UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(MARK ONE)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE FISCAL YEAR ENDED March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934.
FOR THE TRANSITION PERIOD FROM _________ TO ____________
COMMISSION FILE NUMBER 2-97869-D
CraftClick.com, Inc.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
Utah 95-4735712
STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER I.D. No)
INCORPORATION OR ORGANIZATION
432 CULVER BLVD, PLAYA DEL REY, CA 90293
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(310) 827-3500
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT: NONE
SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT: NONE
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes /x/ No /_/
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure
will be contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. / /
The Issuer's revenues for its most recent fiscal year ended March 31, 2000
were $154,986.
On March 31, 2000, the aggregate market value of the voting stock of the
Registrant (consisting of common stock, $.001 par value (the "Common Stock"))
held by non-affiliates of the Registrant was approximately $27,769,808 based
on the closing price for such Common Stock on said date as reported by the
NASD of $2.75.
On March 31, 2000, there were 16,931,444 shares of Common Stock, $.001 par
value, issued and outstanding. On March 31, 2000, there were 101,000 shares of
Series A Convertible Preferred Stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE: SEE PART III, ITEM 13
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
Our History
CraftClick.com Inc. ("CraftClick" or the "Company") was formed in January
2000, as a product of Buylt.com. BuyIt.com was formed in 1997 and spent two
years in the development and testing of an e-commerce engine until its
incorporation in January 1999. BuyIt.com completed a reorganization into a
publicly-held developmental stage company (Tecon, Inc.) on April 16, 1999. The
Board of Directors subsequently voted to change the name of the Company to
"BuyIt.com, Inc." On September 21, 1999, the Company was approved for
quotation on the NASD's OTC Bulletin Board ("OTC") under the symbol "BUYT".
Subsequently, the Company refocused its strategy to be the premier destination
for buyers and sellers of arts and crafts products and supplies. This was
achieved by creating a new web site called CraftClick.com. On January 10,
2000, the Company's name was changed to "CraftClick.com, Inc." and we now
trade on the OTC under the symbol "CTCK".
Our Business
CraftClick was formed to be the premier arts and crafts destination on the
Internet. CraftClick has built the ultimate online arts and crafts community
that offers amateur and professional craftspeople worldwide a wealth of arts
and crafts related content. Through the strategic acquisition of 13 online
arts and crafts related web sites, we control all the significant entry points
for arts and crafts on the Internet. Being the first entrant to market in this
space, we are the distinct leader in the arts and crafts vertical with over
500,000 members. The expanding scale and scope of the CraftClick network
comprising 14 web sites has created a cost-based entry barrier to competitors.
This vertical integration allows us to offer the broadest array of craft
materials available, the most compelling prices for arts and crafts materials
and the most comprehensive arts and crafts-based information point. Our
network of sites provides crafters with over 15,000 free projects, and further
fulfills the needs of this community by selling over 100,000 different arts
and crafts supplies and kits online.
More than just a low-cost online seller of arts and crafts products, we
maintain an entire virtual community of craftspeople, and provide a free
integrated e-commerce solution to this community, including personal homepages
and applications that enable e-commerce such as a virtual storefront with
shopping carts, credit card processing, e-mail, auctions and bulletin board
forums. We also have global search capabilities, allowing users to search the
entire community of craftspeople and affiliated arts and crafts vendors for
raw materials, finished products, "how to" content and craft-related course
information offered by individual craftspeople and vendors alike.
We ship our products through a fulfillment center located in the Midwestern
United States. Orders placed with us are transmitted electronically to our
fulfillment center using EDI protocol. Our fulfillment center then ships the
order directly to the end customer.
Our web site & Technology
Our production infrastructure incorporates proven technologies, and therefore,
is simple, robust and reliable. A sufficient amount of concurrent users can
be managed efficiently and initial network traffic projections are within the
capabilities of our system. As we experience rapid growth and success, the
production environment will scale easily to accommodate additional hardware
and/or software. Load-balancing is in place to distribute traffic among
multiple web servers, and the database and file servers are clustered
The initial design, construction, operation and maintenance of our web site,
which was initially launched in December 1999, was developed in-house by our
team of developers and programmers. Our goal in designing our web site was,
and continues to be, to allow the consumer to easily navigate our web site and
to be able to pay for everything ordered in one payment transaction without
ever having to leave our web site. CraftClick.com is the ultimate arts and
craft Superstore! The CraftClick site sells over 40,000 items from all major
manufacturers at below retail prices.
We provide much more than supplies to the artist and crafter. We offer free
projects, free ideas, a virtual community to share and explore favorite types
of crafts with people all around the world, along with free bulletin boards
and chats and celebrity interviews and ask an expert a question, 24 customer
support, 800 phone sales and support, free email and free Web Hosting, plus
much more.
In addition to the CraftClick web site, our network provides the best in class
arts and craft sites on the Internet. We allow crafters to find all
disciplines of arts and craft sites through our portal sites; submit and drive
traffic to their individual sites by submitting to the Top Craft Sites
network; learn and share specialty crafts at sites like Tolenet; or buy
specialty items at specialty e-commerce stores through sites like Art2Art and
CraftNetVillage.
For further information on our network web sites, see "Acquisitions" in Part
II, Item 5.
Sales and Marketing
Our established membership base and high-customer retention rate, coupled with
low customer acquisition costs, will allow a greater percentage of our
resources to be allocated to marketing and branding efforts. This allows us to
leverage our existing customer base and site traffic to launch promotional
activities via many different channels: email, onsite, direct mail, run of
site banners, affiliate programs, keyword banners and cross-promotion within
our own network.
Our brand is built around our customers' perceived value of goods, services
and community interaction on our network of web properties. The focus of our
marketing strategy is to reinforce the brand and drive our message to market.
We will use a combination of online, off-line and e-mail promotions to drive
visitors and traffic to our sites. Our strategy consists of integrated
campaigns, not independent programs, to ensure prospects see our brand
messages in more than one place via more than one medium.
Marketing to the total market via the Internet and traditional media outlets
will be limited due to the vertical nature of the audience. Instead, we will
implement synchronized advertising strategies, using multiple niche media to
drive customers through the buying cycle based on their personal traits.
Our online advertising strategy will be focused on web-based advertising
(banners and buttons) in the above-related areas, as well as qualified local
newspaper, regional and community publications, complementary vertical portals
(e.g., home, gardening) and others.
Affiliate links to and from relevant sites give our visitors direct access to
helpful resources and information while serving to pull traffic from related
web destinations. Conventional marketing affiliates pair us with non-profit
and special interest organizations in the local off-line clubs and
communities.
Aggressive cross-promotional efforts will drive traffic between each of the
fifteen company sites on our network.
We have made sales and marketing alliances with the following:
- Commission Junction, to handle our network affiliate program.
- Inktomi Corporation, to provide their shopping network with our complete
inventory.
- Earthlink, for placement in the Earthlink Mall.
- Clarity Holding, to be the exclusive partner on the clarity shopping site
in the arts and crafts category.
- FreeRide.com, to participate in their Shopping Points program.
- Affinia, Inc., to provide arts and crafts products and supplies to the
Affinia network (with over 66,000 storefronts).
Competition
Our competitors fall into two main categories. Firstly, our online competition
includes web sites such as Craftopia.com, IdeaForest.com and Craft.com. These
sites provide arts and crafts content and sell related products online. The
second category of our competition comprises "brick & mortar" businesses and
includes Michaels Stores, JoAnn Stores and A.C. Moore. Given the nature of
the products we sell, we expect to face competition from national retail
chains like Walmart and others.
Although barriers to entry are minimal, as new competitors can launch new
sites at a relatively low cost, we believe that the costs to remain
competitive can be significant. These costs include the development of a
robust site, the hiring of human resources with industry knowledge, customer
acquisition costs and the marketing costs associated with the building of a
widely recognized brand.
Employees
We have 32 full-time employees. None of our employees are represented by a
labor union, and we consider our relationship with our employees to be good.
ITEM 2. PROPERTIES
We currently operate offices in the States of Missouri, Wisconsin and
California.
Our Corporate offices are located at 432 Culver Blvd, Playa Del Rey,
California 90293. The total monthly rent is $3,700 on a lease that commenced
June 16, 1999, and expires June 15, 2002. We have an option to extend the
lease for one term of three year. We anticipate additional office space will
be required in the future to accommodate new employees and expansion of the
Company.
Our second office is located at 205 Park Central East, Suite 407, Springfield,
Missouri 65806. The lease is on a month-to-month basis. The current rent for
this space is $500 per month. This office handles our call center, all
telephone orders and customer service support. We intend to expand these
offices to accommodate additional customer service and support staff.
We also maintain an office at 219 N. Milwaukee Street, 6th Floor, Milwaukee,
Wisconsin 53202. This office houses staff for customer service. This lease
expires July 26, 2000, and we do not intend to renew the lease.
ITEM 3. LEGAL PROCEEDINGS
We are not a party to any material pending legal proceedings.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter has been submitted to a vote of the stockholders during the past two
years ended March 31, 1999 and 2000.
PART II
ITEM 5 MARKET FOR AND DIVIDENDS OF THE REGISTRANT'S COMMON STOCK EQUITY AND
RELATED STOCKHOLDER MATTERS.
The OTC Electronic Bulletin Board is the principal market for our Common
Stock, where our shares are traded under the symbol "CTCK".
Market Information
The following table sets forth the range of high and low bid quotations for
our Common Stock for each of the quarters of the fiscal year ended March 31,
2000. Our Common Stock began trading on the OTC Electronic Bulletin Board on
September 21, 1999, under the name BuyIt.com, symbol "BUYT". Following our
name and symbol change on January 10, 2000 to CraftClick.com, our Common Stock
has been trading on the OTC Electronic Bulletin Board since then under the
symbol "CTCK". The quotations represent inter-dealer prices without retail
markup, mark down or commission and may not necessarily represent actual
transactions.
PERIOD HIGH LOW
-------------------------------------------------------------------------
Second Quarter 1999 . $4.75 $1.00
Third Quarter 1999 $3.75 $1.25
Fourth Quarter 1999 .. $2.87 $1.50
Dividends
We have never paid a cash dividend on our shares of Common Stock, and we have
no present expectation of doing so in the foreseeable future.
Approximated Number of Equity Security Holders
The approximate number of record holders of our Common Stock as of March 31,
2000, was 512. Such number of record owners was determined from our
shareholder records, and does not include beneficial owners of our Common
Stock whose shares are held in the names of various security holders, dealers
and clearing agencies. We believe that the number of beneficial owners of our
Common Stock held by others as or in nominee names exceeds 700 in number.
Recent Sales of Unregistered Securities
For the year ended March 31, 2000, we raised an aggregate of $2.3 million in
equity financing. In April through August 1999, we sold an aggregate of $1.3
million of Common Stock in private offerings. In November 1999 through March
2000, we sold an aggregate of $1.0 million of Convertible Preferred Stock and
Common Stock Purchase Warrants in private offerings. Net proceeds to us from
the financings were approximately $ 2.2 million. We believe, based on
currently proposed plans and assumptions relating to its operations, that the
net proceeds from the financings and related interest income, together with
anticipated revenues from operations, will not be sufficient to fund our
operations and working capital requirements for at least twelve months. We
anticipate meeting these needs through equity or debt financing. There can be
no assurance that such additional funding will be available to us, or if
available, that the terms of such additional financing will be acceptable to
us.
Specific recent sales of unregistered securities are as follows:
Date Consideration No. of Shares Type
January 1999 * 8,500,000 Common
April 1999 $600,000 1,621,621 Common
April 1999 to $708,048 472,032 Common
August 1999
February 2000 ** 2,725,000 Common
to March 2000
November 1999 $1,010,000 101,000 Preferred
to March 2000
* Issued in exchange for the technology of BuyIt.com Auction. For further
information, see Part II, Item 7, "Financial Statements and Supplementary
Data".
** Issued for acquisitions of web sites. For further information, see Part
II, Item 7, "Financial Statements and Supplementary Data".
Acquisitions
We operate in a highly fragmented business arena that has many small players.
As a result, we have decided to consolidate the space through strategic
acquisitions of other entities. To date, we have made 13 strategic
acquisitions, as follows:
(1) On January 26, 2000, we entered into a Reorganization Agreement with
Craftnetvillage.com, Inc., a Wisconsin corporation ("Craftnet"), and all of
the stockholders of Craftnet (the "Craftnet Stockholders") whereby we issued
750,000 shares of "restricted securities" (common stock) to the Craftnet
Stockholders in consideration of the exchange of 100% of the outstanding
voting securities of Craftnet. These shares amounted to approximately 5.3% of
the post-Craftnet Agreement outstanding voting securities of CraftClick.
Craftnet became a wholly-owned subsidiary of CraftClick.
Milwaukee-based CraftNetVillage.com is one of the first large-scale
online Arts and Crafts destinations, and has served to bring craftspeople and
craft merchants together on the Internet for almost five years. CraftNet has
built a loyal following of craftspeople worldwide, and is located on the
Internet at www.CraftNetVillage.com.
(2) On February 2, 2000, we completed an Asset Purchase Agreement with Kirk
A. Hines, the sole proprietor of Bella-Decor.com. We issued 100,000 shares of
"restricted securities" (common stock) to Mr. Hines in consideration of the
exchange of the CraftsSearch.com web site and related assets.
CraftsSearch.com is a far-reaching search engine that enables
craftspeople to rapidly locate craft-related products, projects, and
discussions on the Internet. In addition, CraftsSearch.com maintains links to
thousands of craft-related web sites, all accessible from the CraftsSearch.com
home page. CraftsSearch.com provides 18 major categories of listings and 112
sub-categories, covering every conceivable area of Arts and Crafts.
CraftsSearch.com also has extensive links to craft-related newsgroups, and
alliances with news providers to update its audience with the latest in craft
industry news, and is located on the Internet at www.CraftsSearch.com.
(3) On February 4, 2000, we entered into an Asset Purchase Agreement
with Art 2 Art L.L.C., a Missouri corporation ("Art2Art"), and all of the
stockholders of Art 2 Art (the "Art2Art Stockholders") whereby we issued
825,000 shares of "restricted securities" (common stock) to the Art2Art
Stockholders in consideration of the exchange of 100% of the outstanding
voting securities of Art2Art. The Agreement was completed on February 11,
2000. These shares amounted to approximately 7.5% of the post-Art2Art
Agreement outstanding voting securities of CraftClick. Art2Art became a
wholly-owned subsidiary of CraftClick.
Art2art.com is an online full service provider of arts and crafts
products and supplies. It sells direct to end consumers worldwide, and offers
in excess of 30,000 products, and is located on the Internet at
www.Art2Art.com.
(4) On February 4, 2000, we completed an Asset Purchase Agreement with
Stitches To Go, a partnership ("Stitches"). We issued 350,000 shares of
"restricted securities" (common stock) to the partners of Stitches in
consideration of the exchange of 100% of the assets and liabilities of the
partnership.
Stitches To Go is an online Needlework supply store, offering over 7,500
items specifically to cross stitching enthusiasts. The Company is a
comprehensive source for all items related to Cross Stitching, where customers
can find patterns, threads, needles, fabric, patterns, and kits, and is
located on the Internet at www.gostitch.com.
(5) On February 15, 2000, we entered into an Asset Purchase Agreement
with Stamparoo.com, Inc., a Massachusetts corporation ("Stamparoo"), and
Ruthann and Daniel Richards (the "Richards"), whereby we issued 100,000 shares
of "restricted securities" (common stock) to the Richards in consideration of
the exchange of 100% of the outstanding voting securities of Stamparoo.
Stamparoo became a wholly-owned subsidiary of CraftClick.
Based in Andover, Massachusetts, Stamparoo.com provides rubber stamp
aficionados with an online source of stamps and supplies, including a
category-specific catalog of rubber stamps that users can view online.
Stamparoo is located on the Internet at www.stamparoo.com.
(6) On February 17, 2000, we completed an Asset Purchase Agreement with
Gil Bresnick, a sole proprietor operating a web site under the name of
TopCraftSites.com ("TopCraftSites"). We issued 112,500 shares of "restricted
securities" (common stock) to Gil Bresnick in consideration of the exchange of
the TopCraftSites web site and related assets.
TopCraftSites is a leading resource for locating Arts and crafts sites
on the Internet. There are currently over 1,200 active crafts sites
registered with TopCraftSites, vying for the top rankings. The site ranks
craft sites based on user traffic, and is located on the Internet at
www.TopCraftSites.com.
(7) On February 17, 2000, we entered into an Asset Purchase Agreement with
Digital Focus, Inc., a Florida corporation ("Digital"), whereby we issued
112,500 shares of "restricted securities" (common stock) to Digital in
consideration of the exchange of the Crafters Network web site and related
assets.
The Crafters Network has over 15,000 members, and provides users with
chat rooms, message boards, live chat and a free project database. The
Crafters Network also hosts the International Craft Fair, which provides free
"virtual booths" on the Internet, enabling craft business owners to advertise
their products and services within an extensive, category-specific menu. The
Crafters Network web site is located on the Internet at www.crafters.net.
(8) On February 20, 2000, we entered into an Asset Purchase Agreement with
Renee Chase ("Chase"), whereby we issued 25,000 shares of "restricted
securities" (common stock) to Chase in consideration of the exchange of the
Crafter.com web site and related assets.
Crafter.com has been a favorite meeting place for online crafters since
1995. It has a very diverse membership base, that ranges from beginners to
craft veterans, and from amateurs to the professional crafter. The site also
offers chat rooms and bulletin boards that allow crafters to interact with
each other and other ideas, and is located on the Internet at www.crafter.com.
(9) On February 29, 2000, we entered into an Asset Purchase Agreement with
Christine Torres ("Torres"), whereby we issued 25,000 shares of "restricted
securities" (common stock) to Torres in consideration of the exchange of the
MakeStuff.com web site and related assets.
MakeStuff.com, founded in 1998, is an extensive online resource for free
instruction on making Arts and crafts projects, recipes, and other products
such as soap, body lotions, and shampoo, and is located on the Internet at
www.MakeStuff.com.
(10) On March 6, 2000, we entered into an Asset Purchase Agreement with
Marie Young and Niccole Young ("Youngs"), whereby we issued 25,000 shares of
"restricted securities" (common stock) to the Youngs in consideration of the
exchange of the CraftCoupons.com web site and related assets.
CraftCoupons.com provides craftspeople with an online source of Arts and
crafts coupons, bargains, and resources, and is located on the Internet at
www.CraftCoupons.com.
(11) On March 20, 2000, we entered into an Asset Purchase Agreement with
Tera Leigh and Ken Mugrage ("Leigh & Mugrage"), whereby we issued 300,000
shares of "restricted securities" (common stock) to Leigh & Mugrage in
consideration of the exchange of the Tolenet.com web site and related assets.
ToleNet.com is the definitive destination for Tole and decorative
painters on the Internet. ToleNet.com is devoted to bringing resources,
information, and a sense of community online for the worldwide denizens of
tole and decorative painting. Tole painting is a form of folk art painting,
originally referring to decorative painting on metal. The term "tole" is
currently often used also to describe decorative painting on walls, furniture
or useful objects. The web site is located on the Internet at
www.tolenet.com.
(12) On May 10, 2000, we entered into an Asset Purchase Agreement with
Julie Jane Denning ("Denning"), whereby we issued 15,000 shares of "restricted
securities" (common stock) to Denning in consideration of the exchange of the
Stenciling.com web site and related assets.
Stenciling.com is one of the oldest and most popular online destinations
devoted to the world of stenciling. Founded in 1997, Stenciling.com, located
on the Internet at www.stenciling.com is an extensive online resource that
offers free advice, education and resources, bringing together stencil artists
worldwide.
(13) On May 16, 2000, we entered into an Asset Purchase Agreement with
Command Line Computer Services, Inc., ("Command"), whereby we issued 240,000
shares of "restricted securities" (common stock) to Command in consideration
of the exchange of the CraftCentralStation.com web site and related assets.
CraftCentralStation.com is a popular and high-traffic Arts and crafts
portal based in Alberta, Canada. CraftClick.com's first acquisition outside
of the United States, CraftCentralStation.com (http://craftcentralstation.com)
has been in existence since 1996 to bring the crafting community information,
advice and Arts and Crafts resources.
Effects of Inflation
We do not view the effects of inflation to have material effect upon our
business.
Committees of The Board of Directors
We have an audit committee consisting of Messrs. Yollin, Seth and Singh, and a
compensation committee consisting of Messrs. Yollin, Seth and Sabnani.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS
Certain statements in this Form 10-KSB, including information set forth under
Item 6 "Plan of Operations" constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995 (the "Act").
The words "anticipates," "believes," "estimates," "expects," "plans,"
"intends" and other similar expressions are intended to identify these
forward-looking statements, but are not the exclusive means of identifying
them. We desire to avail ourselves of certain "safe harbor" provisions of the
Act and are therefore including this special note to enable us to do so.
Forward-looking statements included in this Form 10-KSB or hereafter included
in other publicly available documents filed with the Securities and Exchange
Commission, reports to our stockholders and other publicly available
statements issued or released by us involve known and unknown risks,
uncertainties, and other factors which could cause our actual results,
performance (financial or operating) or achievements to differ from the future
results, performance (financial or operating) achievements expressed or
implied by such forward looking statements. Such future results are based upon
our best estimates based upon current conditions and the most recent results
of operations. Various risks, uncertainties and contingencies could cause our
actual results, performance or achievements to differ materially from those
expressed in, or implied by, these statements, including, but not limited to,
the following: the success or failure of our efforts to implement our business
strategy; our inability to obtain additional financing if required; third-
party suppliers failure to fulfill their obligations to us; intense
competition; the failure of our systems or those of our third-party suppliers;
and government regulation of the Internet.
Overview
We intend to become the premier brand in the online arts and crafts industry
and the leading resource on the Internet for consumers seeking arts and crafts
supplies, projects and information. Our web site was launched in December
1999. Since our launch we made over 13 strategic acquisitions of diverse arts
and crafts sites focusing on covering all segments of the arts and crafts
industry. Through these acquisitions we have provided a comprehensive base for
users to access craft specific sites. Our acquisitions have focused on
acquiring sites that are either e-commerce sites or high-traffic portal sites.
The technologies of these sites have been centrally integrated to reduce
development and maintenance costs. We have also added e-commerce capabilities
to our content and portal sites, thus helping generate more traffic and
revenues.
Results of Operations
The year ended March 31, 2000 was the first year of operations of the Company
with activity since Tecon. Tecon was dormant and accordingly had no activity
for the year ended March 31, 1999.
Revenue for the year ended March 31, 2000, which includes product and
advertising sales net of returns, was $154,986. There were no revenues in
1999. Product sales are recognized at the time products are shipped to
customers, and advertising sales are amortized over the period of delivery.
Cost of goods sold consists of the cost of merchandise sold to customers. For
the year ended March 31, 2000, the cost of goods sold was $103,216. Our
fulfillment partner began fulfilling orders placed on our web site in February
2000.
General and administrative expenses ("G&A ") for the year ended March 31,
2000, were $3,263,422. The largest components of G&A expenses are payroll
expenses and sales and marketing expenses. Total payroll expenses for the year
ended were approximately $814,000. Payroll expense consists of salaries for
all departments and includes technology development, marketing and general
administration. Total sales and marketing expenses, including advertising and
promotions, were approximately $377,000. The other key components of G&A
expenses were consulting fees paid for outsourced services for technology
development, which were approximately $229,000 for the year. We intend to
pursue an extensive marketing campaign and will therefore incur significant
incremental costs in the future. We expect G&A expenses to continue to
increase commensurate with our growth and expansion plans. In addition to
ongoing investments in our web site and infrastructure, we intend to increase
investments in products and services.
We incurred losses of $(3,199,285) for the year ended March 31, 2000. The
losses incurred were in line with our expectations. We are in a development
stage and costs were incurred as a result of product development, marketing
and promotion and in building the business. As a start-up, there were no
unusual events that caused the loss.
We incurred approximately $1,358,000 in non-cash compensation expenses for the
year ended March 31, 2000. The non-cash compensation expenses resulted from
the issuance of "restricted stock" as compensation paid issued to consultants.
This amount is included under G&A expenses.
Interest income on cash and cash equivalents for the year ended March 31, 2000
was $13,789.
We expect to hire between 35 and 45 employees in the next twelve months as our
needs may require to sustain our growth and expansion, and to remain
competitive and creative.
Liquidity and Capital Resources
We used cash in operating activities for the year ended March 31, 2000,
totaling $1,557,327. Additionally, we invested $281,264 in property and
equipment. For the year ended March 31, 2000, we raised an aggregate of $2.3
million in equity financing.
We believe, based on currently proposed plans and assumptions relating to its
operations, that the net proceeds from the financings and related interest
income, together with anticipated revenues from operations, we will need to
raise additional funds in the amount of $10 million to fund our operations and
working capital requirements for the next twelve months. In the event that our
plans or assumptions change or prove inaccurate (due to unanticipated
expenses, increased competition, unfavorable economic conditions, or other
unforeseen circumstances), we could be required to raise our estimates of
financing sooner than currently expected. There can be no assurance that such
additional funding will be available to us, or if available, that the terms of
such additional financing will be acceptable to us.
ITEM 7 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CraftClick.com, Inc.
Formerly known as Tecon, Inc.
[A Development Stage Company]
TABLE OF CONTENTS
Independent Auditors' Report
Balance Sheet -- March 31, 2000
Statements of Operations for the periods ended March 31, 2000 and
1999, and for the period from inception [January 20, 1999] through
March 31, 2000
Statement of Stockholders' Equity for the periods ended March 31,
2000 and 1999, and for the period from inception [January 20, 1999]
through March 31, 2000
Statements of Cash Flows for the periods ended March 31, 2000 and
1999, and for the period from inception [January 20, 1999] through
March 31, 2000
Notes to Financial Statements
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
CraftClick.com, Inc. [a development stage company]
We have audited the accompanying balance sheet of CraftClick.com, Inc.,
formerly known as Tecon, Inc., [a development stage company] as of March 31,
2000, and the related statements of operations, stockholders' equity, and cash
flows for the periods ended March 31, 2000 and 1999, and for the period from
inception [January 20, 1999] through March 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of CraftClick.com, Inc. [a
development stage company] as of March 31, 2000, and the results of operations
and cash flows for the periods ended March 31, 2000 and 1999, in conformity
with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has minimal current revenue
generating activities which raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters
are also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Mantyla McReynolds
Salt Lake City, Utah
April 14, 2000
<PAGE>
<TABLE>
CraftClick.com, Inc.
Formerly known as Tecon, Inc
[A Development Stage Company]
Balance Sheet
March 31, 2000
<CAPTION>
ASSETS
<S> <C>
Assets:
Current Assets:
Cash 435,056
Accounts Receivable - Note 1 35,280
Shareholder Loan - Note 4 13,000
Note receivable 4,167
Prepaid Expenses 4,152
Total Current Assets 491,655
Property and equipment (net of depreciation,
$66,839) - Notes 1 & 6 289,788
Goodwill - Note 12 1,969,729
Deposits 32,781
Total Assets $ 2,783,953
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Current Liabilities:
Accounts Payable $ 122,902
Accrued Liabilities 123,067
Current Portion Contract Payable 13,100
Total Current Liabilities 259,069
Contract Payable - Note 8 3,200
Total Liabilities 262,269
Stockholders' Equity:
Preferred Stock -- 5,000,000 shares authorized, $.001 par
value; 101,000 shares issued and outstanding - Note 10 101
Capital Stock -- 300,000,000 shares authorized having
$.001 par value; 16,931,444 shares issued and
outstanding - Note 5 16,931
Additional Paid-in Capital 5,713,854
Deficit accumulated during the development stage (3,209,202)
Total Stockholders' Equity 2,521,684
Total Liabilities and Stockholders' Equity $ 2,783,953
</TABLE>
<TABLE>
CraftClick.com, Inc.
[A Development Stage Company]
Statements of Operations
For the Periods Ended March 31, 2000 and 1999 and for the Period from
Inception
[January 20, 1999] through March 31, 2000
<CAPTION>
Inception
March 31, March 31, through March
2000 1999 31,2000
<S> <C> <C> <C>
Revenues $ 154,986 $ -0- $ 154,986
Cost of Sales (103,216) -0- (103,216)
Gross Profit 51,770 -0- 51,770
General & Administrative
Expenses 3,263,422 9,917 3,273,339
Operating Loss (3,211,652) (9,917) (3,221,569)
Other Income/Expenses:
Interest Income 13,789 -0- 13,789
Interest expense (622) -0- (622)
Total Other Income/Expense 13,167 -0- 13,167
Net Loss Before Taxes (3,198,485) $ (9,917) $ (3,208,402)
Current Period Provision for
Income Taxes 800 -0- 800
Net Loss $ (3,199,285) $ (9,917) $ (3,209,202)
Loss Per Share $ (.24) $ (.01) $ (.26)
Weighted Average Shares
Outstanding 13,163,454 8,500,000 12,243,599
</TABLE>
<TABLE>
CraftClick.com, Inc.
[A Development Stage Company]
Statement of Stockholders' Equity
For the Periods Ended March 31, 2000 and 1999, and for the Period from
Inception
[January 20, 1999] through March 31, 2000
<CAPTION>
Preferred Preferred Common Common
Shares Stock Shares Stock
<S> <C> <C> <C> <C>
Balance, January 20,
1999, date of Inception -0- -0- -0- -0-
Issued stock to funding
Shareholders January 20,
1999 -0- -0- 8,500,000 -0-
Net loss for the period
ended March 31, 1999 -0- -0- -0- -0-
Balance, March 31, 1999 -0- -0- 8,500,000 -0-
Tecon, Inc. outstanding,
shares, March 31, 1999 -0- -0- 1,199,962 1,200
Issued common shares to
consultants as part of pre
combination agreement -0- -0- 600,000 600
Shares converted in
reverse acquisition, April
16,1999 8,500
Issued common shares for
cash through subscriptions 2,083,320 2,083
Issued common shares for
equipment, 10,333 10
Issued preferred shares
under PPM November 1,
1999 101,000 101
Issued common shares for
services 1,812,829 1,813
Issued common shares for
assets/acquired companies 2,725,000 2,725
Net loss for the period
ended March 31, 2000 -0- -0- -0- -0-
Balance, March 31, 2000 101,000 101 16,931,444 $ 16,931
</TABLE>
<TABLE>
CraftClickCom, Inc.
[A Development Stage Company]
Statement of Stockholders' Equity
For the Periods Ended March 31, 2000 and 1999, and for the Period from
Inception [January 20, 1999] through March 31, 2000
<CAPTION>
Addit'l Net
Paid-in Accumulated Stockholders'
Capital Deficit Equity
<S> <C> <C> <C>
Balance, January 20,
1999, date of Inception $ -0- $ -0- $ -0-
Issued stock to funding
Shareholders January 20,
1999 -0- -0- -0-
Net loss for the period
ended March 31, 1999 (9,917) (9,917)
Balance, March 31, 1999 -0- (9,917) (9,917)
Tecon, Inc. outstanding,
shares, March 31, 1999 2,114,138 (2,120,906) (5,568)
Issued common shares to
consultants as part of pre
combination agreement 19,200 (19,800) -0-
Shares converted in
reverse acquisition, April
16,1999 (2,143,638) 2,140,706 5,568
Issued common shares for
cash through subscriptions 1,299,931 -0- 1,302,014
Issued common shares for
equipment, 15,490 -0- 15,500
Issued preferred shares
under PPM November 1,
1999 1,009,899 -0- 1,010,000
Issued common shares for
services 1,357,809 -0- 1,359,622
Issued common shares for
assets/acquired companies 2,041,025 -0- 2,043,750
Net loss for the period
ended March 31, 2000 -0- (3,199,285) (3,199,285)
Balance, March 31, 2000 $ 5,354,232 $ (3,209,202) $ 2,521,684
</TABLE>
<TABLE>
CraftClick.com, Inc.
[A Development Stage Company]
Statements of Cash Flows
For the Periods Ended March 31, 2000 and 1999, and for the Period from
Inception
[January 20, 1999] through March 31, 2000
<CAPTION>
Inception
March 31, March 31, through March
2000 1999 31,2000
<S> <C> <C> <C>
Cash Flows Provided From Qperating
Activities
Net Loss $ (3,199,285) $ (9,917) $ (3,209,202)
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 74,849 113 74,962
Organization costs 950 (1,000) (50)
Increase in accounts receivable (35,280) (35,280)
Increase in prepaid expenses (4,152) (4,152)
Increase in accounts payable and
current liabilities 245,969 245,969
Issued common stock for services 1,359,622 1,359,622
Net Cash Used for Operating Activities (1,557,327) (10,804) (1,568,131)
Cash Flows From Investing Activities
Purchase of equipment (281,264) (1,263) (282,527)
Net Cash Used for Investing Activities (281,264) (1,263) (282,527)
Cash Flows From Financing Activities
Issued stock for cash 2,312,014 2,312,014
Increase in security deposits (29,600) (29,600)
Change in shareholder loan (25,067) 12,067 (13,000)
Contract payable 16,300 -0- 16,300
Net Cash Provided by Financing
Activities 2, 273,647 12,067 2,285,714
Net Increase in Cash 435,056 -0- 435,056
Beginning Cash Balance -0- -0- -0-
Ending Cash Balance 435,056 $ -0- $ 435,056
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for
interest $ 622 $ -0- $ 622
Cash paid during the year for
income taxes -0- -0- -0-
Purchased property for common shares 15,500 -0- 15,500
Issued common shares for assets 2,043,750 -0- 2,043,750
</TABLE>
CraftClick.com, Inc.
[A Development Stage Company]
Notes to Financial Statements
March 31, 2000
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization
CraftClick.com, Inc. ("CraftClick" or "Company") incorporated under
the laws of the State of California in January, 1999, as BuyIt.com,
Inc. ("BuyIt"). From inception through March 31, 1999, the Company
engaged in preliminary activities related to the set up of an
Internet auction business. On April 16, 1999, the Company entered
into an Agreement and Plan of Reorganization ("Plan") with Tecon,
Inc. ("Tecon"), a Utah Corporation, wherein all of the outstanding
shares and subscriptions (Note 5) of BuyIt were exchanged for
8,500,000 shares (for the outstanding shares) of common stock of
Tecon, and 245,997 shares (for the outstanding subscriptions) of
common stock of Tecon. At the conclusion of all the transactions
contemplated in the Plan, BuyIt shareholders and subscribers owned
8,745,997 shares of total outstanding shares of 12,179,249, or 71.9
%. The survivor in the aforementioned combination is Tecon.
However, the name of the surviving company was changed to BuyIt.com,
Inc, simultaneously with the Plan. The combination of these two
entities has been accounted for as a purchase. The Company changed
its name to CraftClick.com, Inc. on January 4, 2000, as a result of
changing its business strategy and focus - which is to become the
premier destination for buyers and sellers of arts & crafts products
and supplies through the use of Internet web sites. The Company is
in the process of commencing its planned principal operations and is
still in the development stage.
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles. The
following summarizes the more significant of such policies:
(b) Income Taxes
Effective January 20, 1999, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109 [the Statement],
Accounting for Income Taxes. The Statement requires an asset and
liability approach for financial accounting and reporting for income
taxes, and the recognition of deferred tax assets and liabilities for
the temporary differences between the financial reporting bases and
tax bases of the Companys assets and liabilities at enacted tax rates
expected to be in effect when such amounts are realized or settled.
The cumulative effect of this change in accounting for income taxes
as of March 31, 2000 is $0 due to the valuation allowance established
as described below.
(c) Statement of Cash Flows
For purposes of the statements of cash flows, the Company considers
cash on deposit in the bank to be cash. The Company had $435,056
cash at March 31, 2000.
(d) Use of Estimates in Preparation of Financial Statements
The preparation of 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 and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(e) Property and Equipment/Amortization of Intangibles
The Company records property and equipment at cost. Depreciation was
computed principally by use of the straight line method.
Expenditures for maintenance and repairs are charged to expense as
incurred. Goodwill is being amortized over 20 years.
(f) Organization Costs
The Company incurred organizational costs at its inception, which
have been recorded in accordance with Statement of Position 98-5,
Reporting on the Costs of Start-Up Activities, which requires start-
up costs to be expensed as incurred. As of April 1, 1999, the
Company had a balance of $950 unamortized which has been charged to
expense in the current year.
<PAGE>
CraftClick.com, Inc.
[A Development Stage Company]
Notes to Financial Statements
March 31, 2000
NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[continued]
(g) Revenue Recognition/Accounts Receivable
Revenue is recognized when earned. For products which the Company
sells, revenue is recognized when products are shipped. Customer
payments for sales are charged to pre-approved/authorized credit
cards. Thus, the sale is not recorded and product not shipped unless
collection is determined to be certain. The Company records accounts
receivable for the sale proceeds during the period of time between
shipping and when cash is posted in the bank. No allowance for
doubtful accounts has been recorded as March 31, 2000.
NOTE 2 LIQUIDITY/GOING CONCERN
The Company has had minimal revenue generating activities to this
point in time, which raises substantial doubt about the Company's
ability to continue as a going concern. Management plans include a
continued effort to develop its arts & crafts business as mentioned
in Note 1. With continued funding, the Company believes that it will
be enabled to develop and refine its Internet business. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
NOTE 3 INCOME TAXES
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 109 [the Statement], Accounting for Income
Taxes, as of January 20, 1999. The provision for income taxes in the
financial statements of $800, is for state minimum franchise tax. The
Company has accumulated losses since inception.
The tax effects of temporary differences that give rise to
significant portions of the deferred tax asset at March 31, 2000 have
no impact on the financial position of the Company.
Deferred tax assets Balance Tax Rate
Depreciation ($3,876) ($1,589) 41%
Loss carryforward(expires 2015) 3,205,326 1,314,184 41%
Valuation allowance (1,312,595)
Deferred tax asset $ -0-
A valuation allowance is provided when it is more likely than not
that some portion of the deferred tax asset will not be realized.
Because of the lack of taxable earnings history, the Company has
established a valuation allowance for all future deductible temporary
differences. The allowance is up $1,310,413 from $2,182 in the prior
year.
NOTE 4 RELATED-PARTY TRANSACTIONS
During the period ended March 31, 2000, a shareholder and officer
received advances of $13,000. These unsecured advances bear no
interest and are due on demand.
NOTE 5 SUBSCRIPTIONS/STOCK ISSUANCE
The Company had subscriptions to issue 257,666 shares of its common
stock for consideration of $386,499 at the time of the Plan with
Tecon. These subscriptions were reduced to 245,997 and were
exercised upon the consummation of the Plan with Tecon. Tecon also
issued 1,621,621 shares of common stock for additional subscriptions
in consideration of $600,000, cash. Additional subscriptions were
received and 215,702 common shares were issued for $315,515.
Simultaneously, the Company issued 10,333 common shares for business
equipment.
CraftClick has issued 1,812,829 shares of common stock to various
consultants and professionals for services. The total value of the
shares has been recorded at $1,359,622.
<PAGE>
CraftClick.com, Inc.
[A Development Stage Company]
Notes to Financial Statements
March 31, 2000
NOTE 6 PROPERTY AND EQUIPMENT
The Company has acquired computer equipment and other property, which
it is depreciating over three to five year periods utilizing the
straight line method, as follows:
Accumulated
Asset Class Cost Depreciation Method/Life
Office Equipment $ 46,701 $ (6,126) SL/5 years
Fixtures & Furnishings 33,112 (6,898) SL/5 years
Computer Hardware 230,269 (44,267) SL/3 years
Computer Software 6,879 (379) SL/3 years
Other Equipment 7,564 (700) SL/3 years
Leasehold Improvements 32,101 (8,468) SL/3 years
Total $356,626 ($66,838)
Depreciation expense for the periods ended March 31, 2000 and 1999
were $64,191 and $63, respectively.
NOTE 7 COLOCATION AGREEMENT
The Company entered into an agreement for Internet web-site hosting
with an unrelated third party in February, 1999. The terms of the
agreement require that the Company pay fees of $3,000 per month for a
period of two years.
NOTE 8 CONTRACT PAYABLE
In July, 1999, the Company purchased a telephone system with a
contract which requires monthly payments of $1,100. The imputed
interest on the contract is 1% and minimum payments including
interest of approximately $200 are $13,200 and $3,300 for the years
ended March 31, 2001 and 2002.
NOTE 9 EMPLOYMENT AGREEMENTS
The Company has entered into four executive employment agreements
with officers and employees of the Company, which were effective
April 1, 1999. The primary terms of such agreements follow:
# Initial Annual Base Expiration Date Initial Term Post-Initial Term
1 $ 120,000 March 8, 2004 Base times 150% Base times 200%
2 75,000 March 8, 2004 Base times 150% Base times 200%
3 70,000 March 8, 2002 Base times 150% Base times 200%
4 70,000 March 8, 2002 Base time 150% Base times 200%
* The Company may terminate these employees at its discretion during
the initial term of the agreement, but must pay to the terminated
employee the amount in this column upon termination.
** After the initial term of the employment agreement, the company
may terminate these employees at its discretion, but must pay the
terminated employee the amount in this column upon termination.
<PAGE>
CraftClick.com, Inc.
[A Development Stage Company]
Notes to Financial Statements
March 31, 2000
NOTE 10 PREFERRED STOCK
On November 1, 1999, the Company offered securities through a
Confidential Private Placement Memorandum (PPM). This PPM offered
accredited investors the opportunity to purchase units of two (2)
shares of Series A Convertible Preferred Stock, each share
convertible any time to 10 shares of common stock, and warrants
exercisable for three years to purchase ten (10) shares of common
stock at $1. The warrants may be redeemed at the option of the
Company on 30 days notice to holders of the warrants at a redemption
price of $.05 per warrant, if the average closing price of the
Company's common stock equals or exceeds $5 per share for 20
consecutive days within a period of 30 consecutive trading days. An
investor must purchase a minimum of 1,000 units at $20 per unit, or a
minimum investment of $20,000. Through March 31, 2000, the Company
has issued 101,000 shares, or 50,500 units for cash of $1,010,000.
No warrants had been exercised to purchase common shares, and not
preferred shares were converted to common.
NOTE 11 SUBSEQUENT EVENTS
In April, 2000, the Company received $260,000 for 26,000 shares of
preferred stock, or 13,000 units under the PPM described in Note 10.
The Company has acquired two entities for shares of common stock
since March 31, 2000 as follows:
Number of shares
Date Description of entity acquired Issued
May 10, 2000 Stenciling.com Asset Purchase Agreement 15,000
May 16, 2000 CraftCentralStation.com Asset
Purchase Agreement 240,000
NOTE 12 ACQUISITIONS
In January, 2000, the Company began development and operation of the
CraftClick web site and the creation of the CraftClick network of
arts and crafts community web sites. The Company began to enter
various asset purchase agreements or other contracts which included
the issuance of common stock for assets or intellectual rights:
These entities are accounted for as purchases. Operations since
acquisition are included in these financial statements and all
significant intercompany transactions are eliminated .
Date Description of entity Number of shares $/ Total Assets Goodwill
acquired Issued share Recorded Recorded
1/26/2000 Craftnetvillage 750,000 0.75 562,500 560,059
2/2/2000 Craftsearch. 100,000 0.75 75,000 75,000
2/4/2000 Art2Art 825,000 0.75 618,750 565,469
2/4/2000 Stitches to Go 350,000 0.75 262,500 252,274
2/15/2000 Stamparoo 100,000 0.75 75,000 75,000
2/17/2000 TopCraftsites 112,500 0.75 84,375 84,375
2/17/2000 Crafters Network 112,500 0.75 84,375 84,375
2/20/2000 Crafter.com 25,000 0.75 18,750 18,750
2/29/2000 MakeStuff 25,000 0.75 18,750 18,750
3/6/2000 Craftcoupons.com 25,000 0.75 18,750 18,750
3/20/2000 ToleNet.com 300,000 0.75 225,000 225,000
Total 2,725,000 2,043,750 1,977,802
Amortization 8,073
Book Value 1,969,729
NOTE 13 SIGNIFICANT CONCENTRATION OF CREDIT RISK
Currently, the Companys craft supplies, which it sells/ships to
customers, come primarily from one vendor. In the event this vendor
became unavailable to the Company, they would have to seek new
suppliers to meet customer orders.
The Company maintains cash balances in a financial institution
located in the California. Accounts at this institution are insured
by the Federal Deposit Insurance Corporation up to $100,000. The
Company had cash of $286,061 in excess of the FDIC insured limit at
March 31, 2000.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following table sets forth certain information regarding our executive
officers and directors:
Name Age Position
Peter A.Yollin 47 Director, Chairman and Chief Executive Officer
Sandip Seth 36 Director, President and Chief Operating Officer
Maninder Singh 43 Executive Vice President and Chief Financial Officer
Edgar Cayce III 29 Director, Vice President and Chief Technology Officer
Adriana M. Vidal 38 First Vice President Operations
Russell T. Murray 31 Vice President Internet Operations
Sanjay Sabnani 30 Director
Leslie Linsley 53 Director
Peter A. Yollin, Chairman and CEO
Mr. Yollin is responsible for the overall business, vision, strategy,
direction and management of CraftClick. He also spearheads all merger and
acquisition activities for the Company. Mr. Yollin has extensive executive-
level marketing and business development experience in fields related to
advertising, entertainment and marketing. From 1990-1996, he served as CEO
and President of Mondragon-Yollin Creative, an advertising agency serving the
motion picture and entertainment industry, and Fortune 1000 clients. At
Mondragon-Yollin Creative, Mr. Yollin managed acquisitions, marketing and
business development. Prior to 1990, Mr. Yollin held senior-level management
positions at Jon Douglas Real Estate and Avis Car Rental, where he was
responsible for marketing and new business development.
Sandip Seth, President and COO
Mr. Seth is responsible for the day-to-day operations of the Company. Prior
to joing the CraftClick team in March 1999, Mr. Seth was CEO and President of
GemNet, Inc. (1995-1999), an exporter of all major brands of technology and
office products to markets in South Asia, Africa and the Middle East. From
October 1994 to November 1995, Mr. Seth was Chairman and CEO of Independence
Technologies, Inc., a technology company based in the Silicon Valley,
specializing in on-line transaction processing for high-end client/server
systems.
Maninder Singh, Executive Vice President and CFO
Mr. Singh brings over 18 years of diversified international experience to
CraftClick. A Certified Public Accountant with experience in accounting,
finance and operations, Mr. Singh is responsible for all financial matters and
the financial management of the Company. Mr. Singh began his career in public
accounting at Ernst & Young, where he served for five years. He has also been
CFO at various companies in both the on-line and off-line worlds. Most
recently, Mr. Singh was the CFO of SuperDrugStore.com, an Internet start-up in
the healthcare and on-line pharmacy areas. Prior to SuperDrugStore.com, Mr.
Singh served as the CFO of Fortune Casuals, LLC. The Fortune Group of
companies had combined annual revenues of approximately $300 million.
Edgar Cayce, Chief Technology Officer
Mr. Cayce has been involved with CraftClick since its inception as BuyIt in
1997. Prior to joining BuyIt, Mr. Cayce was employed by Network Solutions
International as a network engineer and programmer; by Network Magic Unlimited
as a network engineer and programmer; by Rival Internet Services, Inc. as the
Chief Information Officer and senior designer, and by VGS NetMedia Corp., of
which he was the founder and chairman. Mr. Cayce has been involved in various
on-line businesses for the past seven years.
Adriana M. Vidal, First Vice President Technology and Operations
Ms. Vidal is responsible for the on-going organization and coordination of
information within CraftClick with an emphasis on integrating all new
facilities into the network. Ms. Vidal brings over 17 years experience in
business operations to CraftClick. She has worked at numerous start-up
ventures, assisting in all aspects of business and project operations
management. Prior to joining CraftClick, Ms. Vidal was an independent
consultant assisting many corporations in project management, web development
and systems integration. Previously, Ms. Vidal served for four years as Vice
President of Project Operations for Automated Data Sciences/CADscan, a Santa
Monica-based systems integration company.
Russell Murray, Vice President Internet Operations
Mr. Murray is responsible for coordinating the Internet operations of the
CraftClick network. Prior to joining CraftClick, he co-founded Art2Art.com,
an on-line arts and crafts store that sells over 35,000 items and boasts a
vast and loyal user base. Mr. Murray brings with him 10 years of experience
specific to the arts and crafts industry, covering product logistics and
distribution, sales and marketing, and setting up key manufacturer and vendor
relationships.
Sanjay Sabnani, Director
Sabnani served as the principal of a Nasdaq securities firm for several years
before leaving to start his own start-up consulting practice, Typhoon Capital
Consultants. Typhoon's principal activities included venture capital analysis,
business plan development and strategic consulting. Just prior to joining
Venture Catalyst, Sabnani served as president of Coffin Communications Group,
a Los Angeles-based investor relations firm, and created the agency's
successful Internet Consulting Unit. He left Coffin when Compaq Computers'
AltaVista.com division acquired one of his early consulting clients,
Shopping.com, for $250 million. Taking his equity stake, Sabnani elected to
return to helping entrepreneurial start-up companies, which led to the
formation of Venture Catalyst's investor relations and venture capital
division. Sabnani has developed and managed investor relations programs and
online strategy and corporate finance activities for over 20 publicly traded
companies. He is currently a board member of CraftClick.com, as well as
several private technology start-ups, and is a member of The Indus
Entrepreneurs and the National Business Incubator Association
Leslie Linsley, Director , renowned TV arts and crafts personality, has been
hired as spokesperson and editorial director. Ms. Linsley has appeared on many
national television and radio shows, including guest appearances on the Oprah
Winfrey Show, Today Show, Good Morning America and Live with Regis and Kathy
Lee. She is the author of over 60 books on crafts, home style decorating and
related subjects. In addition to writing a regular column for CraftClick, she
also hosts an on-line forum where members ask questions and share ideas.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY EXECUTIVE OFFICER COMPENSATION TABLE
The following table summarizes the aggregate cash compensation paid during
fiscal year ended March 31, 2000 (see footnotes below) to our Chief Executive
Officer and other executive officers that received compensation during fiscal
1999 in excess of $100,000 in salary and bonus pursuant to their contracts.
Currently, options have been granted to management as indicated below, and all
these options have been granted during the last fiscal year.
NAME AND PRINCIPAL POSITION SALARY BONUS STOCK OPTIONS
Peter A. Yollin, Chief Executive Officer
Year ended 3/31/2000 $166,375 $13,750 0
Year ended 3/31/1999 $0 $0 0
Sandip Seth, President and COO
Year ended 3/31/2000 $146,208 $12,083 0
Year ended 3/31/1999 $0 $0 0
Maninder Singh, Chief Financial Officer
Year ended 3/31/2000 $13,214 $0 0
Year ended 3/31/1999 $0 $0 0
Adriana M. Vidal
Year ended 3/31/2000 $15,833 $0 0
Year ended 3/31/1999 $0 $0 0
Russell T. Murray
Year ended 3/31/2000 $9,167 $0 0
Year ended 3/31/1999 $0 $0 0
Edgar E. Cayce, Chief Technology Officer
Year ended 3/31/2000 $80,583 $8,333 0
Year ended 3/31/1999 $ 0 $0 0
The Company had no activities for the year ended March 31, 1999, and no
compensation was paid for the year then ended.
INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS
Our certificate of incorporation and bylaws provide that we indemnify all of
our directors and officers to the fullest extent permitted by the Utah Revised
Business Corporation Act. Under our certificate of incorporation and bylaws,
any director or officer, who in his capacity as such is made or threatened to
be made, party to any suit or proceeding, will be indemnified. A director or
officer will be indemnified if it is determined that the director or officer
acted in good faith and in a manner he reasonably believed to be in or not
opposed to our best interests. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and
persons controlling our company pursuant to the foregoing provision, or
otherwise, we have been advised that in the opinion of the Securities Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
We maintain a directors' and officers' liability insurance policy covering
certain liabilities that may be incurred by directors and officer in
connection with the performance of their duties. We pay the entire premium for
the liability insurance.
Compensation of Directors.
There are no standard arrangements pursuant to which the Company's non-
employee directors are compensated for any services provided as director. No
additional amounts are payable to the Company's directors for committee
participation or special assignments.
There are no arrangements pursuant to which any of the Company's directors was
compensated during the Company's last completed calendar year for any service
provided as director.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Company files reports under Section 15D of the Securities Exchange Act of
1934; hence no such filings are required
EMPLOYMENT AND CONSULTING AGREEMENTS
We have entered into an Employment Agreement with Mr. Yollin, which provides
for him to act as our Chief Executive Officer for a term expiring on March 8,
2004. The Employment Agreement provided for an initial annual salary of
$120,000, which amount was increased to $165,000 beginning April 16, 1999.
We have entered into an Employment Agreement with Mr. Seth, which provides for
him to act as our President and Chief Operating Officer for a term expiring on
March 8, 2004. The Employment Agreement provided for an initial annual salary
of $75,000, which amount was increased to $145,000 beginning April 16, 1999.
We have entered into an Employment Agreement with Mr. Cayce, which provides
for him to act as our Chief Technology Officer for a term expiring on March 8,
2002. The Employment Agreement provided for an initial annual salary of
$70,000, which amount was increased to $100,000 beginning January 1, 2000.
We have entered into an Employment Agreement with Mr. Reick, which provides
for him to act as our Vice President Research and Development for a term
expiring on March 8, 2002. The Employment Agreement provided for an initial
annual salary of $70,000.
We have entered into an Employment Agreement with Mr. Singh, which provides
for him to act as our Executive Vice President and Chief Financial Officer for
a term expiring on February 21, 2002. The Employment Agreement provided for an
initial annual salary of $120,000.
We have entered into a Consulting Agreement with Ms. Linsley, which provides
for her to act as our Spokesperson for a term expiring on December 31, 2001.
The Consulting Agreement provided for a monthly fee of $3,500, plus the grant
of 500,000 "restricted" shares of our common stock to be issued over the first
year of this agreement. Additionally, the Consulting Agreement provides for
options to purchase 500,000 "restricted" shares of our common stock at a price
of $5.00 per share in year two of the Consulting Agreement, and warrants to
purchase 250,000 "restricted" shares of our common stock at a price of $20.00
per share in year three of the agreement.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Security Ownership of Certain Beneficial Owners.
The following table sets forth the shareholdings of those persons who
beneficially own more than five percent of each class of our equity securities
as of the date of this Report.
NUMBER OF COMMON
SHARES BENEFICIALLY PERCENTAGE
NAME OF BENEFICIAL OWNER OWNED OF CLASS
Peter A. Yollin 3,655,000 21.59%
Edgar E. Cayce 950,000 5.61%
Michael Reick 950,000 5.61%
Communication Technology
Investments Limited 1,000,000 5.90%
NUMBER OF PREFERRED*
SHARES BENEFICIALLY PERCENTAGE
NAME OF BENEFICIAL OWNER OWNED OF CLASS
Venture Catalyst, Inc. 32,000 31.68%
David Lake 10,000 9.90%
William Long 8,000 7.92%
* Each Preferred Share is convertible into 10 (ten) shares of common stock
and 5 (five) common stock purchase warrants at a price of $1.00 per share.
Security Ownership of Management.
The following table sets forth the share holdings of the Company's directors
and executive officers as of the date of this Report:
NUMBER OF COMMON
SHARES BENEFICIALLY PERCENTAGE
NAME OF BENEFICIAL OWNER OWNED OF CLASS
Peter A. Yollin 3,655,000 21.59%
Sandip Seth 500,000 2.95%
Maninder Singh 50,000 0.3%
Edgar E. Cayce 950,000 5.61%
Michael Reick 950,000 5.61%
Leslie Linsley 233,332 1.38%
All directors and executive officers
as a group (6 persons) 6,338,332 37.44%
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have entered into a Consulting Agreement with Venture Catalyst, Inc. for
them to provide us with investor relations services for a term expiring
November 30, 2000. The Consulting Agreement provided for the payment of a
monthly retainer of $8,500, payable at our option in either cash or the
equivalent in our restricted common stock at the closing price on the last day
of each month. Additionally, the Consulting Agreement provides for options to
purchase 150,000 "Restricted" shares of our common stock at a price of $7.00
per share.
During the year ended March 31, 2000, a shareholder and officer received
advances of $13,000. These unsecured advances bear no interest and are due
on demand.
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
Reports on Form 8-K
During the last quarter of the date covered by this Report, we filed the
following Form 8-K's with respect to our acquisitions:
Form 8-K/A dated January 25, 2000
Form 8-K dated February 4, 2000
Form 8-K/A dated February 4, 2000
Form 8-K dated February 15, 2000
Form 8-K/A dated February 15, 2000
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CRAFTCLICK.COM, INC.
Date: June 28, 2000 By/S/ Peter A. Yollin
Peter A. Yollin
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated:
CRAFTCLICK.COM, INC.
Date: June 28, 2000 By/S/ Peter A. Yollin
Peter A. Yollin
Chief Executive Officer and
Director
Date: June 28, 2000 By/S/ Sandip Seth
Sandip Seth
President and Director
Date: June 28, 2000 By/S/ Leslie Linsley
Leslie Linsley
Director
