<PAGE>
FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: November 30, 1999
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period _______________ to ________________
Commission file number:
DENMANS.COM, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
COLORADO 91-2015608
- ------------------------ ---------------------
(State of Incorporation) (IRS Employer ID No.)
Suite 1512 550 South Hill St.
Los Angeles, California
USA 90013
---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (604) 684-7862
------------------
Indicate by check mark whether the registrant (1) has file all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
---------- ----------
As of November 30, 1999, the registrant had 11,000,000 shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format (check one);
YES NO X
---------- ----------
The registrant meets the conditions set forth in General Instruction and is
therefore filing this Form with the reduced disclosure format.
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)
UNAUDITED
NOVEMBER 30, 1999
<PAGE>
DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)
<TABLE>
CONSOLIDATED BALANCE SHEETS
(IN UNITED STATES DOLLARS)
UNAUDITED
As at
<CAPTION>
NOV 30, AUGUST 31,
1999 1999
$ $
- --------------------------------------------------------------------------------------------------
<S> <S> <C>
ASSETS
CURRENT
Cash 166,187 331,751
Accounts receivable 12,647 14,211
Prepaid expenses 303,236 2,088
- --------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 482,070 348,050
- --------------------------------------------------------------------------------------------------
Capital assets, net [NOTE 3] 154,129 56,750
- --------------------------------------------------------------------------------------------------
636,199 404,800
==================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities 70,705 21,469
- --------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 70,705 21,469
- --------------------------------------------------------------------------------------------------
Note payable [NOTE 4] 1,000,000 500,000
- --------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,070,705 521,469
- --------------------------------------------------------------------------------------------------
Commitments [NOTE 6
]
SHAREHOLDERS' EQUITY
Share capital [NOTE 5]
Authorized
100,000,000 common shares, par value $0.001
50,000,000 preferred shares, par value $0.001
Issued
11,000,000 common shares 11,000 11,000
Deficit accumulated in the development stage (445,506) (127,669)
- --------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY (434,506) (116,669)
- --------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 636,199 404,800
==================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)
<TABLE>
CONSOLIDATED STATEMENT OF
LOSS, COMPREHENSIVE LOSS, AND DEFICIT
(IN UNITED STATES DOLLARS)
UNAUDITED
<CAPTION>
FOR THE FOR THE FOR THE
THREE MONTH THREE MONTH NINE MONTHS
PERIOD ENDED PERIOD ENDED ENDED
NOVEMBER 30, AUGUST 31, NOVEMBER 30,
1999 1999 1999
$ $ $
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Sales 780 0 780
Other Income 1,288 0 1,288
COST OF SALES 479 0 479
- --------------------------------------------------------------------------------------------------------------------
Profit 1,589 0 1,589
EXPENSES
Accounting and legal 600 11,465 19,417
Amortization 8,794 3,069 12,535
Foreign exchange loss 7,213 783 9,329
General and administrative 84,545 23,291 120,374
Incorporation costs 0 965 1,377
Marketing and media 85,326 0 85,326
Salaries and benefits 132,948 40,649 188,658
- --------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 319,426 80,222 437,016
LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD 317,837 80,222 435,427
Accumulated deficit, beginning of period 127,669 47,447 10,079
- --------------------------------------------------------------------------------------------------------------------
ACCUMULATED DEFICIT, END OF PERIOD 445,506 127,669 445,506
====================================================================================================================
</TABLE>
<PAGE>
<TABLE>
DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)
CONSOLIDATED STATEMENT OF
SHAREHOLDERS' EQUITY
(IN UNITED STATES DOLLARS)
UNAUDITED
<CAPTION>
COMMON STOCK DEFICIT
SHARES AMOUNT ACCUMULATED
# $ $
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C.
BALANCE, JANUARY 6, 1999 -- -- --
Common shares issued for cash 11,000,000 11,000 --
Loss for the period -- -- (10,079)
- --------------------------------------------------------------------------------------------------
BALANCE, FEBRUARY 28, 1999 11,000,000 11,000 (10,079)
Loss for the period -- -- (37,368)
- --------------------------------------------------------------------------------------------------
BALANCE, MAY 31, 1999 11,000,000 11,000 (47,447)
- --------------------------------------------------------------------------------------------------
Loss for the period -- -- (80,222)
- --------------------------------------------------------------------------------------------------
BALANCE, AUGUST 31, 1999 11,000,000 11,000 (127,669)
- --------------------------------------------------------------------------------------------------
Loss for the period -- -- (313,096)
- --------------------------------------------------------------------------------------------------
BALANCE, NOVEMBER 30, 1999 11,000,000 11,000 (440,765)
- --------------------------------------------------------------------------------------------------
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
<TABLE>
DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN UNITED STATES DOLLARS)
UNAUDITED
<CAPTION>
FOR THE FOR THE FOR THE
THREE MONTH THREE MONTH NINE MONTHS
PERIOD ENDED PERIOD ENDED ENDED
NOVEMBER 30, AUGUST 31, NOVEMBER 30,
1999 1999 1999
$ $ $
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Loss for the period (317,837) (80,222) (435,427)
Amortization 8,794 3,069 12,535
Decrease in accounts receivable 1,564 (1,190) (12,647)
Increase in prepaid expenses (301,148) (422) (303,096)
Increase in accounts payable and accrued liabilities 49,236 4,274 62,204
- --------------------------------------------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES (559,391) (74,491) (676,431)
- --------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Additions to capital assets (106,173) (41,389) (166,664)
- --------------------------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES (106,173) (41,389) (166,664)
- --------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase in note payable 500,000 -- 980,000
Decrease in note receivable -- 430,000 --
Decrease in shareholder loan payable -- (50,000) --
- --------------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES 500,000 380,000 980,000
- --------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH DURING THE PERIOD (165,564) 264,120 136,905
Cash, beginning of period 331,751 67,631 29,282
- --------------------------------------------------------------------------------------------------------------------
CASH, END OF PERIOD 166,187 331,751 166,187
====================================================================================================================
</TABLE>
SEE ACCOMPANYING NOTES
<PAGE>
DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
UNAUDITED
November 30, 1999
1. NATURE OF BUSINESS
The discussion in this Report contains forward-looking statements that involve
risks and uncertainties. Actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed herein as well as those
discussed in the "Risks" and the "Year 2000 Risks and Compliance" sections
in the Company's Registration on Form 10-SB/A declared effective by the
Securities and Exchange Commission on October 31, 1999.
DENMANS.com, Inc. (the "Company") was incorporated on January 6, 1999 in the
State of Colorado as IDS Internet Distribution Systems Inc. and is currently in
the development stage. On July 23, 1999 the Company changed its name from IDS
Internet Distribution Systems Inc. to DENMANS.com, Inc.
The Company is operating as an online retailer of jewelry and jewelry related
products. The Company's online store (www.denmans.com) offers broad selection,
informative content, easy-to-use navigation and search capabilities, a high
level of customer service, competitive pricing and personalized merchandising
and recommendations.
DENMANS.com, Inc. has two wholly owned subsidiaries; Denmans Jewelry (USA) Inc.
and Denmans Jewelry (Canada) Inc.
Denmans Jewelry (USA) Inc. was incorporated on March 8, 1999 as IDS Jewelry
(U.S.A.) Inc. On July 28, 1999, IDS Jewelry (U.S.A.) Inc. changed its name to
Denmans Jewelry (USA) Inc. It was incorporated in the State of Nevada and
functions as the operating company for the United States market.
Denmans Jewelry (Canada) Inc. was incorporated on March 25, 1999 as IDS Jewelry
(Canada) Inc. On August 1, 1999, IDS Jewelry Canada Inc. changed its name to
Denmans Jewelry (Canada) Inc. It was incorporated in the Province of British
Columbia and functions as the operating company for the Canadian
market.
The Company has selected February as its fiscal year end. In the opinion of
management, the interim financial statements for the quarter ended November 30,
1999, reflect all adjustments, which consist only of normal and recurring
adjustments, necessary to present fairly the financial position at November 30,
1999 and the results of operations and cash flows for the respective three month
period ended November 30, 1999 in accordance with accounting principles
generally accepted in the United States.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements are prepared in accordance with generally accepted
accounting principles in the United States. The following is a summary of the
significant accounting policies used in the preparation of these financial
statements.
<PAGE>
DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
UNAUDITED
The accompanying unaudited consolidated financial statements have been prepared
by denmans.com, Inc. (the "Company") pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of management, all
adjustments and disclosures necessary for a fair presentation of these financial
statements have been included. These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Form 10-SB/A Registration Statement declared effective on October 31,
1999. Results for the three months ended November 30, 1999 are not necessarily
indicative of the results that may be expected for the year ending February 29,
2000.
MANAGEMENT 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 financial statements and accompanying notes.
Management believes that the estimates utilized in preparing its financial
statements are reasonable and prudent; however, actual results could differ from
these estimates. Results for the three months and nine months ended November 30,
1999 are not necessarily indicative of the results that may be expected for the
year ending February 29, 1999.
FINANCIAL INSTRUMENTS
The carrying values of the Company's financial instruments approximate fair
values, except as otherwise disclosed in the financial statements.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued SFAS133 "Accounting for
derivative instruments and hedging activities". SFAS133 is effective for
financial statements for fiscal years beginning after June 15, 2000.
SFAS133 currently has no impact on the Company.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the amounts of the Company and all
its subsidiaries. All significant intercompany balances and transactions have
been eliminated.
CAPITAL ASSETS
Capital assets are recorded at cost less accumulated depreciation. Capital
assets are depreciated over their useful lives as follows:
Office furniture 10% declining balance
Computer hardware 30% declining balance
Computer software 1 year straight line
Internet software 2 years straight line
The Company recognizes only 50% of the depreciation in the year of acquisition.
<PAGE>
DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
UNAUDITED
TRANSLATION OF FOREIGN CURRENCIES
Monetary assets and liabilities denominated in foreign currencies are translated
into United States dollars at the period end rates of exchange. Non-monetary
assets and liabilities denominated in foreign currencies are translated into
United States dollars at the rates of exchange in effect at the date of the
transaction. Foreign currency revenue and expense items, except amortization are
translated at average monthly rates of exchange. Exchange gains or losses are
included in the statements of loss as incurred. Amortization is translated at
the same rate as the related assets.
NET EARNINGS PER COMMON SHARE
The Company has adopted Statement of Financial Accounting Standards No. 128
("FAS 128") regarding the determination and disclosure of earnings per share for
the purpose of preparing its financial statements. The calculations of net
earnings per common share are based upon the weighted average number of common
shares of the Company outstanding during each year.
The adoption of FAS 128 has no impact on previously reported information.
3. CAPITAL ASSETS
<TABLE>
Capital assets of the Company consist of the following:
<CAPTION>
ACCUMULATED NET BOOK
COST DEPRECIATION VALUE
- --------------------------------------------------------------------------------------------------
$ $ $
<S> <C> <C> <C>
NOVEMBER 30, 1999
Office furniture 21,302 424 20,878
Computer software 8,794 1,254 7,540
Computer hardware 44,296 2,683 41,613
Internet software 92,272 8,174 84,098
- --------------------------------------------------------------------------------------------------
166,664 12,535 154,129
==================================================================================================
</TABLE>
At February 28, 1999, capital asset balances of the Company were $nil.
<PAGE>
DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
UNAUDITED
4. NOTE PAYABLE
There are two notes payable at November 30, 1999, totaling $1,000,000. One, for
$500,000, is due to DGD Wealth Management, is unsecured, bears interest at the
rate of 5% per annum and is due on May 31, 2001. The other $500,000 note is
payable to Eagle Harbour Management Ltd., is unsecured, bears interest at the
rate of 15% per annum, and is due on October 31, 2001. The fair value of the
notes are undeterminable due to the difficulty in obtaining the fair value of
the interest rate.
5. STOCK OPTIONS
At November 30, 1999, 1,200,000 common shares were reserved for issuance
pursuant to exercise of stock options to be granted to the directors, officers
and employees of the Company.
6. COMMITMENTS
The Company has entered into an operating lease in respect of its office
premises on a month by month basis. The monthly lease payment is $2,408.
<PAGE>
DENMANS.COM, INC.
(FORMERLY IDS INTERNET DISTRIBUTION SYSTEMS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN UNITED STATES DOLLARS)
UNAUDITED
7. YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize the
year 2000 as 1900 or some other date, resulting in errors when information using
year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 Issue affecting the
entity, including those related to the efforts of customers, suppliers, or other
third parties will be fully resolved.
8. COMPARATIVE FIGURES
Certain of the comparative figures have been reclassified to conform to the
presentation adopted in the current period.
9. SUBSEQUENT EVENT
During the month of December, 1999, $500,000 of additional financing was
received by way of a note payable due to Eagle Harbour Management Ltd. The note
is unsecured, bears interest at the rate of 15% per annum and is due on December
31, 2001.
<PAGE>
Item 2. PLAN OF OPERATION
(All figures are in US dollars)
GENERAL
- -------
The Company was incorporated in January 1999 and commenced operations and began
offering products for sale on its Web site in late November 1999. Accordingly,
the results for the quarter ended November 30 1999 represent Only the first week
that the Web site was operational The Company is focused exclusively on the sale
of jewelry and jewelry related products. Since inception, management has focused
on establishing and broadening its product offerings, establishing relationships
with jewelry brand owners, generating sales momentum and expanding its
operational and customer service capabilities. The Company has grown rapidly
since incorporation in January 1999. The growth occurred in the areas of general
administrative, Marketing and technical staff in connection with building
infrastructure and developing the Web site and associated systems to process
customer orders and payments and manage the anticipated growth in revenue.
The market for jewelry products is highly seasonal, with a disproportionate
amount of net sales occurring during the fourth calendar quarter. Although less
significant, seasonal sales periods occur in May and June due to graduation gift
giving, Mother's Day and Father's Day. Management expects that these trends will
continue in future periods. In addition, since a disproportionate amount of the
net sales are realized during the fourth calendar quarter, management increases
it advertising, marketing and personnel expenses during and in advance of that
quarter. Accordingly, management expects that the accounts payable will be at
their highest levels during the latter part of the Company's third quarter and
in the forth quarter. Although there have not been Enough sales to accurately
determine the Company's gross margin, management expects gross margin will
fluctuate in future periods based on factors such as: product sales mix; the mix
of direct and indirect sources of product; pricing strategy; promotional
activities; and shipping costs.
Since inception, the Company has incurred significant net losses. Management
expects its net losses to increase and to generate negative cash flows for the
foreseeable future. The Company expects operating expenses and net losses will
continue to rise as the Company pursues an aggressive marketing and advertising
campaign to attract new customers and build the Company's brand identity,
develop strategic partnerships, invest in new operational and customer service
infrastructure and recruit additional employees.
DENMANS.com has a limited operating history upon which to base an evaluation of
its business and prospects. As a result of the limited operating history, it is
difficult to accurately forecast net sales and management has limited meaningful
historical financial data upon which to base projected operating expenses.
Management has based current and future expense levels on operating plans and
estimates of future net sales, and expenses are fixed to a large extent. Sales
and operating results are difficult to forecast because they generally depend on
the volume and timing of the orders received. As a result, management may be
unable to adjust spending in a timely manner to compensate for any unexpected
revenue shortfall. This inability could cause net losses in a given quarter to
be greater than expected.
Its early entry into the on-line jewelry products retailing industry is expected
to help the Company gain a well-recognized brand and a large customer base. The
Company is striving to combine the advantages of online commerce with a superior
customer focus in order to be the authoritative source for jewelry and jewelry
related products. The Company's online store offers broad selection, informative
content, easy to use navigation and search capabilities, a high level of
customer service, competitive pricing and personalized merchandising and
recommendations. With the intention to make available up to 250,000 items, the
Company will provide a selection of readily available products that is 20 to 50
times that of a typical, store-based or online, jewelry products retailer. The
Company's store is open 24 hours a day, seven days a week and offers its
customers convenient and timely product fulfillment, including free second day
shipping and an overnight delivery option.
The Company has situated itself in the heart of the Los Angeles, California
"Jewelry District" in one of the most prestigious jewelry building in the area.
because of its physical proximity to an extensive list of suppliers of jewelry,
denmans.com has been able to access the inventories of such suppliers on the
denmans.com "Just-in-Time" inventory model which allows the Company to maximize
its product offerings and the related efficiencies of the Internet.
RESULTS OF OPERATIONS
- ---------------------
The website and online store launched November 30, 1999 which was the last week
at the end of the third fiscal quarter. This week generated sales of $780.
Additional sales were generated over the Christmas season which will be reported
in the fourth fiscal quarter results.
Operations to date have primarily been establishing the infrastructure and
making other general and administrative expenditures. Losses for the third
fiscal quarter ended November 30, 1999 amounted to $317,837. Expenses during the
period increased to $319,426 from $80,222 in the prior quarter as a result of
continued development of the Company's website, marketing efforts, and the
corresponding human resources required. The Company anticipates that this
development will continue to require moderate increases in staff levels and
office space.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash flow used in operations for the three months ended November 30, 1999 was
$559,391, approximately half of that being marketing related expenditures to be
expensed in subsequent periods. It is intended that revenues from sales should
continue to increase in the fourth fiscal quarter, into the year 2000. No
assurance can be given that revenues from sales will initially meet expenses and
as such, the Company plans to finance operations through existing and additional
debt financing from arm's length private lenders until such time as revenues
from sales meet or exceed expenses. Once achieved, the Company intends to begin
repaying the private arm's length lenders. In addition, the Company may raise
additional money as is deemed necessary by management through private placements
of stock issued out of the treasury of the Company to individuals or
corporations who have expressed interest in obtaining stock in the Company.
The $106,173 used in investing activities consisted primarily of office and
computer equipment.
Net cash provided by financing activities for the three months ended November
30, 1999 was $500,000 from the proceeds of the note payable.
<PAGE>
Part II - Other Information
- -----------------------------
Item 5 - Other Information
YEAR 2000 RISKS AND COMPLIANCE
Many existing computer programs use only two digits to identify a year. These
programs were designed and developed without addressing the impact of the
upcoming change in the century. If not corrected, many computer software
applications could fail or create erroneous results by, at or beyond the year
2000. The Company uses software, computer technology and other services
developed and provided by third party suppliers that may fail due to the year
2000 phenomenon. For example, the Company is dependent on the financial
institutions involved in processing customers' credit card payments for the
Internet services and a third party that hosts the Company's services. The
Company is also dependant on telecommunications vendors and suppliers to
maintain our network and the United States Postal Service and other third party
carriers to deliver orders to customers.
The Company has identified three categories of computer systems which may be
affected by the Year 2000 issue:
1. Internal Systems. The Company owns and operates computer hardware on which is
loaded licensed software from major software providers. The Company uses these
computers and software programs for some accounting functions, office
administration functions, word processing functions, internal and external
e-mail.
2. Third party Providers of Computer Systems. The Company relies on various
third party providers of computer hardware and software which third parties
provide critical services to the Company including, product supply, product
distribution, credit card processing, website hosting, long distance Internet
connectivity, e-mail providers, and substantially all other systems used by the
Company in respect of the operation of the website; and
3. The General Infrastructure. This category includes the integrity and
stability of the Internet in providing the Company's services, the computer
systems of financial institutions and services used by customers, the utility
companies used by the Company and the customers, etc.
In respect of number 1 above, the Company has assessed the year 2000 readiness
of its internal systems. All hardware and software used internally has been
purchased within the previous six months and were purchased from reputable
vendors with assurances there from that all such items, alone and in combination
with each other are Year 2000 compliant. Based upon these assurances, the
Company has neither incurred any expenses in relation to this assessment nor has
it developed a remediation plan because it believes that it is not necessary.
In respect of number 2 above, the Company has relied upon third parties for the
provision of substantially all of the systems for the operation of the website.
These systems include software used to provide the Company's websites' search
capabilities, customer interaction, and transaction processing and fulfillment
functions, as well as firewall, security monitoring and back-up capabilities.
The Company is currently assessing the Year 2000 readiness of the third party
supplied software, computer technology and other services of the Company's
vendors. As part of the assessment, the Company is in the process of seeking
assurances from these third parties that their software, computer technology and
other services are Year 2000 compliant. At this time, the Company has not yet
developed a contingency plan to address situations that may result if these
third parties are unable to achieve Year 2000 compliance. Such contingency plan
will depend on the results of the Year 2000 review and assessment, the extent of
the corrective actions that have been implemented by the third parties and by
the Company and the status of the distribution systems that the Company intends
to establish. Based upon the results of this assessment, the Company will
develop and implement, if necessary, a remediation plan with respect to the
third party software, third party vendors and computer technology and services
that may fail to be Year 2000 compliant. At this time, the expenses associated
with this assessment and potential remediation plan are expected to be
insignificant but cannot be determined with any degree of accuracy at this time.
<PAGE>
The failure of the software and computer technologies of the third parties to be
Year 2000 compliant would have an adverse effect on the Company including
difficulties in operating the website effectively or at all, difficulties taking
customers' orders, difficulties in making product deliveries and difficulties
conducting other fundamental parts of the business.
In respect of number 3 above, the Year 2000 readiness of the general
infrastructure necessary to support the Company's operations is difficult to
assess. For example, the Company depends on the integrity and stability of the
Internet to provide the Company's services. The Company also depends on the Year
2000 compliance of the computer systems and financial services used by
consumers. Thus, the infrastructure necessary to support the Company's
operations consists of a network of computers and telecommunications systems
located throughout the world and operated by numerous unrelated entities and
individuals, none of which has the ability to control or manage the potential
Year 2000 issues that may impact the entire infrastructure. The Company's
ability to assess the reliability of this infrastructure is limited and the
Company relies solely on generally available news reports, surveys and
comparable industry data. Based on these sources, the Company believes that most
entities and individuals that rely significantly on the Internet are reviewing
and attempting to remediate issues relating to Year 2000 compliance, but it is
not possible to predict whether these efforts will be successful in reducing or
eliminating the potential negative impact of Year 2000 issues.
A significant disruption in the ability of consumers to reliable access the
Internet or portions of it or to use their credit cards would have an adverse
effect on demand for the Company's products and services. In addition, the
Company may have difficulties operating portions or all of its website
effectively, taking customers' orders, fulfilling and distributing customers'
orders and conducting other fundamental parts of the Company's business.
The costs to address the Year 2000 compliance issues delineated above have not
been determined at this time. The cost of developing and implementing a plan, if
necessary, could be material and the Company may not have enough time to
implement it before the year 2000. Any failure of the Company's material
systems, our suppliers' material systems or the Internet to be year 2000
compliant could include difficulties in operating the website effectively,
taking product orders, making product deliveries or conducting other fundamental
parts of the Company's business, any one of which would have an adverse effect
on the Company.
Although January 1, 2000 has passed without incident for the Company, management
is of the view that the foregoing issues still require attention because it is
possible that the full impact of the issues associated with the Year 2000 have
not yet been felt.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit No. Description
-------------- ---------------
27 Financial Data Schedule
(b) There are no reports on Form 8-K that were filed for the quarter.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DENMANS.COM, INC.
(Registrant)
Date: January 12, 2000 /s/ "KURT DOHLEN"
------------------------------------
Kurt Dohlen
President and CEO
Date: January 12, 2000 /s/ C. "JAMIE LANFRANCO"
------------------------------------
C. Jamie Lanfranco
Vice President of Finance
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> MAR-01-1999
<PERIOD-END> NOV-30-1999
<CASH> 166,187
<SECURITIES> 0
<RECEIVABLES> 12,647
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 482,070
<PP&E> 154,129
<DEPRECIATION> 8,794
<TOTAL-ASSETS> 636,199
<CURRENT-LIABILITIES> 70,705
<BONDS> 0
0
0
<COMMON> 11,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 636,199
<SALES> 780
<TOTAL-REVENUES> 2,068
<CGS> 479
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 437,016
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (435,427)
<INCOME-TAX> 0
<INCOME-CONTINUING> (435,427)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (435,427)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
