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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10/A
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
AMERICABILIA.COM, INC.
(Exact Name of Registrant as specified in its charter)
Florida 65-0142472
- ---------------------------------------- ------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
9155 Las Vegas Boulevard
Suite 242 89123
Las Vegas, Nevada ------------------------------------
- ---------------------------------------- (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 702-914-8411
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SECURITIES TO BE REGISTERED UNDER SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
None N/A
- ---------------------------------------- ------------------------------------
SECURITIES TO BE REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.001 par value
------------------------------------------
(TITLE OF CLASS)
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PART 1
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
americabilia.com, Inc., ("americabilia") is engaged in direct
Internet merchandising of American-themed collectibles, gifts and
memorabilia. americabilia manufactures and assembles its own products and
also purchases products from a number of sources. All of these products are
then marketed and sold over its Internet shopping site, www.americabilia.com.
americabilia strives to offer its customers a broad selection of products, a
convenient shopping experience and competitive pricing.
americabilia.com, a Nevada corporation ("americabilia.com Nevada")
was formed on March 2, 1999 to engage in the merchandising of American-themed
collectibles and gifts. On August 11, 1999, americabilia.com Nevada acquired
the outstanding capital stock of Veltre Enterprises, Inc., a Nevada
corporation, dba Unique Images. Unique Images is in the business of designing
and manufacturing Hollywood and sports memorabilia for fine art and
memorabilia galleries. Unique Images also provides high volume and custom
picture framing services using computerized joiner and mat cutting equipment.
The purchase price paid for Unique Images consisted of (i) $200,000 in cash,
(ii) a Promissory Note in the original principal amount of $200,000 and (iii)
100,000 shares of the Rule 506 common stock of americabilia.com Nevada. The
Promissory Note was paid in full in November 1999. As part of the purchase,
americabilia.com Nevada agreed to lease from Mr. Keith Veltre and his
affiliates the premises that are used for Unique Images' business operations
as well as certain business equipment.
americabilia was originally organized under the laws of the state of
Florida on August 22, 1989 under the name First Zurich Investments, Inc. On
November 15, 1996, the name of the entity was changed to Terra International
Pharmaceuticals, Inc. On September 7, 1999, the entity's name was changed to
americabilia.com, Inc. On September 17, 1999, americabilia conducted a
recapitalization through the merger of americabilia.com Nevada with and into
Worldwide Collectibles, Inc., a Nevada corporation and a wholly owned
subsidiary of americabilia formed for the purpose of the merger. Pursuant to
an Agreement of Merger dated September 14, 1999, each of the former
stockholders of americabilia.com Nevada received one (1) share of
americabilia's common stock, $.001 par value per share ("Common Stock"), in
exchange for their shares of americabilia.com Nevada. As a result of the
acquisition, a total of 6,115,000 shares of Rule 506 Common Stock were issued
to the former shareholders of americabilia.com Nevada. Prior to its
acquisition of americabilia.com Nevada, americabilia did not have any
operations.
Unless the context otherwise requires, all references to
americabilia include its wholly-owned subsidiaries, Veltre Enterprises, Inc.,
a Nevada corporation, and Worldwide Collectibles, Inc., a Nevada corporation.
americabilia's executive offices are located at 9155 Las Vegas Boulevard,
Suite 242, Las Vegas, Nevada 89123; telephone number (702) 914-8411.
BUSINESS OF THE ISSUER
GENERAL DESCRIPTION OF BUSINESS
americabilia engages in the direct merchandising of American-themed
collectibles, gifts, and memorabilia, primarily through its Internet shopping
site. americabilia also offers products through its Las Vegas showroom and
sells its products through auctions on the eBay Web site. americabilia
intends to continue offering products on eBay as a means of making potential
customers aware of americabilia's Web site.
americabilia was formed to capitalize on the opportunity for online
retailing of collectibles and memorabilia. americabilia believes that the
collectibles and memorabilia industry is particularly suited to online
retailing. An online seller has virtually unlimited online shelf space and
can offer customers a vast selection through an efficient search and
retrieval interface. This is particularly valuable in the collectibles and
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memorabilia market because the extraordinary number of different items
precludes even the largest physical store from economically stocking more
than a small number of available products. Beyond the benefits of selection,
purchasing products online is more convenient than shopping in a physical
store because the products can be purchased 24 hours a day and shopping does
not require a trip to a store. Products can be shipped directly to the
customer's home or office. americabilia believes that customers may buy more
products because they have more hours to shop, can act immediately on a
purchase impulse and can locate products that are hard to find. Because the
online store has a global reach, it can deliver an extremely broad selection
to customers in rural, international or other locations that cannot support
large-scale physical stores. americabilia will strive to offer its customers
compelling value through the use of technology, broad product selection, a
high level of customer service and competitive pricing. As an online
retailer, americabilia has virtually unlimited online shelf space and can
offer customers a large selection of products through an efficient search and
retrieval interface. americabilia offers more than 2,000 products.
americabilia's objective is to be the leading online retailer of
collectibles and memorabilia. To attain this objective, it will be necessary
for americabilia to build strong brand recognition by promoting, advertising
and increasing its brand equity and visibility through a variety of marketing
and promotional techniques. As its business develops, americabilia may
advertise on leading Web sites.
GROWTH OF THE INTERNET AND ONLINE COMMERCE
The Internet is an increasingly significant global medium for
communications, content and online commerce. International Data Corporation
("IDC") estimates that the number of Web users will grow from approximately 150
million worldwide in 1998 to approximately 500 million worldwide by the end of
2003. The growing adoption of the Web represents an enormous opportunity for
businesses to conduct commerce over the Internet. IDC estimates that commerce
over the Internet will increase from approximately $40 billion worldwide in 1998
to approximately $900 billion worldwide in 2003. The Internet gives companies
the opportunity to develop one-to-one relationships with customers worldwide
from a central location without having the burdensome costs of managing and
maintaining a significant retail store infrastructure or the continuous printing
and mailing costs of catalog marketing. Growth in Internet usage has been fueled
by a number of factors, including the large and growing installed base of
personal computers in the workplace and home, advances in the performance and
speed of personal computers and modems, improvements in network infrastructure,
easier and cheaper access to the Internet and increased awareness of the
Internet among businesses and consumers. The increasing functionality,
accessibility and overall usage of the Internet and online services have made
them an attractive commercial medium. The Internet and other online services are
evolving into a unique sales and marketing channel, just as retail stores,
mail-order catalogs and television shopping have done. Online retailers can
interact directly with customers by frequently adjusting their featured
selections, editorial insights, shopping interfaces, pricing and visual
presentations. The minimal cost to publish on the Web, the ability to reach and
serve a large and global group of customers electronically from a central
location, and the potential for personalized low-cost customer interaction
provide additional economic benefits for online retailers. Because of these
advantages over traditional retailers, online retailers have the potential to
build large, global customer bases quickly and to achieve superior economic
returns over the long term. An increasingly broad base of products is being sold
successfully online, including computers, travel services, brokerage services,
automobiles, music and books.
PRODUCTS
americabilia offers a broad range of collectibles, gifts, and
memorabilia, most of which are replicas, and some of which will be authentic
restored merchandise, including Coca-Cola bottle dispenser machines.
americabilia offers more than 2,000 products ranging from original
autographed photos and collectibles of Hollywood Stars, Famous Sports
Athletes, and Rock `n Roll Legends to Jukeboxes and Coca-Cola Machines.
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Merchandise offered will have a broad price range, from a low end of
$15 to $20 for such items as coffee mugs and die-cast cars to a high end of up
to $6,500 for such items as love seats made from the rear end of a 1957
Chevrolet Bel Air, to a full-size floor model Wurlitzer Jukebox, to rare and
authenticated autographed photos and collectibles. americabilia anticipates that
its average sale will range from $50 to $100.
Most products to be offered by americabilia will be supplied by
authorized manufacturers of trademark registered companies, such as Coca-Cola,
Star Wars, Star Trek, Pepsi, Chevrolet, Harley-Davidson, NASCAR, Disney, Warner
Bros., and various Hollywood and entertainment personalities such as Elvis
Presley, Marilyn Monroe, James Dean, and John Wayne, as well as a number of
famous sports figures. americabilia's acquisition of Unique Images will allow it
to also design and manufacture its own Hollywood and sports memorabilia and to
offer these products on its Web site.
americabilia believes that the market for collectibles and memorabilia
is well suited to online retailing. An online retailer has virtually unlimited
online shelf space and can offer customers a vast selection through an efficient
search and retrieval interface. This is particularly valuable in the
collectibles and memorabilia market because the extraordinary number of
different items precludes even the largest physical store from economically
stocking more than a small minority of available products. Furthermore, unlike
with clothing or other personal products, consumers can make educated purchase
decisions using online information. Collectibles and memorabilia can be selected
effectively through online descriptions.
INTERNET SHOPPING SITE
americabilia's Web site uses Shopsite Web hosting software.
americabilia's Web site is physically located on a server owned and
maintained by InterLand Incorporated in Atlanta, Georgia.
americabilia's Web site features a "secure server" shopping cart for
online ordering and tracking of product shipment. A primary feature of the
Web site is its interactive, searchable catalog of more than 2,000 products.
americabilia provides search tools to find products primarily based on
categories such as sports, television stars, movie stars, music artists,
political and historical, game room and home theater, beverage collectibles,
Coca-Cola collectibles, hot collectibles, cartoons, science fiction, neon and
electric art, transportation and metal signs. americabilia also plans to
offer free e-mail notification services which will be designed to
automatically notify customers when a new product that matches their criteria
becomes available.
Through americabilia's Web site, customers are able to order
products, conduct targeted searches, browse from among highlighted product
offerings, participate in promotions and check order status. Clicking with
the mouse on any of the products pulls up more information about the product,
as well as a button which, if clicked, adds the product to the customer's
order. Customers can add and remove products from their shopping baskets as
they browse prior to making a final purchase decision, just as in a physical
store. To execute orders, customers click on the buy button and are prompted
to supply shipping and credit card details, either by e-mail or by telephone.
Customers are offered a variety of delivery services, including
overnight and various international shipping options. americabilia's system
automatically confirms each order by e-mail to the customer within minutes
after the order is placed and advises customers by e-mail shortly after
orders are shipped.
americabilia ships products from its Las Vegas, Nevada facilities
via the U.S. Postal Service and UPS. In some instances, americabilia has made
arrangements for larger products to be drop-shipped by the manufacturer or
supplier directly to americabilia's customer.
americabilia sources product from a network of distributors.
americabilia has implemented the necessary shipping and inventory control
capacity to enable it to provide a rapid response to customer requests. Most
of americabilia's products are available for shipment within 24 hours for
delivery within two to four business days. Items too large for conventional
shipping may be shipped via freight. If an item is backordered, the customer
is notified immediately via e-mail.
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All products are shipped with a customer satisfaction guarantee, which
includes credit, refund or exchange of product which is damaged, defective, or
unsatisfactory to the customer in any way, provided the product is returned in
"like-new" condition in its original packaging box with the customer's receipt
within 30 days.
americabilia intends to participate in The Council of Better Business
Bureau's BBBONLINE-Registered Trademark- Privacy Program and to comply with
its privacy standards. This will allow americabilia to display the
BBBONLINE-Registered Trademark- compliance seal on its Web site. The
BBBONLINE-Registered Trademark- Privacy Program provides verification,
monitoring and review of Web sites and customer dispute resolution services.
Through the BBBONLINE-Registered Trademark- Privacy Program, customers can
check americabilia's history and obtain contact information and assurance that
americabilia stands behind its advertising claims.
americabilia has obtained a Thawte Digital Certificate to register its
right to use the domain name "americabilia.com." This certificate authenticates
americabilia for purposes of secure online transactions.
MARKETING AND PROMOTION
americabilia's marketing strategy is designed to strengthen the
americabilia.com brandname, increase customer traffic to its Web site, build
strong customer loyalty and maximize repeat purchases. americabilia intends
to build customer loyalty by both creatively applying technology to deliver
planned personalized programs and services, as well as through creative and
flexible merchandising. americabilia will be able to provide increasingly
targeted and customized services by using the extensive customer preference
and behavioral data obtained as a result of its online experience and market
share. The Internet allows rapid and effective experimentation and analysis
and instant user feedback, which americabilia intends to incorporate in its
merchandising. In contrast to traditional direct-marketing efforts,
americabilia's planned personalized notification services will be designed to
send customers customized notices at their request. americabilia hopes that
these customized notices will increase the number of visitors that make
purchases at its site, will encourage repeat visits and purchases and will
assist customer retention. Loyal, satisfied customers also generate
word-of-mouth advertising and awareness and are able to reach thousands of
other customers and potential customers because of the reach of online
communication.
americabilia intends to employ a variety of media, program and
product development, business development and promotional activities to
achieve these goals. americabilia's Web site has been registered with key
search engine/online web sites, including Yahoo, HotBot, Lycos, WebCrawler,
Excite, Infoseek, AltaVista, Northern Light, Whatyouseek, GoTo, Snap and AOL
Netfind. In the future, americabilia may place advertisements on various
high-profile and high-traffic conduit Web sites. americabilia is
investigating the use of link exchanges and paid banner advertising and in
the future, americabilia may advertise through the use of banners that
encourage readers to click through directly to americabilia's Web site.
americabilia will also engage in a program of print advertising in
specialized newspapers and magazines.
americabilia believes that its ability to establish and maintain
long-term relationships with its customers and encourage repeat visits and
purchases depends, in part, on the strength of its customer support and
service operations and staff. Furthermore, americabilia values frequent
communication with and feedback from its customers in order to continually
improve the store and its services. americabilia offers e-mail addresses to
enable customers to request information and to encourage feedback and
suggestions. americabilia's customer support and service personnel will be
responsible for handling general customer inquiries, answering customer
questions about the ordering process, and investigating the status of orders,
shipments and payments.
MARKET AND COMPETITION
The market for collectibles and memorabilia is large and relatively
fragmented. Although the market for collectibles and antiques is worldwide,
americabilia anticipates that the majority of customers will be from the
United States (with more than 80 million households currently connected to
the Internet, according to a study by IntelliQuest Research), as well as
Japan, Western Europe and the United Kingdom. americabilia believes that
collectible and memorabilia Web sites
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currently doing business on the Internet generally lack product selection and
customer appeal. americabilia has attempted to select a product line which
will not only fill a niche in Internet marketing, but will also have a broad
appeal for collectors of all types of American-themed collectibles and
memorabilia.
The online commerce market, particularly over the Internet, is new,
rapidly evolving and intensely competitive. americabilia expects this
competition to intensify in the future. Barriers to entry are minimal, and
current and new competitors can launch new sites at a relatively low cost.
americabilia believes that the principal competitive factors in its market
are brand recognition, selection, personalized services, convenience, price,
accessibility, customer service, quality of search tools, reliability and
speed of fulfillment. Many of americabilia's current and potential
competitors have longer operating histories, larger customer bases, greater
brand recognition and significantly greater financial, marketing and other
resources than americabilia. In addition, online retailers may be acquired
by, receive investments from or enter into other commercial relationships
with larger, well-established and well-financed companies as use of the
Internet and other online services increases.
Certain of americabilia's competitors may be able to secure merchandise
from vendors on more favorable terms, devote greater resources to marketing and
promotional campaigns, adopt more aggressive pricing or inventory availability
policies and devote substantially more resources to Web site and systems
development than americabilia. Increased competition over time may result in
reduced operating margins, loss of market share and a diminished brand
franchise. There can be no assurance that americabilia will be able to compete
successfully against current and future competitors, and competitive pressures
faced by americabilia may have a material adverse effect on americabilia's
business, prospects, financial condition and results of operations. Further, as
a strategic response to changes in the competitive environment, americabilia may
from time to time make certain pricing, service or marketing decisions or
acquisitions that could have a material adverse effect on its business,
prospects, financial condition and results of operations.
New technologies and the expansion of existing technologies may
increase the competitive pressures on americabilia. For example, client-agent
applications that select specific products from a variety of Web sites may
channel customers to companies that compete with americabilia. In addition,
companies that control access to transactions through network access or Web
browsers could promote americabilia's competitors or charge americabilia a
substantial fee for inclusion.
SEASONALITY
americabilia anticipates that its business will be seasonal with higher
than average sales occurring in the fourth calendar quarter as a result of
holiday gift purchases. Some companies marketing products over the Internet may
experience in excess of a majority of their sales in the fourth calendar quarter
each year.
EMPLOYEES AND CONSULTANTS
americabilia currently employs eighteen (18) full time employees and
five (5) part time employees at its Las Vegas, Nevada locations to handle
product production, administration and shipping. In addition, seven (7) of
americabilia's shareholders currently work for americabilia without
compensation. It is anticipated that americabilia's management will continue
to conduct all aspects of americabilia's business until sales generate cash
flow sufficient to permit the payment of salaries. americabilia believes that
its relations with its employees are good. americabilia anticipates that
within the next twelve months, americabilia will need to hire additional
personnel for shipping and sales. americabilia also may hire additional
management personnel.
americabilia intends to start paying compensation to existing
management and increase compensation for other employees at such time and in
such amounts as determined by americabilia's officers and directors in their
sole discretion.
TRADENAME
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In April, 1999, americabilia filed a federal trademark application
for "americabilia."
INVESTMENT RISKS
The following is a discussion of the risks that are unique to an
investment in americabilia and that could have an adverse impact on its
business, operating results and financial condition. Risks that are applicable
to investments in all companies in general are not discussed in this section.
LIMITED OPERATING HISTORY; ANTICIPATED LOSSES; ACCUMULATED DEFICIT.
americabilia has only a limited operating history on which to base an
evaluation of its business and prospects. americabilia's prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in new and rapidly evolving markets such as online commerce. Such
risks for americabilia include, but are not limited to, an evolving and
unpredictable business model and the management of growth. It is anticipated
that americabilia may initially incur substantial losses and these losses are
expected to continue through the third quarter of 2000. As of December 31,
1999, americabilia had an accumulated deficit of approximately $350,000.
NEED FOR ADDITIONAL FINANCING. americabilia needs to raise additional
capital from outside sources in order to sustain its operations until such
time as it can conduct its operations on a profitable basis. Accordingly,
americabilia recently commenced a private placement of Units of its
securities, pursuant to which americabilia seeks to raise up to $5,000,000 in
gross proceeds. americabilia is dependent on and intends to use the proceeds of
that offering to acquire inventory, for advertising, to upgrade its Web site
and server and for working capital. americabilia anticipates, based on
currently proposed plans and assumptions relating to its operations, that the
proceeds of its private placement, together with projected cash flow from
operations and available cash resources, will be sufficient to satisfy its
anticipated cash requirements for the next twelve months. If the gross
proceeds from the private placement are less than $5,000,000, however,
americabilia's ability to implement its plan of operations will be hindered
and the planned expenditures towards acquiring inventory and advertising may
not be made. In the event that americabilia's plans change, its assumptions
change or prove to be inaccurate or the proceeds of the offering and cash
flow prove to be insufficient to fund operations (due to smaller than
anticipated revenues, unanticipated expenses, delays, problems, difficulties
or otherwise), americabilia would be required to seek additional financing
sooner than anticipated or to curtail its business activities.
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INTRODUCTION OF NEW PRODUCTS. americabilia believes its future
prospects depend on its ability not only to successfully market its existing
products, but also to introduce new products that achieve market acceptance.
The market for memorabilia is characterized by the need to develop and
introduce new products. There is always the potential threat of new entrants
offering competitive products. There can be no assurance that americabilia
will be able to identify or market such additional products successfully or
that americabilia will be able to respond effectively to new product
offerings by competitors. In particular, if americabilia fails to
successfully anticipate customer demand for new products or otherwise makes
incorrect decisions pertaining to new products, americabilia could be
adversely affected both by the loss of anticipated revenue and, possibly, its
competitors' increase in their established bases of customers. americabilia
may also experience delays in the introduction of new products, resulting in
delay or loss of revenues. There can be no assurance that announcements of
new product offerings will not cause customers to defer purchasing existing
americabilia products.
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RELIANCE ON SUPPLIERS. americabilia will purchase a majority of its
products from in excess of 70 vendors and, accordingly, americabilia is
substantially dependent upon its relationships with its vendors. americabilia
believes that based upon its prior sales and the popularity of certain of its
items, it will be able to acquire sufficient inventory to ship its products
without interruption. Accordingly, americabilia intends to carry more
inventory of its more popular products and minimal inventory of other
products. americabilia relies to a large extent on rapid fulfillment from its
vendors. americabilia has no long-term contracts or arrangements with any of
its vendors that guarantee the availability of merchandise, the continuation
of particular payment terms or the extension of credit limits. There can be
no assurance that americabilia's current vendors will continue to sell
merchandise to americabilia on current terms or that americabilia will be
able to establish new or extend current vendor relationships to ensure
acquisition of merchandise in a timely and efficient manner and on acceptable
commercial terms. If americabilia were unable to develop and maintain
relationships with vendors that would allow it to obtain sufficient
quantities of merchandise on acceptable commercial terms, its business,
prospects, financial condition and results of operations would be materially
adversely affected.
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CONTROL BY MANAGEMENT. americabilia's officers and directors will
beneficially own approximately 26% of americabilia's outstanding Common
Stock. Such persons together with their adult children who also own Common
Stock of americabilia, acting together, will be in a position to control
americabilia, elect a majority of americabilia's directors, increase the
authorized capital, dissolve, merge, or sell the assets of americabilia and
generally direct the affairs of americabilia.
NO ASSURANCE OF PUBLIC MARKET. There is currently only a limited
public trading market for the Common Stock. There can be no assurance that a
regular trading market for the Common Stock will develop or that, if
developed, it will be sustained. Factors such as the financial results or
acquisition of additional businesses may have a significant impact on the
ability of americabilia to operate profitably. This may in turn have a
significant impact on the market price of the Common Stock. Additionally, in
recent years, the stock market has experienced a high level of price and
volume volatility and market prices for the stock of many companies,
particularly Internet and technology companies, with common stock that trades
in the over-the-counter market, have experienced wide fluctuations which have
not necessarily been related to the operating performance of such companies.
NO DIVIDENDS. americabilia has not paid any cash dividends to date
and does not expect to pay dividends for the foreseeable future. americabilia
intends to retain earnings, if any, as necessary to finance the operation and
expansion of its business.
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ITEM 2. FINANCIAL INFORMATION
SELECTED FINANCIAL INFORMATION
The summary financial information set forth below has been derived
from americabilia's financial statements and should be read in conjunction
with the financial statements and notes thereto, included elsewhere in this
Registration Statement. The operations amounts do not cover a full year since
americabilia was formed in 1999. The operations amounts do not include a full
year of the results for the acquired companies as the acquisitions occurred
during the fiscal year.
OPERATIONS DATA:
<TABLE>
<CAPTION> PERIOD FROM MARCH 2, 1999
THROUGH
DECEMBER 31, 1999
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<S> <C>
Revenues...................................................... $ 662,231
Total expenses................................................ 1,055,188
Net loss...................................................... (349,551)
Loss per share................................................ (0.08)
Weighted average shares outstanding........................... 4,172,576
BALANCE SHEET DATA
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DECEMBER 31, 1999
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Working capital............................................... $ 746,261
Total assets.................................................. 1,473,908
Total liabilities............................................. 283,693
Stockholders' equity.......................................... 1,190,215
</TABLE>
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MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
The following discussion should be read in conjunction with, and is
qualified in its entirety by, our financial statements, including the notes
thereto, and the other financial information included elsewhere in this
prospectus. The period from March 2, 1999 through December 31, 1999 is referred
to as "fiscal 1999". Because this is the first year of operations for
americabilia, there are no comparative amounts for prior periods.
DESCRIPTION OF BUSINESS
americabilia is engaged in direct internet merchandising of
American-themed collectibles, gifts, and memorabilia. americabilia
manufactures and assembles its own products and also purchases products from
a number of sources. americabilia products are marketed on an internet
shopping site, www.americabilia.com. americabilia strives to offer its
customers a broad selection of products, a convenient shopping experience,
and competitive pricing. americabilia commenced with organizational and
operational activities on March 2, 1999 in Nevada as americabilia.com.
On August 11, 1999, americabilia acquired the outstanding capital stock
of Veltre Enterprises, Inc. dba Unique Images. Unique Images designs and
manufactures Hollywood and sports memorabilia for fine art and memorabilia
galleries. Unique Images also provides high volume and custom picture framing
services. Unique Images uses computerized joiner and mat cutting equipment. The
purchase price paid for Unique Images consisted of (i) $200,000 in cash, (ii) a
Promissory Note in the original principal amount of $200,000 and (iii) 100,000
shares of the Rule 506 common stock of americabilia.com Nevada. The stock was
issued at its fair value on the issue date of $1.00 per share or $100,000 in
total. The Promissory Note was paid in full in November 1999. As part of the
purchase, americabilia.com Nevada agreed to lease from Mr. Keith Veltre and his
affiliates the premises that are used for Unique Images' business operations as
well as certain business equipment.
americabilia was originally organized under the laws of the state of
Florida on August 22, 1989 under the name First Zurich Investments, Inc. On
November 15, 1996, the name of the entity was changed to Terra International
Pharmaceuticals, Inc. On September 7, 1999, the entity's name was changed to
americabilia.com, Inc. On September 17, 1999, americabilia conducted a
recapitalization through the merger of americabilia.com Nevada with and into
Worldwide Collectibles, Inc., a Nevada corporation and a wholly owned subsidiary
of americabilia formed for the purpose of the merger. Pursuant to an Agreement
of Merger dated September 14, 1999, each of the former stockholders of
americabilia.com Nevada received one (1) share of Common Stock, in exchange for
their shares of americabilia.com Nevada. As a result of the acquisition, a total
of 6,115,000 shares of common stock were issued to the former shareholders of
americabilia.com Nevada. Prior to its acquisition of americabilia.com Nevada,
americabilia did not have any operations. For accounting purposes, the
acquisition has been treated as a recapitalization of americabilia.com with
americabilia.com as the acquirer (reverse merger). As a result of this
transaction americabilia became a publicly traded company.
The recapitalization was accounted for by adjusting common stock by
$537 for the 537,690 shares of common stock held by the shareholders at the
time that the entity was known as Terra International Pharmaceuticals, Inc.
In addition, because the net assets of Terra International Pharmaceuticals,
Inc. were $0, paid in capital was decreased by an amount equal to the par
value of the 537,690 shares. Prior to the reverse merger, Terra
Pharmaceuticals had no operations. The companies involved in the
recapitalization included Terra Pharmaceuticals, Terra's wholly owned
subsidiary, Worldwide Collectibles, and americabilia.com Nevada. Unique
Images is a wholly owned subsidiary of Worldwide Collectibles.
REVENUES
americabilia's revenues reached $662,231 in fiscal 1999 due to
$294,009 in revenues from sales by World Wide Collectibles, (a wholly owned
subsidiary of americabilia.com) and external sales of $368,223 from Unique
Images whose operations were acquired on August 11, 1999. External sales
refers to sales to third parties, excluding intercompany sales by Unique
Images to Worldwide Collectibles, Inc.
EXPENSES
Cost of sales in fiscal 1999 were $415,330 as a result of product
costs of Worldwide Collectibles and of $272,778 from Unique Images whose
operations were acquired on August 11, 1999. Costs of sales include cost of
the product plus associated freight costs to acquire and ship the product.
Costs of sales also include direct labor and related payroll benefits
associated with the manufacturing (for wholesale products), stocking,
packaging, and shipping of products. Worldwide Collectibles, the retail
segment, had a gross margin for fiscal 1999 of $10,914 or 3% of revenues.
Unique Images, the wholesale segment, had gross margin for fiscal 1999 of
$146,924 or 39% of revenues. Retail gross margin was low due to aggressive
pricing of product to develop americabilia's customer base. General and
administrative expenses (including marketing) were $557,310 in fiscal 1999.
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These expenses reflect americabilia's recognition of opening expenses (expenses
incurred to establish the business and costs prior to commencement of
operations) and general and administrative expenses. General and administrative
expenses for the period from March 2, 1999 (Inception) through December 31,
1999 include marketing expenses of $126,009, professional and legal expenses
of $156,963, facility expenses including utilities of $60,345, salaries and
benefits of office personnel of $137,600 (including the costs of contributed
salaries). All other expenses were $76,393. Several officers of americabilia
are currently not receiving salaries. However contributed salary expense has
been recognized in the form of contributed capital.
OTHER INCOME (EXPENSE)
Interest expense in fiscal 1999 increased to $13,648 as a result of
loans of World Wide Collectibles and of Unique Images whose operations were
acquired on August 11, 1999. Interest expense from loans to officers and
directors of $3,779 for the period from March 2, 1999 (inception) through
December 31, 1999 is included in interest expense. Interest income and other
income in fiscal 1999 increased to $12,405 as a result of interest on cash in
interest bearing bank accounts of World Wide Collectibles and of Unique
Images whose operations were acquired on August 11, 1999
LOANS FROM RELATED PARTIES
As of September 30, 1999, Henry E. Cartwright, americabilia's
Chairman of the Board and Gary Moore, americabilia's President, have each
loaned americabilia $50,000. Each of these loans bear interest at the rate of
eight percent (8%) per annum and are all due and payable on July 1, 2000. In
addition, Mr. Cartwright sold americabilia inventory owned by him for a
promissory note in the amount of $31,943 payable on the same terms as the
loans mentioned above.
During July 1999, americabilia accepted notes totaling $200,000 from
six shareholders in connection with the issuance of shares of americabilia's
Common Stock. The notes bear interest at a rate of 8% per annum with all
principal and interest due July 31, 2004. During 1999, Mr. Cartwright,
americabilia's Chairman, exchanged $67,778 of his note payable for the same
amount of the notes receivable of two of the above-mentioned shareholders. In
addition, Mr. Moore, americabilia's President, exchanged $33,889 of his note
payable for the note payable of one of the remaining shareholders mentioned
above.
NET INCOME (LOSS)
The Net Loss in fiscal 1999 increased to $349,551 as a result of
corporate operations and due to the results of operations for World Wide
Collectibles and from Unique Images whose operations were acquired on August 11,
1999 due to matters discussed above.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, americabilia had cash and cash equivalents of
$323,127. americabilia had working capital of $792,861 and shareholders
equity of $1,190,215. The cash increased during fiscal 1999 as a result of
the issuance of stock and as a result of two loans from officers of
americabilia.
Cash flow from operations is expected to be sufficient to pay operating
costs of americabilia during fiscal 2000. However americabilia expects to raise
additional funds through a combination of private placements, public offerings
of its stock or bank loans in order to expand operations and increase its
technical infrastructure and inventory. However, there can be no assurance that
any additional financing, if needed to meet liquidity needs, will be available
to us on favorable terms or at all. There can be no assurance that our estimate
of foreseeable liquidity needs is accurate or that no new business developments
or other unforeseen events will not occur, any of which could result in the need
to raise additional funds. We expect that the adequacy of our operating cash
flow will depend upon:
- customer acceptance of our products;
- the continued development of the Internet market as a source for
our products;
- the intensity of our competition;
- the efficiency of operations;
- the depth of customer demand, and the effectiveness of our marketing
and promotional efforts:
RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board recently issued FAS No. 137,
`Deferral of FAS 133 Accounting for Derivatives' which delays the implementation
of that pronouncement to June 15, 2000. americabilia has not determined what
effect, if any, that FAS 133 may have on our results of operations.
YEAR 2000
In the past, many computer software programs were written using two
digits rather than four to define the applicable year. As a result,
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This situation is generally referred to as the "Year 2000
Problem". If such situation occurs, the potential exists for computer system
failures or miscalculations by computer programs, which could disrupt
operations.
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americabilia has conducted a comprehensive review of its computer
systems and other systems for the purpose of assessing its potential Year
2000 Problem. Based upon this review, americabilia's management believes such
systems are compliant.
All costs related to the Year 2000 Problem were expensed as
incurred, while the cost of new hardware and software is capitalized and
amortized over its expected useful life. The costs associated with Year 2000
compliance have not been and are not anticipated to be material to
americabilia's financial position or results of operations. As of December
31, 1999, americabilia incurred costs of approximately $2,000, primarily for
analysis by internal labor, related to the system applications. americabilia
does not anticipate spending any additional amounts on Year 2000 compliance
matters since all of its software and hardware was Year 2000 compliant when
purchased in fiscal 1999.
In addition, americabilia has communicated with its major suppliers
and vendors to determine their state of readiness relative to the Year 2000
Problem and its possible exposure to Year 2000 issues with any such party.
The suppliers have responded indicating that they have reached operational
sustainability in all areas. However, there can be no guarantee that the
systems of other companies, which americabilia's systems may rely upon, have
been converted or representations made to americabilia by these parties are
accurate. As a result the failure of a major vendor or supplier to adequately
address their Year 2000 Problem could have a significant adverse impact on
americabilia's operations.
As a result of various external risk factors, americabilia could be
adversely impacted and the effect could be material regardless of the
readiness of its own systems. The most reasonable worst case scenario - if
one or more of americabilia's suppliers, or its web site provider,
experiences Year 2000 problems that impact their ability to provide their
services, americabilia's operations could be adversely impacted. americabilia
has developed, and continues to update and revise, contingency plans to
address the identified risks. As of the date of this Registration Statement,
nothing has come to americabilia's attention that would indicate that any of
its computer systems are unable to operate accurately after January 1, 2000.
However, americabilia has been advised that the consequences of a Year 2000
failure may not become apparent for several weeks following January 1, 2000.
Should americabilia experience any problems, its response will include
seeking other suppliers who have demonstrated fully compliant systems and the
impact on its results of operations could be material.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
americabilia invests its cash and cash equivalents in FDIC insured
savings accounts which, by their nature, are not subject to interest rate
fluctuation.
As of December 31, 1999, americabilia had $55,700 in borrowings. The
borrowings are primarily related to capitalized leases which, by their nature,
are not subject to interest rate fluctuations.
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1997 provides a "safe harbor"
for certain forward-looking statements. Certain matters discussed in this filing
could be characterized as forward-looking statements such as statements relating
to plans for future expansion, as well as other capital spending, financing
sources and effects of regulation and competition. Such forward-looking
statements involve important risks and uncertainties that could cause actual
results to differ materially from those expressed in such forward-looking
statements.
ITEM 3. DESCRIPTION OF PROPERTY
PROPERTY
americabilia currently occupies approximately 6,500 square feet of
office/retail/warehouse space at a cost of $3,250 per month pursuant to a lease
that expires on June 1, 2000 with an option to extend for an additional three
(3) year term. americabilia has leased an additional 4,500 square feet of space
at a cost of
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$2,250 per month for a term which commences on August 1, 1999 and expires on
June 1, 2000, with an option to extend the lease for an additional three (3)
year term.
Unique Images occupies approximately 7,616 square feet of office/
production space which it leases for $5,000 per month pursuant to a lease
which expires on September 1, 2009 with an option to extend for two five year
periods. The building is owned by the wife of the president of Unique Images.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the
beneficial ownership of the shares of Common Stock as of February 29, 2000 by
(i) each person who is known by americabilia to be the beneficial owner of more
than five percent (5%) of the issued and outstanding shares of Common Stock,
(ii) each of americabilia's directors and executive officers and (iii) all
directors and executive officers as a group. Each stockholder listed below has
sole voting power and investment power with respect to the shares beneficially
owned by such person.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
NAME AND ADDRESS SHARES OWNED
- --------------------------------------------------------- ---------------------- ---------------------
<S> <C> <C>
Gary Moore(1) 559,000 8.4%
Henry E. Cartwright(1) 500,000 7.5%
Keith Veltre(2) 500,000 7.5%
Paul Heroy(1) 345,000 5.2%
Tom Pitch(1) 335,000 5.0%
Dixie Cartwright(1) 125,000 1.9%
Joseph P. Flynn(3) 50,000 (4)
Dalton L. Conners(5) 46,900 (4)
All Directors and Officers
as a group (6 persons) 1,780,900 26.8%
</TABLE>
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(1) Address is 9155 Las Vegas Boulevard South, Suite 242, Las Vegas, Nevada
89123.
(2) Address is 6080 East Burnham Avenue, Suite 28, Las Vegas, Nevada 89119.
(3) Address is 8236 E. Sands Drive, Scottsdale, AZ 85255.
(4) Less than one percent.
(5) Address is 32 Paladin Court, Henderson, NV 89014.
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The directors and executive officers of americabilia are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------------- ---------- -------------------------------------------------------
<S> <C> <C>
Henry E. Cartwright 60 Chairman of the Board of Directors
Gary Moore 54 President and Director
Joseph Flynn 60 Director
Keith Veltre 28 Director
Dalton L. Conners 54 Director
Dixie Cartwright 60 Secretary and Treasurer
</TABLE>
Mr. Cartwright has served as Chairman of the Board of americabilia
since September 1999. Mr. Cartwright is a private investor in numerous real
estate, lending transactions and other ventures. Mr. Cartwright served as
Chairman of the Board of Major Video Corp. from December 1982 until its
merger with Blockbuster Entertainment Corporation in January 1989. In
September 1993, Mr. Cartwright founded Back to the 50's, Inc., a company that
sold 50's and 60's memorabilia through a mail order catalog and showroom.
Back to the 50's, Inc. was acquired by Crowne Ventures, Inc. in November
1995. Mr. Cartwright served as director of Crowne Ventures, Inc. from 1995
until he resigned in April 1998.
Mr. Moore has served as the President of americabilia and as director
since September 1999. Mr. Moore is a private investor. Mr. Moore was the
President and Chief Operations Officer of Major Video Corp. from 1984 until its
merger with Blockbuster Entertainment Corp. in 1989. Mr. Moore continues to be a
Blockbuster Video franchisee.
Mr. Flynn has served as a director of americabilia since September
1999. From 1987 through the present, Mr. Flynn has been the legal counsel for
Gaelic Management, Inc., which provides legal, management, franchise, merger
and acquisitions and operations consulting to restaurant, real estate
development, communications, aircraft maintenance and athletic supply chains
for affiliated and unrelated domestic and international companies.
Mr. Veltre has served as a director of americabilia since September
1999 and President of Veltre Enterprises, Inc. dba Unique Images, a subsidiary
of americabilia. Unique Images is a supplier of novelty and autographed
collectibles that was founded by Mr. Veltre in 1996.
Mr. Conners has served as a director of americabilia since September
1999. Since 1998, Mr. Conners has been a private investor and financial
consultant. For thirty years prior thereto, Mr. Conners was employed in the
commercial banking business and served in the positions of Vice President and
Branch Manager, Area Sale Manager, Manager Automobile Lending Center and Senior
Commercial Real Estate Officer.
Mrs. Cartwright has served as the Secretary and Treasurer of
americabilia since September 1999. Mrs. Cartwright is a private investor.
From 1983 until 1989, Mrs. Cartwright managed all aspects of the office
operations of Major Video Corp. From 1993 to 1995, Mrs. Cartwright managed
all aspects of the office and financial operations of Back to the 50's, Inc.
Each director serves for a term of one year or until his or her
successor has been elected and qualified. Each executive officer serves at the
pleasure of the Board of Directors. Henry E. Cartwright and Dixie Cartwright
are husband and wife. Gary Moore and Dixie Cartwright are brother and sister.
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ITEM 6. EXECUTIVE COMPENSATION
COMPENSATION OF OFFICERS AND DIRECTORS. The following table sets forth
the cash compensation americabilia paid to its executive officers for services
rendered from its inception in March 1999 through December 31, 1999.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------------- ----------------------------
COMMON
OTHER RESTRICTED SHARES ALL OTHER
ANNUAL STOCK UNDERLYING COMPENSATION
NAME AND YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS n (1)
POSITION ($) GRANTED
(# SHARES)
- --------------------- ------- ----------- -------- --------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gary Moore, 1999 -0- -0- -0- -0- -0- -0-
President
Keith Veltre, 1999 26,000(1)
President of Unique
Images
</TABLE>
- --------------------
(1) Represents salary paid to Mr. Veltre since September 1999 following
americabilia's acquisition of Unique Images.
Since its inception in March 1999, americabilia has paid no salaries
to any of its executive officers other than Keith Veltre, the President of
Unique Images. No salaries have been accrued although amounts have been
included in the income statement and as contributed capital for the value of
such services. It is anticipated that payment of salaries will commence at such
time as americabilia's operations have generated sufficient cash flow to enable
the payment of salaries. americabilia has not yet determined the amount or
timing of the payment of salaries to its executive and management personnel and
will do so in the discretion of its officers and directors. Directors do not
receive compensation for their services.
EMPLOYMENT CONTRACTS. americabilia has an employment contract with
Keith Veltre, the President of americabilia's wholly-owned subsidiary, Veltre
Enterprises, Inc. The employment contract with Mr. Veltre is for a period of
five years commencing in September 1999 and provides for compensation of $6,500
per month.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
LOANS FROM RELATED PARTIES
As of September 30, 1999, Henry E. Cartwright, americabilia's
Chairman of the Board and Gary Moore, americabilia's President, have each
loaned americabilia $50,000. Each of these loans bear interest at the rate of
eight percent (8%) per annum and are all due and payable on July 1, 2000. In
addition, Mr. Cartwright sold americabilia inventory owned by him for a
promissory note in the amount of $31,943 payable on the same terms as the
loans mentioned above.
During July 1999, americabilia issued notes totaling $200,000 to six
shareholders in connection with the issuance of shares of americabilia's
Common Stock. The notes bear interest at a rate of 8% per annum with all
principal and interest due July 31, 2004. During 1999, Mr. Cartwright,
americabilia's Chairman, exchanged $67,778 of his note payable for the same
amount of the notes receivable of two of the above-mentioned shareholders. In
addition, Mr. Moore, americabilia's President, exchanged $33,889 of his note
payable for the note payable of one of the remaining shareholder mentioned
above.
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ACQUISITION
On August 11, 1999, americabilia.com Nevada acquired all of the
outstanding common stock of Veltre Enterprises, Inc. dba Unique Images.
Unique Images was wholly owned by Keith Veltre who at the time of the
transaction owned 8% of the common stock of americabilia.com Nevada. The
purchase price paid for Unique Images consisted of (i) $200,000 in cash,
(ii) a Promissory Note in the original principal amount of $200,000 and
(iii) 100,000 shares of common stock of americabilia.com Nevada. The stock was
issued at its fair value of $1.00 per share on the date of issuance or
$100,000 in total. The Promissory Note was paid in full in November 1999.
As part of the purchase, americabilia agreed to lease from Mr. Keith Veltre
and his affiliates the premises that are used for Unique Images' business
operations as well as certain business equipment.
ITEM 8. LEGAL PROCEEDINGS.
There are no pending legal proceedings to which americabilia or the
property of americabilia is subject. In addition, no other such proceedings are
known to be contemplated against americabilia.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON AMERICABILIA'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS.
americabilia's Common Stock has been listed on the OTC Bulletin Board
under the symbol "ABIL" since September 16, 1999. Set forth in the following
table are the high and low bid quotations for americabilia's Common Stock for
each of the quarters of the fiscal year ended December 31, 1999 during which
the Common Stock was listed. americabilia considers its Common Stock to be
thinly traded and that any reported bid or sale prices may not be a true
market-based valuation of the Common Stock. The quotations represent
inter-dealer quotations without retail markups, markdowns or commissions and
may not represent actual transactions.
<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW
- ------------- ---- ---
<S> <C> <C>
September 30, 1999 $ 20.60 $10.75
December 31, 1999 $ 14.31 $9.50
</TABLE>
As of February 29, 2000, there were approximately 560 record holders
of americabilia's Common Stock.
americabilia has not paid any cash dividends since its inception and
does not contemplate paying dividends in the foreseeable future. It is
anticipated that earnings, if any, will be retained for the operation of
americabilia's business.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
During the last three years americabilia sold unregistered shares of
its Common Stock in only one transaction. In August 1999, pursuant to an
Agreement and Plan of Reorganization dated August 31, 1999, the holders of
all of the issued and outstanding capital shares of americabilia.com Nevada
transferred those shares to americabilia in exchange for americabilia's
issuance of 6,115,000 shares of Common Stock. There was no underwriter
involved in this issuance. The issuance was conducted pursuant to Rule 506
under the 1933 Act.
ITEM 11. DESCRIPTION OF SECURITIES.
COMMON STOCK
americabilia is authorized to issue 50,000,000 shares of Common Stock,
$.001 par value, of which, as of the date hereof, 6,652,692 shares are issued
and outstanding and held of record by approximately 550 persons. Holders of
shares of Common Stock are entitled to one vote per share on all matters to be
voted upon by the shareholders generally. The approval of proposals submitted
to shareholders at a meeting other than for the election of directors requires
the favorable vote of a majority of the shares voting, except in the case of
certain
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fundamental matters (such as certain amendments to the Articles of
Incorporation, and certain mergers and reorganizations), in which cases Florida
law and americabilia's Bylaws require the favorable vote of at least a majority
of all outstanding shares. Stockholders are entitled to receive such dividends
as may be declared from time to time by the Board of Directors out of funds
legally available therefor, and in the event of liquidation, dissolution or
winding up of americabilia to share ratably in all assets remaining after
payment of liabilities. The holders of shares of Common Stock have no
preemptive, conversion or subscription rights.
STOCK OPTION PLAN
americabilia has adopted a 1999 Stock Option Plan ("Plan"), which
permits americabilia to grant options to its employees, officers, directors,
consultants and independent contractors. americabilia may issue an aggregate of
600,000 shares of Common Stock pursuant to the Plan. The Plan is governed by
the board of directors, which has the power to determine the terms of any
options granted, including the exercise price, the number of shares subject to
the option, and the exercisability thereof. Options under the Plan generally
are not transferable, and each option is exercisable during the lifetime of the
optionee only by such optionee. Stock options can be exercised at any time
before expiration after they are vested. As of the date of this Registration
Statement, americabilia has granted options under the Plan to purchase an
aggregate of 25,000 shares of Common Stock at an exercise price of $1.00 to
certain employees of its subsidiary, Unique Images.
DIVIDENDS
americabilia has never paid dividends and does not anticipate the
payment of cash dividends on its common stock in the foreseeable future.
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ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
FLORIDA STATUTES
Section 607.0850 of the General Corporation law of the State of Florida
provides as follows:
"Section 607.0850 --Indemnification of officers, directors, employees,
and agents.--
(1) A corporation shall have power to indemnify any person who was or
is a party to any proceeding (other than an action by, or in the right of, the
corporation), by reason of the fact that he or she is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
liability incurred in connection with such proceeding, including any appeal
thereof, if he or she acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful. The termination of any proceeding by
judgment, order, settlement, or conviction or upon a plea of nolo contendere or
its equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in, or not opposed to, the best interests of the corporation or, with respect to
any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.
(2) A corporation shall have power to indemnify any person, who was or
is a party to any proceeding by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee, or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise,
against expenses and amounts paid in settlement not exceeding, in the judgment
of the board of directors, the estimated expense of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding, including any appeal thereof. Such
indemnification shall be authorized if such person acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation, except that no indemnification shall be made under
this subsection in respect of any claim, issue, or matter as to which such
person shall have been adjudged to be liable unless, and only to the extent
that, the court in which such proceeding was brought, or any other court of
competent jurisdiction, shall determine upon application that, despite the
adjudication of liability but in view of all circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses which
such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsection (1) or subsection (2), or in defense of any
claim, issue, or matter therein, he or she shall be indemnified against expenses
actually and reasonably incurred by him or her in connection therewith.
(4) Any indemnification under subsection (1) or subsection (2), unless
pursuant to a determination by a court, shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee, or agent is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in subsection (1) or
subsection (2). Such determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such proceeding;
(b) If such a quorum is not obtainable or, even if obtainable,
by majority vote of a committee duly designated by the board of directors (in
which directors who are parties may participate) consisting solely of two or
more directors not at the time parties to the proceeding;
(c) By independent legal counsel:
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1. Selected by the board of directors prescribed in
paragraph (a) or the committee prescribed in paragraph (b); or
2. If a quorum of the directors cannot be obtained
for paragraph (a) and the committee cannot be designated under paragraph (b),
selected by majority vote of the full board of directors (in which directors who
are parties may participate); or
(d) By the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such proceeding or, if no
such quorum is obtainable, by a majority vote of shareholders who were not
parties to such proceeding.
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by paragraph (4)(c)
shall evaluate the reasonableness of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if he or she is ultimately found
not to be entitled to indemnification by the corporation pursuant to this
section. Expenses incurred by other employees and agents may be paid in advance
upon such terms or conditions that the board of directors deems appropriate.
(7) The indemnification and advancement of expenses provided pursuant
to this section are not exclusive, and a corporation may make any other or
further indemnification or advancement of expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office. However, indemnification or advancement of expenses shall not be made to
or on behalf of any director, officer, employee, or agent if a judgment or other
final adjudication establishes that his or her actions, or omissions to act,
were material to the cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the director,
officer, employee, or agent had reasonable cause to believe his or her conduct
was lawful or had no reasonable cause to believe his or her conduct was
unlawful;
(b) A transaction from which the director, officer, employee,
or agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under which the
liability provisions of s. 607.0834 are applicable; or
(d) Willful misconduct or a conscious disregard for the best
interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of a shareholder.
(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person, unless otherwise provided when authorized or ratified.
(9) Unless the corporation's articles of incorporation provide
otherwise, notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary determination of the board or of the
shareholders in the specific case, a director, officer, employee, or agent of
the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
On receipt of an application, the
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court, after giving any notice that it considers necessary, may order
indemnification and advancement of expenses, including expenses incurred in
seeking court-ordered indemnification or advancement of expenses, if it
determines that:
(a) The director, officer, employee, or agent is entitled to
mandatory indemnification under subsection (3), in which case the court shall
also order the corporation to pay the director reasonable expenses incurred in
obtaining court-ordered indemnification or advancement of expenses;
(b) The director, officer, employee, or agent is entitled to
indemnification or advancement of expenses, or both, by virtue of the exercise
by the corporation of its power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is fairly and
reasonably entitled to indemnification or advancement of expenses, or both,
in view of all the relevant circumstances, regardless of whether such person
met the standard of conduct set forth in subsection (1), subsection (2), or
subsection (7).
(10) For purposes of this section, the term "corporation" includes,
in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger, so that any person who is or was a director, officer, employee, or
agent of a constituent corporation, or is or was serving at the request of a
constituent corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, is in
the same position under this section with respect to the resulting or
surviving corporation as he or she would have with respect to such
constituent corporation if its separate existence had continued.
(11) For purposes of this section:
(a) The term "other enterprises" includes employee benefit
plans;
(b) The term "expenses" includes counsel fees, including those
for appeal;
(c) The term "liability" includes obligations to pay a
judgment, settlement, penalty, fine (including an excise tax assessed with
respect to any employee benefit plan), and expenses actually and reasonably
incurred with respect to a proceeding;
(d) The term "proceeding" includes any threatened, pending, or
completed action, suit, or other type of proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the corporation"
includes any service as a director, officer, employee, or agent of the
corporation that imposes duties on such persons, including duties relating to an
employee benefit plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation" describes the actions of a person who acts in good faith and in a
manner he or she reasonably believes to be in the best interests of the
participants and beneficiaries of an employee benefit plan.
(12) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against the
person and incurred by him or her in any such capacity or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify the person against such liability under the provisions of this
section."
-22-
<PAGE>
BYLAWS
americabilia's Amended and Restated Bylaws provide for the
indemnification of americabilia's directors, officers, employees, or agents
under certain circumstances as follows:
"ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
Section 1. ACTIONS OTHER THAN BY THE CORPORATION. The
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, except an
action by or in the right of the corporation, by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses, including attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with the action, suit or proceeding if he acted in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, has no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, does not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and that, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
Section 2. ACTIONS BY THE CORPORATION. The corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses, including amounts paid in settlement and attorneys'
fees, actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit if he acted in good faith and in a manner which
he reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue or matter as
to which such a person has been adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable to the corporation or
for amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
Section 3. SUCCESSFUL DEFENSE. To the extent that a director,
officer, employee or agent of the corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
Sections 1 and 2, or in defense of any claim, issue or matter therein, he must
be indemnified by the corporation against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the defense.
Section 4. REQUIRED APPROVAL. Any indemnification under
Sections 1 and 2, unless ordered by a court or advanced pursuant to Section 5,
must be made by the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a
quorum consisting of directors who were not parties to the act, suit or
proceeding;
-23-
<PAGE>
(c) If a majority vote of a quorum consisting of
directors who were not parties to the act, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not
parties to the act, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
Section 5. ADVANCE OF EXPENSES. The articles of incorporation,
the bylaws or an agreement made by the corporation may provide that the expenses
of officers and directors incurred in defending a civil or criminal action, suit
or proceeding must be paid by the corporation as they are incurred and in
advance of the final disposition of the action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the corporation. The provisions of this
section do not affect any rights to advancement of expenses to which corporate
personnel other than directors or officers may be entitled under any contract or
otherwise by law.
Section 6. OTHER RIGHTS. The indemnification and advancement
of expenses authorized in or ordered by a court pursuant to this Article VI:
(a) Does not exclude any other rights to which a
person seeking indemnification or advancement of expenses may be entitled under
the articles of incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to Section 2 or for the
advancement of expenses made pursuant to Section 5, may not be made to or on
behalf of any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a
director, officer, employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
Section 7. INSURANCE. The corporation may purchase and
maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise for any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability under the provisions of this Article VI.
Section 8. RELIANCE ON PROVISIONS. Each person who shall act
as an authorized representative of the corporation shall be deemed to be doing
so in reliance upon the rights of indemnification provided by this Article.
Section 9. SEVERABILITY. If any of the provisions of this
Article are held to be invalid or unenforceable, this Article shall be construed
as if it did not contain such invalid or unenforceable provision and the
remaining provisions of this Article shall remain in full force and effect.
Section 10. RETROACTIVE EFFECT. To the extent permitted by
applicable law, the rights and powers granted pursuant to this Article VI shall
apply to acts and actions occurring or in progress prior to its adoption by the
board of directors."
ITEM 13. FINANCIAL STATEMENTS.
See pages F-1 through F-32.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
-24-
<PAGE>
Deloitte & Touche LLP, Las Vegas, Nevada, was engaged as
americabilia's independent accountants. Prior to engaging Deloitte & Touche
LLP as its independent auditors, americabilia did not consult Deloitte &
Touche LLP regarding (i) either the application of accounting principles to a
specified transaction or the type of audit opinion that might be rendered on
americabilia's financial statements, or (ii) any matter that was the subject
of a disagreement or was a reportable event.
ITEM 15. INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.
<C> <S>
2.1 Agreement and Plan of Reorganization dated August 31, 1999(1)
3.1 Certificate of Incorporation of americabilia(1)
3.2 Amended and Restated Bylaws of americabilia(1)
3.3 Amendment to Articles of Incorporation filed June 20, 1996(1)
3.4 Amendment to Articles of Incorporation filed November 15, 1996(1)
3.5 Amendment to Articles of Incorporation filed September 7, 1999(1)
4.1 Specimen of Common Stock Certificate(1)
10.1 americabilia's 1999 Stock Option Plan(1)
10.2 Stock Purchase Agreement between americabilia and Keith Veltre dated July 23, 1999(1)
10.3 Employment Agreement between americabilia and Keith Veltre, dated August 11, 1999(1)
10.4 Promissory Note of americabilia in favor of Henry E. Cartwright dated November 30, 1999(1)
10.5 Promissory Note of americabilia in favor of Gary Moore dated November 30, 1999(1)
10.6 Lease Agreement between americabilia and KPT REMIC Loan LLC dated May 7, 1999(1)
10.7 Commercial Lease Agreement between americabilia and Tricia Veltre dated as of September 1, 1999(1)
21.1 Subsidiaries(1)
27.1 Financial Data Schedule(1)
</TABLE>
- -----------------------------
(1) Filed as an exhibit to americabilia's Registration Statement on Form 10
dated March 3, 2000 (SEC File No. 0-29781) and incorporated herein by
reference.
-25-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
AMERICABILIA.COM, INC.
<S> <C>
Independent Auditors' Reports..........................................................................F-1
Consolidated Balance Sheet as of December 31, 1999.....................................................F-2
Consolidated Statement of Operations for the period from March 2, 1999 (date of inception)
through December 31, 1999............................................................................F-4
Consolidated Statement of Stockholders' Equity for the period from March 2, 1999
(date of inception) through December 31, 1999........................................................F-5
Consolidated Statement of Cash Flows for the period from March 2, 1999
(date of inception) through December 31, 1999........................................................F-6
Notes to Consolidated Financial Statements ............................................................F-7
UNIQUE IMAGES, INC.
Independent Auditors' Reports.........................................................................F-22
Balance Sheets as of August 10, 1999 and December 31, 1998 and 1997...................................F-23
Statements of Income for the period from January 1, 1999 to August 10, 1999 and
the years ended December 31, 1998, 1997 and 1996....................................................F-24
Statements of Stockholders' Equity from January 1, 1999 to August 10, 1999 and
the years ended December 31, 1998, 1997 and 1996....................................................F-25
Statements of Cash Flows from January 1, 1999 to August 10, 1999 and
the years ended December 31, 1998, 1997 and 1996....................................................F-26
Notes to Consolidated Financial Statements ...........................................................F-27
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Pro Forma Consolidated Statement of Operations for the year ended December 31, 1999...................F-33
Notes to Pro Forma Consolidated Financial Statements..................................................F-35
</TABLE>
-26-
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
americabilia.com, Inc.
We have audited the accompanying consolidated balance sheet of americabilia.com,
Inc. (the "Company") as of December 31, 1999, and the related consolidated
statements of operations, stockholders' equity and cash flows for the period
from March 2, 1999 (date of inception) through December 31, 1999. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Company as of
December 31, 1999, and the consolidated results of its operations and its cash
flows for the period from March 2, 1999 (date of inception) through December 31,
1999, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
February 5, 2000
F-1
<PAGE>
AMERICABILIA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 323,127
Accounts receivable, net 236,583
Inventories 446,448
Prepaid expenses and deposits 23,796
-----------
Total current assets 1,029,954
-----------
PROPERTY AND EQUIPMENT, Net 154,399
GOODWILL, Net 282,061
OTHER ASSETS 7,494
-----------
TOTAL $1,473,908
-----------
-----------
See accompanying notes to consolidated financial statements.
(Continued)
</TABLE>
F-2
<PAGE>
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 224,422
Current portion of long-term debt 9,122
Income taxes payable 3,549
-----------
Total current liabilities 237,093
-----------
LOANS FROM SHAREHOLDERS 34,508
LONG-TERM DEBT, Less current portion 12,092
-----------
Total liabilities 283,693
-----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value; authorized 50,000,000 shares; 6,652,690 shares
issued and outstanding 6,653
Additional paid-in capital 1,637,525
Notes receivable from shareholders for stock (104,412)
Accumulated deficit (349,551)
-----------
Total stockholders' equity 1,190,215
-----------
TOTAL $1,473,908
-----------
-----------
See accompanying notes to consolidated financial statements.
(Concluded)
</TABLE>
F-3
<PAGE>
AMERICABILIA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
PERIOD FROM MARCH 2, 1999 (DATE OF INCEPTION) TO DECEMBER 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
REVENUES:
Retail/wholesale $ 662,231
Cost of sales 415,330
-----------
Gross profit 246,901
OPERATING EXPENSES:
General and administrative expenses 431,301
Marketing expenses 126,009
Depreciation and amortization 34,368
Organization costs 34,532
-----------
Total operating expenses 626,210
-----------
LOSS FROM OPERATIONS BEFORE INTEREST AND TAXES (379,309)
OTHER INCOME (EXPENSE):
Interest expense (13,648)
Other 12,405
-----------
Total other (1,243)
-----------
LOSS FROM OPERATIONS BEFORE INCOME TAXES (380,552)
PROVISION (BENEFIT) FOR INCOME TAXES -
Deferred tax benefit (31,001)
-----------
NET LOSS $(349,551)
-----------
-----------
EARNINGS PER SHARE:
Basic:
Net loss $(349,551)
-----------
-----------
Weighted average common shares outstanding 4,172,576
-----------
-----------
Loss per share $0.08
-----------
-----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
AMERICABILIA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM MARCH 2, 1999 (DATE OF INCEPTION) TO DECEMBER 31, 1999
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RECEIVABLE NOTES
------------------- PAID-IN FROM ACCUMULATED
SHARES AMOUNT CAPITAL SHAREHOLDERS DEFICIT TOTALS
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 2, 1999
(Date on inception) - $ - $ - $ - $ - $ -
Proceeds from issuance
to original investors 5,000,000 5,000 495,000 (200,000) 300,000
Proceeds from private placement 1,000,000 1,000 989,178 990,178
Stock issued in connection with
acquisition 100,000 100 99,900 100,000
Stock options exercised 15,000 15 14,985 15,000
Effect of a reverse merger accounted
for as a recapitalization 537,690 538 (538)
Interest income from notes
receivable from shareholders (3,412) (3,412)
Contributed services of officers
and employees 39,000 39,000
Loans payable to officers exchanged
for shareholder loans 99,000 99,000
Net loss (349,551) (349,551)
--------- ------ ---------- --------- ---------- ----------
BALANCE,
DECEMBER 31, 1999 6,652,690 $6,653 $1,637,525 $(104,412) $(349,551) $1,190,215
--------- ------ ---------- --------- ---------- ----------
--------- ------ ---------- --------- ---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
AMERICABILIA.COM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD FROM MARCH 2, 1999 TO DECEMBER 31, 1999
- -------------------------------------------------------------------------------
<TABLE>
<S> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net loss $(349,551)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 34,368
Provision for bad debts (150)
Contributed services of officers and employees 39,000
Deferred income taxes (7,600)
Changes in operating assets and liabilities, net of effects from acquisition
of businesses:
Increase in trade accounts receivable (10,511)
Increase in inventories (410,768)
Increase in prepaid assets and deposits (8,447)
Decrease in other assets 24,875
Increase in trade accounts payable and accrued expenses 152,244
Decrease in income taxes payable (20,100)
---------
Net cash used in operating activities (556,640)
---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of property and equipment (103,998)
Acquisition of business, net of cash acquired (394,434)
---------
Net cash used in investing activities (498,432)
---------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Net payments on long-term borrowings (26,979)
Loans from shareholders 100,000
Common stock issued 1,305,178
---------
Net cash provided by financing activities 1,378,199
---------
INCREASE IN CASH AND CASH EQUIVALENTS 323,127
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -
---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $323,127
---------
---------
</TABLE>
See accompanying notes to consolidated financial statements.
(Continued)
F-6
<PAGE>
<TABLE>
<S> <C>
SUPPLEMENTAL DISCLOSURES OF NONCASH ACTIVITIES:
Stock issued for notes receivable $ 104,412
Inventory acquired through loan to shareholder 34,506
The Company purchased all of the capital stock of Unique Images for $500,000.
In conjunction with the acquisition, liabilities were assumed as follows:
Fair value of assets acquired through purchase of Unique Images, Inc. 586,128
Cash paid for capital stock (400,000)
---------
Liabilities assumed through purchase of Unique Images, Inc. $ 186,128
---------
---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION -
Cash paid during the year for:
Interest $ 12,842
Taxes -
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
(Concluded)
<PAGE>
AMERICABILIA.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS - americabilia.com, Inc., a Florida corporation
(the "Company" or "americabilia"), is engaged in direct internet
merchandising of American-themed collectibles, gifts, and memorabilia.
The Company manufactures and assembles its own products and also purchases
products from a number of sources. The Company's products are marketed on
an internet shopping site, www.americabilia.com. The Company strives to
offer its customers a broad selection of products, a convenient shopping
experience, and competitive pricing. The Company commenced with
organizational and operational activities on March 2, 1999 in Nevada as
americabilia.com.
On August 11, 1999, the Company acquired the outstanding capital stock
of Veltre Enterprises, Inc. dba Unique Images. Unique Images designs
and manufactures Hollywood and sports memorabilia for fine art and
memorabilia galleries. Unique Images also provides high volume and
custom picture framing services. Unique Images uses computerized joiner
and mat cutting equipment. The purchase price paid for Unique Images
consisted of (i) $200,000 in cash, (ii) a Promissory Note in the
original principal amount of $200,000 and (iii) 100,000 shares of the
Rule 506 common stock of americabilia.com Nevada. The stock was issued
at its fair value on issue date of $1.00 per share or $100,000 in total.
The Promissory Note was paid in full in November 1999. As part of the
purchase, americabilia.com Nevada agreed to lease from Mr. Keith Veltre
and his affiliates the premises that are used for Unique Images' business
operations as well as certain business equipment.
americabilia was originally organized under the laws of the state of
Florida on August 22, 1989 under the name First Zurich Investments,
Inc. On November 15, 1996, the name of the entity was changed to Terra
International Pharmaceuticals, Inc. On September 7, 1999, the entity's
name was changed to americabilia.com, Inc. On September 17, 1999,
americabilia conducted a recapitalization through the merger of
americabilia.com Nevada with and into Worldwide Collectibles, Inc., a
Nevada corporation and a wholly owned subsidiary of americabilia was
formed for the purpose of the merger. Pursuant to an Agreement of
Merger dated September 14, 1999, each of the former stockholders of
americabilia.com Nevada received one (1) share of Common Stock, in
exchange for their shares of americabilia.com Nevada. As a result of
the acquisition, a total of 6,115,000 shares of Rule 506 Common Stock
were issued to the former shareholders of americabilia.com Nevada.
Prior to its acquisition of americabilia.com Nevada, americabilia did
not have any operations. For accounting purposes, the acquisition has
been treated as a recapitalization of americabilia.com with
americabilia.com as the acquirer (reverse merger). As a result of this
transaction americabilia became a publicly traded company.
The recapitalization was accounted for by adjusting common stock by
$537 for the 537,690 shares of common stock held by the shareholders at
the time that the entity was known as Terra International
Pharmaceuticals, Inc. In addition, because the net assets of Terra
International Pharmaceuticals were $0, paid in capital was decreased by
an amount equal to the par value of the 537,690 shares. Prior to the
reverse merger, Terra Pharmaceuticals had no operations. The companies
involved in the recapitalization included Terra Pharmaceuticals,
Terra's wholly-owned subsidiary, Worldwide Collectibles, and
americabilia.com Nevada (the predecessor of Worldwide Collectibles).
Since Unique Images is a wholly owned subsidiary of Worldwide
Collectibles, it was merged into americabilia.com, Inc. as well.
During the period ended December 31, 1999, certain shareholders provided
services for the Company. The accompanying financial statements for the
period ended December 31, 1999 include contributions to capital
representing estimates of compensation costs for services rendered to the
Company by the executive officers of the Company upon commencement of
sales. These contributions, which amounted to $60,000 for the period ended
December 31, 1999, were based on management's estimate of time expended on
the Company's behalf by the executive officers. Such contributions have
been accounted for with charges to operations and with credits net of tax
effects in like amounts to paid-in capital.
It is anticipated that payment of salaries will commence at such a time as
the Company's operations have generated sufficient cash flow to enable the
payment of salaries. The Company has not yet determined the amount or
timing of the payment of salaries to certain of its executive personnel
and will do so at the discretion of its officers and directors. The
Company will continue to estimate and record compensation costs for
services rendered by executive officers as charges to operations and
credits in like amounts to paid-in capital.
BASIS OF PRESENTATION - The accompanying consolidated financial statements
include the accounts of the Company and its subsidiaries. All material
intercompany transactions and accounts have been eliminated in
consolidation. Results of operations of the acquisition of Unique Images,
Inc., as described in Note 3, accounted for using the purchase method, are
included from its date of acquisition. The period from March 2, 1999
through December 31, 1999, is herein referred to as "fiscal 1999."
F-8
<PAGE>
CASH AND CASH EQUIVALENTS - Cash and cash equivalents are defined as
highly liquid investments with original maturities of three months or less
and at December 31, 1999 consist of amounts held as bank deposits.
ACCOUNTS RECEIVABLE - The Company's accounts receivable principally result
from credit sales to third-party wholesale customers. Allowances for
doubtful accounts are made when management believes that accounts are
uncollectible.
INVENTORIES - Inventories, consisting primarily of framed
celebrity-autographed memorabilia pictures and collectibles, are valued at
the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method for both raw materials and finished goods.
Product sold by the Company is obtained from outside sources and
through the Company's subsidiary, Unique Images. The Company does not
have product manufactured on its behalf by third parties.
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
Equipment under capital leases is stated at the present value of future
minimum lease payments. Depreciation and amortization is provided in
amounts sufficient to allocate the cost of depreciable or amortizable
assets to operations over their estimated service lives or the lease term,
using the straight-line method. The estimated service lives are generally
as follows:
<TABLE>
<S> <C>
Machinery and equipment 5-10 years
Vehicles 5-7 years
Office furniture and equipment 3-7 years
Leasehold improvements 5-10 years
</TABLE>
GOODWILL - The excess of cost over the fair value of net assets of
purchased companies (goodwill) is being amortized by the straight-line
method over 5 years. As of December 31, 1999, unamortized goodwill was
$282,061, net of accumulated amortization of $20,147. Goodwill and other
intangibles are reassessed annually to determine whether any potential
impairment exists.
RETAIL AND WHOLESALE REVENUES - Retail revenues are recognized upon
receipt of payment from the customer. Products are generally shipped
within 48 hours thereafter. Revenues are shown net of returns. The Company
estimates the amounts of returns and refunds each month. Due to the
shipping methods used by the Company, customers typically receive their
product within one week after order placement.
Estimated returns and refunds are recognized in the same period as sales.
For the period from March 2, 1999 (Inception) through December 31, 1999,
the Company recorded returns of $1,600 which approximated actual returns.
The Company's refund and return policy is generally a "no questions asked"
policy for thirty days after the sale provided the product is returned in
"like new" condition in its original packaging box with the customer's
receipt.
Wholesale revenues are recognized when goods are shipped.
The Company records prepayments for goods as deferred revenue until the
goods are shipped. Such prepayments are generally the result of deposits
on larger wholesale orders. At December 31, 1999 there was no deferred
revenue.
The Company has arrangements with a number of its suppliers to send
certain larger products directly to customers. The Company recognizes
revenue from the sale of these products upon receipt of payment. Products
are generally shipped within 48 hours thereafter. These products are
manufactured and sold by third parties, are inventoried by the supplier
and are shipped upon the Company's request as a result of Internet sales
orders placed by customers.
COST OF SALES - Costs of sales include cost of the product plus
associated freight costs to acquire and ship the product. Costs of
sales also include direct labor and related payroll benefits associated
with the manufacturing (for wholesale products), stocking, packaging,
and shipping of products. Agent or commission fees for the sales of
products are included in costs of sales. The Company had no agent of
commission fees for fiscal 1999.
ADVERTISING AND PROMOTIONAL COSTS - All advertising and promotional costs
associated with advertising and promoting the Company's lines of business
are expensed in the period incurred.
IMPAIRMENT OF LONG-LIVED ASSETS - In the event that facts and
circumstances indicate that the carrying value of long-lived assets,
including associated intangibles, may be impaired, an evaluation of
recoverability is performed by comparing the estimated future undiscounted
cash flows associated with the asset to the asset's carrying amount to
determine if a write-down to market value or discounted cash flow is
required. As of December 31, 1999, no adjustments or write-downs were
required.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying values of cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities
approximated their fair values because of the short maturity of these
instruments. The fair value of the Company's notes payable and long-term
debt is estimated based on quoted market prices for the same or similar
issues or on current rates offered to the Company for debt of the same
remaining maturities. At December 31, 1999, the aggregate fair value of
the Company's notes payable and long-term debt approximated its carrying
value.
INCOME TAXES - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standard ("SFAS") No. 109, "Accounting
for Income Taxes." Under the asset and liability method with SFAS No. 109,
deferred income taxes are required for the tax consequences of
F-9
<PAGE>
temporary differences by applying enacted statutory rates applicable to
future years to the difference between the financial statement carrying
amounts and the tax bases of existing assets and liabilities. Under
SFAS No. 109, the effect on deferred taxes of a change in tax rates is
recognized in income in the period that includes the enactment date.
NET INCOME PER SHARE - Basic earnings per share ("EPS") is computed by
dividing the net income available to common stockholders by the weighted
average of common shares outstanding during the period. Dilutive earnings
per share was not presented, as its effect was not material to the
financial statements for fiscal years presented. When applicable, the
Company's diluted EPS will include the dilutive effect of potential stock
options and certain warrant exercises, calculated using the treasury stock
method.
STOCK-BASED COMPENSATION - SFAS No. 123 provides companies with a choice
to follow the provisions of SFAS No. 123 in determination of stock-based
compensation expense or to continue with the provisions of the Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees." The Company continues to follow APB No. 25 and will provide
pro forma disclosure as required by SFAS No. 123 in the notes to the
consolidated financial statements.
RECENTLY ISSUED ACCOUNTING STANDARDS - The Financial Accounting Standards
Board ("FASB") issued SFAS No. 133, "Accounting for Derivatives," which is
effective for fiscal years beginning after June 15, 2000. This statement
defines derivatives and requires qualitative disclosure of certain
financial and descriptive information about a company's derivatives. The
Company will adopt SFAS No. 133 in the year ending December 31, 2001.
Management has not finalized its analysis of this SFAS or the impact on
the Company.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
consolidated financial statements and related notes to the consolidated
financial statements. Estimates are used when accounting for uncollectible
accounts receivable, inventory obsolescence, depreciation, taxes,
contingencies, and sales returns. Actual results could differ from those
estimated by management and changes in such estimates may affect amounts
reported in future periods.
2. CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk are cash and cash equivalents and accounts
receivable arising from its normal business activities.
Regarding retail accounts receivable, the Company believes that credit
risk is limited due to the large number of entities comprising the
Company's customer base. The Company performs certain credit evaluation
procedures and does not require collateral. The Company believes that
credit risk is limited because the Company routinely assesses the
financial strength of its customers, and based upon factors surrounding
the credit risk of customers, establishes an allowance for uncollectible
accounts and, as a consequence, believes that its accounts receivable
credit risk exposure beyond such allowances is limited. The Company
believes that credit risk beyond this amount, if any, would be negligible.
Changes in the allowance for doubtful accounts for fiscal 1999 consist of
the following:
F-10
<PAGE>
<TABLE>
<S> <C>
Beginning balance (acquired from Unique Images) $6,914
Recoveries of allowances 150
------
Ending balance $6,764
------
------
</TABLE>
3. BUSINESS COMBINATIONS
On August 11, 1999, the Company acquired the outstanding capital stock of
Veltre Enterprises, Inc. dba Unique Images. The purchase price paid for
Unique Images consisted of (i) $200,000 in cash and $200,000 by delivery
of a Promissory Note and (ii) 100,000 shares of common stock of the
Company. The Promissory Note was paid in full in November 1999. As part of
the purchase, the Company entered into leases with Mr. Keith Veltre and
his affiliates for the premises being used in Unique Images' business
operations and certain business equipment.
The fair value of Unique Images' assets and liabilities at the date of
acquisition are presented below.
<TABLE>
<S> <C>
Cash and cash equivalents $ 5,566
Accounts receivable, net 225,922
Inventories 35,680
Prepaid expenses and deposits 15,349
Other assets 36,784
Property and equipment, net 64,622
Accounts payable and accrued expenses (72,178)
Income taxes payable (23,649)
Deferred taxes (7,600)
Debt (82,701)
--------
Net assets acquired $ 197,795
--------
--------
</TABLE>
The transaction was recorded as a purchase. The resulting goodwill of
$302,208 is being amortized over five years.
On September 21, 1999, the Company merged with Terra. The shareholders of
americabilia.com exchanged 100 percent of their stock for approximately 91
percent of the stock of Terra. The transaction was accounted for as a
recapitalization of the Company. Terra had no assets or liabilities. At
the date of the merger, the financial position of Terra reflected $397,000
of accumulated deficit and an equal amount of additional paid-in capital
and common stock. Its net equity was equal to $0. Terra had no operations
for the years ended 1999, 1998, or 1997.
The following unaudited pro forma information has been prepared assuming
Unique Images had been acquired as of the beginning of the period
presented. The pro forma information is presented for information purposes
only and is not necessarily indicative of what would have occurred if the
acquisition had been made as of those dates. In addition, the pro forma
information is not intended to be a projection of futures results and does
not reflect synergies expected to result from the integration of Unique
Images and the Company's operations. Terra had no operations for the
period, and, accordingly, no separate disclosure is presented.
Pro forma information (unaudited), for the period from March 2, 1999
through December 31, 1999, is as follows (dollars in thousands, except per
share amounts):
F-11
<PAGE>
<TABLE>
<S> <C>
Sales and other income $ 1,350,578
-----------
-----------
Net loss from operations $ (286,770)
-----------
-----------
Loss per share from continuing operations $ 0.07
-----------
-----------
</TABLE>
F-12
<PAGE>
4. INVENTORIES
The components of inventories, for the period from March 2, 1999 through
December 31, 1999, are as follows:
<TABLE>
<S> <C>
Memorabilia and collectibles $344,886
Raw materials 101,562
--------
Total $446,448
--------
--------
</TABLE>
5. PROPERTY AND EQUIPMENT
The components of property and equipment as of December 31, 1999, are as
follows:
<TABLE>
<S> <C>
Machinery and equipment $ 58,400
Vehicles 4,500
Office furniture and equipment 79,179
Leasehold improvements 26,541
--------
168,620
Less accumulated depreciation and amortization 14,221
--------
Total $154,399
--------
--------
</TABLE>
6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of the following at
December 31, 1999:
<TABLE>
<S> <C>
Accounts payable and accrued expenses $210,001
Accrued interest payable 225
Payroll and related costs (including commissions) 14,196
--------
Total $224,422
--------
--------
</TABLE>
7. LONG-TERM DEBT
Long-term debt consists of the following at December 31, 1999:
F-13
<PAGE>
<TABLE>
<S> <C>
Notes payable to related parties (company shareholders), interest at 8%, due
November 30, 2004, unsecured $34,508
Capitalized lease obligations with interest at 9.569% and 13.376% collateralized
by certain manufacturing equipment 20,764
Other debt 450
-------
Total debt 55,722
Less current portion 9,122
-------
Long-term debt $46,600
-------
-------
</TABLE>
At December 31, 1999, annual maturities on long-term debt and capitalized
lease obligations were as follows:
<TABLE>
<S> <C>
2000 $ 9,122
2001 8,705
2002 3,387
2003 -
2004 34,508
Thereafter -
-------
$55,722
-------
-------
</TABLE>
8. LEASES
The Company leases certain office space, warehouse, and equipment. The
Company paid $58,570 in rent expense for the period from March 2, 1999
through December 31, 1999. See Note 12 regarding the lease on the building
for Unique Images. The Company rents its corporate offices and retail
store in two adjoining spaces with monthly rentals of $3,250 and $2,250
whose leases expire in June of 2000. Commitments for minimum rentals under
noncancelable leases at the end of 1999 are as follows:
<TABLE>
<CAPTION>
CAPITALIZED OPERATING
LEASE LEASE
----------- ----------
<S> <C> <C>
2000 $ 10,500 $ 114,982
2001 9,541 62,232
2002 3,936 62,232
2003 - 61,116
2004 - 60,000
Thereafter - 280,000
---------- ----------
Total minimum lease payments 23,977 $ 640,562
Less amount representing interest 3,213 ----------
---------- ----------
Present value of net minimum lease payments, including
current maturities of $8,672 $ 20,764
----------
----------
</TABLE>
F-14
<PAGE>
Property and equipment at year-end include the following amounts for
capitalized leases:
<TABLE>
<S> <C>
Machinery and equipment $25,251
Less allowance for depreciation 2,323
-------
$22,928
-------
-------
</TABLE>
9. STOCKHOLDERS' EQUITY
COMMON STOCK - In June and July of 1999 through July 15, 1999, the Company
issued 5,000,000 common shares valued at $.10 per share or $500,000 to the
original investors of the Company. The stock was restricted from trading
for a period of one year after issuance.
F-15
<PAGE>
During August and September of 1999, the Company issued 1,000,000 shares
at $1.00 per share of its authorized, but unissued common stock in a
private placement. The proceeds from the sale of stock, net of issuance
costs of $9,822, totaled $990,178. The stock was restricted from trading
for a period of one year after issuance.
NOTES RECEIVABLE FROM SHAREHOLDERS - In June of 1999, the Company issued
notes totaling $200,000 to six shareholders in connection with the
issuance of 2,000,000 shares of stock. The stock was restricted from
trading for a period of one year after issuance. The notes bear interest
at 8 percent per annum with principal and interest due December 31, 2000
(see Note 12).
EARNINGS PER SHARE - Basic Earnings Per Share ("EPS") is computed by
dividing net income by the weighted average number of common shares
outstanding for the period. Diluted EPS is computed by dividing net income
by common and common equivalent shares outstanding for the period. Options
to purchase common stock, whose exercise price was greater than the
average market price for the period, have been excluded from the
computation of diluted EPS. For fiscal 1999, there were no dilutive
options as the options would have been anti-dilutive due to the net loss
for the period.
STOCK OPTIONS - During fiscal 1999, the Company's Board of Directors
adopted a stock option plan for certain employees ("Optionees") whereby
Optionees are granted the right to purchase shares of the Company's common
stock at a price of $1.00. The options generally vest immediately and
expire one year after grant. The stock was restricted from trading for a
period of one year after issuance.
Transactions and other information relating to the plan for fiscal year
1999 are summarized as follows:
<TABLE>
<CAPTION>
STOCK OPTIONS
--------------------------------------------
WEIGHTED
SHARES AVERAGE PRICE
<S> <C> <C>
Outstanding at March 2, 1999 - $ -
Granted 20,000 1.00
Exercised (15,000) 1.00
------- --------
Outstanding at December 31, 1999 5,000 $ 1.00
------- --------
------- --------
</TABLE>
The exercise price of the stock options discussed below were at the fair
market value of the common stock on the date the options were granted:
On August 11, the Company issued options to purchase 15,000 shares at
$1.00 per share to three employees of the Company's subsidiary, Unique
Images. The options vested immediately and were exercised in August
1999 at the market value of $1.00 per share. The stock was restricted
from trading for a period of one year after issuance.
On August 12, the Company issued options to purchase 5,000 shares at
$1.00 per share to an employee of the Company. The options vested
immediately and expire after August 12, 2000. The stock was restricted
from trading for a period of one year after issuance.
For purposes of the following pro forma disclosures, the weighted average
fair value of each option has been estimated on the date of grant using
the Black-Scholes options-pricing model with the following weighted
average assumptions used for grants in fiscal 1999: no dividend yield;
volatility
F-16
<PAGE>
of 20 percent; risk-free interest rate of three percent; and an expected
term of one year. The weighted average Black-Scholes value of options
granted during fiscal 1999 was $.12 per option. Had compensation cost for
the
F-17
<PAGE>
Company's fixed stock-based compensation plan been determined based on the
fair value at the grant dates for awards under this plan consistent with
the method of SFAS No. 123, the Company's pro forma net income and pro
forma net income per share would have been as indicated below:
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 2, 1999
(INCEPTION)
THROUGH
DECEMBER 31,
1999
<S> <C>
Net loss:
As reported $ (349,551)
-----------
-----------
Pro forma $ (350,771)
-----------
-----------
Basic loss per share:
As reported $ (0.08)
-----------
-----------
Pro forma $ (0.08)
-----------
-----------
Diluted loss per share:
As reported $ (0.08)
-----------
-----------
Pro forma $ (0.08)
-----------
-----------
</TABLE>
10. INCOME TAXES
The effective tax rate varies from the U.S. Federal statutory tax rate for
the period ended December 31, 1999 principally due to the following:
<TABLE>
<S> <C>
U.S. federal statutory tax rate (34.0)%
Valuation allowance for deferred taxes 25.2 %
All other 0.8 %
---------
Efective tax rate (8.0)%
---------
---------
</TABLE>
The differences between the benefit (provision) for income taxes at the
U.S. statutory rate and the Company's effective rate are summarized as
follows:
<TABLE>
<S> <C>
Expected benefit for income taxes $(100,662)
Valuation allowance for deferred taxes 90,156
Non-deductible items (20,495)
---------
Provision for income taxes $ (31,001)
---------
---------
</TABLE>
F-18
<PAGE>
The benefits for taxes for the period from March 2, 1999 through December
31, 1999 consist of:
<TABLE>
<S> <C>
Current benefit $31,001
Deferred benefit
-------
Benefit for income taxes $31,001
-------
-------
</TABLE>
The tax effects of items comprising the Company's net deferred tax asset
consist of the following at December 31, 1999:
<TABLE>
<S> <C>
Deferred tax liabilities -
Difference between book and tax depreciable property $ (8,112)
Deferred tax assets:
Net operating loss carryforwards 98,268
Valuation allowance (90,156)
--------
Net deferred tax asset $ -
--------
--------
</TABLE>
SFAS No. 109 requires a valuation allowance to be recorded when it is more
likely than not that some or all of the deferred tax assets will not be
realized. A valuation allowance has been established on the computed
deferred tax asset at December 31, 1999 due to the uncertainties
associated with realizing such assets in the future.
The accompanying financial statements do not include a provision for state
income tax as the Company's income is earned in Nevada, which does not
have a corporate income tax.
11. COMMITMENTS AND CONTINGENCIES
LEASES - The following is a schedule of future minimum lease payments
under operating leases, including those with related parties as more fully
described in Note 12, that have initial or remaining noncancelable lease
terms in excess of one year at December 31, 1999.
<TABLE>
<S> <C>
2000 $114,982
2001 62,232
2002 62,232
2003 61,116
2004 60,000
Thereafter 280,000
</TABLE>
EMPLOYMENT CONTRACTS - The Company has no employment contracts with any of
its executive officers other than the President of Unique Images, Inc. The
contract is for five years beginning September 1999 and provides for
compensation of $6,500 per month.
F-19
<PAGE>
12. RELATED PARTY TRANSACTIONS
The Company leases its office space, production facilities, and certain
equipment from a related party. These multiple lease agreements require
base monthly payments of $8,000 at December 31, 1999, and have been
classified as operating leases. These leases require the Company to
provide insurance, repairs and maintenance, and to pay real estate taxes
on the leased property. These leases expire at various dates through
September 1, 2009. Lease expense for the year ended December 31, 1999
incurred under these agreements was $32,000.
The Company's Chairman of the Board and the Company's President, each
loaned the Company $50,000, which bears interest at the rate of 8 percent
per annum and is all due and payable on November 30, 2004. In addition,
the Chairman sold to the Company inventory and vehicles owned by him for a
promissory note in the amount of $34,506 payable on the same terms.
During November 1999, the Company's chairman exchanged $67,778 of his
notes payable including accrued interest for the same amount of the note
receivable from shareholders arising from the issuance of stock in June
1999. During fiscal 1999, the Company's president exchanged $33,889 of his
note payable including accrued interest for the same amount of notes
receivable arising from the issuance of stock in June 1999 (see Note 9).
13. SEGMENT REPORTING
The Company has two reportable segments based upon products offered:
retail sales and corporate operations, and wholesale distribution and
manufacturing.
The Company evaluates each segment's performance based on segment
operating profit. The accounting policies of the operating segments are
the same as those described in the summary of significant accounting
policies.
F-20
<PAGE>
Information pertaining to the operations of reportable segments are as
follows:
<TABLE>
<CAPTION>
FOR THE PERIOD FROM MARCH 2, 1999 (INCEPTION)
FOR RETAIL AND CORPORATE AND FROM AUGUST 11, 1999 WHOLESALE
FOR WHOLESALE, DISTRIBUTION AND MANUFACTURING RETAIL AND DISTRIBUTION AND
TO DECEMBER 31, 1999 CORPORATE MANUFACTURING TOTAL
<S> <C> <C> <C>
Revenues from external customers $ 294,009 $ 368,222 $ 662,231
Intersegment revenues 89,065 89,065
Depreciation and amortization 13,785 5,473 19,258
Interest income 13,491 1,363 14,854
Intersegment interest income 2,449 2,449
Interest expense 7,987 5,661 13,648
Intersegment interest expense 2,449 2,449
Segment (loss) income before interest and taxes (437,946) 58,637 (379,309)
Net (loss) income before taxes (434,891) 54,339 (380,552)
Income tax (benefit) provision (50,713) 19,712 (31,001)
Net property and equipment 59,902 94,497 154,399
RECONCILIATION OF SEGMENT REVENUES TO CONSOLIDATED
REVENUES
Total revenues for reportable segments $ 751,296
Elimination of intersegment revenues (89,065)
---------
Total consolidated revenues $ 662,231
---------
---------
</TABLE>
Significantly all (over 95 percent) of the Company's sales are in the United
States.
******
F-21
<PAGE>
INDEPENDENT AUDITORS' REPORT
Unique Images, Inc.
We have audited the accompanying balance sheets of Unique Images, Inc. (the
"Company") as of August 10, 1999 and December 31, 1998 and 1997, and the related
statements of income, stockholder's equity and cash flows for the period from
January 1, 1999 to August 10, 1999 and for each of the years ended December 31,
1998, 1997, and 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at August 10, 1999 and December
31, 1998 and 1997, and the results of its operations and its cash flows for the
period ended August 10, 1999 and for each of the years ended December 31, 1998,
1997, and 1996, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Las Vegas, Nevada
February 5, 2000
F-22
<PAGE>
UNIQUE IMAGES, INC.
BALANCE SHEETS
AUGUST 10, 1999 AND DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
DECEMBER 31,
AUGUST 10, ----------------------------------
ASSETS 1999 1998 1997
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 5,566 $ 34,260 $ 16,190
Accounts receivable, net 225,922 143,815 99,298
Inventory 35,680 25,500 14,720
Prepaid expenses and deposits 15,349 5,695 3,117
Other assets 36,784 15,584 -
-------- -------- --------
Total current assets 319,301 224,854 133,325
PROPERTY AND EQUIPMENT, Net 64,622 30,803 15,617
-------- -------- --------
TOTAL $383,923 $255,657 $148,942
-------- -------- --------
-------- -------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 72,178 $ 69,900 $ 63,368
Income taxes payable 23,649 9,789 5,394
Current portion of long-term debt 9,229
Notes payable 63,654 68,391 12,873
Notes payable to shareholders 2,562 18,199
Deferred taxes 7,600 3,665 793
-------- -------- --------
Total current liabilities 176,140 154,307 100,627
LONG-TERM DEBT, Less current portion 9,818 - -
-------- -------- --------
Total liabilities 186,128 154,307 100,627
-------- -------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY:
Common stock $1.00 par value; 1,000 shares authorized,
issued and outstanding 1,000 1,000 1,000
Retained earnings 196,795 100,350 47,315
-------- -------- --------
Total stockholder's equity 197,795 101,350 48,315
-------- -------- --------
TOTAL $383,923 $255,657 $148,942
-------- -------- --------
-------- -------- --------
</TABLE>
See notes to financial statements.
F-23
<PAGE>
UNIQUE IMAGES, INC.
STATEMENTS OF INCOME
PERIOD FROM JANUARY 1, 1999 TO AUGUST 10, 1999 AND YEARS ENDED
DECEMBER 31, 1998, 1997, AND 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, YEAR ENDED
1999 TO DECEMBER 31,
AUGUST 10, ----------------------------------------------
1999 1998 1997 1996
<S> <C> <C> <C> <C>
REVENUES:
Retail sales $ 688,347 $ 966,032 $ 737,806 $ 521,807
Cost of sales 420,923 695,539 588,944 401,078
--------- --------- --------- ---------
Gross profit 267,424 270,493 148,862 120,729
--------- --------- --------- ---------
OPERATING EXPENSES:
General and administrative expenses 133,357 198,126 105,988 100,251
Depreciation and amortization 4,980 3,862 5,300 2,970
--------- --------- --------- ---------
Total operating expenses 138,337 201,988 111,288 103,221
--------- --------- --------- ---------
INCOME FROM OPERATIONS 129,087 68,505 37,574 17,508
OTHER, Net (158) (2,810) 1,554 (550)
--------- --------- --------- ---------
NET INCOME BEFORE INCOME
TAX PROVISION 128,929 65,695 39,128 16,958
PROVISION FOR INCOME TAXES 32,484 12,660 6,187 2,584
--------- --------- --------- ---------
NET INCOME $ 96,445 $ 53,035 $ 32,941 $ 14,374
========== ========= ========= =========
</TABLE>
See notes to financial statements.
F-24
<PAGE>
UNIQUE IMAGES, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY
PERIOD FROM JANUARY 1, 1999 TO AUGUST 10, 1999 AND YEARS ENDED
DECEMBER 31, 1998, 1997, AND 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK
---------------------- RETAINED
SHARES AMOUNT EARNINGS TOTALS
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996 - $ - $ - $ -
Proceeds from issuance of common stock 1,000 1,000 1,000
Net income 14,374
-------- ------- --------- --------
BALANCE, DECEMBER 31, 1996 1,000 1,000 14,374 15,374
Net income 32,941 32,941
-------- ------- --------- --------
BALANCE, DECEMBER 31, 1997 1,000 1,000 47,315 48,315
Net income 53,035 53,035
-------- ------- --------- --------
BALANCE, DECEMBER 31, 1998 1,000 1,000 100,350 101,350
Net income 96,445 96,445
-------- ------- --------- --------
BALANCE, AUGUST 10, 1999 1,000 $1,000 $196,795 $197,795
========= ======= ========= ==========
</TABLE>
See notes to financial statements.
F-25
<PAGE>
UNIQUE IMAGES, INC.
STATEMENTS OF CASH FLOWS
PERIOD FROM JANUARY 1, 1999 TO AUGUST 10, 1999 AND
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
JANUARY 1, YEAR ENDED
1999 TO DECEMBER 31,
AUGUST 10, ---------------------------------
1999 1998 1997 1996
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 96,445 $ 53,035 $ 32,941 $ 14,374
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation and amortization 4,980 3,862 5,300 2,970
Deferred income taxes 3,935 3,665 260 533
Changes in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable (82,107) (44,517) (36,671) (62,627)
Prepaid expenses and deposits (9,654) (2,578) 2,042 (5,159)
Inventory (10,180) (10,780) (3,626) (11,094)
Other assets (21,242) (15,542)
Increase from changes in -
Accounts payable and other current liabilities 16,180 10,886 16,136 53,697
------- ------- ------- -------
Net cash (used in) provided by operating activities (1,643) (1,969) 16,382 (7,306)
------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (38,799) (22,224) (4,403) (20,555)
Proceeds from sale of assets, net 2,382
------- ------- ------- -------
Net cash used in investing activities (38,799) (19,842) (4,403) (20,555)
------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 1,000
Proceeds from (payments on) debt, net 11,748 39,881 (80) 31,152
------- ------- ------- -------
Net cash provided by (used in) financing activities 11,478 39,881 (80) 32,152
------- ------- ------- -------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (28,694) 18,070 11,899 4,291
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 34,260 16,190 4,291
------- ------- ------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,566 $ 34,260 $ 16,190 $ 4,291
======== ======== ========= ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION -
Cash paid during the year for:
Federal income tax $ 18,624 $ 8,263 $ 2,051 $
Interest $ 3,248 $ 4,359 $ 6,814 $ 550
</TABLE>
See notes to financial statements.
F-26
<PAGE>
UNIQUE IMAGES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unique Images, Inc. (the "Company") was incorporated on December 29, 1995.
Operations commenced in January 1996. On August 11, 1999, the Company
entered into a stock exchange agreement with americabilia.com, Inc., a
Florida corporation. Under the stock exchange agreement, americabilia.com,
Inc. acquired all of the Company's stock. The Company's former stockholder
became an officer in americabilia.com, Inc.
Unique Images provides framing and matting services to retailers including
those in the memorabilia and collectibles markets. The Company has a
single segment for accounting purposes.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents are defined as
highly liquid investments with original maturities of three months or less
and consist of amounts held as bank deposits.
REVENUES - Revenues are recognized as the products are sold and shipped to
customers.
ADVERTISING AND PROMOTIONAL COSTS - All advertising and promotional costs
associated with advertising and promoting the Company are expensed in the
period incurred.
INVENTORIES - Inventories, consisting primarily of sports memorabilia
products and acrylic cases, are valued at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method for both
raw materials and finished goods.
PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
Depreciation is provided for using the straight-line method over the
estimated useful lives of the assets ranging from five to seven years.
Leasehold improvements are amortized over the lease period or the
estimated useful life of the improvements, whichever is less.
Maintenance and repairs are charged to expense as incurred and major
renewals and betterments are capitalized. Gains and losses are credited or
charged to earnings upon disposition.
IMPAIRMENT OF LONG-LIVED ASSETS - In the event that facts and
circumstances indicate that the carrying value of long-lived assets may be
impaired, an evaluation of recoverability is performed by comparing the
estimated future undiscounted cash flows associated with the asset to the
asset's carrying amount to determine if a write-down to market value or
discounted cash flow is required. At August 10, 1999, no write-downs were
deemed necessary.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying values of cash and cash
equivalents, accounts receivable, accounts payable, debt and accrued
liabilities approximated their fair values because of the short maturity
of these instruments.
INCOME TAXES - The Company accounts for income taxes under the asset and
liability method. Under this method, deferred income taxes are required
for the tax consequences of temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss carryforwards. Deferred tax assets
and liabilities are measured using
F-27
<PAGE>
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
The effect on deferred taxes of a change in tax rates is recognized in
income in the period that the change in the rate is enacted.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
consolidated financial statements and related notes to the financial
statements. Estimates are used when accounting for uncollectible accounts
receivable, inventory obsolescence, depreciation, and taxes, among others.
Actual results could differ from those estimated by management and changes
in such estimates may affect amounts reported in future periods.
2. CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk are cash and cash equivalents and accounts
receivable arising from its normal business activities.
Regarding accounts receivable, the Company believes that credit risk is
limited due to the large number of entities comprising the Company's
customer base. The Company performs certain credit evaluation procedures
and does not require collateral. The Company believes that credit risk is
limited because the Company routinely assesses the financial strength of
its customers, and based upon factors surrounding the credit risk of
customers, establishes an allowance for uncollectible accounts and, as a
consequence, believes that its accounts receivable credit risk exposure
beyond such allowances is limited. The Company had a consolidated
allowance for doubtful accounts at August 10, 1999 of approximately
$6,500. The Company believes any credit risk beyond this amount would be
negligible.
3. LONG-TERM DEBT AND NOTES PAYABLE
Long-term debt consists of the following at August 10, 1999 and December
31, 1998 and 1997:
F-28
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
AUGUST 10, -------------------
1999 1998 1997
<S> <C> <C> <C>>
Note payable to a bank, interest at 8%, due December 31,
1999, secured by factored accounts receivable $63,654 $63,413 $12,873
Capitalized lease obligations with interest at 9.569%
and 13.376% collateralized by certain manufacturing
equipment due in 2000 and through 2002 18,597 4,978
Loans from shareholders, no interest, balance payable
upon demand 2,562 18,199
Other debt 450
--------- ------- --------
Total debt 82,701 70,953 31,072
Less current portion (due within the next 12 months) 72,883 70,953 31,072
--------- ------- --------
Long-term debt $ 9,818 $ - $ -
========= ======== ==========
</TABLE>
At August 10, 1999, annual maturities based upon a year ending December 31
on long-term debt and capitalized lease obligations were as follows:
<TABLE>
<S> <C>
1999 $67,447
2000 5,436
2001 5,979
2002 3,839
--------
$82,701
=========
</TABLE>
4. LEASES
The Company leases certain equipment and office space. Commitments for
minimum rentals under noncancelable lease at August 10, 1999 are as
follows:
F-29
<PAGE>
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASE LEASE
<S> <C> <C>
1999 $3,550 $30,000
2000 6,661 84,000
2001 6,661 60,000
2002 3,936 60,000
2003 - 60,000
2004 - 60,000
Thereafter - 280,000
-------- ----------
Total minimum lease payments 20,808 $634,000
==========
Less amount representing interest 2,211
-------
Present value of net minimum lease payments, including current
maturities through December 31, 1999 and 2000 of $3,343 and
$5,436, respectively. $18,597
=========
Property, plant and equipment at August 10, 1999 include the following
amounts for capitalized leases:
Machinery and equipment $25,251
Less allowance for depreciation 1,936
---------
Net book value of equipment under capital lease $23,315
=========
</TABLE>
See also Note 6 regarding rent expense with a related party.
F-30
<PAGE>
5. INCOME TAXES
The effective tax rate varies from the U.S. Federal statutory tax rate for
the period ended August 10, 1999, and for the years ended December 31,
1998, 1997, and 1996 principally due to the following:
<TABLE>
<CAPTION>
AUGUST 10, DECEMBER 31,
----------------------------------------
1999 1998 1997 1996
<S> <C> <C> <C> <C>
U.S. Federal statutory rate 24.90 % 17.40 % 15.00 % 15.00 %
Total deduct -
All other 0.30 % 1.90 % 0.80 % 0.20 %
------- ------- ------- -------
Effective tax rate 25.20 % 19.30 % 15.80 % 15.20 %
======= ======= ======= =======
</TABLE>
The differences between the provision for income taxes at the U.S.
statutory rate and the Company's effective rate are summarized as follows:
<TABLE>
<CAPTION>
AUGUST 10, DECEMBER 31,
----------------------------------------
1999 1998 1997 1996
<S> <C> <C> <C> <C>
Provision at U.S. statutory rate $32,086 $11,423 $ 5,869 $ 2,543
Non-deductible items and other 398 1,237 318 41
--------- --------- --------- ---------
Provision for income taxes $32,484 $12,660 $ 6,187 $ 2,584
========= ========= ========= =========
</TABLE>
The benefits for taxes for the period ended August 10, 1999 and for the
years ended December 31, 1998, 1997, and 1996 consist of:
<TABLE>
<CAPTION>
AUGUST 10, DECEMBER 31,
----------------------------------------
1999 1998 1997 1996
<S> <C> <C> <C> <C>
Current federal $ 36,419 $ 16,325 $ 5,927 $ 2,051
Deferred federal (3,935) (3,665) 260 533
--------- --------- --------- ---------
Provision for income tax $ 32,484 $ 12,660 $ 6,187 $ 2,584
========= ========= ========= =========
</TABLE>
The tax effects of items comprising the Company's net deferred tax
liability consist of the following:
<TABLE>
<CAPTION>
AUGUST 10, DECEMBER 31,
------------------------
1999 1998 1997
<S> <C> <C> <C>
Deferred tax liability -
Difference between book and tax depreciable property $7,600 $3,665 $793
========= ========= =========
</TABLE>
The accompanying financial statements do not include a provision for state
income tax as the Company's income is earned in Nevada, which does not
have a corporate income tax.
F-31
<PAGE>
SFAS No. 109 requires a valuation allowance to be recorded when it is more
likely than not that some or all of the deferred tax assets will not be
realized. At August 10, 1999, no valuation allowance of the net deferred
tax asset was recorded.
6. COMMITMENTS AND CONTINGENCIES
SALE OF COMPANY - In connection with the purchase of Unique Images,
americabilia.com, Inc. assumed all assets, liabilities, and leases of the
Company.
RELATED PARTY TRANSACTIONS - The Company leases its office space,
production facilities and certain equipment from a related party. These
multiple lease agreements require base monthly payments of $8,000 at
August 10, 1999, and have been classified as operating leases. These
leases require the Company to provide insurance, repairs and maintenance,
and to pay real estate taxes on the leased property. These leases expire
at various dates through September 1, 2009. Lease expense for the period
from January 1 through August 10, 1999 under these lease agreements was
$57,800. For the years ended December 31, 1998, 1997, and 1996, the rent
expense was $96,000.
******
F-32
<PAGE>
americabilia.com, Inc.
I. PRO FORMA CONSOLIDATED FINANCIAL STATEMENT
The accompanying pro forma consolidated financial statements present pro
forma information for the Company and Unique Images giving effect to the
Unique Images acquisition using the purchase method of accounting. The pro
forma consolidated statement of operations for the year ended December 31,
1999 are based on the historical consolidated statement of operations of the
Company for the period from March 2, 1999 (date of Inception) through
December 31, 1999 and the historical statement of operations for Unique
Images for the year ended December 31, 1999 as if Unique Images were the
predecessor company.
The pro forma adjustments are based on currently available information and upon
certain assumptions that management of the Company believes are reasonable under
the circumstances.
The accompanying pro forma consolidated financial statement is provided for
informational purposes only and are not necessarily indicative of the results
that will be achieved for future periods. The accompanying pro forma
consolidated statement of operations does not purport to represent what the
results of operations would actually have been if the Unique Images
acquisition in fact had occurred at January 1, 1999. The accompanying pro
forma consolidated statement of operations and the related notes thereto
should be read in conjunction with the Company's consolidated financial
statements and the financial statements of Unique Images included elsewhere
in this document.
F-33
<PAGE>
AMERICABILIA.COM, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
americabilia.com,
Inc. from March 2,
1999 (Date of Unique Images
Inception) for the period
through from January 1, Pro Forma
December 31, 1999 to August Adjustments Combined
1999 10, 1999 and eliminations Company
----------------- -------------- ---------------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Retail/wholesale $ 662,231 $ 688,347 $ 1,350,578
Cost of sales 415,330 420,923 836,253
-------------- ------------ ----------- ------------
Gross profit 246,901 267,424 514,325
OPERATING EXPENSES:
General and administrative expenses 431,301 125,412 556,713
Marketing expenses 126,009 7,945 133,954
Depreciation and amortization 34,368 4,980 35,257 (a) 74,605
Organization costs 34,532 34,532
-------------- ------------ ----------- ------------
Total operating expenses 626,210 138,337 35,257 799,804
-------------- ------------ ----------- ------------
LOSS FROM OPERATIONS BEFORE INTEREST AND TAXES (379,309) 129,087 (35,257) (285,479)
OTHER INCOME (EXPENSE):
Interest expense (13,648) (13,648)
Other 12,405 (158) 12,247
-------------- ------------ ----------- ------------
Total other (1,243) (158) (1,401)
-------------- ------------ ----------- ------------
LOSS FROM OPERATIONS BEFORE INCOME TAXES (380,552) 128,929 (35,257) (286,880)
PROVISION (BENEFIT) FOR INCOME TAXES -
Deferred tax benefit (31,001) 32,484 (1,483) (b)
-------------- ------------ ----------- ---- ------------
NET LOSS $ (349,551) $ 96,445 $ (33,774) $ (286,880)
-------------- ------------ ----------- ------------
-------------- ------------ ----------- ------------
EARNINGS PER SHARE:
Basic:
Net loss $ (349,551) n/a $ (286,880)
-------------- ------------ ------------
-------------- ------------ ------------
Weighted average common shares outstanding 4,172,576 n/a 4,222,576
-------------- ------------ ------------
-------------- ------------ ------------
Loss per share $ 0.08 n/a $ 0.07
-------------- ------------ ------------
-------------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of these proforma consolidated
financial statements.
F-34
<PAGE>
americabilia.com, Inc.
A. Notes to Pro Forma Consolidated Financial Statements
The proforma adjustments contained in the accompanying pro forma consolidated
statement of operations reflect:
(a) Amortization expense for seven months on the goodwill recorded in connection
with the purchase
(b) A valuation allowance was provided for the income tax benefit due to the
uncertainties associated with realizing such assets in the future.
F-35
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
americabilia.com, Inc.,
a Florida corporation
Date: April 6, 2000 By: /s/ Gary Moore
------------------------------
Gary Moore, President
F-36
