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
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________.
Commission File Number 0-27929
SKREEM.COM CORPORATION
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 62-1655508
- -------------------------------- -----------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization
200 S. Knowles Avenue, Winter Park, Florida 32790
----------------------------------------------------
(Address of principal executive offices)
(407) 622-2040
---------------------------
(Issuer's telephone number)
(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 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 1, 2000, 13,545,315 shares of the issuer's Common Stock, $.01 par
value, outstanding.
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SKREEM.COM CORPORATION
INDEX
Page
Number
-------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of March 31, 2000 and
December 31, 1999......................................... 3
Statements of Operations for the Three Months
Ended March 31, 2000 and 1999............................. 4
Statements of Cash Flows for the Three Months Ended
March 31, 2000 and 1999................................... 5
Notes to Financial Statements............................. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 9
PART II - OTHER INFORMATION............................................ 10
SIGNATURES............................................................. 11
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
SKREEM.COM CORPORATION
BALANCE SHEETS
<TABLE>
March 31, 2000 December 31, 1999
---------------- ------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 283,117 $ 377,089
Accounts Receivable 214,336 209,331
Other 25,384 25,384
-------------- ----------------
Total current assets: 522,837 611,804
-------------- ----------------
Securities 162,500 162,500
Property Plant & Equipment 23,671 13,380
Less: Accumulated Depreciation (4,114) (2,676)
-------------- ----------------
Other Assets:
Organization costs net of amortization 718 765
-------------- ----------------
Total other assets $ 705,612 $ 785,773
============== ================
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Accrued expenses $ 12,996 $ 23,056
-------------- ----------------
Total current liabilities 12,996 23,056
-------------- ----------------
Stockholders' equity
Common Stock, $.01 par value; authorized 30,000,000
shares; issued and outstanding 13,545,315 and 2,920,200
Capital in excess of par value 135,453 135,453
Deficit accumulated during the development stage 985,311 985,311
Unrealized gain on securities available for sale (540,648) (470,547)
112,500 112,500
-------------- ----------------
Total stockholders' equity 692,616 762,717
-------------- ----------------
Total liabilities and stockholders' equity $ 705,612 $ 785,773
============== ================
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
SKREEM.COM CORPORATION CONSOLIDATED
UNAUDITED STATEMENT OF OPERATIONS
<TABLE>
Three Months Ended Inception Through
March 31, March 31,
--------------------------- -----------------
2000 1999 2000
---------- ---------- -----------------
<S> <C> <C> <C>
Revenues
Sales $ 9,465 $ - $ 34,500
------------- ------------ ----------------
Expenses:
Selling, general and administrative 78,080 5,157 565,114
Depreciation & Amortization 1,485 31 10,034
------------- ------------ ----------------
Total expenses 79,565 5,188 575,148
------------- ------------ ----------------
Net loss $ (70,100) $ (5,188) $ (540,648)
============= ============ ================
Loss per share $ (.01) $ -
============= ============
Weighted average shares outstanding 13,545,315 2,920,315
============= ============
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
SKREEM.COM CORPORATION
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
March 31, 2000 March 31, 1999 Inception to March
31, 2000
---------------- ----------------- ------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash used $ (70,101) $ (5,188) $ (540,648)
by operating activities:
Depreciation and amortization
(Increase) in accounts receivable 1,485 16 4,333
Increase (decrease) in accounts payable (5,005) - (11,063)
Expenses paid and debts settled with common stock (10,060) 5,780 12,996
- - 111,420
------------- -------------- -----------------
Net cash (used) by operations (83,681) 698 (422,962)
------------- -------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Issuance of notes receivable
Purchase of marketable securities - - (228,658)
Purchase of equipment - - (50,000)
Increase in organization costs (10,291) - (23,671)
- (921) (936)
------------- -------------- -----------------
Net cash (used) by investing activities (10,291) (921) (303,265)
------------- -------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock for cash
- 5,000 1,009,344
------------- -------------- -----------------
Net cash provided from financing activities
- 5,000 1,009,344
------------- -------------- -----------------
Net increase in cash (93,972) 4,777 283,117
Cash, beginning 377,089 - -
------------- -------------- -----------------
Cash, ending $ 283,117 $ 4,777 $ 283,117
============= ============== =================
Supplemental Disclosures:
Non-cash financing activities:
Issuance of common stock for expenses
$ - $ - $ 111,420
============= ============== =================
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
SKREEM.COM CORPORATION CONSOLIDATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY
Business activity
- -----------------
The Company, a Delaware corporation was incorporated on May 17, 1989, and is
currently in the development stage. The Company intends to acquire and develop
high technology software firms.
In April 1999 the Company changed its name from Commerce Centers Corporation to
Skreem.com Corporation and approved a reverse stock split of 3 shares of
outstanding stock for 5 shares. The report has been prepared as if the stock
split had occurred at inception.
Accounting method
- -----------------
The Company's financial statements are prepared using the accrual method of
accounting.
Principles of consolidation
- ---------------------------
The consolidated financial statements include the accounts of Skreem.com
Corporation, a Nevada corporation. All material intercompany transactions have
been eliminated.
Computer software costs
- -----------------------
The Company expenses research and development costs related to software
development that has not reached technological feasibility and started
production for sale. Thereafter costs are capitalized and amortized over a
maximum of five years or expected life of the product, whichever is less.
Computer research and development costs of $8,116 were incurred in the current
period ended March 31, 2000.
Income (loss) per share
- -----------------------
The computation of income (loss) per share of common stock is based on the
weighted average number of shares outstanding, after the stock split.
Statement of cash flows
- -----------------------
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents for purposes of the
statement of cash flows.
Financial instruments
- ---------------------
The Company estimates that the fair value of all financial instruments at March
31, 2000 and December 31, 1999 do not differ materially from the aggregate
carrying values of its financial instruments recorded in the accompanying
balance sheets.
6
<PAGE>
Dividend policy
- ---------------
The Company has not yet adopted a policy regarding payment of dividends.
Estimates and assumptions
- -------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
Marketable securities:
- ----------------------
Equity securities are classified as available for sale as defined by SFAS 115.
In accordance with that Statement, they are reported at aggregate fair value
with unrealized gains and losses excluded from earnings and reported as a
separate component of stockholders' equity.
1. INCOME TAXES
The Company complies with Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. At December 31, 1999 the Company had a net
operating loss ("NOL") carry forward for United States income tax purposes of
approximately $470,547. The NOL carryforward expires in increments beginning in
2004. The Company's ability to utilize its net NOL carryforward is subject to
the realization of taxable income in future years, and under certain
circumstances, the Tax Reform Act of 1986 restricts a corporation's use of its
NOL carryforward. The Company believes that there is at least a 50% chance that
the carryforward will expire unused, therefore, any tax benefit from the loss
carryforward has been fully offset by a valuation reserve.
2. ACQUISITION OF NEVADA SKREEM.COM CORPORATION
In April 1999 the Company, Skreem.com Corporation, a Delaware corporation
("SCD") acquired all of the outstanding stock of Skreem.com Corporation, a
Nevada corporation ("SCN") through a stock for stock exchange in which the
stockholders of SCN received 9,600,000 post stock split common shares of the SCD
in exchange for all of the stock of the SCN. Skreem.com Corporation ("SCN") was
incorporated in Nevada on January 29, 1999 for the purpose of developing high
technology software.
For reporting purposes, the acquisition is treated as an acquisition of the
Company ("SCD") by Skreem.com Corporation of Nevada ("SCN") (reverse
acquisition) and a recapitalization of SCN with its historical financial
statements being combined with the Company's. No proforma statements have been
included since the acquisition is considered to be a reverse acquisition.
3. DEMAND NOTES RECEIVABLE
As of March 31, 2000, the Company had demand notes receivable, including accrued
interest as follows:
7
<PAGE>
Maker Interest rate Amount
------- --------------- --------
Related parties:
Organized Internet Services, Inc. 8% $ 53,652
Organized Internet Services, Inc. 8% 52,137
Organized Internet Services, Inc. 8% 51,611
Skreem Entertainment Corp. 10% 56,937
---------
214,337
Other:
GO2 Union.com 8% 25,384
---------
$239,721
=========
The notes due from Organized Internet Services, Inc. are each to be secured with
200,000 shares of common stock of the maker, however, delivery of the security
had not been made as of March 31, 2000. The note due from Skreem Entertainment
Corp. is secured by recording equipment. The note from GO2 Union.com is secured
by assets of the company. Refer to note 6 for discussion of related party
transactions.
4. MARKETABLE SECURITIES
The Company had no sales of securities classified as available for sale for the
periods ended March 31, 2000 and 1999. The amortized cost and estimated fair
values of marketable securities as of December 31, 1999 are as follows as:
Gross
Amortized Unrealized Fair
Cost Gain Value
----------- ------------ -------
Available for sale equity securities $50,000 $112,500 $162,500
====== ======= =======
5. RELATED PARTY TRANSACTIONS
During February 1998, the Company issued 1,585,258 post stock split shares to
five major stockholders and two persons who were both officers and directors.
The consideration for the issuance was assumption of the Company's accrued
liabilities in the amount of $21,920 by the above mentioned shareholders, and
the agreement by them to fund future Company expenditures in the amount of
$4,500.
The shares issued pursuant to the acquisition agreement as described in note 3
were issued to four individuals who collectively represent a controlling
interest of the Company.
Certain demand notes receivable as detailed in note 4 above were created in
related party transactions since the Company's President is a major shareholder
in both Organized Internet Services, Inc. and Skreem Entertainment Corp.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Three Months Ended March 31
Revenues for the three months ended March 31, 2000 increased to $9,465 from
no revenues for the three months ended March 31, 1999. This increase in revenues
resulted from interest recovered on investment accounts.
General and administrative expenses increased by $72,923 or 1,414% to
$78,080 for the three months ended March 31, 2000 from $5,157 for the
corresponding period of the prior year. This increase resulted from the
expenditures made by the Company in the development of its software products.
Depreciation and amortization expense increased by $1,454 or 4,690% to
$1,485 for the three months ended March 31, 2000 from $31 for the corresponding
period of the prior year. The increase in depreciation and amortization expense
resulted from the increased depreciation on equipment purchased since the period
ended March 31, 1999.
As a result of the foregoing, the Company's net operating loss increased by
$64,912 or 1,251% to $70,100 for the three months ended March 31, 2000 from
$5,188 for the corresponding period of the prior year.
CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
For the past twelve months, the Company has funded its operating losses and
capital requirements through the sale of stock. As of March 31, 2000, the
Company had a cash balance of $283,117 and working capital of $509,841. This
compares with cash of $377,089 and working capital of $588,748 for the
corresponding period of the prior year.
Net cash used in operating activities increased to $83,681 from $698 of
cash provided by operations for the three months ended March 31, 2000 and 1999,
respectively. The increase in cash used in operations resulted from an increase
in the net operating loss, an increase in accounts receivable and a decrease in
accounts payable.
Cash flows used in investing activities for the three months ended March
31, 2000 increased to $10,291 from $921 for the corresponding period of the
prior year. This increase resulted from an increase in the purchase of equipment
which was partially offset by a decrease in expenditures for organizational
costs.
9
<PAGE>
Net cash provided by financing activities decreased to $0 from $5,000 for
the three months ended March 31, 2000 and 1999, respectively. This decrease
resulted from the absence of any sale of shares in the current period.
The Company has experienced significant operating losses throughout its
history, and will acquire substantial funds for the development of its business.
Therefore, the Company's ability to survive is dependent on its ability to raise
capital through the issuance of stock or borrowing of additional funds. Without
the success of one of these options, the Company will not have sufficient cash
to satisfy its working capital and investment requirements for the next twelve
months.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
1. 27.1 Financial Data Schedule
b. Reports on Form 8-K
None
10
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereto
duly authorized.
SKREEM.COM CORPORATION
/s/ Thomas Tedrow
--------------------------
Thomas Tedrow
May 11, 2000
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 283,117
<SECURITIES> 0
<RECEIVABLES> 214,336
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 522,837
<PP&E> 23,671
<DEPRECIATION> 4,114
<TOTAL-ASSETS> 705,612
<CURRENT-LIABILITIES> 12,996
<BONDS> 0
0
0
<COMMON> 135,453
<OTHER-SE> 557,163
<TOTAL-LIABILITY-AND-EQUITY> 692,616
<SALES> 9,465
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 79,565
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (70,100)
<INCOME-TAX> 0
<INCOME-CONTINUING> (70,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (70,100)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
