<PAGE>
FORM 10-QSB/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[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: 29951
PEDIANET.COM, INC.
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(Exact name of registrant as specified in its charter)
Georgia 58-1727874
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1804 Jerome Avenue
Brooklyn, New York 11235
(Address of principal executive offices)
(Zip Code)
718-332-3994
(Registrant's telephone number, including area code)
(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.
At May 1, 2000, there were 5,279,896 shares of Common Stock, $.001 par
value, outstanding.
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PEDIANET.COM, INC.
INDEX
Page Number
Part I. Financial Information
Item 1. Financial Statements 1
Balance Sheets as of
March 31, 2000 (unaudited) and
December 31, 1999 2
Statements of Operations
and Comprehensive Income
for the Three Months Ended
March 31, 2000 and 1999 (unaudited) 3 - 4
Statements of Cash Flows
for the Three Months Ended
March 31, 2000 and 1999
(unaudited) 5
Notes to Consolidated Financial
Statements (unaudited) 6 - 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9 - 10
Part II. Other Information
Item 1. Legal Proceedings 11
Item 2 Changes in Securities 11
Item 3 Default in Senior Securities 11
Item 4 Submission of Matters to a
Vote of Security Holders 11
Item 5 Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
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PART I. Financial Information
Item 1. Financial Statements
Certain information and footnote disclosures required under
generally accepted accounting principles have been condensed or omitted from the
following consolidated financial statements pursuant to the rules and
regulations of the Securities and Exchange Commission. It is suggested that the
following financial statements be read in conjunction with the year-end
financial statements and notes thereto included in the Company's Annual Report
on Form 10-SB/A dated May 22, 2000.
The results of operations for the three month period ended
March 31, 2000 are not necessarily indicative of the results for the entire
fiscal year or for any other period.
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PEDIANET.com, INC
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
2000 1999
----------- -----------
(Unaudited)
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 108,886 $ 151,687
Marketable securities 3,750 25,000
Accounts receivableshareholder -- 25,000
Prepaid interest 61,751 82,335
----------- -----------
Total Current Assets 174,387 284,022
Property, furniture and equipment net 137,346 157,653
Other assets 4,800 --
----------- -----------
TOTAL ASSETS $ 316,533 $ 441,675
=========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY)
Current Liabilities:
Accounts payable $ 59,076 $ 129,864
Accrued expenses 99,530 92,530
Note payable 793,800 793,800
Loans payablerelated parties 45,111 48,611
----------- -----------
Total Liabilities 997,517 1,064,805
----------- -----------
Commitments and Contingencies
Stockholders' (Deficiency):
Preferred stock, par value $.10
per share, 10,000,000 shares authorized;
outstanding 10,003 shares 1,000 1,000
Common stock, par value $.001 per share
50,000,000 shares authorized;
outstanding 5,279,896 and 5,248,557
shares 5,280 5,249
Additional paidin capital 1,884,030 1,836,883
Cumulative other comprehensive (loss) (46,250) (25,000)
Note receivable subscription agreement (850,000) (850,000)
Deficit (1,675,044) (1,591,262)
----------- -----------
Total Stockholders' (Deficiency) (680,984) (623,130)
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIENCY) $ 316,533 $ 441,675
=========== ===========
</TABLE>
See notes for financial statements
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PEDIANET.com, INC
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
------------------------------
2000 1999
----------- -----------
Revenue:
Website income $ -- $ 3,500
----------- -----------
Cost and Expenses:
Selling, general
and administrative 84,484 184,629
----------- -----------
Loss from operations (84,484) (181,129)
Other income
Interest income 702 --
----------- -----------
Net (loss) $ (83,782) $ (181,129)
=========== ===========
Net (loss) per common
share basic and diluted $ (0.02) $ (0.05)
=========== ===========
Weighted average of common
shares outstanding
basic and diluted 5,248,557 3,686,386
=========== ===========
See notes for financial statements
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PEDIANET.com, INC
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
Three Months Ended
March 31,
2000 1999
--------- ---------
Net loss $ (83,782) $(181,129)
Other comprehensive loss
net of income taxes:
Unrealized loss on
marketable securities (46,250) --
--------- ---------
Comprehensive loss $(130,032) $(181,129)
========= =========
See notes for financial statements
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PEDIANET.com, INC
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities
Net (loss) $ (83,782) $(181,129)
Adjustments to reconcile net loss to
cash used in operating activities:
Noncash compensation for services -- 89,925
Depreciation 853 891
Amortization 19,455 19,455
Changes in operating assets and
liabilities:
Decrease in accounts receivable 25,000 --
Decrease in prepaid interest 20,584 --
Increase in other assets (4,800) --
(Decrease) increase in accounts
payable and accrued expenses (16,611) 54,841
--------- ---------
Net Cash (Used in)
Operating Activities (39,301) (16,017)
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Cash flows from financing activities:
Proceeds from loans payable -- 1,500
Payments on loans (3,500) (1,500)
Proceeds from exercise of stock options -- 15,000
--------- ---------
Net Cash Provided by (Used in)
Financing Activities (3,500) 15,000
--------- ---------
Net (decrease) in cash and
cash equivalents (42,801) (1,017)
Cash and cash equivalents beginning of year 151,687 (107)
--------- ---------
Cash and cash equivalents end of year $ 108,886 $ (1,124)
========= =========
Supplementary information:
Conversion of accounts payable to
common stock $ 47,178
=========
</TABLE>
See notes for financial statements
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<PAGE>
PEDIANET.com, INC.
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTANT POLICIES
The balance sheet as of March 31, 2000 and the statements of operations
and comprehensive loss and cash flows for the period presented herein
have been prepared by Pedianet.com Inc ("PediaNet" or the "Company")
and are unaudited. In the opinion of management, all adjustments
(consisting solely of normal recurring adjustments) necessary to
present fairly the financial position, results of operations and
comprehensive loss and cash flows for all periods presented have been
made. The information for December 31, 1999 was derived from audited
financial statements.
2. BASIS OF PRESENTATION
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.
As of March 31,2000 the Company has no revenues for the current year
and is in default on its debt to one of the Company's shareholders.
The Company's ability to continue as a going concern is dependant upon
its ability to obtain additional debt and/or equity financing and
realize revenues from its website sufficient to cover its overhead. The
Company intends to derive future revenues from the design and
implementation of their Pediatrics Information Directory System and
will offer a number of website services to members of the Pediatric
profession. These potential revenue streams will come from offering
website design of Internet home pages for Pediatricians, registration
of domain addresses, setup of access service and webmaster services. In
addition, the Company's aim is to license and distribute the Devset
software and upgrades to Devset module. The Company expects to commence
implementation of these services sometime in the early third quarter of
2000. The Company also plans to generate future revenues from digital
space, pediatric internet digital TV, pediatric national database
subscriptions, instructional courses and online conferences.
In addition to internal growth, the Company intends to expand through
acquisitions and new product development. While the Company has no
present agreements to acquire additional companies, it intends to focus
on companies that exhibit stable, aggressive growth that would
complement the services offered on its website.
There is no assurance that additional capital will be obtained, revenue
stream from it website will be commercially successful or that the
Company will be successful in its endeavors to acquire compatible
companies.
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The Company currently does not have commitments for capital
expenditures and does not expect to purchase property or equipment over
the next twelve months that cannot be financed in the ordinary course
of business. The Company estimates that is will require $850,000 to
support its planned activities over the next twelve months.
3. EARNINGS PER COMMON SHARE
Basic and diluted loss per common share is computed by dividing net
loss by the weighted average number of common shares outstanding during
the year. Diluted earnings per common share are computed by dividing
net earnings by the weighted average number of common and potential
common shares during the year. Potential common shares are excluded
from the loss per share calculation. because the effect would be
antidilutive. Potential common shares relate to the preferred stock
that is convertible into common stock, convertible debt and outstanding
warrants.
4. RECAPITALIZATION
On December 31, 1999 the Company merged with Ultraphonics-USA, Inc and
issued 10,003 shares of its preferred stock and 1,518,171 shares of its
common stock in exchange for the outstanding shares of
Ultraphonics-USA, Inc. In connection with the share exchange the
Company acquired the assets net of liabilities of Ultraphonics-USA, Inc
with a net book value of $154,538. For accounting purposes, the merger
has been treated as a recapitalization of PediaNet Inc as the
accounting acquirer. The historical financial statements prior to
December 31, 1999 are those of PediaNet Inc.
The financial statements include the Statements of Operations of the
Company, exclusive of Ultraphonics, for the three months ended March
31, 2000 and 1999. The net assets acquired by the Company included the
following at December 31, 1999:
Cash $ 100,000
Marketable securities 50,000
Notes receivable-
shareholders 850,000
Prepaid interest 82,335
----------
Assets acquired 1,082,335
Liabilities assumed 927,797
----------
$ 154,538
==========
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<PAGE>
5. NOTES RECEIVABLE/NOTES PAYABLE
As part of the recapitalization with Ultraphonics, the Company assumed
the subscription agreement in connection with a private placement of
Ultraphonic's common stock in December 1999. In connection with the $1
million financing under Rule 504 of Regulation D of the Securities Act
of 1933, Ultraphonics offered (i) 900,000 shares of Ultraphonic common
stock at $.22 per share; (ii) $793,800 of Ultraphonic's one year, 10%
convertible promissory notes which are convertible into shares of
common stock at $1.50 per share and (iii) 410,000 warrants at $.01 per
warrant, each warrant exercisable at $.01 per share. Ultraphonics
received $100,000 in cash, $50,000 in marketable securities and
received a note receivable in the amount of $850,000, bearing interest
at 10%, due June 28, 2000.
The convertible note payable of $793,000 is due December 28, 2000.
Interest is payable on the due date and thereafter until the obligation
is discharged. The note is convertible into 529,200 of the Company's
common stock at the option of the holder.
The note receivable and note payable are obligations of the same
related party. At December 31, 1999 the Company did not offset the note
receivable against the note payable as it is not the intention of the
Company to offset the two obligations at maturity. The Company has
offset the note receivable-subscription agreement of $850,000 against
stockholder's equity until the note has been paid.
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Item 2. Management's' Discussion and Analysis of Financial Condition and
Results of Operations
The Company's quarterly and annual operating results are affected by a
wide variety of factors that could materially and adversely affect
revenues and profitability, including competition; changes in consumer
preferences and spending habits; the inability to successfully manage
growth; seasonality; the ability to introduce and the timing of the
introduction of new products and the inability to obtain adequate
supplies or materials at acceptable prices. As a result of these and
other factors, the Company may experience material fluctuations in
future operating results on a quarterly or annual basis, which could
materially and adversely affect its business, financial condition,
operating results, and stock prices. Furthermore, this document and
other documents filed by the Company with the Securities and Exchange
Commission (the "SEC") contain certain forward-looking statements.
These forward-looking statements are subject to certain risks and
uncertainties, including those mentioned above, and those detailed in
the Company's Form 10-SB dated May 22, 2000, which may cause actual
results to differ materially from these forward-looking statements. An
investment in the Company involves various risks, including those
mentioned above and those which are detailed from time to time in the
Company's SEC filings.
Results of Operations
PediaNet intends to derive future revenues from the design and
implementation of their Pediatrics Information Directory System and
will offer a number of website services to members of the Pediatrics
profession. These potential revenue streams will come from offering
website design of Internet home pages for Pediatricians, registration
of domain addresses, setup of access service and webmaster service. In
addition, the Company's aim is to license and distribute the Devset
software and upgrades to Devset module. The Company expects to commence
implementation of these services sometime early in the third quarter of
2000. The Company also plans to generate future revenues from digital
space, pediatric internet digital TV, pediatric national database
subscriptions, instructional courses and online conferences.
In addition to internal growth, the Company intends to expand through
acquisitions and new product development. While the Company has no
present agreements to acquire additional companies, it intends to focus
on companies that exhibit stable, aggressive growth that would
complement the services offered on its website.
There is no assurance that additional capital will be obtained, revenue
stream from its website will be commercially successful or that the
Company will be successful in its endeavors to acquire compatible
companies.
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<PAGE>
Three Months Ended March 31, 2000 compared to
Three Months Ended March 31, 1999
Sales
Sales decreased from $3,500 for the three months ended March 31, 1999
to $-0- for the three months ended March 31, 2000. The Company expects
to commence implementation of its website services sometime early in
the third quarter of 2000.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased from $184,629
for the three months ended March 31, 1999 to $63,900 for the three
months ended March 31, 2000. This decrease is primarily due to
additional expenses recorded from the issuance of stock issued for
services in the three months ended March 31, 1999.
Interest Expense
Interest expense increased from $-0- for the three months ended March
31, 1999 to $20,584 for the three months ended March 31, 2000. This
increase is due to interest expense for warrants issued below fair
market value which expire December 31, 2000.
Liquidity and Capital Resources
As of March 31, 2000 the Company needs to obtain additional financing
to fulfill its activities and achieve a level of sales adequate to
support its cost structure. The main revenue stream is expected to be
from specialized services, such as advertising and sponsors, digital
space, pediatric internet TV, pediatric national database
subscriptions, instructional courses and online conferences. There can
be no assurance that any revenue will be generated from these sources.
The Company estimates that it will require approximately $850,000 to
support the planned activities over the next twelve months. The Company
expects to generate working capital from the collection of $850,000 in
notes receivable and from debt and equity financing. Although the
Company received $140,000 against the notes receivable in 2000, the
Company at present does not have adequate cash reserves to meet its
future cash requirements. The Company's ability to continue as a going
concern will depend upon successful completion of any financing, any
future acquisitions or its ability to generate revenue from advertising
and sponsors. The Company does not expect to have to purchase any
property or equipment over the next year that cannot be financed in the
ordinary course of business.
Other Matters
Year 2000
Impact of Year 2000
The Company's mission critical systems have operated without
interruption during 2000. Furthermore, the Company has not experienced
a failure of any non-critical devices or systems. In addition, the
Company has not experienced a delay from any service providers or
vendors.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Default in senior securities
None.
Item 4. Submission of matters to a vote of security holders
None
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: Exhibit 27.1 Financial Data Schedule.
(b) There were no Current Reports on Form 8-K filed by
the registrant during the quarter ended March 31,
2000.
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<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
PEDIANET.COM, INC
Date: June 19, 2000 By: /s/Melvin D. Koplow
---------------------------
Dr. Melvin D. Koplow
Chief Executive Officer
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