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 June 30, 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
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(Exact name of small business issuer as specified in its charter)
Nevada 62-1655508
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization
200 Knowles Avenue, Winter Park, FL 32789
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(Address of principal executive offices)
(407) 622-2040
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(Issuer's telephone number)
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(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 August 15, 2000, 13,545,315 shares of the issuer's Common Stock, $.01
par value, outstanding.
<PAGE>
SKREEM.COM CORPORATION
INDEX
Page
Number
-------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of June 30, 2000 and
December 31, 1999........................................... 3
Statements of Operations for the Three Months
and Six Months Ended June 30, 2000 and 1999................ 4
Statements of Cash Flows for the Six Months Ended
June 30, 2000 and 1999...................................... 5
Notes to Financial Statements............................... 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................10
PART II - OTHER INFORMATION...................................................11
SIGNATURES....................................................................12
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
SKREEM.COM CORPORATION
BALANCE SHEETS
December 31,
June 30, 2000 1999
------------- ------------
Current Assets:
Cash $175,599 $377,089
Demand notes receivable (Note 4):
Related parties 200,400 209,331
Other 25,884 25,384
------------- -------------
Total current assets: 401,883 611,804
Marketable Securities:
Available for sale securities (Note 5) 125,000 162,500
------------- -------------
Equipment:
Office equipment 23,671 13,380
Accumulated depreciation (5,552) (2,676)
------------- -------------
Other Assets:
Investment in non-marketable securities (Note 5) 45,000 -
Organization costs net of amortization 718 765
------------- -------------
45,718 765
------------- -------------
$ 590,720 $ 785,773
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued expenses $ 11,298 $23,056
Note payable (Note 7) 50,000 -
------------- -------------
Total current liabilities 61,298 23,056
------------- -------------
Stockholders' equity
Common Stock, $.01 par value; authorized
30,000,000 shares; issued and outstanding
13,545,315 shares
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 (666,342) (470,547)
75,000 112,500
------------- -------------
Total stockholders' equity 529,422 762,717
------------- -------------
$590,720 $785,773
============= =============
See accompanying notes to financial statements
3
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SKREEM.COM CORPORATION CONSOLIDATED
UNAUDITED STATEMENT OF OPERATIONS
<TABLE>
Three Months Three Months Six Months June Six Months Inception
June 30, June 30, 30, June 30, Through June 30,
------------- ------------- ------------- ------------ ----------------
2000 1999 2000 1999 2000
------------ ------------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Revenue
Sale of software $ 45,000 $ - $ 45,000 $ - $ 45,000
Interest income 7,594 - 17,059 5,697 42,094
-
------------ -------------- ------------ ------------ ---------------
52,594 - 62,059 5,697 87,094
Expenses:
General &
administrative 176,269 119,521 254,349 123,824 741,383
Interest 581 - 581 - 581
Depreciation &
amortization 1,438 - 2,923 794 11,472
------------ -------------- ------------ ------------ ---------------
178,288 119,521 257,853 124,618 753,436
------------ -------------- ------------ ------------ ---------------
Net loss $(125,694) $ (119,521) $ (195,794) $(118,921) $(666,342)
============ ============== ============ ============ ===============
Net loss per
common share $ (.01) $ (.01) $ (.01) $ (.01)
============ ============== ============ ============
Weighted average
shares outstanding 13,545,315 13,120,315 13,545,315 7,943,266
============ ============== ============ ============
</TABLE>
See accompanying notes to financial statements
4
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SKREEM.COM CORPORATION
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
March 31, March 31, Inception to
2000 1999 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
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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 $27,678 were incurred in the current
period ended June 30, 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.
6
<PAGE>
SKREEM.COM CORPORATION CONSOLIDATED
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS ACTIVITY
(continued)
Financial instruments
---------------------
The Company estimates that the fair value of all financial instruments at June
30, 2000 and December 31, 1999 do not differ materially from the aggregate
carrying values of its financial instruments recorded in the accompanying
balance sheets.
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:
----------------------
Certain 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.
2. 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.
3. 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.
7
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3. ACQUISITION OF NEVADA SKREEM.COM CORPORATION (continued)
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.
4. DEMAND NOTES RECEIVABLE
As of June 30, 2000, the Company had demand notes receivable, including accrued
interest as follows:
Maker Interest rate Amount
------- --------------- --------
Related parties:
Organized Internet Services, Inc. 8% $ 54,652
Organized Internet Services, Inc. 8% 53,137
Organized Internet Services, Inc. 8% 52,611
JT Investments 10% 40,000
---------
200,400
Other:
GO2 Union.com 8% 25,884
---------
$226,284
=========
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 June 30, 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.
5. MARKETABLE SECURITIES
The Company had no sales of securities classified as available for sale for the
periods ended June 30, 2000 and 1999. The amortized cost and estimated fair
values of marketable securities as of are as follows as:
Gross
Amortized Unrealized Fair
Cost Gain Value
--------- ----------- --------
December 31, 1999 $50,000 $112,500 $162,500
========= ========= ========
June 30, 2000 $50,000 $ 75,000 $125,000
========= ========= ========
8
<PAGE>
6. NON-MARKETABLE SECURITIES
On April 1, 2000, Parks America, Inc. acquired intellectual property developed
by the Company in exchange for 150,000 shares of Parks America, Inc "restricted"
common stock. Parks America, Inc. is a public company, however, since only 200
shares actually traded over a six month period, the stock was not considered
marketable on April 1, 2000 or after through June 30, 2000. Consideration for
the transaction was recorded based on an estimate of the Company's cost to
create the intellectual property plus a reasonable markup - $45,000.
7. 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.
During May, 2000, the Company borrowed $50,000 from its President payable on
demand at 8%.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Three Months Ended June 30, 2000 Compared to the Three Months Ended June 30,
1999
Revenues for the three months ended June 30, 2000 increased to $52,594 from
no revenues for the three months ended June 30, 1999. $45,000 of this increase
in revenues resulted from the sale of software and $7,594 from interest on
investment accounts.
General and administrative expenses increased by $56,748 or 47.5% to
$176,269 for the three months ended June 30, 2000 from $119,521 for the
corresponding period of the prior year. This increase resulted from additional
expenditures made by the Company in the development of its software products.
Depreciation and amortization expense increased to $1,438 from no
depreciation and amortization for the three months ended June 30, 2000 from the
corresponding period of the prior year. The increase in depreciation and
amortization expense resulted from depreciation on equipment purchased since the
period ended June 30, 1999.
As a result of the foregoing, the Company's net operating loss increased by
$6,173 or 5.2% to $125,694 for the three months ended June 30, 2000 from
$119,521 for the corresponding period of the prior year.
Six Months Ended June 30, 2000 Compared to the Six Months Ended June 30, 1999
Revenues for the six months ended June 30, 2000 increased to $52,594 from
no revenues for the six months ended June 30, 1999. $45,000 of this increase in
revenues resulted from the sale of intellectual property and $7,594 from
interest on investment accounts.
General and administrative expenses increased by $130,525 or 10.54% to
$254,349 for the six months ended June 30, 2000 from $123,824 for the
corresponding period of the prior year. This increase resulted from additional
expenditures made by the Company in the development of its products.
Depreciation and amortization expense decreased by $10,678 or 93.1% to $794
for the six months ended June 30, 2000 from $11,472 for the corresponding period
of the prior year. The decrease in depreciation and amortization expense
resulted from depreciation on equipment purchased since the period ended June
30, 1999.
As a result of the foregoing, the Company's net operating loss increased by
$76,873 or 64.6% to $195,794 for the six months ended June 30, 2000 from
$118,921 for the corresponding period of the prior year.
10
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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 June 30, 2000, the Company
had a cash balance of $175,599 and working capital of $340,585. 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 for the six
months ended June 30, 2000 from $698 of cash provided by operations for the six
months ended June 30, 1999. 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 six months ended June 30,
2000 increased to $10,291 from $921 for the corresponding period of the prior
year. This increase is entirely attributable to the purchase of equipment in the
current period.
Net cash provided by financing activities decreased to $0 from $5,000 for
the six months ended June 30, 2000 and 1999, respectively. For the six months
ended June 30, 2000, the Company did not sell any of its common stock, but sold
$5,000 of common stock during the six months ended June 30, 1999.
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
11
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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
August 18, 2000
