise price of $7.50. The shares are
not freely traded until the registration of the private placement agreement. The
warrants may be exercised, commencing upon the date the Company closes a public
offering of its stock pursuant to a Registration Statement registering the
shares underlying the warrants and terminating 180 days thereafter. The
investment period expired on December 1, 1999.
At December 31, 1999, a total offering of $1,201,247, net of offering costs, was
completed, and 458,334 shares of common stock were issued.
In connection with the offering, the Company granted 113,106 warrants to
investors at December 31, 1999 at an exercise price of $5 per share. The Company
further granted 45,832 warrants to broker-dealers at an exercise price of $7.50
per share.
On December 5, 1999, the Company entered into another private placement
agreement to offer up to $4,000,000 worth of units to accredited investors with
a minimum offering of $2,000,000. During the three months ended March 31, 2000,
the Company received $2,910,978 net of offering costs, and issued 1,301,600
shares of common stock and 433,866 warrants. Each unit was comprised of six
shares of the Company's common stock and two warrants at an exercise price of $5
per share. The warrants may be exercised, commencing upon the date the Company
closes a public offering of its stock pursuant to a Registration Statement
registering the shares underlying the warrants and terminating three years
thereafter. Each warrant shall be callable upon providing the holder 20 days'
written notice in the event the shares have been registered and the closing bid
price of the shares is at a price of $10 per share during 10 consecutive trading
days. The securities comprising the units shall not be detachable unless and
until a Registration Statement is declared effective.
The offering also included distribution of warrants to broker-dealers in the
amount of 20% of the aggregate proceeds raised by a broker, divided by 3.75 at
an exercise price of $5 per share. At March 31, 2000, a total of 178,600
warrants were issued to brokers. In the event the Company registers its
securities, the Company shall register the shares and the shares underlying the
warrants, subject to a trading lock-up, (i) upon the effective date of the
Registration Statement ("the Effective Date"), 33.33% of such securities shall
be free trading; (ii) 45 days after the Effective Date, 33.33% of such
securities shall be free-trading, and (iii) 90 days after the Effective Date,
33.33% of such securities shall be free-trading. In the event the Company has
not filed a Registration Statement registering the shares and the shares
underlying the warrants prior to July 1, 2000, then a majority of the holders of
the units issued shall have the right to demand that the Company immediately
register all such securities. In the event of such a demand, then upon the first
9
<PAGE>
of each month after such demand during which the Registration Statement is not
effective, commencing no earlier then October 1, 2000, the number of warrants
issued hereunder shall be increased, on a pro-rata basis, to the holders of the
units, by an amount equal to 2% of the warrants issued.
On December 3, 1999, the Company entered into a subscription agreement to offer
units at a price of $9 per unit. For Investors investing at least $1,000,000,
the price per unit will be decreased to $7.50 per unit. Each unit is comprised
of six shares of the Company's common stock and two warrants. There is no
minimum or maximum total investment related to this agreement. The Company shall
pay to each broker-dealer warrants to purchase shares equal to 10% of the
Company's total units issued. All warrants shall have an exercise price of $5
per share. In the event the Company has not filed a Registration Statement on or
prior to September 1, 2000, the investor shall have the right to demand
registration of the shares and the warrant shares, and the number of warrants
issued shall be increased by 5% of the original number of warrants issued,
commencing September 1, 2000 and upon the first of each month thereafter, until
the shares and warrants are registered. In the even the Company, during the
six-month period of time following the date of the agreement, sells shares at
less than $3 per share (or $2.50 per share in the event an investor is providing
$1,000,000), then the Company shall be required to issue additional securities
to the investor in an amount such that the investor would receive, in the
aggregate, the same securities as if he had participated in the reduced price
offering. As of March 31, 2000, a total offering of $3,435,577, net of offering
costs, was completed, and 1,436,314 shares of common stock were issued. In
connection with the offering, a total of 47,878 and 478,780 warrants were issued
to brokers and investors, respectively.
We have incurred significant net losses and negative cash flows from operations
since our inception. At March 31, 2000, we had an accumulated deficit of
$11,715,249. These losses have been funded primarily through the issuance of our
equity securities. We intend to continue to invest heavily in marketing and
brand development, content enhancements, and technology and infrastructure
development. As a result, we believe that we will continue to incur net losses
and negative cash flows from operations for the foreseeable future. Moreover,
the rate at which these losses will be incurred may increase from current
levels.
For the three months ended March 31, 2000 and for the period from February 3,
1999 (inception) to March 31, 1999, the Company's selling, general and
administrative expenses were $3,367,267 and $386,477 respectively. The Company
earned $12,761 in other income for the three months ended March 31, 2000. The
net loss for the three months ended March 31, 2000 and the period from February
3, 1999 (inception) to March 31, 1999 totaled $3,354,506 and $1,861,990,
respectively.
We incurred cumulative deferred compensation, which represents the difference
between the exercise price of stock options granted, and the fair market value
of the underlying common stock at the date of grant. The difference is recorded
and amortized over the vesting period of the applicable options. Options granted
through December 1999 typically vest over 15 months, although a portion of those
options vested immediately. Options granted after December 1999 generally vest
over 36 months. Of the total deferred compensation amount, approximately
$501,842 and $0 was amortized during the three months ended March 31, 2000 and
1999.
As of March 31, 2000, the Company had current assets of $2,078,855, and $883,645
in furniture, equipment, and other assets, resulting in total assets of
$2,962,500. The Company's current liabilities were $636,406.
10
<PAGE>
Results of Operations
The Company is a development stage company and did not generate any operating
revenues for the three months ended March 31, 2000 and the period from February
3, 1999 (inception) to March 31, 1999. The Company is currently focusing its
efforts on developing quality products and establishing a large consumer base
for these products. While there is no assurance, the Company anticipates that by
developing quality products and establishing a consumer base, it will be in a
position to generate revenues in the future.
Operating Expenses
- ------------------
Selling, General and Administrative Expenses
- --------------------------------------------
For the three months ended March 31, 2000 and the period from February 3, 1999
(inception) to March 31, 1999, the Company incurred $3,367,267 and $386,477
respectively in operating expenses. These expenses were primarily for product
development and general administrative costs. The increase is due to the
increased activity in continuing product development and increased general
business activity. The Company expects its absolute dollar expenses to continue
to increase as a result of general business activity and sales. Sales are
expected to materialize during the second quarter of 2000.
Other Income
- ------------
Miscellaneous Income and Interest Income totaled $12,761 and $0 for the three
months ended March 31, 2000 and respectively. Investment income in future
periods may fluctuate as a result of fluctuations in average cash balances
maintained by the Company and changes in the market rates of its investments.
Financing Expense
- -----------------
For the three months ended March31, 2000 and the period from February 3, 1999
(inception) to March 31, 1999, finance expense was $0 and $1,557 335,
respectively. Financing expense consists primarily of cost associated with the
issuance of below market options and warrants.
Depreciation and Amortization
- -----------------------------
For the three months ended March 31, 2000 and the period from February 3, 1999
(inception) to March 31, 1999, depreciation and amortization expenses were
$66,094 and $26,738 respectively.
11
<PAGE>
Stock-Based Compensation Expense
- --------------------------------
For the three months ended March 31, 2000, $501,842 of compensation expense was
recorded. The unamortized balance is being amortized over the vesting period for
the individual options, which is typically 15 months for options issued earlier
than December 1999 and 36 months for options issued since that date.
Liquidity and Capital Resources
The Company has generated no revenues and does not anticipate generating revenue
until the second quarter of year 2000. The Company anticipates that it will
continue to incur net losses and negative cash flows from operations for the
foreseeable future. Moreover, the rate at which these losses will be incurred
may increase from current levels. As a result, the Company's sole source of
capital from February 3, 1999 (inception) to March 31, 2000 has been investment
capital provided by third parties. Further, the Company anticipates it will
require additional capital contributions to fund its operations during the year
2000. In December 1999, the Company commenced two private offerings of its
securities.
During the three months ended March 31, 2000, the proceeds from the offerings of
$5,197,146 (net of offering costs) were received for the issuance of 2,237,912
shares.
Capital expenditures have generally been comprised of purchases of computer
hardware and software as well as leasehold improvements related to leased
facilities and are expected to increase in future periods.
The Company currently has commitments including those under operating lease
agreements. The Company has experienced a substantial increase in its capital
expenditures and operating lease arrangements since its inception, which is
consistent with increased staffing, and anticipates that this will continue in
the future. Additionally, the Company will continue to evaluate possible
acquisitions of or investments in businesses, products, and technologies that
are complementary to those of the Company, which may require the use of cash.
Management believes existing cash and investments will not be sufficient to meet
the Company's operating requirements for the next twelve months; however, the
Company may sell additional equity or debt securities or obtain credit
facilities to further enhance its liquidity position. The sale of additional
securities could result in additional dilution to the Company's shareholders.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a party to various actions and proceedings incident to its normal
business operations. The Company believes that the outcome of such litigation
and proceedings, individually and in the aggregate, will not have a material
adverse effect on the business or financial condition of the Company.
Item 2. Changes in Securities
During the three months ended March 31, 2000, the Company received the balance
of two private offerings of common stock made in December. Net of offering
costs, the Company received $5,197,147 for 2,237,912 shares of common stock.
As of December 31, 1999, the number of shares of common stock outstanding
totaled 26,413,052. As of the March 31, 2000, common stock shares outstanding
totaled 28,650,964.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to a vote of security holders through a
solicitation of proxies or otherwise during the three months ended March 31,
2000.
Item 5. Other Information
None
Item 6.
(A) Exhibits
27. Financial Data Schedule
---------------------------
(B) During the three months ended March 31, 2000, two (2) Form 8-K reports
were filed. The first, filed on February 14, 2000, announced the change of
the name of the Company from STOCKUP.COM, INC. to Preference Technologies,
Inc. It also announced a forward stock split of 2 for 1. A second Form 8-K
was filed on March 14, 2000. It announced that on March 9, 2000, Mr. Kerry
Nicponski tendered his resignation as Chief Operating Officer and Director.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Signature Title Date
--------- ----- ----
/s/ Michael Calderone
________________________ Director May 12, 2000
Michael Calderone Chief Executive Officer
(Principal Executive Officer)
/s/ Paul Yeager
________________________ Chief Financial Officer May 12, 2000
Paul Yeager (Principal Accounting Officer)
14
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<ARTICLE> 5
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,047,586
<SECURITIES> 0
<RECEIVABLES> 31,269
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,078,855
<PP&E> 1,119,039
<DEPRECIATION> 303,150
<TOTAL-ASSETS> 2,962,500
<CURRENT-LIABILITIES> 636,406
<BONDS> 0
0
0
<COMMON> 28,651
<OTHER-SE> 2,297,443
<TOTAL-LIABILITY-AND-EQUITY> 2,962,500
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,367,267
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,354,506)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,354,506)
<EPS-BASIC> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
