<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NO. 000-15034
TAKE TO AUCTION.COM, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 65-0924433
------------------------- -------------------------
(State of Incorporation) (I.R.S. Employer
Identification Number)
5555 ANGLERS AVENUE, SUITE 16
FORT LAUDERDALE, FL 33312
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
954-987-0654
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
As of November 13, 2000, 7,438,889 shares of Common Stock, $.001 par
value were outstanding.
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TAKE TO AUCTION.COM, INC.
TABLE OF CONTENTS
PAGE
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements............................................. 2
Item 2. Management's Discussion and Analysis............................. 7
Item 3. Quantitative and Qualitative Disclosures about Market Risk.......10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................11
Item 2. Changes in Securities and Use of Proceeds........................11
Item 5. Other Information................................................11
Item 6. Exhibits and Reports on Form 8-K.................................11
1
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TAKE TO AUCTION.COM, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,247,771 $ 856,949
Accounts receivable 5,644 5,964
Stock subscription receivable -- 635,466
Inventory, net 2,010,407 200,429
Prepaid expenses and other current assets 1,423,635 18,625
------------ ------------
Total current assets 6,687,457 1,717,433
------------ ------------
Prepaid offering costs -- 667,842
Property and equipment, net 1,118,778 186,041
Other 8,731 8,423
------------ ------------
Total assets $ 7,814,966 $ 2,579,739
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 521,672 $ 289,719
Accrued expenses 365,749 54,362
Accrued professional fees 109,716 55,000
Deferred revenue 375,746 30,320
------------ ------------
Total current liabilities 1,372,883 429,401
Note payable to affiliate, net of unamortized fair value
of stock purchase warrants -- 1,000,000
------------ ------------
Total liabilities 1,372,883 1,429,401
------------ ------------
Commitments and Contingencies -- --
Shareholders' equity:
Preferred shares, $0.001 par value, 10 million shares
authorized, no shares issued and outstanding -- --
Common shares, $0.001 par value, 50 million shares
authorized, 7,438,889 and 6,000,000 shares
issued and outstanding, respectively 7,439 6,000
Additional paid-in capital 10,837,148 1,694,000
Accumulated deficit (4,402,504) (549,662)
------------ ------------
Total shareholders' equity 6,442,083 1,150,338
------------ ------------
Total liabilities and shareholders' equity $ 7,814,966 $ 2,579,739
============ ============
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
2
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TAKE TO AUCTION.COM, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE-MONTHS FOR THE NINE-MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
----------------------------- -----------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues $ 1,513,975 $ 9,528 $ 2,896,341 $ 9,528
Cost of net revenues 1,725,484 9,963 3,465,191 9,963
----------- ----------- ----------- -----------
Gross margin (211,509) (435) (568,850) (435)
----------- ----------- ----------- -----------
Operating expenses:
General and administrative expenses 1,056,941 132,530 2,335,332 133,452
Auction fees 164,086 654 218,685 654
Sales and marketing 500 -- 217,107 --
Fulfillment 63,788 310 217,133 310
Web site development expenses 31,912 33,441 133,034 33,441
----------- ----------- ----------- -----------
Total operating expenses 1,317,227 166,935 3,121,291 167,857
----------- ----------- ----------- -----------
Net loss from operations (1,528,736) (167,370) (3,690,141) (168,292)
Interest income (expense), net 68,219 -- (162,701) --
----------- ----------- ----------- -----------
Net loss $(1,460,517) $ (167,370) $(3,852,842) $ (168,292)
=========== =========== =========== ===========
Basic and diluted loss per common share $ (0.20) $ (0.03) $ (0.59) $ (0.03)
=========== =========== =========== ===========
Weighted average number of common
shares outstanding 7,438,889 5,428,572 6,576,135 5,428,572
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
condensed financial statements.
3
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TAKE TO AUCTION.COM, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE-MONTHS
ENDED SEPTEMBER 30,
-------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,852,842) $ (168,292)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 181,103 813
Amortization of stock purchase warrants 207,799 --
Inventory writedown 187,461 --
Change in operating assets and liabilities:
Accounts receivable 320 (3,053)
Inventory (1,997,439) (44,333)
Prepaid expenses and other current assets (1,405,010) (36,785)
Other assets (308) (1,129)
Accounts payable 231,953 217,713
Accrued expenses 311,387 13,595
Accrued professional fees 54,716 --
Deferred revenue 345,426 11,683
------------ ------------
Net cash used in operating activities (5,735,434) (9,788)
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (1,113,840) (105,635)
------------ ------------
Net cash used in investing activities (1,113,840) (105,635)
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock 10,045,596 566,162
Borrowings from affiliate 1,000,000 --
Payments on borrowings to affiliate (1,000,000) --
Payments for offering costs (805,500) (161,942)
------------ ------------
Net cash provided by financing activities 9,240,096 404,220
------------ ------------
Net increase in cash and cash equivalents 2,390,822 288,797
Cash and cash equivalents at beginning of period 856,949 --
------------ ------------
Cash and cash equivalents at end of period $ 3,247,771 $ 288,797
============ ============
</TABLE>
Supplemental disclosure of non-cash financing activities:
o During June 2000, E Com Ventures, Inc. (formerly Perfumania, Inc.), a
company related through common chairman of the board, converted a $1
million promissory note into 138,889 common shares.
o During the nine-months ended September 30, 2000, the Company recorded
$562,000 to additional paid-in capital in connection with the issuance
of stock purchase warrants.
The accompanying notes are an integral part of these
condensed financial statements.
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TAKE TO AUCTION.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
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1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of Take to Auction.com,
Inc. (the "Company") for the periods indicated herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission and in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all of
the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating results for
the three and nine month periods ended September 30, 2000 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2000. For further information, refer to the Company's
1999 financial statements and notes thereto.
The Company was incorporated on June 2, 1999, and was a development stage
enterprise through March 31, 2000. During the second quarter of fiscal
2000, the Company's planned principal operations commenced and, the Company
therefore, is no longer considered to be in the development stage. The
results for the nine-month period ended September 30, 1999 are from June 2,
1999 (date of inception) through September 30, 1999.
2. INITIAL PUBLIC OFFERING
Effective June 12, 2000 (the actual closing date was June 16, 2000), the
Company completed an equity offering of 1.3 million shares of common stock
(the "Common Stock") at an offering price of $8.00 per share. Net proceeds
to the Company, after deducting approximately $2.5 million in costs, fees,
underwriter discounts and other expenses associated with the offering, were
approximately $7.9 million and are being used primarily for inventory
expansion, other capital expenditures necessary to support the Company's
growth, working capital and other general corporate purposes.
3. PROPERTY AND EQUIPMENT
Property and equipment include the following:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
(IN YEARS) SEPTEMBER 30, 2000 DECEMBER 31, 1999
---------- ------------------ -----------------
<S> <C> <C> <C>
Computer equipment 3 $ 473,856 $ 42,609
Computer software 3 542,622 130,257
Furniture and fixtures 5 120,118 9,292
Telecommunication equipment 5 39,485 8,769
Leasehold improvements 5 128,686 --
----------------- ----------------
1,304,767 190,927
Less: accumulated depreciation (185,989) (4,886)
----------------- ----------------
Property and equipment, net $ 1,118,778 $ 186,041
================= ================
</TABLE>
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NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
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The Company capitalizes certain costs in connection with internal use
software, which will be amortized when the software is available for use or
when project modules are implemented. As of September 30, 2000 and December
31, 1999, approximately $27,000 and $130,000, respectively, related to
internally used software-in-process not yet implemented is included within
"Computer software" in the above table.
4. RELATED PARTY TRANSACTION:
The Company received an advance of $1 million on December 21, 1999 from E
Com Ventures, Inc. (formerly Perfumania, Inc.) and an additional advance of
$1 million on March 9, 2000. The chairman of the board of E Com Ventures,
Inc. is also the chairman of the board of the Company. These advances were
structured into two separate two-year convertible note agreements during
May 2000, bearing interest at six percent (6%) per annum. In connection
with these advances, the Company granted a total of 200,000 warrants to
purchase the Company's common shares to E Com Ventures, Inc. at $7.20 per
share. These warrants expire on June 13, 2001. During June 2000, one of the
$1 million notes was paid back to E Com Ventures, Inc. in full and the
other $1 million note was converted into 138,889 shares of the Company's
common stock.
On October 12, 2000, the Company advanced E Com Ventures, Inc. $500,000.
This amount bears interest at the prime rate plus four percent and is due
on December 31, 2000.
On October 1, 2000, we entered into a six-month service agreement with
Perfumania.com to outsource our warehouse and distribution functions in the
southeast section of the United States. This agreement will automatically
renew for successive one-year terms. This service agreement includes order
processing, inventory management, warehousing, fulfillment and shipping of
product. The agreement is variable, based on volume of sales, however, the
agreement includes monthly minimum fees if such volume levels are not
obtained. Such fees range from $11,000 to $20,000 per month based on volume
of sales.
5. COMMITMENTS:
Effective September 23, 1999, the Company entered into a 60 month service
agreement ("the USi Agreement") with USinternetworking, Inc. ("USi"), a
software and network provider, to develop and host the Company's Web site.
The Company paid an initial fee of $40,000 and the USi Agreement was for 60
equal monthly service fee payments of $41,000 commencing on December 15,
1999 through December 14, 2004 (the "Initial Period"). During December
1999, the Company notified USi that it was terminating the USi Agreement
(as per the terms of the USi Agreement) for material breach of its
obligations thereunder. A breach of contract lawsuit has been threatened by
USi. The Company and USi are currently discussing a resolution of the
matter. The Company believes that it has meritorious defenses, as well as
counterclaims, to any claim which may be brought by USi, and if any such
claim is brought, the Company will defend it vigorously. However, if USi
successfully pursues its claim against the Company, it may have a material
adverse effect on the Company's results of operations.
6
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TAKE TO AUCTION.COM, INC.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
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This report contains "forward-looking statements" within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements include, among others, statements concerning the
Company's outlook for the second half of 2000 and beyond, the Company's
expectations, beliefs, future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not historical
facts. Although we believe that the expectations reflected in forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. The forward-looking statements in this
report are subject to risks and uncertainties that could cause actual results to
differ materially from those expressed in or implied by the forward-looking
statements.
OVERVIEW
We provide our members with a total solution for taking items to online
auction sites. Our revenues come from membership credits purchased by our
members, additional credits purchased by existing members and from sales of
product. In the future, we also anticipate receiving fees from third parties for
online advertising and revenues from selling products directly to our members.
We believe that word of mouth and repeat business from existing members are the
most effective means of implementing our growth strategy. Members purchase
membership credits to enable them to select items to take to an online auction
site. Each annual membership costs a minimum of $100.00 and allows a member to
take any number of items which have an aggregate value of $100.00 or less from
our Web site to an online auction site for one week at a time. Each membership
lasts for one year.
In order for a member to recoup his or her entire membership fee, he or she
must earn $100.00 from auctions over the course of the membership term. By
accumulating additional credits, the member will be eligible to list multiple
items and/or items that have greater value. The total number of credits and,
consequently, our revenues depend upon our members' interest in listing multiple
items at one time or seeking more valuable merchandise. That is because the more
credits a member purchases, the more (both in number and value) items he or she
can send to auction. The more credits a member purchases, the more revenues are
generated by Take to Auction.
If members want to select items which have an aggregate value greater than
$100.00, additional credits may be purchased. Each credit beyond the initial
membership fee costs $1.00. The cost of additional credits will be prorated
based on when they are purchased within the members' membership term and may be
purchased in $25.00 credit increments. Members may choose to cash-out and
receive a check from us for their accumulated profits from successful auctions
at the end of every month by clicking on a screen prompt.
Our rate of expense growth will follow revenue growth and will be primarily
driven by increases in membership and by the volume of successful online
transactions completed by existing members. That is because the more members we
have, the more expenses we incur, such as listing fees, customer service,
merchandise and warehouse expenses. In the short term, we expect our expenses to
increase significantly in an effort to attain a high level of revenue growth.
7
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TAKE TO AUCTION.COM, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (CONTINUED)
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RESULTS OF OPERATIONS
We were incorporated on June 2, 1999, and we were a development stage
enterprise through March 31, 2000. During the second quarter of fiscal 2000, our
planned principal operations commenced and, therefore, we are no longer
considered to be in the development stage. The results for the nine-month period
ended September 30, 1999 are from June 2, 1999 (date of inception) through
September 30, 1999.
NET REVENUES. Net revenues include the membership fees charged to our
members, prorated over the annual membership term, and the sale of products to
our members upon a successfully completed auction. Net revenues amounted to
approximately $1.5 million and $2.9 million for the three and nine-month periods
ended September 30, 2000, respectively. We had approximately 16,000 and 30,000
completed transactions during the three and nine-month periods ended September
30, 2000, respectively, at an average net sale price of approximately $90 and
$91, respectively. Net revenues amounted to approximately $10,000 for the three
and nine-month periods ended September 30, 1999, respectively. Revenues
generated during this period were during our development stage.
COST OF NET REVENUES. Cost of net revenues consist primarily of the cost of
the merchandise sold and inbound shipping costs related to those items. Cost of
net revenues amounted to approximately $1.7 million and $3.5 million during the
three and nine-month periods ended September 30, 2000, respectively. Cost of net
revenues as a percentage of revenues were approximately 114% and 120% during the
three and nine months ended September 30, 2000, respectively. We believe that
offering our members attractive pricing is a key component to our success. The
majority of our negative margins are attributable to offering our current
members discounted pricing to promote our brand. We believe that our gross
margins will continue to improve as we improve our supply chain management,
including buying directly from the manufacturers and taking advantage of volume
purchase discounts and manufacturer rebates. We expect to realize positive
margins from the sale of products in the future, however, we cannot assure you
that this will be the case. Cost of net revenues amounted to approximately
$10,000 during the three and nine-month periods ended September 30, 1999,
respectively, and related to revenues generated during our development stage.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
consist of payroll and related expenses for executive, accounting and
administrative personnel, professional fees and other general corporate
expenses. General and administrative expenses amounted to approximately $1.1
million and $2.3 million for the three and nine-month periods ended September
30, 2000, respectively. General and administrative expenses amounted to
approximately $133,000 for the three and nine-month periods ended September 30,
1999, respectively. General and administrative expenses will continue to
increase as we expand our staff and incur additional costs to support the growth
of the business.
AUCTION FEES. Auction fees consist of fees incurred for posting and selling
items at online auction sites. Auction fees amounted to approximately $164,000
and $219,000 for the three and nine-month periods ended September 30, 2000,
respectively, and approximately $1,000 for the three and nine-month periods
ended September 30, 1999, respectively. Auction fees will continue to increase
as the number of items listed and sold at online auction sites increase through
our increased membership base.
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TAKE TO AUCTION.COM, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (CONTINUED)
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SALES AND MARKETING. Sales and marketing expenses consist of fees incurred
for advertising and promotion of our brand during our development stage. Sales
and marketing amounted to approximately $500 and $217,000 for the three and
nine-month periods ended September 30, 2000, respectively. We use
"word-of-mouth" referrals and targeted marketing to buyers of our merchandise
posted on online auction sites to expand our membership community, and
therefore, incur limited marketing costs to increase our membership base. We
incurred no sales and marketing expenses during the three and nine-month periods
ended September 30, 1999.
FULFILLMENT FEES. Fulfillment fees consist of fees incurred to implement our
outsource agreement with our third party warehousing facility and to warehouse,
fulfill and ship products to the highest bidders for completed auctions.
Fulfillment fees amounted to approximately $64,000 and $217,000 for the three
and nine-month periods ended September 30, 2000, respectively and approximately
$300 for the three and nine-month periods ended September 30, 1999,
respectively. Fulfillment fees will continue to increase as our sales increase.
WEB SITE DEVELOPMENT EXPENSES. Web site development expenses consist
principally of expenses incurred to develop and maintain our network operations
and systems and telecommunications infrastructure. Web site development expenses
amounted to approximately $32,000 and $133,000 for the three and nine-month
periods ended September 30, 2000, respectively, and approximately $33,000 for
the three and nine-month periods ended September 30, 1999, respectively. Web
site development expenses are expected to increase as we increase our network
infrastructure to facilitate and maintain our operations.
INCOME TAXES. We expect to have operating losses for the foreseeable future
and do not expect to have any federal or state income tax liability until we are
profitable and have utilized our operating loss carry forwards.
NET LOSS. As a result of the factors discussed above, the net loss totaled
approximately $1.5 million and $3.9 million for the three and nine-month periods
ended September 30, 2000, respectively, and approximately $168,000 for the three
and nine-month periods ended September 30, 1999. We expect to incur net losses
for the foreseeable future.
LIQUIDITY AND CAPITAL RESOURCES
Our principal capital requirements are acquiring merchandise and maintaining
and improving our Web site. We have had negative cash flows since inception. Our
working capital to date has been provided primarily by the proceeds from our
initial capitalization of $1 million, other private placements, the issuance of
the Notes and our initial public offering.
We used cash of approximately $5.7 million in operating activities for the
nine-month period ended September 30, 2000. This was primarily the result of a
loss of approximately $3.9 million, the increase in our inventory of
approximately $2.0 million and the increase of prepaid expenses and other
current assets of $1.4 million. During the nine-month period ended September 30,
2000, inventory levels were increased to support the growth in our membership
base from approximately 50,000 credits as of December 31, 1999 to approximately
750,000 as of September 30, 2000. The increase in prepaid expenses and other
current assets primarily related to amounts advanced to suppliers for specialty
purchased inventory of which a majority of this inventory has been received
subsequent to September 30, 2000. The additional changes in other operating
assets and liabilities were principally related to increases in accounts
payable, accrued expenses and deferred revenue. We used cash of approximately
$10,000 in operating activities for the nine
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TAKE TO AUCTION.COM, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION (CONTINUED)
------------------------------------------------------------------------------
month period ended September 30, 1999. This was primarily the result of a net
loss of approximately $168,000, the increase in our inventory of approximately
$44,000, the increase of prepaid expenses and other current assets of
approximately $37,000 and the increase in accounts payable of approximately
$218,000.
We used cash in investing activities of approximately $1.1 million and
$106,000 for the nine-month periods ended September 30, 2000 and 1999,
respectively, primarily related to the purchase of computer hardware and
software and expenditures for leasehold improvements at our new corporate
facility.
Cash provided by financing activities for the nine-month period ended
September 30, 2000 was approximately $9.2 million. This was the result of net
proceeds received on our initial public offering of approximately $9.4 million,
proceeds received on our stock subscriptions receivable (relating to our initial
capitalization) in the amount of approximately $0.6 million, proceeds received
on a convertible promissory note (the "Note") in the amount of $1 million from E
Com Ventures, Inc. (formerly Perfumania, Inc.), a company related through common
chairman of the board, offset by the repayment of another note (similar in all
respects to the "Note") in the amount of $1 million and payments made for
offering costs of approximately $0.8 million. Cash provided by financing
activities for the nine-month period ended September 30, 1999 was approximately
$404,000. This was the result of net proceeds received on our stock
subscriptions receivable (relating to our initial capitalization) in the amount
of approximately $566,000 and offset by payments made for offering costs related
to our initial public offering of approximately $162,000.
We had two $1 million convertible promissory notes from E Com Ventures, Inc.
One of the notes was converted into 138,889 shares of our Common Stock on June
16, 2000, and the other note was repaid in full on June 20, 2000. As of
September 30, 2000, there was no debt facility available to us.
On October 12, 2000, the Company advanced E Com Ventures, Inc. $500,000.
This amount bears interest at the prime rate plus four percent and is due on
December 31, 2000.
We believe that the net proceeds generated from our initial public offering
will be sufficient to finance our current and anticipated operations through
June 2001. We believe that our business strategy will provide us with
sufficient operating cash flow by that point in time, however, there can be no
assurance that such business strategy will be successfully implemented,
completed in a timely manner or that our future cash flows will be sufficient to
meet all of our obligations and commitments. The failure to generate such
sufficient cash flow could significantly adversely affect the market value of
our Common Stock.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our market risk exposure with respect to financial instruments is to changes
in the "prime rate" in the United States. We have a loan receivable from a
shareholder in the amount of $66,486 bearing interest at prime plus two percent.
We have short-term financial instruments, primarily investments, which are
sensitive to changes in interest rates. Our investments are classified as cash
equivalents. The average interest rate on these investments during the
three-month period ended September 30, 2000 was approximately 6.5%. As of
September 30, 2000, we had no long-term investments.
10
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PART II - OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
See Note 5 to the Condensed Financial Statements included in Part I, Item 1 of
this quarterly report for certain other information relevant to ongoing legal
matters.
ITEM 2. CHANGE IN SECURITIES
The Company did not issue or sell any unregistered securities during the
quarter ended September 30, 2000.
ITEM 5. OTHER INFORMATION
On October 1, 2000, we entered into a six-month service agreement with
Perfumania.com, a related party through common directors, to outsource our
warehouse and distribution functions in the southeast section of the United
States. This agreement will automatically renew for successive one-year terms.
This service agreement includes order processing, inventory management,
warehousing, fulfillment and shipping of product. The agreement is variable,
based on volume of sales, however, the agreement includes monthly minimum fees
if such volume levels are not obtained. Such fees range from $11,000 to $20,000
per month based on volume of sales.
On October 12, 2000, the Company advanced E Com Ventures, Inc., a related
party through common directors, $500,000. This amount bears interest at the
prime rate plus four percent and is due on December 31, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27.1 - Financial Data Schedule.
(b) Perfumania.com Service Agreement.
(c) E Com Ventures, Inc. Note Agreement.
(d) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the
quarter ended September 30, 2000
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 duly authorized officer.
Take to Auction.com
By: /s/ Albert Friedman
------------------------------------------
Albert Friedman
President and Chief Executive Officer
By: /s/ Mitchell Morgan
------------------------------------------
Mitchell Morgan
Chief Financial Officer
Date: November 13, 2000
11
