<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10 QSB
(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
( ) Transition report pursuant of Section 13 or 15(d) of the Securities
Exchange Act of 1939 for the transition period _____ to______
COMMISSION FILE NUMBER
DSTAGE.COM, INC.
-----------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 52-2195605
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1600 Broadway, Suite 2400, Denver, Colorado 80202 (303) 542-1802
--------------------------------------------------------------------------------
(Address of Principal Executive Offices, including Registrant's zip code and
telephone number)
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Former name, former address and former fiscal year, if changed
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____
The number of shares of the registrant's common stock as of September 30, 2000:
7,272,034 shares.
Transitional Small Business Disclosure Format (check one): Yes ____No __X__
<PAGE>
<TABLE>
DSTAGE.COM, INC.
(A Development Stage Company)
BALANCE SHEETS
<CAPTION>
Assets September 30, December 31,
2000 1999
------------ ------------
(Unaudited) (Audited)
<S> <C> <C.
CURRENT ASSETS
Cash $ 4,804 $ 16,686
Prepaid expenses (Note 5) 193,203 1,347
------------ ------------
Total current assets 198,007 18,033
Computer equipment and software, net of depreciation 3,485 2,449
Office furniture and equipment, net of depreciation 3,505 1,106
Deposits 1,468 -
Investments in other companies, less impairment
of $713,592 (Note 6) 7,208 -
Other assets - 379
Prepaid expenses 33,000 -
------------ ------------
Total assets $ 246,673 $ 21,967
============ ============
Liabilities and Stockholders' Equity
CURRENT LIABILITIES
Accounts payable $ 281 $ 72
Accrued expenses 3,193 0
Note payable - stockholder 1,680 0
------------ ------------
Total current liabilities 5,154 72
STOCKHOLDERS' EQUITY
Common stock, $.001 par value, 50,000,000 shares authorized;
issued and outstanding 7,272,034 at September 30, 2000 and 7,272 4,435
4,434,569 at December 31, 1999
Additional paid-in capital 1,203,884 84,256
(Deficit) accumulated during development stage (969,637) (66,796)
------------ ------------
Total stockholders' equity 241,519 21,895
------------ ------------
Total liabilities and stockholders' equity $ 246,673 $ 21,967
============ ============
</TABLE>
See accompanying summary of accounting policies
and notes to the financial statements
<PAGE>
<TABLE>
DSTAGE.COM, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
Cumulative Three Nine
During Months Ended Months Ended
Development September 30, September 30,
Stage 2000 2000
------------ ------------ ------------
<S> <C> <C> <C>
Revenue:
Professional services $ 108 $ 108 $ 108
Operating expenses:
Cost of services 15,000 15,000 15,000
Sales and marketing 4,153 - -
Operations and development 108,624 107,450 107,450
General and administrative 139,417 14,903 77,846
Reserve for impairment of long term assets 702,900 702,900 702,900
------------ ------------ ------------
Total operating expenses 970,094 840,253 903,196
Income (loss) from operations (969,986) (840,145) (903,088)
Interest income (expense), net 349 77 247
------------ ------------ ------------
Income (loss) before income taxes (969,637) (840,068) (902,841)
------------ ------------ ------------
Provision for (benefit from) income taxes - - -
------------ ------------ ------------
Net income (loss) $ (969,637) $ (840,068) $ (902,841)
============ ============ ============
Net income (loss) per share:
Basic $ (0.15) $ (0.13) $ (0.14)
============ ============ ============
Diluted $ (0.15) $ (0.13) $ (0.14)
============ ============ ============
Weighted average shares used in computing
net income (loss) per share
Basic 6,278,314 6,532,221 6,304,354
============ ============ ============
Diluted 6,278,314 6,532,221 6,304,354
============ ============ ============
</TABLE>
See accompanying summary of accounting policies
and notes to the financial statements
<PAGE>
<TABLE>
DSTAGE.COM, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Cumulative
During Nine Months Ended
Development September 30,
Stage 2000
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $(969,637) $(902,841)
Adjustments to reconcile net (loss)
to cash provided (used) by operating activities:
Depreciation 710 710
Issuance of stock for services 174,000 122,000
Issuance of stock for expense reimbursement 26,933 15,130
Impairment of investments in other companies 702,900 702,900
Investment in other companies for services (108) (108)
Increase in other current assets 14,055 14,055
Increase in accounts payable 281 209
Increase in accrued liabilities 3,193 3,193
Increase in notes payable 1,680 1,680
---------- ----------
Net cash (used) by operating activities (45,993) (43,072)
Cash flows from investing activities:
Acquisition of fixed assets (4,538) (4,145)
---------- ----------
Net cash (used) by investing activities (4,538) (4,145)
Cash flows from financing activities:
Proceeds from issuance of common stock 30,835 10,835
Proceeds from convertible note payable 24,500 24,500
---------- ----------
Net cash provided by financing activities 55,335 35,335
---------- ----------
Net increase in cash 4,804 (11,882)
Cash, beginning of period - 16,686
---------- ----------
Cash, end of period $ 4,804 $ 4,804
========== ==========
Non-cash transactions
Purchased of equipment by issuance of stock $ 3,162 $ -
========== ==========
Payment of prepaid and other assets by issuance of stock $ 1,726 $ -
========== ==========
Prepayment of services for stock $ 240,000 $ 240,000
========== ==========
Investments in other companies $ 710,000 $ 710,000
========== ==========
</TABLE>
See accompanying summary of accounting policies
and notes to the financial statements
<PAGE>
DSTAGE.COM, INC.
(A Development Stage Company)
Notes to the Financial Statements September 30, 2000
Note 1 - Basis of Presentation
The accompanying financial statements have been prepared by management in
accordance with basic rules established by the Securities and Exchange
Commission for Form 10-QSB. Not all financial disclosures required to present
the financial position and results of operations in accordance with generally
accepted accounting principles are included herein. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1999 audited
financial statements on Form 10-SB12G to the Securities and Exchange Commission
filed on June 12, 2000. In the opinion of management, all accruals and
adjustments (each of which is of a normal recurring nature) necessary for a fair
presentation of the financial position as of September 30, 2000 and the results
of operations for the nine-month period then ended have been made. Significant
accounting policies have been consistently applied in the interim unaudited
financial statements and the audited financial statements.
Note 2 - Nature of Business and Organization
Dstage.com, Inc., a Delaware corporation (the "Company") was incorporated on
October 12, 1999 to provide support, creation and restructuring services to
development stage companies. For the period October 12, 1999 (Inception) to
September 30, 2000, the Company has been in the development stage. The Company's
activities since inception have consisted of; building a network of individuals
and organizations participating in the development of the Dstage.com online
resources for development stage companies; Completing development and testing of
our proprietary indexes to track various types of development stage company
activity; and developing concepts that can be successfully converted into new
development stage ventures. Through September 30, 2000, the Company has expended
costs of organizing the Company and developing the business in the amount of
$980,438. The Company has not generated any revenues as of September 30, 2000.
The Company is dependent on the continued financial support of its largest
stockholder and the contributions of time from its officers and directors. While
the Company operates independently of its largest stockholder, a loss of this
support in the near term could have a detrimental effect on the Company.
Note 3 - Legal Proceedings
There are no pending legal proceedings involving the Company and we are not
aware of any proceeding that any governmental authority or any other party is
contemplating.
<PAGE>
Note 4 - Stockholders' Equity
On May 20, 2000, the Company entered into a promissory note with BulletProof
Business Plans, Inc., the Company's largest stockholder. The promissory note
provided for the Company to receive up to $10,000 in cash advances and
administrative expenses paid on our behalf. Interest is to accrue on the unpaid
principal balance at a rate equal to the prime rate. Outstanding principal and
accrued interest is due and payable on demand by the stockholder. Terms of the
promissory note includes conversion provisions, allowing the holder to convert
all advances to common stock at a rate of $1.00 per share. On August 2, 2000,
BulletProof converted the $10,000 note payable into 10,000 shares of the
Company's common stock as full payment of the note payable balance outstanding.
On August 2, 2000, the Company entered into a promissory note with BulletProof
Business Plans, Inc., the Company's largest stockholder. The promissory note
provided for the Company to receive up to $5,000 in cash advances and
administrative expenses paid on our behalf. Interest is to accrue on the unpaid
principal balance at a rate equal to the prime rate. Outstanding principal and
accrued interest is due and payable on demand by the stockholder. Terms of the
promissory note includes conversion provisions, allowing the holder to convert
all advances to common stock at a rate of $1.00 per share. On August 2, 2000,
BulletProof converted the $5,000 note payable into 5,000 shares of the Company's
common stock as full payment of the note payable balance outstanding.
On September 8, 2000, the Company entered into a promissory note with
BulletProof Business Plans, Inc., the Company's largest stockholder. The
promissory note provided for the Company to receive up to $5,000 in future cash
advances and expenses paid on our behalf. Interest is to accrue on the unpaid
principal balance at a rate equal to the prime rate. Outstanding principal and
accrued interest is due and payable on demand by the stockholder. Terms of the
promissory note includes conversion provisions, allowing the holder to convert
all advances to common stock at a rate of $2.00 per share. As of September 30,
2000, the Company had accrued $1,680 as payable under the BulletProof note
payable agreement for purchase of fixed assets. As of the date of this filing,
BulletProof had not converted the note payable to common stock.
Note 5 - Prepaid expenses
On June 17, 2000, the Company entered into an agreement with Eagle Consulting
Group whereby Eagle Consulting agreed to provide document preparation, filing,
and consulting services in exchange for 75,000 common shares of the Company. As
of September 30, 2000, 75,000 common shares were issued under this agreement. As
the preparation, filing and consulting services had not yet been provided as of
September 30, 2000, the amount has been recorded as a prepaid expense. The
Company plans to utilize these prepaid services in October, November, and
December of 2000. As services are rendered, the prepaid will be reduced and
professional service expense will be expensed in the statement of operations.
<PAGE>
On July 25, 2000, the Company entered into an agreement with Direct Marketing
Consultants whereby Direct Marketing Consultants agreed to provide advertising
and marketing services in exchange for 10,000 common shares of the Company. As
of September 30, 2000, 10,000 common shares were issued under this agreement. As
the advertising and marketing services had not yet been provided as of September
30, 2000, the amount has been recorded as a prepaid expense. The Company plans
to utilize these services in October, and November of 2000. As services are
rendered, the prepaid will be reduced and advertising and marketing expense will
be expensed in the statement of operations.
On July 28, 2000, the Company entered into an agreement with Sagacorp whereby
Sagacorp agreed to provide design and development services in exchange for
10,000 common shares of the Company. As of September 30, 2000, 10,000 common
shares were issued under this agreement. As the design and development services
had not yet been provided as of September 30, 2000, the amount has been recorded
as a prepaid expense. The Company plans to utilize these services in October and
November of 2000. As services are rendered, the prepaid will be reduced and
professional service expense will be expensed in the statement of operations.
On August 2, 2000, the Company entered into an agreement with BulletProof
Business Plans whereby BulletProof Business Plans agreed to provide business
planning and consulting services in connection with the development of GOTO-MD
in exchange for 45,000 common shares of the Company. As of September 30, 2000,
45,000 common shares were issued under this agreement. As of September 30, 2000,
professional services of $15,000 had been expensed in connection with the
development of GOTO-MD. The entire business planning and consulting services had
not yet been provided as of September 30, 2000, the balance has been recorded as
a prepaid expense. The Company plans to utilize the remainder of these services
in October and November of 2000. As services are rendered, the prepaid will be
reduced and professional service expense will be expensed in the statement of
operations.
On August 4, 2000, the Company entered into an agreement with Trainingscape.com
whereby Trainingscape.com agreed to co-brand, redistribute, and jointly develop
proprietary training courses. Further, Trainingscape.com agreed to provide
celebrity speakers in the development of training courses under this agreement
in exchange for 100,000 common shares of the Company. As of September 30, 2000,
100,000 common shares were issued under this agreement. As the content and
services had not yet been provided as of September 30, 2000, two-thirds of the
amount has been recorded as a current prepaid expense and one-third as a
non-current prepaid expense. The Company plans to utilize these services over
the next twelve to eighteen months. As services are rendered, the prepaid will
be reduced and professional service expense will be expensed in the statement of
operations.
<PAGE>
Note 6 - Investment in other companies
On August 1, 2000, the Company acquired a warrant in exchange for 50,000 shares
of the Company's common stock. The warrant entitles the Company to purchase up
to the aggregate exercise price of $1,400,000 of GOTO-MD common stock. The
warrant entitles the Company to acquire the greater of up to $700,000 of GOTO-MD
common stock or at least 10% of GOTO-MD's outstanding common stock in exchange
for 650,000 common shares of the Company. The warrant also entitles the Company
to acquire up to $700,000 of GOTO-MD common stock in exchange for professional
services rendered by the Company.
As GOTO-MD is in the development stage, an adjustment has been made to recognize
the impairment of the investment. The Company has recorded the investment in
GOTO-MD at $50,000 less an impairment of $49,500.
On August 8, 2000, the Company acquired 1% of AmeriBank Card Services in
exchange for 10,000 common shares of the Company. The Company has recorded the
investment in AmeriBank Card Service at $10,000 less an impairment of $9,900.
On September 25, 2000, the Company exercised the warrant to purchase 10% of
GOTO-MD's outstanding common stock in exchange for 650,000 of common shares of
the Company. The Company exchanged 650,000 shares at $1.00 per share for
1,111,111 shares at $0.63 per share of GOTO-MD's outstanding common shares. The
Company has recorded an adjustment to recognize the impairment of the investment
of $643,500.
As of September 30, 2000, the Company has provided professional services for the
development of GOTO-MD in the contractual amount of $10,800 in exchange for
17,143 GOTO-MD common shares under the exercised warrant with GOTO-MD. However,
the Company has valued the stock received from GOTO-MD for services rendered at
1% of the stock's face value. The Company has recorded the revenue earned and
the investment in GOTO-MD at $108. As of September 30, 2000, GOTO-MD had issued
1,128,254 common shares to the Company under this agreement.
Note 7 - Expenses
On August 11, 2000, the Company entered into an agreement with NVST.com whereby
NVST.com agreed to provide licensing, development, and hosting services in
exchange for 107,000 common shares of the Company. The Company expenses all
costs associated with acquiring technologies in developing its application until
a functional prototype has been developed.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-Looking Statements
The statements contained in this report on Form 10-QSB concerning our
business outlook or future economic performance; anticipated profitability,
gross revenues, commissions and expenses or other financial items; and
statements concerning assumptions made or exceptions as to any future events,
conditions, performance or other matters are "forward-looking statements" as
that term is defined under the Federal Securities Laws. Forward-looking
statements are subject to risks, uncertainties, and other factors, which would
cause actual results to differ materially from those stated in such statements.
Such risks, uncertainties and factors include, but are not limited to, adequate
funding, competition and external factors that we cannot control.
Overview
As in the fiscal year ended December 31, 1999, Dstage.com, Inc.,
continues to concentrate primarily on three core business elements: 1) building
a network of individuals and organizations participating in the development of
the Dstage.com online resources for development stage companies; 2) completing
development and testing of our proprietary indexes to track various types of
development stage company activity; and 3) developing concepts that can be
successfully converted into new development stage ventures.
We have completed the steps that will eventually result in us becoming
a publicly traded company. We have acquired the technology that will become an
integral part the infrastructure of our online resources. We have also agreed to
co-develop, co-brand, and distribute a series of training courses that are
consistent with the needs of development stage enterprises. We anticipate the
completion of our initial training product to be November of 2001. In addition,
we have had preliminary discussions with potential "Concept Sponsors", including
some influential industry leaders in the Internet marketplace.
Accounting for Affiliate Company Ownership
The various interests that we acquire in our affiliate companies are
accounted for under the following: equity method and cost method. The applicable
accounting method is generally determined based on our voting interest in an
affiliate company.
Equity Method. The equity method of accounting is used for affiliate companies
and other investments in which we have a significant influence (at least 20%)
are accounted for under the equity method of accounting. Under the equity method
of accounting, the Company records its equity ownership share of the affiliate's
earnings, losses, and dividends paid.
<PAGE>
Cost Method. The cost method of accounting is used for affiliate companies and
other investments in which we do not have significant influence (less than 20%
of the voting stock). Under the cost method of accounting, our share of the
earnings or losses of these companies is not recorded and the investments are
recorded at historical cost.
Affiliate companies accounted for under the cost method of accounting
at September 30, 2000 included:
Voting Ownership
----------------
GOTO-MD 10%
AmeriBank Card Services 1%
Our cost method affiliate companies are in the development stage and have not
generated significant revenues.
Changes in Financial Position, Liquidity and Capital Resources
Results of Operations
Net Loss from Operations
For the three months ended September 30, 2000, we had incurred a net
operating loss of $840,145. We have had a net loss from operations for each
period since inception. Our net operating losses are primarily due to recording
a reserve of $702,900 for impairment of investments in other companies, the
costs associated with organizing the Company and developing the business model.
Impairment of investments in other companies is recorded in accordance with FAS
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of". Our business is designed to allow the largest
expenses, namely the cost of personnel, consultants, license, and royalties for
third-party information use to be paid for with stock in lieu of cash. We expect
that shares issued under these arrangements may be subject to lockup provisions
and certain other restrictions. There can be no assurance that personnel,
consultants, or other parties will accept stock in lieu of cash. However, if
they do, we expect our immediate operational cash needs over the next twelve
months will not exceed $250,000. We can sustain operations for the next twelve
months, albeit at a much slower rate, with as little as $20,000.
From inception to September 30, 2000, we had incurred net operating
losses of $969,986. Our net operating losses are due primarily to the
recognition of impairment of investments in other companies, initial general and
administrative costs, organizational costs, and initial start up operations.
While our contractual agreements call for our professional services to be billed
at our hourly rates, we recognize non-cash compensation for our services at fair
market value. Fair market value is likely to be less than fair contractual
value.
<PAGE>
Revenues
For the third quarter ended September 30, 2000, we generated initial
revenues of $108. We classify our revenues as revenue from professional
services, since this has been our only source of revenue. If our planned revenue
streams materialize in the future, we expect to classify our revenues as revenue
from professional services and revenue from online services. These
classifications are expected to represent the way in which we will operate our
business and the way in which we will position our offerings in the marketplace.
Professional services revenue includes revenue from professional service and
consulting agreements. It is anticipated that these agreements will typically
involve a variety of contracting methodologies, including, but not limited to,
performance based compensation for services rendered, fixed sum, guaranteed
maximum price, and time and materials. It is also anticipated that most of these
contracts will accept payment by the customers stock, in lieu of cash or in
addition to cash, for some or all of the services rendered. Similarly, it is
expected that an hourly rate will be used to track contract progress and
determine client billings. However, when the compensation earned is in a form
other than cash we will value our services revenues at the fair value of the
property received. Professional services under all types of agreements except
those involving contingent consideration are recognized as the services are
performed.
Operating Expenses
Certain reclassifications have been made to the prior period and prior
year financial statements to conform to the 2000 presentation.
For the third quarter ended September 30, 2000, operating expenses were
$850,945. Cost of services totaled $15,000, operations and development totaled
$107,450, general and administrative expenses totaled $14,903. Our cost of
services is comprised principally of consulting fees billed by outside parties
delivering services we believe are necessary to meet the objectives of our
customers. Since many of these consultants are currently, and will be in the
future, compensated primarily or entirely by shares of our stock or certain
shares of the customer's stock we acquire through delivery of the services,
related party transactions are expected to be inherent to our operating
structure and strategy. Sales and marketing is comprised of advertising and
marketing related expenses. Operations and development are comprised of expenses
related to the operations and the development of the company's technology
infrastructure. General and Administrative expenses are comprised of,
professional services, rent, telephone, and travel expenses. As we begin to
enter the next stage of our business model, many of our internal service
requirements will be paid for by issuance of stock in lieu of cash. As we grow
and our common stock increases in value, we will adjust the value of our common
stock to reflect the market price at the time the services are provided. This
approach will enable us to minimize overhead costs while providing both the
company and the employee the maximum benefit for the services being performed.
<PAGE>
Operating expenses from January 1, 2000 to September 30, 2000 were
$913,888. Cost of services were $15,000. Operations and development costs were
$107,450. Operations and development consist of licensing, development, and
Internet access and hosting expenses. General and administrative expenses
totaled $77,846. General and Administrative expenses are comprised of
professional fees, rent, telephone, and travel. Interest income totaled $247.
Since inception, we have incurred operating expense of $980,786.
Income Taxes
There is no current or deferred tax expense for the period from October
12, 1999 (inception) to September 30, 2000 due to net losses from operations by
the Company. As of September 30, 2000, we had operating loss carryforwards of
approximately $969,637 (unaudited). The operating loss carryforwards expire
beginning in 2019.
Liquidity and Capital Resources
To date, we have not had substantial revenues and we have not had to
heavily rely on cash availability since we have been dependent on our management
and shareholders providing services for stock in lieu of cash. In order for our
business model to be successful, this trend will have to continue. We plan to
build a cash reserve that will be available in the event additional cash is
needed in the future. Nonetheless, our business model is designed to be
functional with minimum cash requirements.
Our primary source of capital has been our initial capitalization,
private equity sales and issuance of convertible notes payable to BulletProof
Business Plans, Inc. Our immediate liquidity needs have been provided by the
proceeds from our Private Placement Memorandum, and prepaid services for stock
in lieu of cash. We will derive most of our cash from revenues generated through
the normal course of business and from the issuance of convertible notes payable
to our major shareholder.
During the nine months ended September 30, 2000, we have received
$24,500 in proceeds from the issuance of convertible notes payable that were
converted to 808,500 shares of common stock. We have received cash and prepaid
services from our Private Placement Memorandum that concluded on August 11,
2000. A significant factor to preserving our liquidity will be management and
our shareholders, who will preserve cash by providing services for stock in lieu
of cash consideration.
<PAGE>
To date, we have acquired $240,000 in prepaid services for our common
stock, which allows us to preserve our capital resources. We plan to use these
services to develop, enhance, and promote the Company. As of September 30, 2000,
we have expensed $15,000 of prepaid professional services in the development of
GOTO-MD. We plan to use our prepaid expenses for the development of our
investments in other companies in October, November, and December of 2000. We
also plan to use our prepayment with Trainingscape.com over the next twelve to
eighteen months to jointly develop proprietary training courses. Since our
development of training courses will extend beyond twelve months, we have
recorded $33,000 in non-current assets. Our agreement with Sagacorp for $10,000
provides for design and development services of multimedia. We anticipate using
these services in October and November of 2000. Our agreement with Eagle
Consulting provides for document preparation, filing and consulting services. We
anticipate using these services in October, November, and December of 2000. Our
agreement with Direct Marketing Consultants provides for advertising and
marketing services. We expect to use these services in October and November of
2000. As of September 30, 2000, our prepaid service expenses totaled $225,000.
Net Cash Provided by Operations
For the nine months ended September 30, 2000, we incurred a net loss of
$902,841 and consumed $43,072 in cash in our operating activities. We spent
$4,145 to acquire computer hardware, software, and office furniture. We have
received $10,835 from the issuance of common stock. We have received $24,500 in
proceeds from issuance of notes payable, which were converted to 808,500 shares
of common stock. These transactions resulted in a decrease of net cash for the
period of $11,882. All of the cash outlays for this period were paid to third
parties. As of September 30, 2000, our cash position was $4,804.
Since inception, operating activities have consumed cash of $45,993. In
addition, we have had services provided to us by our management team for which
the consideration was stock in lieu of cash. As a result, our consumption of
cash has been primarily directed to third party out-of-pocket costs, including
consulting, rent, telephone, legal and audit fees. To date, we have received
$30,835 in proceeds from the issuance of common stock and $24,500 in proceeds
from issuance of convertible notes payable to our major shareholder. Our
cumulative net loss to date is $969,637, the majority of which is a direct
result of operations. Our current accounts payable is $281. The majority of our
expenses have been paid for by the issuance of common stock, greatly reducing
our cash dependence.
Capital Expenditures
We require funding primarily for computer hardware and software,
furniture, fixtures, and general working capital needs. Substantially all of our
capital expenditures have been paid for by the issuance of convertible notes
payable to our major shareholder and the proceeds from our Private Placement
Memorandum.
<PAGE>
Material Commitments for Capital Expenditures
While we have budgeted approximately $250,000 for working capital and
operating expenditures in 2000, we have no material commitments for those
expenditures. Our expected source of funds for these expenditures will be a
combination of future revenues from management and indexing fees. In the event
we do not receive enough proceeds from indexing fees, we will reduce our
operating activity to coincide with working capital available.
Trends, Events and Uncertainties that could have an Impact on Net Operating
Results
We believe that the need for the services we provide will continue for
the foreseeable future as more companies enter the B2B and e-commerce
marketplace. In the event that we are unable to continue our business model due
to a major shift in the economy or some other unforeseen reason, and as a result
we have to adjust our business model to a more traditional reliance on cash
consideration, this event could have an impact on net operating results by,
among other things, requiring us to obtain various fiscal tools to meet
obligations, which could result in interest payments and other debt expenses.
Interim Periods
Between December 31, 1999 and September 30, 2000, the current interim
period, our accumulated deficit increased from $66,796 to $980,438. During this
period our cash position declined from $16,686 to $4,804. We received in
exchange for notes payable an additional $35,000 from our largest shareholder,
and the majority of our operating expenses were paid for by our common stock in
lieu of cash consideration.
Discussion on Material Events That Would Cause Reported Information Not to be
Indicative of the Future
Since we are in our first full year of operations, there have been no
material events that would be indicative of the future.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act
of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 3, 2000 By: /s/ Sue Perrault
----------------------------------------
Sue Perrault, President
