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 0-26809
ASPI EUROPE, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 91-1962104
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
Two Union Square
601 Union Street, Suite 4200
Seattle, Washington
98101
(Address of principal executive offices)
(206) 652-3675
(Registrant's telephone number, including area code)
SHOPPING SHERLOCK, INC.
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all documents
and 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 outstanding shares of common stock, $0.001 par value,
of the registrant at March 31, 2000 was 7,063,116.
<PAGE>
ASPI EUROPE, INC.
INDEX TO THE FORM 10-Q
For the quarterly period ended March 31, 2000
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Page
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS...................................................................1
Consolidated Balance Sheets........................................................1
Consolidated Statements of Operations and Deficit..................................2
Consolidated Statements of Stockholders Deficit....................................3
Consolidated Statements of Cashflow................................................4
Notes to Consolidated Financial Statements.........................................5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS .................................................................8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK............................12
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.....................................................................13
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.............................................13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.......................................................13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................................13
ITEM 5. OTHER INFORMATION.....................................................................14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................................14
SIGNATURES ......................................................................................15
</TABLE>
ii
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASPI EUROPE, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
March 31, December 31,
2000 1999
(unaudited)
- - --------------------------------------------------------------------------------------------------------------
ASSETS
Current Assets
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Cash and cash equivalents $ 31,716 $ 93,127
Restricted cash 17,873 35,686
Prepaid expenses and deposits 2,878 22,917
- - --------------------------------------------------------------------------------------------------------------
Total Current Assets 52,467 151,730
Net assets to be disposed 42,835 86,098
- - --------------------------------------------------------------------------------------------------------------
Total Assets $ 95,302 $ 237,828
- - --------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 166,463 $ 74,907
Due to related party 98,463 95,033
Convertible note payable - 150,616
- - --------------------------------------------------------------------------------------------------------------
Total Current Liabilities 264,926 320,556
- - --------------------------------------------------------------------------------------------------------------
Stockholders' Deficit
Common stock, $.001 par value; 50,000,000 shares authorized,
7,063,116 and 9,000,000 issued and outstanding 7,063 9,000
Additional paid-in capital 2,159,328 1,131,579
Deficit accumulated during the development stage (2,336,015) (1,223,307)
- - --------------------------------------------------------------------------------------------------------------
Total Stockholders' Deficit (169,624) (82,728)
- - --------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit $ 95,302 $ 237,828
- - --------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
1
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ASPI EUROPE, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2000 AND 1999
(Unaudited)
Three Months Ended March 31,
----------------------------
2000 1999
- - --------------------------------------------------------------------------------
OPERATING EXPENSES
General and administrative $ 124,809 $ 10,306
Noncash stock-based compensation 68,334 -
Financial consulting fee 1,156,000 -
Depreciation and amortization 2,221 624
Interest expense, net 500 -
- - --------------------------------------------------------------------------------
Total operating expenses 1,351,864 10,930
- - --------------------------------------------------------------------------------
NET (GAIN) LOSS FROM DISCONTINUED
OPERATIONS (239,156) 135,142
- - --------------------------------------------------------------------------------
Net loss $ (1,112,708) $ (146,072)
- - --------------------------------------------------------------------------------
Net (loss) gain per share -
Continuing operations $ (0.16) $ (0.00)
Discontinued operations 0.03 (0.03)
- - --------------------------------------------------------------------------------
Net loss per share - basic and diluted $ (0.13) $ (0.03)
- - --------------------------------------------------------------------------------
Weighted average number of shares
of common stock outstanding 8,396,449 4,333,333
- - --------------------------------------------------------------------------------
The accompanying notes are an integral part of these
consolidated financial statements.
2
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ASPI EUROPE, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(Unaudited )
<TABLE>
Deficit
Accumulated
Common Stock Additional During the
Shares Amount Paid-in Capital Development Stage Total
- - -----------------------------------------------------------------------------------------------------------------------
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ASPi Europe, Inc. Activities
(Formerly Shopping Sherlock, Inc.
and AIDA Industries, Inc.):
Issuance of common stock for cash 100,000 $ 100 $ 900 $ - $ 1,000
Net Loss - - - (1,000) (1,000)
- - -----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1985 100,000 100 900 (1,000) -
Activity January 1986 through
December 31, 1997 - - - - -
- - -----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 100,000 100 900 (1,000) -
Issuance of Common stock for
reinstatement fees - July 20,
1998 900,000 900 1,179 - 2,079
Net Loss - - - (2,079) (2,079)
- - -----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998 1,000,000 1,000 2,079 (3,079) -
Sale of Common Stock for Cash
($.05/Share) - February 17, 1999 5,000,000 5,000 245,000 - 250,000
Sale of Common Stock for Cash
($1.00/Share) - April 16, 1999 1,000,000 1,000 999,000 - 1,000,000
Issuance of Common Stock for
Acquisition of Shopping Sherlock
- Delaware - May 26, 1999 2,000,000 2,000 (2,000) - -
Cash distributed to significant
stockholder - May 26, 1999 - - (150,000) - (150,000)
Beneficial conversion discount of
convertible debt - December 14,
1999 - - 37,500 - 37,500
Net Loss - - - (1,220,228) (1,220,228)
- - -----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999 9,000,000 $ 9,000 $1,131,579 $ (1,223,307) $ (82,728)
Conversion of Convertible debt
($2.80/Share) - January 21, 2000 63,116 63 151,415 - 151,478
Compensation related to issuance of
stock options - February 7, 2000 68,334 - 68,334
Warrants issued relating to
financial consulting fees
- March 17, 2000 1,156,000 - 1,156,000
Redemption of Common Stock for
Software License - March 27,
2000 (2,000,000) (2,000) (348,000) - (350,000)
Net Loss - - - (1,112,708) (1,112,708)
- - -----------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2000 7,063,116 $ 7,063 $2,159,328 $ (2,336,015) $ (169,624)
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
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ASPI EUROPE, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASHFLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2000 AND 1999
(Unaudited )
<TABLE>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Three Months Ended March 31,
----------------------------
2000 1999
- - ---------------------------------------------------------------------------------------------
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Cash Flows From Operating Activities
Net loss $ (1,112,708) $ (146,072)
Adjustments to reconcile net loss to net
cash used in operating activities:
Shares redeemed for sale of software license (350,000) -
Noncash Stock-based compensation 68,334 -
Warrants issued relating to financial
consulting fees (1,156,000) -
Depreciation 5,397 1,112
Provision for losses on assets held
for liquidation 35,866 -
Change in assets and liabilities:
Restricted cash 17,813 -
Prepaid expenses and deposits 20,039 (43,342)
Accounts payable 91,556 57,572
Accrued interest on convertible
note payable 862 -
- - ---------------------------------------------------------------------------------------------
Net Cash Used in Operating Activities (66,841) (130,730)
- - ---------------------------------------------------------------------------------------------
Cash Flows From Investing Activities
(Purchase) sale of furniture and equipment 2,000 (39,507)
- - ---------------------------------------------------------------------------------------------
Net Cash Provided by (Used in) Investing Activities 2,000 (39,507)
- - ---------------------------------------------------------------------------------------------
Cash Flows From Financing Activities
Proceeds from issuing common stock - 250,000
Proceeds from advances pending subscriptions - 932,318
Advances from related party 3,430 7,500
- - ---------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 3,430 1,189,818
- - ---------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (61,411) 1,019,581
Cash and Cash Equivalents, beginning of period 93,127 -
- - ---------------------------------------------------------------------------------------------
Cash and Cash Equivalents, end of period $ 31,716 $ 1,019,581
- - ---------------------------------------------------------------------------------------------
Non-cash Financing Activity
Conversion of note payable to common stock $ 151,478 $ -
- - ---------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
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ASPI EUROPE, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BUSINESS DESCRIPTION
ASPi Europe, Inc. ("the Company") was incorporated in the State of Florida on
August 17, 1984, under the name of AIDA Industries, Inc. From its inception
until July 20, 1998, there was no activity within the Company. On July 20, 1998,
the Company amended its Articles of Incorporation to provide for a thousand to
one (1000:1) stock split, and applied for listing on the OTC Bulletin Board. The
Company began operations in January of 1999, and on March 24, 1999, the Company
changed its name from AIDA Industries, Inc. to Shopping Sherlock, Inc.
On May 26, 1999, the Company entered into an acquisition agreement with Shopping
Sherlock, Inc. ("SSI"), a corporation organized and incorporated in the State of
Delaware on January 20, 1999, for the purpose of developing and implementing its
website hosting and e-business services as well as developing its own e-commerce
website to sell consumer products over the Internet through discounts and
purchase rebates to its customers. The Company acquired 100% of the common stock
of SSI in exchange for the issuance of a total of 2,000,000 shares of the
Company's common stock to the shareholders of SSI, namely Premier Lifestyles
International Corporation ("PLIC") and Stewart Family Partners (the
"Partnership").
On January 2, 2000, the Company's board of directors decided to cease its
website hosting and e-business services as well as its e-commerce operations due
to a lack of working capital and disappointing financial results. On January 27,
2000, the Company entered into the Stock Redemption and Settlement Agreement
(the "Redemption Agreement") with PLIC, the Partnership, and Richard Stewart
under which the Company agreed to transfer a worldwide, non-exclusive,
perpetual, fully-paid-up license to use, distribute or make derivative works
from the Company's software designed to operate and host websites in
consideration for the redemption of the 2,000,000 shares of the Company's common
stock that PLIC and the Partnership owned or had a right to purchase.
On March 14, 2000, the shareholders of the Company at a special shareholder
meeting approved of the terms of the Redemption Agreement and, as a result, the
2,000,000 shares of common stock that PLIC and the Partnership owned or had a
right to purchase were redeemed by the Company and were deemed authorized but
unissued shares of the Company pursuant to Florida law.
Due to the Company's lack of success in launching its website hosting and
e-business services as well as its e-commerce business, the Company decided to
change its business focus and explore the possibility of acquiring a viable
operating company in a different industry. On March 8, 2000, the Company
announced that it entered into a letter of intent to acquire all of the issued
and outstanding equity securities of it-softdialog AG ("ITAG"), an established
information technology consulting company with its headquarters in Germany.
Under the terms of the letter of intent, the Company intends to acquire 100% of
ITAG's outstanding securities in consideration for $8.0 million in cash, and up
to 2,000,000 shares of common stock of the Company.
The Company is currently renegotiating the terms of this letter of intent, and
the terms of the proposed transaction may be materially different than the terms
previously negotiated by the parties. In addition, there can be no assurance
that the transaction contemplated will be completed between the Company and
ITAG. In anticipation of the closing of the proposed acquisition, however, on
May 2, 2000, the Company received shareholder approval to change its name from
Shopping Sherlock, Inc. to ASPi Europe, Inc., and on May 5, 2000, the Company
changed its name to ASPi Europe, Inc.
5
<PAGE>
ASPI EUROPE, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
2. BASIS OF PRESENTATION
The accompanying consolidated financial statements of the Company are unaudited
and include, in the opinion of management, all normal recurring adjustments
necessary to present fairly the consolidated balance sheets as of March 31,
2000, and the related statements of operations, stockholders deficit and cash
flows for the period presented. 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 Securities and Exchange Commission. These condensed
consolidated financial statements should be read in conjunction with the
Company's audited consolidated financial statements and the related notes
thereto included in the Company's Form 10-K filed with the Securities and
Exchange Commission on March 30, 2000.
The Company has been in the development stage since its inception. It has no
significant operating revenue to date, has accumulated losses of $2,336,015, and
will require additional working capital to complete its acquisition of ITAG.
This fact raises substantial doubt as to the Company's ability to continue as a
going concern.
3. INCOME TAXES
The Company records its provision for income taxes using the liability method.
Under this method deferred tax assets and liabilities are recognized based on
the anticipated future tax effects arising from the differences between the
financial statement carrying amounts of assets and liabilities and their
respective tax bases.
4. NET LOSS PER SHARE
Basic loss per share is computed by dividing net loss by the weighted average
number of common stock outstanding. Per share information for all prior periods
have been adjusted to reflect the 1,000:1 stock split declared on July 20, 1998.
As of March 31, 2000, the Company had outstanding options to purchase 305,000
shares of common stock and outstanding warrants to purchase 50,000 shares of
common stock which were not included in the calculation of loss per share as
their effect was anti-dilutive.
5. BUSINESS COMBINATION
On May 26, 1999 the Company entered into an acquisition agreement by which the
Company acquired 100% of SSI in consideration of 2,000,000 of the Company's
common stock. At the time of acquisition, the controlling shareholder of SSI was
Richard Stewart and, as a result of the acquisition, Mr. Stewart became a
director and 20% shareholder of the Company. Mr. Stewart is also the President
and Chief Executive Officer of PLIC. Because of the common ownership between SSI
and PLIC, and the fact that the majority shareholder of SSI and PLIC will hold a
continuing equity position in the Company in excess of 10%, the marketing
agreement acquired has been assigned no value in the Company's financial
statements. The $150,000 paid to SSI has been recorded as a capital distribution
to shareholders in the financial statements of the Company.
6
<PAGE>
ASPI EUROPE, INC.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. ISSUANCE OF SECURITIES
On January 21, 2000, the 10% subordinated convertible note, representing
the principal amount of $150,000 and the related accrued interest, was
converted into 63,116 shares of the Company's common stock. The conversion
ratio was 80% of the closing price of the Company's common stock on the
date of conversion.
On March 15, 2000, the Company entered into an agency agreement with DJ
Limited ("DJL") and issued 50,000 warrants to DJL to purchase the Company's
common stock at a purchase price of $14.50 per share. These warrants will
expire on March 15, 2005. The agency agreement called for DJL to provide
the Company with the necessary funding, on a best efforts basis, to close
the proposed acquisition of ITAG and provide additional working capital.
The warrants were accounted for under EITF 96-18 "Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling Goods or Service" such that the relative fair
value ascribed to the warrants will be measured under the Black-Scholes
method at the end of each interim financial reporting period until the
warrants have been exercised. The Company recorded $1,156,000 as a
financial consulting fee and an addition to paid-in capital of
stockholders' deficit for the quarter ended March 31, 2000.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Certain statements and information contained in this Report constitute
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of the Company, or developments in the Company, to
differ materially from the anticipated results, performance or achievements
expressed or implied by such forward-looking statements. Such risks and
uncertainties include, but are not limited to: the Company's limited operating
history, history of losses, need for additional financing, uncertainty about its
ability to continue as a going concern, risk related to future acquisitions and
strategic alliances, dependence on key personnel, directors' and officers'
involvement in other projects, such factors related to the Company's proposed
acquisition of it-softdialog AG ("ITAG") including, but are not limited to:
ITAG's limited operating history, dependence on key personnel, reliance on key
third-party relationships, risks involving the management of growth, product
development risks and risks of technological change, competition, the Company's
ability to protect ITAG's intellectual property rights and the other risks and
uncertainties described in the Company's 10-K filed with the Securities and
Exchange Commission on March 30, 2000. "We," "our," "us" and the "Company" refer
to ASPi Europe, Inc., our subsidiary, and the Company's former corporate names
AIDA Industries, Inc. and Shopping Sherlock, Inc.
Overview
The Company was incorporated in Florida on August 17, 1984, under the name AIDA
Industries, Inc. The Company began operations in January of 1999, and on March
24, 1999 changed its name from AIDA Industries, Inc. to Shopping Sherlock, Inc.
On May 26, 1999, the Company acquired all the issued and outstanding capital
stock of Shopping Sherlock, Inc., a Delaware corporation ("SSI"), for the
purpose of developing and implementing its website hosting and e-commerce
services as well as developing its own e-commerce website to sell consumer
products over the Internet through discounts and purchase rebates to its
customers. The Company acquired 100% of the common stock of SSI in exchange for
the issuance of a total of 2,000,000 shares of the Company's common stock to the
shareholders of SSI, namely Premier Lifestyles International Corporation
("PLIC") and Stewart Family Partners (the "Partnership"). At the time of the
acquisition, the controlling shareholder of SSI was Richard Stewart and, as a
result of the acquisition, Mr. Stewart became a director and 20% percent
shareholder of the Company. Mr. Stewart is also the President and Chief
Executive Officer of PLIC.
Due to a lack of working capital and disappointing financial results in fiscal
year 1999, however, the Company's board of directors decided on January 2, 2000
that it would cease its website hosting and e-business services as well as its
e-commerce operations. The Company's operations did not generate material
traffic or revenues in the fiscal year ended December 31, 1999, and its efforts
to raise additional significant sources of capital were unsuccessful. As a
result, the Company decided to conserve its remaining cash reserves and
terminated office leases, reduced staff, terminated all management and
consulting contracts, and significantly reduced resources directed at keeping
its e-commerce site operational.
On January 27, 2000, the Company entered into the Stock Redemption and
Settlement Agreement (the "Redemption Agreement") with PLIC, the Partnership and
Richard Stewart under which the Company agreed to transfer a worldwide,
non-exclusive, perpetual, fully-paid-up license to use, distribute or make
derivative works from the Company's software designed to operate and host
websites in consideration for the redemption of approximately 2,000,000 shares
of common stock by the Company that PLIC and the Partnership owned or had a
right to purchase.
On March 14, 2000, the shareholders of the Company, at a special shareholder
meeting, approved of the terms of the Redemption Agreement and, as a result, the
2,000,000 shares of common stock were deemed authorized but unissued shares of
the Company pursuant to Florida law. The software license had a deemed value of
$350,000 based on the actual expenditures incurred by the Company to develop the
software in 1999.
8
<PAGE>
Due to the Company's lack of success in launching its website hosting and
e-business services and its e-commerce operations, the Company decided to change
its business focus and explore the possibility of acquiring a viable operating
company in a different industry. On March 8, 2000, the Company announced that it
entered into a letter of intent to acquire all of the issued and outstanding
equity securities of ITAG. Under the terms of the letter of intent, the Company
intends to acquire 100% of ITAG's outstanding securities in consideration for
$8.0 million in cash, and up to 2,000,000 shares of the Company's common stock.
Under the terms of the proposed transaction, it is anticipated that some of the
executives of ITAG will assume senior executive positions as well as be invited
to join the board of directors of the Company.
The Company is currently renegotiating the terms of this letter of intent, and
the terms of the proposed transaction may be materially different than the terms
previously negotiated by the parties. In addition, there can be no assurance
that the transaction contemplated will be completed between the Company and
ITAG.
The Company anticipates that it will require up to an additional $20 million in
order to fund the proposed acquisition of ITAG as well as fund its operations
over the next twelve months. The Company currently has sufficient working
capital to support its current minimum operations through June 2000. In March
2000, the Company entered into an agreement with DJ Limited ("DJL") whereby DJL
will seek to raise capital for the Company through the issuance of the Company's
capital stock. DJL was issued 50,000 warrants at an exercise price of $14.50 as
compensation for undertaking the capital raising efforts, on a best efforts
basis, for the proposed acquisition of ITAG. The Company is also currently
exploring additional financing alternatives, including the possibility of a
private equity offering. There can be no assurance, however, that such financing
will be available to the Company or, if it is, that it will be available on
terms acceptable to the Company. If the Company is unable to obtain the
financing necessary to support its operations, its may be unable to continue as
a going concern.
In anticipation of the closing of the proposed acquisition, however, the Company
received shareholder approval on May 2, 2000, to change its name from Shopping
Sherlock, Inc. to ASPi Europe, Inc., and on May 5, 2000, the Company changed its
name to ASPi Europe, Inc.
On March 2, 2000, Mitchell Eggers, the Company's Chief Operating Officer and
acting Chief Technology Officer, resigned and on March 14, 2000, Richard Stewart
resigned as a director of the Company as part of the Redemption Agreement. These
vacancies are expected to be filled upon completion of the acquisition of ITAG
or another operating business entity.
Results of Operations
In January, 2000, the Company's wholly owned subsidiary, SSI, became inactive
due to the curtailing of substantially all operations of the Company. All
remaining administration operations of the Company will be performed in the
parent company.
For the Three Months Ended March 31, 2000 Compared to the Three Months Ended
March 31, 1999
Net Gain/Loss From Discontinued Operations. The Company ceased substantially all
of its operations on January 3, 2000 and, as a result, has combined all
operating revenues and expenses related to the previous business under
discontinued operations. The Company incurred a net gain from discontinued
operations of $239,156 for the three months ended March 31, 2000, compared with
a net loss of $135,142 for the three months ended March 31, 1999.
This amount includes a gain on the sale of a software licence of $350,000 for
the three months ended March 31, 2000, compared with no gain on the sale of
software licenses for the three months ended March 31, 1999. The Company
incurred $15,812 for the cost of revenue from discontinued operations for the
three months ended March 31, 2000, compared with no costs of revenue from
discontinued operations for the three months ended March 31, 1999. The Company
incurred $10,979 technical and system development expenses from discontinued
operations for the three months ended March 31, 2000, compared with $31,085 for
the three months ended March 31, 1999. The Company incurred $5,305 for sales and
marketing expenses from discontinued operations for the three months ended March
31, 2000, compared with $12,668
9
<PAGE>
for the three months ended March 31, 1999. The Company incurred $42,883 for
general and administrative expenses from discontinued operations for the three
months ended March 31, 2000, compared with $91,389 for the three months ended
March 31, 1999. The Company also wrote down the value of a loan by $35,865 to a
third party for the three months ended March 31, 2000, compared with no such
write down of the value of any loans for the three months ended March 31, 1999,
representing the amount management believes is collectable.
Technical and system development expenses from discontinued operations consist
primarily of expenses incurred for the development and maintenance of the
software required to support the Company's online stores, including employee
compensation and the cost of developing and improving store content, Internet
connectivity and operations. The significant costs were payroll and consulting
expenses of $7,637 for the three months ended March 31, 2000, compared with
$10,717 for the three months ended March 31, 1999.
Sales and marketing expenses from discontinued operations consist of costs
associated with designing and marketing the Company's online stores. Payroll
expenses relating to merchandising, helpdesk, graphic design, advertising and
promotion department employees were $2,970 for the three months ended March 31,
2000, compared with $10,929 for the three months ended March 31, 1999.
General and administrative expenses from discontinued operations consist of
management, compensation, rent for the research and development facilities,
professional services, and travel. Payroll expenses from discontinued operations
relating to management and administrative personnel were $2,257 for the three
months ended March 31, 2000, compared with $24,746 for the three months ended
March 31, 1999. Professional fees from discontinued operations were $35,700 for
the three months ended March 31, 2000, compared with $46,556 for the three
months ended March 31, 1999, reflecting the cost of raising funds, signing of
agreements, and completing the Company's registration statement.
General and Administrative Expenses. General and administrative expenses consist
of rent, secretarial services, telephone expense and other general corporate
expenses. General and administrative expenses were $124,809 for the three months
ended March 31, 2000, compared with $10,306 for the three months ended March 31,
1999. This increase reflected the substantially increased activity related to
the new direction of the Company's operations. Professional fees were $56,674
for the three months ended March 31, 2000, compared with no professional fees
for the three months ended March 31, 1999. The professional fees relate to the
costs of the Company's regulatory filings and the costs associated with the
proposed acquisition of ITAG. General office expenses, including rent, telephone
and courier expenses, were $16,005 for the three months ended March 31, 2000,
compared with $10,306 for the three months ended March 31, 1999. Management fees
were $9,000 for the three months ended March 31, 2000, compared with no
management fees for the three months ended March 31, 1999. Travel expenses were
$38,172 for the three months ended March 31, 2000, compared with no travel
expenses for the three months ended March 31, 1999
Noncash stock-based compensation. Noncash stock-based compensation costs were
$68,334 for the three months ended March 31, 2000, compared with no noncash
stock-based compensation costs for the three months ended March 31, 1999. The
cost is due to the grant of 20,000 options to management of the Company during
the first quarter of 2000. The charge represent the difference between the
closing price of our common stock on the date of grant and the exercise price of
the option. This amount is presented as an addition to paid-in capital of
stockholders' deficit.
Financial consulting fees. A financial consulting fee of $1,156,000 was recorded
for the three months ended March 31, 2000, compared with no financial consulting
fees for the three months ended March 31, 1999. The fee is due to the issuance
of 50,000 warrants to DJL during the first quarter of 2000, pursuant to an
agency agreement whereby DJL is to raise capital, on a best efforts basis, for
the Company. The fee represents the valuation of the warrants based on the Black
- - -Scholes method as at March 31, 2000. This amount is presented as an addition to
paid-in capital of stockholders' deficit.
10
<PAGE>
Interest Expense, net. Interest costs were $500 for the three months ended March
31, 2000, compared with no interest costs for the three months ended March 31,
1999. This amount included $862 for accrued interest on the convertible note
payable and $362 in interest income from short term deposit.
Income Taxes. The Company has not generated any taxable income to date and,
therefore, has not paid any federal income taxes since inception. Deferred tax
assets created primarily from net operating loss carryforwards have been fully
reserved as management is unable to conclude that future realization is more
likely than not.
Liquidity and Capital Resources
As at March 31, 2000, the Company's consolidated cash position was $31,716, and
the consolidated working capital deficit was $212,459 compared with a
consolidated cash position of $93,127 and a consolidated working capital deficit
of $168,826 for the year ended December 31, 1999.
Since inception, the Company has financed its operations from capital
contributions from shareholders and the issuance of a $150,000 subordinated
convertible note. On January 21, 2000, the convertible note was converted into
63,116 shares of the Company's common stock. The Company currently has
sufficient working capital to support its current minimum operations June 2000.
The Company anticipates that it will require an additional $20 million in order
to fund the proposed acquisition of ITAG as well as fund its operations over the
next twelve months. In March 2000, the Company entered into an agreement with DJ
Limited ("DJL") whereby DJL will seek to raise capital for the Company through
the issuance of the Company's capital stock. DJL was issued 50,000 warrants at
an exercise price of $14.50 as compensation for undertaking the capital raising
efforts, on a best efforts basis, for the proposed acquisition of ITAG. There
can be no assurance, however, that such financing will be available to the
Company or, if it is, that it will be available on terms acceptable to the
Company. There is also no assurance that the transaction will be completed. If
the Company is unable to obtain the financing necessary to support its
operations, it may be unable to continue as a going concern. The Company
currently has no commitments for any credit facilities such as revolving credit
agreements or lines of credit that could provide additional working capital.
Net cash used in operating activities was $66,841 for the three months ended
March 31, 2000, compared to $130,730 for the three months ended March 31, 1999,
including a net loss of $544,208 and $146,072 respectively. The Company's
current operating expenditures are approximately $10,000 per month and the
Company plans to increase its operating expenditures significantly upon closing
the proposed acquisition of ITAG.
The Company sold capital assets for proceeds of $2,000 for the three months
ended March 31, 2000, compared to capital expenditures of $39,507 for the three
months ended March 31, 1999. The sale related to furniture and equipment that
the Company no longer required due to the reduction of its operating activities.
The expenditures were primarily for computer equipment, furniture and fixtures
associated with the Company's employee growth, new facilities and continued
systems development during early 1999.
On January 24, 2000, the Company terminated its lease for the office space
located in Bellevue, Washington. On February 24, 2000, the Company entered into
a lease for office space located in Seattle, Washington. The future minimum
payments on the lease are $4,260 for 2000. This lease may be terminated upon 60
days written notice.
11
<PAGE>
Year 2000 Issue
Because many computer applications have been written using two digits rather
than four to define the applicable year, some date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. The year
2000 issue could result in system failures or miscalculations that could disrupt
the Company's operations.
To the best of the Company's knowledge, it has not experienced any systems
failures or disruptions of its systems resulting from the year 2000 issue. The
Company has not incurred any expenses during the current fiscal year related to
year 2000 compliance, and it does not expect to incur any future expenses
related to year 2000 compliance matters.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments, and Hedging Activities," which establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts (collectively referred to as derivatives) and for
hedging activities. SFAS 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. The Company does not expect the adoption of
this statement to have a significant impact on its results of operations,
financial position or cash flows.
Non-Qualified Stock Options
As of March 31, 2000, the Company had outstanding non-qualified stock options to
purchase 305,000 shares of the Company's common stock issued to various
employees, consultants and directors pursuant to its stock option plan. These
stock options entitle holders to purchase common stock at a price of $5 or $6
depending on which year the stock options vest.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company believes that it does not have any material exposure to interest or
commodity risks. The Company is exposed to economic and political changes in
international markets where the Company competes, such as inflation rates,
recession, foreign ownership restrictions, domestic and foreign government
spending, budgetary and trade policies and other external factors over which the
Company has no control.
12
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Section 4(2) Offering to The Silver Trust
On December 14, 1999, the Company entered into a $150,000 subordinate
convertible note with an interest rate of 10% (the "Note") with The
Silver Trust. All accrued principal and interest on the Note was
convertible at the option of The Silver Trust at 80% of the closing
price of the Company's common stock on the date of conversion. On
January 21, 2000, The Silver Trust converted this note and the related
accrued interest into 63,116 shares of Company's common stock pursuant
to the $3.00 closing price of the Company's common stock on that date.
These securities have been issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act. In relying upon
such exemption (i) the Company did not engage in any "general
solicitation," (ii) the purchaser represented and the Company
reasonably believed that it had such knowledge and experience in
financial matters such that it was capable of evaluating the merits
and risks of the prospective investment and was able to bear the
economic risk of such investment, (iii) the purchaser was provided
access to all necessary and adequate information to enable the
purchaser to evaluate the financial risk inherent in making an
investment, (iv) the offer was part of agreement to repay a
subordinate convertible note and as such was made only to the
purchaser, and (v) the purchaser represented that it was acquiring the
shares for itself and not for distribution.
On March 15, 2000, the Company entered into an agency agreement with
DJ Limited ("DJL") and issued 50,000 warrants to DJL to purchase the
Company's common stock at a purchase price of $14.50 per share. These
warrants will expire on March 15, 2005.
These securities have been issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act. In relying upon
such exemption (i) the Company did not engage in any "general
solicitation," (ii) the purchaser represented and the Company
reasonably believed that it had such knowledge and experience in
financial matters such that it was capable of evaluating the merits
and risks of the prospective investment and was able to bear the
economic risk of such investment, (iii) the purchaser was provided
access to all necessary and adequate information to enable the
purchaser to evaluate the financial risk inherent in making an
investment, (iv) the offer was part of agency agreement and as such
was made only to the purchaser, and (v) the purchaser represented that
it was acquiring the shares for itself and not for distribution.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
A special shareholders meeting was held on March 14, 2000 where the
shareholders of the Company approved the Redemption Agreement dated
January 27, 2000, by and among the Company, PLIC, the Partnership, and
Richard Stewart, with the shareholders voting in the following manner:
13
<PAGE>
For 4,613,834
Against -
Abstain -
Broker Non-vote -
A special shareholders meeting was held on May 2, 2000 where the
shareholders of the Company approved an amendment to the Company's
Amended Articles of Incorporation to change the name of the Company to
ASPi Europe, Inc., with the shareholders voting in the following
manner:
For 4,032,123
Against -
Abstain -
Broker Non-vote -
ITEM 5. OTHER INFORMATION
On May 5, 2000, the Company changed its name from Shopping Sherlock,
Inc. to ASPi Europe, Inc.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
------ -----------
3.1 Amended Articles of Incorporation
27.1 Financial Data Schedule
99.1 Private Securities Litigation Reform Act of 1995 -
Safe Harbor for Forward-Looking Statements
99.2 Press Release dated May 12, 2000
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the period.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report on its behalf by the undersigned
thereunto duly authorized.
ASPI EUROPE, INC.
May 15, 2000 /s/ PHILIP GARRATT
-------------------------------------
Philip Garratt, Chief Executive Officer
May 15, 2000 /s/ PATRICK MCGRATH
-------------------------------------
Patrick McGrath, Chief Accounting Officer
15
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Description
- - ------ -----------
3.1 Amended Articles of Incorporation
27.1 Financial Data Schedule
99.1 Private Securities Litigation Reform Act of 1995 -
Safe Harbor for Forward-Looking Statements
99.2 Press Release dated May 12, 2000
EXHIBIT 3.1
ARTICLES OF AMENDMENT [FILING STAMP]
FILED
TO 00 MAY -5 PM: 3:31
ARTICLES OF INCORPORATION SECRETARY OF STATE
TALLAHASSEE, FLORIDA
OF
SHOPPING SHERLOCK, INC.
Pursuant to the provisions of Section 607.1006 of the Florida Business
Corporation Act, Shopping Sherlock, Inc., a Florida corporation (the
"Corporation"), hereby adopts the following amendment to its Articles of
Incorporation as follows:
1. Article I of the Articles of Incorporation is hereby amended as
follows:
ARTICLE I
Name and Address
The name of the Corporation is "ASPi Europe, Inc." and its principal
place of business is Two Union Square, Suite 4200, 601 Union Street,
Seattle, Washington 98101.
The amendment was adopted at the Corporation's special meeting of
shareholders on May 2, 2000 by a number of votes sufficient for approval of the
amendment.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment this 2nd of May, 2000.
/s/ Patrick McGrath, Secretary
---------------------------------------
Patrick McGrath, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 49,589
<SECURITIES> 0
<RECEIVABLES> 2,878
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 52,467
<PP&E> 114,189
<DEPRECIATION> (71,354)
<TOTAL-ASSETS> 95,302
<CURRENT-LIABILITIES> 264,926
<BONDS> 0
0
0
<COMMON> 7,063
<OTHER-SE> (176,687)
<TOTAL-LIABILITY-AND-EQUITY> 95,302
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,351,864
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,351,864)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,351,864)
<DISCONTINUED> 239,156
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,112,708)
<EPS-BASIC> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 - SAFE HARBOR FOR
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe-harbor
for forward-looking statements made by public companies. This safe-harbor
protects a company from securities law liability in connection with
forward-looking statements if the company complies with the requirements of the
safe-harbor. As a public company, the Company has relied and will continue to
rely on the protection of the safe harbor in connection with its written and
oral forward-looking statements.
When evaluating the Company's business, you should consider:
o all of the information in this quarterly report on Form 10-Q;
o the risk factors described in the Company's Form 10-K filed with the
Securities and Exchange Commission on March 30, 2000; and
o the risk factors described below.
RISK FACTORS
Although the Company believes that the expectations reflected in its
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance or achievements or other future events.
Moreover, neither the Company nor anyone else assumes responsibility for the
accuracy or completeness of forward-looking statements. You should consider the
Company's forward-looking statements in light of the following risk factors and
other information in this quarterly report. If any of the risks described below
occurs, the Company's business, results of operation and financial condition
could differ from those projected in its forward-looking statements. The Company
is under no duty to update any of its forward-looking statements after the date
of the quarterly report. You should not place undue reliance on forward-looking
statements.
Risks to the Company related to its current business situation
The Company is subject to certain risks related to its current business
situation. These risks also could cause actual results to differ materially from
results projected in any forward-looking statement in this Quarterly Report.
The Company has abandoned its business operations, which makes it difficult to
predict its future performance.
The Company commenced operations in January 1999 and subsequently abandoned
its website hosting, e-business services and e-commerce business operations in
January 2000. The Company is currently negotiating to acquire an operating
business entity in the information technology industry. The Company, however,
has no historical operating history in the information technology industry upon
which an evaluation of its business and prospects can be based. As a result, in
view of the rapidly evolving nature of the Company's business situation, the
Company believes that period-to-period comparisons of financial results are not
necessarily meaningful and should not be relied upon as an indication of future
performance.
The Company has a history of losses, expects future losses and may never achieve
profitability.
The Company has not achieved profitability and expects to continue to incur
operating losses for the foreseeable future. The Company incurred a net loss of
$1,112,708 for the three months ended March 31, 2000. The Company has not had
any material revenue in recent years, it has never been profitable and there can
be no assurance that, in the future, the Company will be profitable on a
quarterly or annual basis. In addition, if the Company plans to acquire an
operating business entity, as is proposed, its operating expenses will increase
significantly.
<PAGE>
The Company will need additional financing to support its operations and may be
unable to obtain it on commercially reasonable terms, or at all.
The Company can satisfy its current cash requirements through June 2000 at
current minimum levels. Accordingly, the Company must raise substantial
additional funds to continue as a going concern and to complete the proposed
acquisition of ITAG. There is no assurance that, after such period, the Company
will be able to secure financing or that such financing will be obtained on
terms favorable to the Company. Failure to obtain adequate financing raises
substantial doubt as to the Company's ability to acquire an operating business
entity as well as continue as a going concern.
There is uncertainty regarding the Company's ability to continue as a going
concern.
The Company has been in the development stage since its inception. It has
had no significant operating revenues to date, has accumulated losses of
$2,336,015 and will require additional working capital to sustain current
operations and complete any proposed future acquisition. This raises substantial
doubt as to the Company's ability to continue as a going concern.
The Company is subject to risks as it makes acquisitions and engages in
strategic alliances.
As part of its business strategy, the Company intends to acquire, make
investments in, and enter into strategic alliances with as yet unidentified
operating companies. Any such future acquisitions, investments or strategic
alliances would involve risks, such as incorrect assessment of the value,
strengths and weaknesses of acquisition and investment opportunities;
underestimating the difficulty of integrating the operations and personnel of
newly acquired companies; the potential disruption of any ongoing business,
including possible diversions of resources and management time; and the threat
of impairing relationships with employees and customers as a result of changes
in management or ownership.
There can be no assurance that the Company will be able to successfully
overcome these risks. Moreover, the Company cannot be certain that any desired
acquisition, investment or strategic alliance can be made in a timely manner or
on terms and conditions acceptable to the Company or that the Company will be
successful in identifying attractive acquisition candidates. The Company expects
that competition for such acquisitions may be significant. The Company may
compete with others who have similar acquisition strategies, many of whom may be
larger and have greater financial and other resources than the Company.
The Company depends upon key personnel.
The Company's future operating results are substantially dependent on the
continued service and performance of its senior personnel: Philip Garratt, the
Company's President and Chief Executive Officer; and Patrick McGrath, the
Company's Chief Financial Officer. The Company intends to hire additional
executives should it acquire an operating business entity. Competition for such
personnel is intense, and there can be no assurance that the Company can retain
its key employees or that it will be able to attract or retain highly qualified
technical and managerial personnel in the future. The loss of the services of
any of the Company's senior management or other key employees or the inability
to attract and retain the necessary technical or managerial personnel could have
a material adverse effect upon the Company's business, financial condition,
operating results and cash flows. The Company does not currently maintain "key
man" insurance for any senior management or other key employees.
Directors and Officers are involved in other projects.
Many of the officers and directors of the Company serve as directors,
officers and/or employees of companies other than the Company. For example,
Raeanne Steele and Patrick McGrath, the Company's Vice President of Sales and
Marketing and Chief Financial Officer, respectively, currently act as
independent consultants to other companies. All of the Company's current
officers devote, on average, at least 25 hours per week to the Company. While
the Company believes that such officers and directors will be devoting adequate
time to effectively manage the Company, there can be no assurance that such
other positions will not negatively impact an officer's or director's duties for
the Company.
<PAGE>
Risks to the Company related to its proposed acquisition of ITAG
The Company will be subject to certain risks related to the proposed
acquisition of ITAG. These risks could cause actual results to differ materially
from results projected in any forward-looking statement in this Quarterly
Report.
ITAG has a limited operating history, which makes it difficult to predict its
future performance.
ITAG commenced operations in May 1996. ITAG, therefore, has only a limited
operating history upon which an evaluation of its business and prospects can be
based. Prior to May 1996, the Company had no operations or revenues. In
addition, the Company expects changes to occur in ITAG should it acquire it, as
is proposed, as an operating business entity. As a result, in view of the
evolving nature of ITAG's business and limited operating history, the Company
believes that period-to-period comparisons of ITAG's financial results are not
necessarily meaningful and should not be relied upon as an indication of ITAG's
future performance.
ITAG depends upon key personnel.
ITAG is currently dependent upon its senior management, board of directors,
alliances and consultants, the loss of any of which may significantly affect its
performance and its ability to carry out the continued successful development
and commercialization of its products and services. Any failure to retain
management, directors and consultants or to attract and retain additional key
employees with necessary skills could have a material adverse impact upon ITAG's
and, therefore, the Company's growth and profitability. Following the
acquisition of ITAG, the Company will be required to recruit additional software
development personnel, expand its direct sales force, expand its customer
support functions and train, motivate and manage its employees. Competition for
qualified consulting software development personnel is intense and expected to
increase. There can be no assurance that the Company will be able to recruit the
personnel required to execute its programs or to manage these changes
successfully.
ITAG relies on key third-party relationship to conduct its business.
ITAG relies on key third-party relationships. These third parties are not
within the control ITAG, and may not be obligated to maintain these
relationships with ITAG upon the Company acquiring ITAG. The loss of these
third-party relationships could have a material adverse effect on the Company's
business, financial condition, operating results and cash flows.
The information technology consulting and software industries must continue to
grow and customers must continue to utilize the Company's products and services.
The overall market for information technology consulting and software has
experienced significant growth in recent years. There can be no assurance that
the market for ITAG's existing or proposed products or services will continue to
grow, that companies within the industry will utilize its products or services,
or that following the acquisition of ITAG by the Company, the Company will be
successful in independently establishing markets for its products or services.
If the various markets in which the Company's products or services will compete
fail to grow, or grow more slowly than the Company currently anticipates, or if
the Company is unable to establish product markets for its new products or
services, the Company's business, results of operation and financial condition
would be materially adversely affected.
Substantial competition exists in the information technology consulting and
software markets.
Substantial competition exists in the information technology consulting and
software markets. Additional competitors with greater financial, technical and
marketing resources than the Company may enter the market and competition may
intensify. Current or future competitors may develop products that are superior
to the Company's products or achieve greater market acceptance due to pricing,
sales channels or other factors, which could have a material adverse effect on
the Company's business, financial condition, operating results and cash flows.
<PAGE>
New technologies must be integrated into the Company's products if they are to
remain competitive.
The information technology consulting and software markets are
characterized by rapidly changing technology and evolving industry standards.
Therefore, it is difficult to predict the rate at which the market for the
Company's services will grow, if at all, should it acquire ITAG and enter the
information technology and software markets. If the market fails to grow, or
grows more slowly than anticipated, the Company's business, financial condition
and results of operations would be materially adversely affected. Even if the
market does grow, there can be no assurance that the Company's products would
achieve commercial success. The Company may find itself competing in markets for
information technology consulting and software against other companies with much
greater financial, marketing and other resources. Such competitors may be able
to institute and sustain price wars, or imitate the features of the Company's
services software, reducing prices and the Company's revenues and ITAG's current
share of the market.
The Company's products must continually be improved if they are to remain
competitive.
Following the acquisition, the Company will be at risk if it is unable to
continually upgrade and improve ITAG's software products and develop new
products. The software industry is characterized by a constant flow of new or
improved products, which quickly render existing products obsolete. The
Company's competitors may develop technically superior and comparably priced
software, which would have a material, adverse effect on the Company's
prospects.
The Company must seek to protect its intellectual property.
The Company considers the information technology software of ITAG and its
other intellectual property to be of value and important to its business. At
this time, the Company is unaware whether ITAG relies on copyright, trademark
and trade secret laws, non-disclosure agreements or other contractual provisions
to establish and maintain its intellectual property rights. The Company is also
unaware whether ITAG has any patents or patent applications pending. Despite
ITAG's efforts to protect its proprietary rights, unauthorized parties may
attempt to copy or obtain and use information that ITAG regards as proprietary.
There can be no assurance that the steps taken by the ITAG to protect its
proprietary information will prevent misappropriation of such information. The
cost of litigation necessary to enforce ITAG's proprietary rights may be
prohibitive. Such steps may not preclude competitors from developing confusingly
similar brand names or promotional materials or developing products and services
similar to those of ITAG.
Although the Company believes that ITAG has the right to use all of the
intellectual property incorporated in its products, third parties may claim that
ITAG's products violate their proprietary rights, including copyrights and
patents. If any such claims are made and found to be valid, the Company may have
to reengineer ITAG's products or obtain licenses from third parties to continue
offering its products. Any efforts to reengineer its products or obtain licenses
from third parties may not be successful and could substantially increase the
Company's costs and have a material adverse effect on the business, financial
condition and results of operations of the Company.
EXHIBIT 99.2
Shopping Sherlock, Inc.
Two Union Square
601 Union Street, Suite 4200
Seattle, WA 98101
(206) 652-3675
Fax (206) 652-3676
OTCBB: "SSLK"
May 12, 2000
SHOPPING SHERLOCK, INC. CHANGES NAME TO ASPI EUROPE, INC.
---------------------------------------------------------
SEATTLE, WASHINGTON- Shopping Sherlock, Inc. (the "Company") announced today
that effective May 5, 2000, the Company changed its name to ASPi Europe, Inc.
after receiving the required number of votes at a special meeting of
shareholders held on May 2, 2000.
Effective today, the Company's trading symbol will change from "SSLK" to "ASPQ".
More information regarding the Company's name change and business operations is
available at www.aspieurope.com.
In connection with the Company's name change, each registered shareholder who
desires to obtain a new stock certificate may surrender its existing stock
certificate(s) to the Company's transfer agent, and it will issue a new
certificate(s) reflecting the Company's new name. Stock certificates should be
mailed to the Company's transfer agent, Interwest Transfer Company, at 1981 East
Murray Holladay Road, Suite 100, Salt Lake City, Utah 84117.
THE SEC AND NASD HAVE NOT REVIEWED AND DO NOT ACCEPT RESPONSIBILITY FOR THE
ADEQUACY OR ACCURACY OF THIS RELEASE.
