<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO _______________
COMMISSION FILE NUMBER 0-26941
ENTREPORT CORPORATION
- --------------------------------------------------------------------------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
FLORIDA 65-0703923
- --------------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
10455 SORRENTO VALLEY ROAD, SUITE 204, SAN DIEGO, CALIFORNIA 92121
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
858-643-5100
---------------------------
(ISSUER'S TELEPHONE NUMBER)
NOT APPLICABLE
- --------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED
SINCE LAST REPORT)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of May 11, 2000, the Company had 11,581,113 shares of its $.001 par
value common stock issued and outstanding.
<PAGE>
<TABLE>
EntrePort Corporation
(a Development Stage Company)
Form 10-QSB Index
<CAPTION>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Balance Sheets at March 31, 2000 and December 31, 1999.............................2
Condensed Statements of Operations for the
three month periods ended March 31, 2000 and 1999
and for the period from inception (October 4, 1996) to March 31, 2000....................3
Condensed Statements of Cash Flows for the
three month periods ended March 31, 2000 and 1999
and for the period from inception (October 4, 1996) to March 31, 2000....................4
Notes to Condensed Financial Statements......................................................5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.............................7
PART II. OTHER INFORMATION
- --------------------------
ITEM 1. LEGAL PROCEEDINGS. ....................................................................9
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. ............................................9
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. .....................................................10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. .................................10
ITEM 5. OTHER INFORMATION. ...................................................................10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. ....................................................10
</TABLE>
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EntrePort Corporation
(a Development Stage Company)
Condensed Balance Sheets
MARCH 31, DECEMBER 31,
2000 1999
(UAUDITED) (NOTE)
-----------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 7,116,944 $ 1,458,139
Other current assets 25,715 205,397
-----------------------------
Total current assets 7,142,659 1,663,536
Investment in Sportsware Technologies, Inc. 399,500 399,500
Property and equipment at cost, net 172,807 97,317
Website development costs 508,991 181,381
Other assets 20,496 91,884
-----------------------------
$ 8,244,453 $ 2,433,618
=============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 652,503 $ 194,268
Accrued liabilities 266,938 263,399
Note payable to officer - 20,000
-----------------------------
Total current liabilities 919,441 477,667
Stockholders' equity:
Common stock, $.001 par value; 50,000,000
shares authorized, 11,581,113 and 7,834,974
issued and outstanding at March 31, 2000
and December 31, 1999, respectively 11,581 7,835
Additional paid-in capital 10,426,076 3,845,753
Deferred compensation (293,656) -
Accumulated deficit during the development stage (2,818,989) (1,897,637)
-----------------------------
Total stockholders' equity 7,325,012 1,955,951
-----------------------------
$ 8,244,453 $ 2,433,618
=============================
SEE ACCOMPANYING NOTES.
Note: The Balance Sheet at December 31, 1999 is derived from the audited
financial statements at that date, but does not include all of the disclosures
required by generally accepted accounting principles.
2
<PAGE>
<TABLE>
EntrePort Corporation
(a development stage company)
Condensed Statements of Operations
(UNAUDITED)
<CAPTION>
FOR THE PERIOD
OCTOBER 4, 1996
THREE MONTHS ENDED (INCEPTION)
MARCH 31, THROUGH
--------------------------- MARCH 31,
2000 1999 2000
------------------------------------------
<S> <C> <C> <C>
Revenues $ 5,120 $ - $ 17,031
Operating Expenses:
Research and development 47,425 - 145,004
Marketing, general and administrative 901,202 376,817 2,704,017
------------------------------------------
Total operating expenses 948,627 376,817 2,849,021
------------------------------------------
Loss from operations (943,507) (376,817) (2,831,990)
Interest income 22,155 - 13,001
------------------------------------------
Net loss $ (921,352) $ (376,817) $(2,818,989)
==========================================
Net loss per common share
(basic and diluted) $ (0.11) $ (0.08)
===========================
Weighted average shares used in
computing net loss per common share
(basic and diluted) 8,034,374 4,955,934
===========================
</TABLE>
SEE ACCOMPANYING NOTES.
3
<PAGE>
<TABLE>
EntrePort Corporation
(a development stage company)
Condensed Statements of Cash Flows
(UNAUDITED)
<CAPTION>
FOR THE PERIOD
OCTOBER 4, 1996
THREE MONTHS ENDED (INCEPTION)
MARCH 31, THROUGH
-------------------------------- MARCH 31,
2000 1999 2000
----------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $ (921,352) $ (376,817) $(2,818,989)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation 11,771 - 29,190
Issuance of common stock options for services 133,854 - 133,854
Issuance of common stock and warrants for
services 74,000 335,900 495,200
Changes in operating assets and liabilities 627,650 (18,052) 873,230
----------------------------------------------------
Net cash flows used in operating activities (74,077) (58,969) (1,287,515)
INVESTING ACTIVITIES
Purchases of property and equipment (87,261) (9,588) (201,997)
Investment in Sportsware Technologies, Inc. - - (399,500)
Increases in website development costs (327,610) - (508,991)
----------------------------------------------------
Net cash flows used in investing activities (414,871) (9,588) (1,110,488)
FINANCING ACTIVITIES
Proceeds from issuance of notes payable - 165,000 1,010,000
Re-payments of notes payable (20,000) - (315,000)
Issuance of common stock for cash, net 6,167,753 - 8,819,947
----------------------------------------------------
Net cash flows provided by financing activities 6,147,753 165,000 9,514,947
----------------------------------------------------
Increase in cash and cash equivalents 5,658,805 96,443 7,116,944
Cash and cash equivalents at beginning of period 1,458,139 - -
----------------------------------------------------
Cash and cash equivalents at end of period $ 7,116,944 $ 96,443 $ 7,116,944
====================================================
SUPPLEMENTAL DISCLOSURE OF NON CASH
FINANCING ACTIVITIES
Conversion of notes payable to common stock $ - $ - $ (695,000)
====================================================
Deferred offering costs in 1999 $ - $ 85,194 $ -
====================================================
</TABLE>
SEE ACCOMPANYING NOTES.
4
<PAGE>
EntrePort Corporation
(a development stage company)
Notes to Condensed Financial Statements
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB, and, in the opinion of
management, contain all adjustments, consisting of normal recurring adjustments
necessary to present fairly the financial position as of March 31, 2000 and the
results of operations for the three months ended March 31, 2000 and 1999.
Certain information and footnote disclosures normally included in financial
statements have been omitted or condensed. These condensed financial statements
should be read in conjunction with the financial information included in the
Company's 1999 Annual Report on Form 10-KSB filed with the Securities and
Exchange Commission. The results of operations for the period ended March 31,
2000 are not necessarily indicative of the results that may be attained for the
entire fiscal year.
Certain adjustments recorded in the December 31, 1999 financial statements
relate to the period ended March 31, 1999. The Company has restated the March
31, 1999 results of operations in the accompanying financial statements to
reflect these adjustments.
2. COMPREHENSIVE LOSS
Comprehensive loss for all periods presented is the same as net loss.
3. NET LOSS PER SHARE
The Company computes net loss per share following SFAS No. 128, EARNINGS PER
SHARE. SFAS 128 requires the presentation of basic and diluted income (loss) per
share amounts. Under the provisions of SFAS No. 128, basic net income (loss) per
share is computed by dividing the net income (loss) available to common
shareholders for the period by the weighted average number of common shares
outstanding during the period. Diluted net income (loss) per share is computed
by dividing the net income (loss) for the period by the weighted average number
of common and common equivalent shares outstanding during the period. Common
equivalent shares, composed of incremental common shares issuable upon the
exercise of stock options, are included in diluted net income (loss) per share
to the extent these shares are dilutive. Common equivalent shares are not
included in the computation of diluted net loss per share for the three month
periods ended March 31, 2000 and 1999 because the effect would be anti-dilutive.
5
<PAGE>
4. COMMON STOCK
The Company raised approximately $3.0 million as a result of the private
placement offering during the period August 1999 to January 2000, for which the
Company incurred $87,700 in financing costs related to this offering and issued
50,850 shares of common stock to various placement agents in connection with the
private placement (valued at $101,700). These costs have been charged as a
reduction to additional paid-in-capital. In January 2000, the Company issued
140,000 shares of common stock at $2.00 to private investors for cash proceeds
of $280,000.
In March 2000, 3,525,000 shares of common stock were issued at $2.00 per share
to private investors for cash proceeds of $7,050,000. The Company incurred
$1,248,019 in transaction costs related to this offering. In conjunction with
the offering, warrants to purchase 377,500 shares of the Company's common stock
at a price of $2.00 were issued to the placement agent. The warrants are fully
exercisable and expire in March 2005.
In January 2000, the Company issued 5,000 shares of common stock as
consideration for the extension of a note payable. In March 2000, the Company
issued 25,000 shares of common stock to an employee as a recruiting incentive.
The Company has expensed $60,000 related to these two transactions.
5. STOCK OPTION PLAN
During the three months ended March 31, 2000, the Company has granted 451,000
options to employees, consultants and a board member with various vesting
periods, from immediately to three years, to purchase shares of common stock of
the Company at prices ranging between $2.00 to $4.00 per share. Options to
purchase 425,000 shares of common stock of the Company at prices ranging between
$2.00 to $3.50 per share were cancelled during March 2000.
6. SALE TO METROSPLASH.COM
In March 2000, the Company entered into an agreement to sell to Metrosplash.com
Inc. its ERT1 website in exchange for 100,000 unregistered shares of
Metrosplash.com. The unlaunched ERT1 website was targeted to the African
American professional. The Company will record no gain or loss on the
transaction as the website had no net book value at the time of the sale and the
value of Metrosplash.com shares is not readily determinable.
7. LITIGATION
From time to time the Company is involved in legal proceedings, claims and
litigation arising in the ordinary course of business. Management believes,
however, that the ultimate outcome of all pending litigation should not have a
material adverse effect on the Company's financial position or liquidity.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PLAN OF OPERATIONS
Entreport is a developmental stage company engaged in the business of developing
Web portals on the Internet for purposes of offering general information,
communication tools and training to members of certain targeted Internet
communities. We have completed the development of our first Web portal devoted
to real estate on April 25, 2000 and expect to commence material revenue
producing operations thirty days thereafter. We expect to begin the market
analysis and our development of other industry specific Web portals during the
remainder of fiscal 2000. Our activities to date have included the market
analysis for and development of its initial Web portals. We conducted in-house
beta testing of several marketing specific Web portals, we intend to generate
revenue through:
o membership fees charged to subscribers to our Web portals
o advertising income from third party advertisers at our Web portals
o percentage interests in the income derived by third parties who provide
seminars, training and speeches at our Web portals
o commissions earned on the sale of products and services at our Web
store
LIQUIDITY AND CAPITAL RESOURCES
We have financed our activities to date through the sale of debt and equity
securities. From March through May 1999, we conducted the private placement sale
of convertible notes payable for gross proceeds of $695,000. The notes bore
interest on the principal amount at a rate of six percent (6%) per annum. The
principal amount of the notes was convertible into shares of common stock at
rates of $2.00 to $3.00 per share. In June 1999, all $695,000 in principal was
converted into a total of 267,500 shares of common stock. In August 1999, the
Company sold 99,710 shares of common stock for $199,420 in a private placement.
Additionally, during the period August 1999 to January 2000, we conducted the
private placement sale of 1,424,430 shares of common stock at $2.00 per share
for gross proceeds of $2,848,860. During February and March 2000, we completed
our private placement managed by Roth Capital Partners Inc. and sold 3,525,000
shares of common stock at $2.00 per share for net proceeds amounting to
$5,801,981.
As of March 31, 2000, we had working capital of $6,223,218. Our plan of
operations over the next nine months includes the upgrade and enhancement of our
initial Web portal devoted to real estate and the development of other industry
specific Web portals. We believe that our current cash balance will be
sufficient to fund the current plan of operations for at least the next twelve
months.
7
<PAGE>
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements that are based on our beliefs as
well as assumptions made by and information currently available to us. When used
in this filing, the words "believe," "endeavor," "expect," "anticipate,"
"estimate," "intends," and similar expressions are intended to identify
forward-looking statements. Such statements are subject to certain risks,
uncertainties and assumptions, including, without limitation, the Company's
development stage status and lack of commercial operations or revenues; the
Company's present financial condition and the risks and the availability of
additional capital as and when required; the risks and uncertainties concerning
technological changes; increased competition; and general economic conditions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated, or projected. We caution potential investors not
to place undue reliance on any such forward-looking statements all of which
speak only as of the date made.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not a part to any material litigation.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three months period ended March 31, 2000, the Company has sold and
issued the following unregistered securities:
COMMON STOCK
The Company raised approximately $3.0 million as a result of the private
placement offering during the period August 1999 to January 2000, for which the
Company incurred $87,700 in financing costs related to this offering and issued
50,850 shares of common stock to various placement agents in connection with the
private placement (valued at $101,700). These costs have been charged as a
reduction to additional paid-in-capital. In January 2000, the Company issued
140,000 shares of common stock at $2.00 to private investors for cash proceeds
of $280,000 related to the Company's December 1999 private offering.
In March 2000, 3,525,000 shares of common stock were issued at $2.00 per share
to private investors for cash proceeds of $7,050,000. The Company incurred
$1,248,019 in financing costs related to this offering.
In January 2000, the Company issued 5,000 shares of common stock as
consideration for the extension of a note payable. In March 2000, the Company
issued 25,000 shares of common stock to an employee as a recruiting incentive.
The Company has expensed $60,000 related to these two transactions.
COMMON STOCK WARRANTS
Periodically, the Company will issue warrants to outside consultants in lieu of
stock options. During the period October 4, 1996 (inception) through December
31, 1999, the Company issued 10,000 warrants at a $1.00 exercise price. The
warrants are fully exercisable and expire in October 2002.
In conjunction with the March 2000 private placement offering, warrants to
purchase 377,500 shares of the Company's common stock at $2.00 was issued to the
placement agent. The warrants are fully exercisable and expire in March 2005.
9
<PAGE>
STOCK OPTIONS
During the three-month period ended March 31, 2000, the Company granted options
to employees, consultants and a board member to purchase an aggregate of 451,000
shares of Common Stock with various vesting periods, from immediately to three
years, at exercise prices ranging between $2.00 to $4.00 per share. Options to
purchase 425,000 shares of common stock of the Company at prices ranging between
$2.00 to $3.50 per share were cancelled during March 2000. No consideration was
paid to the Company by any recipient of any of the foregoing options for the
grant of any such options.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Inapplicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Inapplicable.
ITEM 5. OTHER INFORMATION.
Inapplicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
27.1 Financial Data Schedule
(b) EPORTS ON FORM 8-K
None.
10
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EntrePort Corporation
(Registrant)
Dated: May 11, 2000 By: /S/ William A. Shue
-----------------------------------
William A. Shue,
Chief Executive Officer
Dated: May 11, 2000 By: /S/ Ronald D. Suokko
-----------------------------------
Ronald D. Suokko,
Chief Accounting Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,116,944
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,142,659
<PP&E> 201,997
<DEPRECIATION> 29,190
<TOTAL-ASSETS> 8,244,453
<CURRENT-LIABILITIES> 919,441
<BONDS> 0
0
0
<COMMON> 11,581
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,244,453
<SALES> 5,120
<TOTAL-REVENUES> 5,120
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 948,627
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (22,155)
<INCOME-PRETAX> (921,352)
<INCOME-TAX> 0
<INCOME-CONTINUING> (921,352)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (921,352)
<EPS-BASIC> (.11)
<EPS-DILUTED> (.11)
</TABLE>
