UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 to 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period to
------------------- --------------------
Commission File Number 0-31197
----------------------
Airbomb.com Inc.
------------------------------------------------------------------------
(Exact name of small Business Issuer as specified in its charter)
Delaware 51 - 0401121
--------------------------------- ----------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Suite 505 - 1155 Robson Street
Vancouver, British Columbia, Canada V6E 1B5
----------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 604-689-1659
---------------------------------
------------------------------------------------------------------------
(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 Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days [X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 11,143,462 Shares of $.001 par value
Class A Common Stock outstanding as of September 30, 2000.
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and Item 310 (b) of Regulation S-B, and,
therefore, do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash flows, and
stockholders" equity in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered necessary
for a fair presentation of the results of operations and financial position have
been included and all such adjustments are of a normal recurring nature.
Operating results for the six months ended September 30, 2000 are not
necessarily indicative of the results that can be expected for the year ending
March 31, 2001.
<PAGE>
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
(Stated in U.S. Dollars)
<PAGE>
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Stated in U.S. Dollars)
--------------------------------------------------------------------------------
SEPTEMBER 30 MARCH 31
2000 2000
--------------------------------------------------------------------------------
ASSETS
Current
Cash $ 55,902 $ 267,050
Accounts receivable 42,880 32,154
Inventory 143,303 141,106
Prepaid expenses and deposits 31,645 11,566
--------------------------
273,730 451,876
Capital Assets (Note 3) 96,565 93,745
--------------------------
$ 370,295 $ 545,621
================================================================================
LIABILITIES
Current
Accounts payable and accrued liabilities $ 91,353 $ 103,247
Current portion of loans and advances payable 63,721 70,650
--------------------------
155,074 173,897
Loans And Advances Payable (Note 4) - 17,149
--------------------------
155,074 191,046
--------------------------
SHARE CAPITAL AND DEFICIT
Share Capital (Note 5)
Authorized:
100,000,000 common shares, par value
of $0.001 per share
Issued and Outstanding:
11,143,462 common shares at September 30,
2000 and
8,315,462 common shares at March 31, 2000 853,112 179,610
Special Warrants (Note 6)
Issued and Outstanding:
1,500,000 special warrants at September 30, 2000
and
3,320,000 special warrants at March 31, 2000 367,080 700,898
Deficit (1,004,971) (525,933)
--------------------------
215,221 354,575
--------------------------
$ 370,295 $ 545,621
================================================================================
<PAGE>
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
(Unaudited)
(Stated in U.S. Dollars)
--------------------------------------------------------------------------------
THREE THREE SIX SIX
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30
2000 1999 2000 1999
--------------------------------------------------------------------------------
Sales $ 243,816 $ 88,741 $ 572,270 $ 181,860
Cost Of Sales
Opening inventory 211,790 158,994 141,106 54,468
Purchases 166,825 79,194 520,303 269,845
Less: Ending inventory (143,303) (141,130) (143,303) (141,130)
---------------------------------------------------
Cost of sales 235,312 97,058 518,106 183,183
---------------------------------------------------
Gross Profit 8,504 (8,317) 54,164 (1,323)
---------------------------------------------------
Expenses
Advertising and promotion 49,538 3,858 78,520 3,912
Amortization 9,126 1,192 17,737 1,635
Auto and travel 9,091 4,693 13,908 5,657
Bad debts 1,125 - 1,125 -
Bank charges, interest
and foreign exchange 3,197 4,616 11,821 7,235
Consulting - 2,356 2,052 4,574
Corporate finance fee (320) - 33,668 -
Investor relations 31,448 - 71,620 -
Management fees 4,995 - 10,087 -
Office and sundry 14,222 5,256 42,576 7,322
Professional fees 29,793 13,728 66,069 15,154
Regulatory and transfer
agent 2,307 - 5,355 -
Rent and utilities 10,294 5,238 17,655 6,281
Telephone and internet 4,766 5,627 12,133 8,802
Wages and contract labour 69,319 10,988 148,876 15,909
---------------------------------------------------
238,901 57,552 533,202 76,481
---------------------------------------------------
Loss For The Period (230,397) (65,869) (479,038) (77,804)
Deficit, Beginning Of Period (774,574) (38,610) (525,933) (26,675)
---------------------------------------------------
Deficit, End Of Period $(1,004,971) $ (104,479) $(1,004,971) $ (104,479)
================================================================================
Loss Per Share $ (0.02) $ (0.01) $ (0.05) $ 0.01)
================================================================================
Weighted Average Shares
Outstanding 12,435,462 100 10,840,462 100
================================================================================
<PAGE>
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
--------------------------------------------------------------------------------
THREE THREE SIX SIX
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30
2000 1999 2000 1999
--------------------------------------------------------------------------------
Cash Flows From
Operating Activities
Loss for the period $ (230,397) $ (65,869) $ (479,038) $ (77,804)
Adjustment for:
Amortization 9,126 1,192 17,737 1,635
---------------------------------------------------
(221,271) (64,677) (461,301) (76,169)
---------------------------------------------------
Changes in non-cash
working capital
(Increase)decrease in
accounts receivable (2,071) - (10,726) 5,730
(Increase)decrease in
inventory 68,487 17,864 (2,197) (86,662)
(Increase)decrease in
prepaid expenses and
deposits (19,620) (4,136) (20,079) (9,976)
Increase(decrease) in
accounts payable and
accrued liabilities (81,025) (25,686) (11,894) 76,749
---------------------------------------------------
(255,500) (76,635) (506,197) (90,328)
---------------------------------------------------
Cash Flows From Investing
Activity
Purchase of capital
assets (10,352) (21,426) (20,557) (21,426)
---------------------------------------------------
Cash Flows From Financing
Activities
Issue of special warrants 105,332 - 338,190 -
Issue of common shares - - 1,494 -
Loans payable 6,001 95,107 (24,078) 108,437
---------------------------------------------------
111,333 95,107 315,606 108,437
---------------------------------------------------
Increase (Decrease) In Cash (154,519) (2,954) (211,148) (3,317)
Cash, Beginning Of Period 210,421 3,624 267,050 3,987
---------------------------------------------------
Cash, End Of Period $ 55,902 $ 670 $ 55,902 $ 670
================================================================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
During the period ended September 30, 2000 the Company issued 2,820,000 common
shares on the exercise of 2,820,000 special warrants.
<PAGE>
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SEPTEMBER 30, 2000
(Unaudited)
(Stated in U.S. Dollars)
<TABLE>
<CAPTION>
COMMON SHARES SPECIAL WARRANTS
--------------------------------------------------------------
NUMBER AMOUNT NUMBER AMOUNT DEFICIT TOTAL
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Issue of common shares 100 $ 70 - $ - $ - $ 70
Loss for the period - - - - (27,694) (27,694)
------------------------------------------------------------------------------------------------
Balance, March 31, 1998 100 70 - - (27,694) (27,624)
Net income for the year - - - - 1,019 1,019
------------------------------------------------------------------------------------------------
Balance, March 31, 1999 100 70 - - (26,675) (26,605)
Adjustment to number of
common shares issued
and outstanding as a
result of the reverse
take-over transaction
Sports Link Direct
Marketing Ltd. (100) - - - - -
Airbomb.com Marketing
Ltd. 5,412,962 - - - - -
Ascribed value of common
shares and special
warrants issued in
connection with the
acquisition of Sports
Link Direct Marketing
Ltd. 2,300,000 63,479 620,000 35,849 - 99,328
Issue of common shares 602,500 116,061 - - - 116,061
Issue of special warrants - - 2,700,000 665,049 - 665,049
Loss for the year - - - - (499,258) (499,258)
------------------------------------------------------------------------------------------------
Balance, March 31, 2000 8,315,462 179,610 3,320,000 700,898 (525,933) 354,575
Exercise of special
warrants - - (2,820,000) (672,008) - (672,008)
Issue of common shares 2,828,000 673,502 - - - 673,502
Issue of special warrants - - 1,000,000 338,190 - 338,190
Loss for the period - - - - (479,038) (479,038)
------------------------------------------------------------------------------------------------
Balance, September 30,
2000 11,143,462 $ 853,112 1,500,000 $ 367,080 $ (1,004,971) $ 215,221
================================================================================================
</TABLE>
<PAGE>
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
(Stated in U.S. Dollars)
1. NATURE OF OPERATIONS
The unaudited consolidated financial statements as of September 30, 2000
included herein have been prepared without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with United States generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
It is suggested that these consolidated financial statements be read in
conjunction with the March 31, 2000 audited consolidated financial
statements and notes thereto.
Airbomb.com Inc., through its subsidiary, Sports Link Direct Marketing
Ltd., is in the business of retailing and wholesaling sporting goods,
specifically bicycles and related accessories, through the Internet.
Sports Link Direct Marketing Ltd. markets products acquired from a variety
of suppliers, and also distributes its own "Airbomb" line of products,
which are acquired from established manufacturers and labelled with the
Company's "Airbomb" label.
These financial statements have been prepared on the basis of accounting
principles applicable to a going concern which assumes the realization of
assets and discharge of liabilities in the normal course of business.
During the period ended September 30, 2000, the Company incurred a loss of
$479,038. The Company's ability to continue its operations on a going
concern basis is dependent upon obtaining additional financing and the
support of creditors. There is no assurance that the Company will be
successful in achieving any, or all, of these objectives over the coming
year. These financial statements do not give effect to any adjustments
that would be necessary should the Company be unable to continue as a going
concern.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Consolidation
These financial statements include the accounts of the Company and its
wholly owned Canadian subsidiary, Sports Link Direct Marketing Ltd.
b) Inventory
Inventory is recorded at the lower of cost and net realizable value.
c) Revenue Recognition
Revenue from sale of products is recognized at the time of shipment.
<PAGE>
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
d) Amortization of Capital Assets
Computers and office furniture and equipment are stated at cost,
amortization is provided at the following rates:
Computer equipment 30% on the declining balance method
Computer software 100% on the declining balance method
Furniture and equipment 20% on the declining balance method
Goodwill related to the acquisition of Sports Link Direct Marketing Ltd.
is recorded at cost and is amortized on a straight line basis over three
years.
e) Foreign Currency Translation
The Company's functional currency is the U.S. dollar. Transactions in
foreign currencies are translated at the exchange rates in effect on
the transaction dates. Monetary assets and liabilities resulting from
such transactions are adjusted to reflect the exchange rates in effect
at the balance sheet date and the resulting gain or loss is recognized
in the statement of earnings.
f) Non-Monetary Transactions
Shares of common stock of the Company issued for non-monetary
consideration are valued at the quoted market price per share at the
close of trading on the date of completion of the transaction except
for those circumstances where, in the opinion of the Company and due to
the nature of the transaction, the trading price does not fairly
represent the value of the transaction. In such circumstances, the
value of the shares is determined based on the estimated fair value of
the consideration received.
g) Income Taxes
The Company has adopted Statement of Financial Accounting Standards No.
109 - "Accounting for Income Taxes" (SFAS 109). This standard requires
the use of an asset and liability approach for financial accounting and
reporting on income taxes. If it is more likely than not that some
portion, or all, of a deferred tax asset will not be realized, a
valuation allowance is recognized.
h) Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period.
By their nature, these estimates are subject to measurement
uncertainty, and the effect on the financial statements of changes in
such estimates in future periods could be significant.
<PAGE>
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
i) Stock Based Compensation
The Company measures compensation cost for stock based compensation
using the intrinsic value method of accounting as prescribed by A.P.B.
Opinion No. 25 - "Accounting for Stock Issued to Employees". The
Company has adopted those provisions of Statement of Financial
Accounting Standards No. 123 - "Accounting for Stock Based
Compensation", which requires disclosure of the pro-forma effect on net
earnings and earnings per share as if compensation cost had been
recognized based upon the estimated fair value at the date of grant for
options awarded.
j) Net Loss Per Share
Net loss per share is based on the weighted average number of common
shares outstanding during the period plus common share equivalents, such
as options, warrants and certain convertible securities. This method
requires primary earnings per share to be computed as if the common
share equivalents were exercised at the beginning of the period or at
the date of issue, and as if the funds obtained thereby were used to
purchase common shares of the Company at its average market value during
the period.
3. CAPITAL ASSETS
Capital assets and related accumulated amortization consist of the
following:
------------------------------------------- -----------
SEPTEMBER 30 MARCH 31
2000 2000
Accumulated Net Book Net Book
Cost Amortization Value Value
---------------------------------------- -----------
Computer equipment $ 36,956 $ 9,324 $ 27,632 $ 19,132
Computer software 5,228 3,018 2,210 256
Furniture and
equipment 12,068 1,967 10,101 5,153
---------------------------------------- -----------
54,252 14,309 39,943 24,541
---------------------------------------- -----------
Goodwill 75,495 18,873 56,622 69,204
---------------------------------------- -----------
$ 129,747 $ 33,182 $ 95,565 $ 93,745
======================================== ===========
<PAGE>
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
(Stated in U.S. Dollars)
4. LOANS AND ADVANCES PAYABLE
September 30 MARCH 31
------------------------------
2000 1999
------------------------------
Loans payable due May 8, 2001, with
interest at 12% per annum commencing
November 8, 1999 $ 18,189 $ 17,149
Loans payable to a director with no
specific terms of repayment, with
interest at 12% per annum 45,532 70,650
------------------------------
63,721 87,799
Less: Current portion 63,721 70,650
------------------------------
$ - $ 17,149
==============================
5. SHARE CAPITAL
a) During the period, the Company changed its authorized capital to
100,000,000 shares with a par value of $0.001, and the Company became
domesticated as a Delaware Corporation.
b) As at September 30, 2000, there were outstanding incentive stock options
for the purchase of:
170,000 shares at $0.50 CDN to January 27, 2005
105,000 shares at $0.50 CDN to January 28, 2005
167,000 shares at $0.45 CDN to November 11, 2004
158,000 shares at $0.28 CDN to December 20, 2004
105,000 shares at $0.50 CDN to March 1, 2005
100,000 shares at $0.50 CDN to January 25, 2005
25,000 shares at $0.50 CDN to February 18, 2005
10,000 shares at $0.29 CDN per share to April 8, 2004
25,000 shares at $0.49 CDN per share to June 8, 2005
15,000 shares at $0.49 CDN per share to June 8, 2002
c) As at September 30, 2000 there were outstanding share purchase
warrants for the purchase of:
700,000 shares at $0.17 CDN per share to October 30, 2000
1,500,000 shares at $0.50 CDN per share to January 5, 2001
or at $0.75 CDN per share to January 5, 2002
1,200,000 shares at $0.50 CDN per share to February 21, 2001
or at $0.65 CDN per share to February 21, 2002
<PAGE>
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(Unaudited)
(Stated in U.S. Dollars)
6. SPECIAL WARRANTS
a) As at September 30, 2000, the Company has 500,000 special warrants
outstanding which were issued in connection with the Sports Link Direct
Marketing Ltd. acquisition. These special warrants are exercisable
without additional consideration into 500,000 common shares.
b) As at September 30, 2000 the Company has 1,000,000 special warrants
outstanding which were issued pursuant to a private placement at $0.50
CDN per special warrant. Each special warrant is exercisable without
additional consideration into one common share and one share purchase
warrant entitling the holder to purchase an additional common share at
$0.55 CDN per share to July 17,2002.
7. FINANCIAL INSTRUMENTS
The carrying amounts for cash, accounts receivable, prepaid expenses and
deposits, accounts payable and accrued liabilities, and loans and advances
payable approximate their respective fair values due to their short term
maturity or capacity of prompt liquidation.
8. RELATED PARTY TRANSACTIONS
During the period, the following amounts were paid to parties not dealing
at arm's length with the Company:
a) Companies controlled by a director were paid $24,210 for office rent and
administrative support services.
b) The Company's president was paid wages totalling $30,000.
9. SUBSEQUENT EVENTS
Subsequent to September 30, 2000.
a) The Company issued 700,000 common shares for cash consideration of
$80,027 on the exercise of the 700,000 share purchase warrants at $0.17
CDN as described in note 5(c).
b) The Company issued 1,000,000 common shares on the exercise of the
special warrants described in note 6(b).
c) The Company granted incentive stock options for the purchased of up to
453,500 common shares at $0.45 CDN per share to October 2, 2005.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
See attached Notice of Annual General Meeting of Stockholders held September 20,
2000 for the following purposes:
a. To receive the report of the directors;
b. To receive audited financial statements of the Company for the fifteen
month period ending March 31, 2000;
c. To appoint the auditor for the Company;
d. To elect directors for the ensuing year;
e. To consider and to amend stock options held by insiders.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
None
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Airbomb.com Inc., through its wholly-owned subsidiary, Sportslink Direct
Marketing Ltd., is an internet retailer of sporting goods, primarily bicycles
and related parts and accessories. Because of the Company's unique relationship
with original equipment manufacturers (OEMs), it is able to acquire a variety of
products at preferential prices and sell them to wholesalers, distributors or
consumers at a significant discount. The Company has developed strong
relationships with some of the largest component manufacturers in Asia and North
America. The retail market in the United States for bicycles and related parts
and accessories is approximately U.S. $5.4 billion, and globally is U.S. $25
billion.
The Company has applied for trademark protection in Canada and the United States
for the brand name "Airbomb. The Company has four web sites. The primary
marketing of bicycles, bicycle components and outdoor sporting equipment is
conducted at www.airbomb.com; sunglass sales are conducted at www.sunbomb.com;
--------------- ---------------
and cycling products are marketed in Canada at http://store.airbomb.com/Can.
----------------------------
The fourth web site is a secure, password-protected site for wholesale
transactions.
The second quarter of fiscal 2001 ended September 2000 with the achievement of a
number of major milestones. The Company continued to grow rapidly during this
quarter. The Company expanded on its core strength with the importation of a
number of containers carrying items directly purchased from overseas
manufacturers. The Company moved into an expanded warehouse in Point Roberts,
Washington, to accommodate the inventory. Access to this type of supply chain
buying represents Airbomb.com's key competitive advantage and, for the first
time, it had a substantial impact on both sales and gross profit during this
quarter.
Continued marketing efforts directed towards B2B customers produced exponential
growth in that sector, in part evidenced by an order from Mazda USA that had
over 160 different Mazda dealerships receiving bikes assembled by Airbomb.com.
The ability to provide private label branded bikes to retailers and other
resellers in custom quantity production runs has been well received. The
offering has been recognized by resellers as innovative, unique and profitable.
The Company feels its competitive advantage will be most successful in the B2B
category and that the potential for further growth is great. Resellers within
Airbomb.com's market are eager to develop these new supply channels. The
password-protected website directly responds to this demand.
A sample e-mail broadcast to a rented list of opt-in, permission defined
consumers produced an above industry response rate as well as an increase in
daily website user sessions that has been maintained.
The Company has seen a marked increase in the proportion of its sales that are
processed purely through the internet versus those sales transacted by phone or
other means. This is seen as support for management's recognition that its
market segment is a proven early adopter of online buying than are those for
other segments such as groceries, furniture, etc. The Company's customers do
not have to be enticed online; they are already there. This provides some
distance from the risk associated with the rate at which the general public
embraces online buying.
Other upgrades were made throughout the website as a reflection of the expanded
product offering and software upgrades. A concomitant growth in the company's
website traffic saw the benchmark of 1 million hits per month eclipsed.
<PAGE>
This quarter saw a growth in the Company's marketing efforts in ways management
feels offers both value and results. This included the development of an
international racing team outfitted with team uniforms, a focused promotion of
the referral program. As well, the Company entered into an agreement with
Cybersurf, a major Canadian ISP, for a large-scale promotion directly to that
company's customer base. Canadian sales have seen a corresponding jump and, at
present, Airbomb.com dominates the Canadian market for online cycling sales.
Results of Operations
Three Months Ended September 30, 2000 and September 30,1999.
Sales increased by 174.8 % or $ 155,075 to $ 243,816 during the period ending
September 30, 2000 compared to $ 88,741 for the period ending September 30,
1999. This increase was due to a higher level of sales through the Company's
web site.
Cost of goods sold increased by 142.4 % or $ 138,254 to $ 235,312 for the period
ending September 30, 2000, compared to $ 97,058 for the period ending September
30, 1999. As part of its sales strategy, the Company continued to use low
prices as a means to attract new customers to the web site.
Inventory increased slightly by 1.56 % or $ 2,197 to $ 143,303 for the period
ending September 30,2000, compared to $ 141,106 for the period ending September
30, 1999. Inventory levels are up slightly over the past year.
General and administrative expenses increased by 31.5 % or $ 181,349 to $
238,901 for the period ending September 30, 2000 compared to $ 57,552 for the
period ending September 30, 1999. The Company incurred higher costs in every
category primarily due to the acquisition of Sportslink Direct Marketing Ltd.,
because of the process and expense of becoming a public company (listed on the
Canadian Venture Exchange) and by re-domiciling the Company into Delaware.
Advertising and Promotion increased by 118.4 % or $ 45,680 to $49,538 for the
period ending September 30, 2000 compared to 3,858 for the period ending
September 30, 1999.
Amortization costs rose $ 7,934 to $ 9,126 for the period ending September 30,
2000 compared to $ 1,192 for the period ending September 30, 1999 and relates to
the amount of goodwill created as a result of the Sportslink acquisition.
Interest and foreign exchange decreased slightly by $1,419 to $ 3,197 for the
period ending September 30, 2000 compared to $ 4,616 for the period ending
September 30, 1999. This is as a result of the loss on conversion from Canadian
to U.S. dollars advanced to fund the operations of Sportslink and expansion of
the business operations.
Investor relations is a new expense category now that the Company is a
publicly-traded company. For the three month period ending September 30, 2000,
the Company incurred expenses of $ 31,448.
Office and Sundry costs increased by 433.9 % or $ 8,966 to $ 14,222 for the
period ending September 30, 2000 compared to 2,066 for the period ending
September 30, 1999. These expenses support the increased costs of being a
public company and expansion of the business operations.
<PAGE>
Professional fees increased 117.0 % or $ 16,065 to $ 29,793 for the period
ending September 30, 2000 compared to $ 13,728 for the period ending September
30, 1999. Again, these expenses included the increased legal and accounting
costs of being a public company and the expansion of the business operations.
Wages and contract labor increased 630 % or $58,331 to $69,319 for the period
ending September 30, 2000 compared to $10,988 for the period ending September
30, 1999. The increase in staff was necessary to support the Company's
expansion.
Plan of Operations
The Company's marketing plans and strategies include:
- Expanding the product base and continuing to upgrade the web site.
- Developing brand names that link on-line customers to the Company.
- Upgrading web search engine results for key search words, often brand
names, that bring on-line shoppers directly to the Company web site.
- Expanding the customer database by developing addtional opt-in
subscription strategies
- Purchasing/renting other highly qualified opt-in subscriber lists.
- Working with suppliers to match customers to a supplier's target market.
- Enhancing the "weekly specials sheet" to attract buyers to special deals
and clear-out sales. This has proven attractive to both suppliers, who use
the feature to move inventory, and on-line buyers looking for special
prices.
- Offering competitive prices relative to the online channel.
- Expanding the "Tell-A-Friend" referral program through support materials
provided to motivated customers.
- Continuing to sponsor a professional bike racing team.
- Publishing bi-monthly brochures and mailing to customer base.
- Continuing with sales force training programs to enhance telephone
customer service.
- Enter new markets via new online storefronts.
To be successful, the Company will have to develop marketing, brand development
and sales on a rapidly expanding basis. There is no guarantee that the Company
will be successful in managing such a complex strategy of marketing and sales or
that the Company will be able to do so soon enough to be successful.
The Company intends to derive substantially all of its revenues from the sale of
goods using the Internet as the chief instrument of transaction. The Company's
ability to generate revenues will depend upon, among other factors, consumers'
acceptance of the Web as an attractive and sustainable medium, and development
of a large base of repeat customers for the Company's products. In addition,
there is intense competition in the sale of goods and services on the Internet,
which makes it difficult to project the future levels of Internet revenues that
will be realized generally or by any specific company.
To be successful, the Company plans to continue entering into strategic
partnerships with other local, national and international businesses to help in
a focused marketing effort and to provide operational support. The Company
cannot guarantee that it will be able to find strategic partners who will be
available and who are suitable for the Company's needs, or if enough strategic
partners can be found to market the Company's products and support its
operations.
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The success of the Company cannot be guaranteed or accurately predicted. There
is no assurance that the Company will be able to operate profitably. Such
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered in the establishment of new product lines and retail
sales outlets in an emerging e-commerce market.
The Company has a limited operating history. There is no assurance that the
Company will be able to operate and manage on a profitable basis or that cash
flow from operations will be sufficient to pay the operating costs of the
Company. The Company anticipates that it will need to raise additional capital
to finance growth of its operations. The Company may seek additional financing
through debt or equity financings. There is no assurance that additional
financing will be available to the Company, or that, if available, the financing
will be on terms acceptable to the Company. There is no assurance that the
Company's estimate of its reasonably anticipated liquidity needs is accurate or
that new business developments or other unforeseen events will not occur that
will result in the need to raise additional funds. In the event that the
Company cannot raise needed capital, it will have a material adverse effect on
the Company.
Although the Company has based its web site upon commercially available software
and hardware, the Company will need to do substantial additional development in
order to offer the goods, services and user-friendly interfaces the Company
believes are needed to attract and retain customers.
The Company may incur significant operating losses and generate negative cash
flow from operating activities during the next several years while it develops
its web sites and services, and builds a customer and subscriber base. There is
no assurance that the Company will achieve or sustain profitability or positive
cash flow from operating activities in the future or that it will generate
sufficient cash flow to service any debt requirements.
To the extent that any financing involves the sale of the Company's equity
securities, the interests of the Company's then-existing shareholders could be
substantially diluted.
The Company's future success is dependent upon continued growth in the use of
the Internet. Rapid growth in the use of and interest in the Internet is a
recent phenomenon. There is no assurance that commerce over the Internet will
become widespread or that extensive content will continue to be provided over
the Internet. In addition, to the extent that the Internet continues to
experience significant growth in the number of users and level of use, there is
no assurance that the Internet infrastructure will continue to be able to
support the demands placed upon it by such potential growth. If use of the
Internet does not continue to grow, or if the Internet infrastructure does not
effectively support growth that may occur, the Company's business, results of
operations and financial condition would be materially and adversely affected.
As is typical in the case of a new and rapidly evolving industry, demand and
market acceptance for recently introduced products and services are subject to a
high level of uncertainty and risk. The Company does not know the extent to
which additional customers will use its products and services. It is difficult
to predict the future growth rate, if any, and size of this market via Internet
sales. In order to sustain rapid growth rates, the Company will need to
continue increasing its share of the bicycle and other sporting goods markets.
There is no assurance either that the market for the Company's products and
services will grow or that the Company can successfully and rapidly expand its
market share. If the market fails to grow, grows more slowly than expected, or
becomes saturated with competitors, or if the Company's products and services do
not achieve or sustain market acceptance and expanded market share, the
Company's business, results of operations and financial condition will be
materially and adversely affected.
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The Company will rely on a combination of common law, copyright and trademark
law, and nondisclosure agreements to establish and protect its proprietary
rights in its products and the content of its web sites. Others, however, might
successfully challenge these protections.
The Company has applied for trademark protection in Canada for the brand name
"Airbomb", and anticipates filing for trademark protection in the United States
for the same brand name. The Company is the owner of the web site domain names
http://www.airbomb.com and http://www.sunbomb.com and maintenance fees for the
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domain names have been paid and are up to date. The Company may file
applications for trademark protection of other intellectual property. No
assurance can be given that such trademark applications will be accepted for
registration. Furthermore, the possibility exists that the Company could be
found to infringe on patents, service marks, trademarks or copyrights held by
others. The Company's use of trademarks, service marks, trade names, slogans,
phrases and other expressions in the course of its business may be the subject
of dispute and possible litigation. Given the growth of business being conducted
on the Internet, electronic commerce and the use of domain names, there can be
no assurance that the Company will be able to continue to use its current trade
name, domain name and Internet and business identification. Such changes could
result in confusion to potential customers and negatively affect the Company's
business.
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SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AIRBOMB.COM INC.
Date: November 20, 2000
By: /s/ David Houston
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DAVID HOUSTON, Director, President
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