<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2000
Commission File Number 0-14692
----------------------------------------------
Singlepoint Systems Corporation
Minnesota 41-1523657
State of Incorporation I.R.S. Employer Identification No.
4020 Moorpark Avenue, Suite 115, San Jose, California 95117-1845
Telephone Number: (408) 557-6500
Global MAINTECH Corporation
7578 Market Place Drive, Eden Prairie, Minnesota, 55344
(Former name and address)
----------------------------------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
----------------------------------------------
As of August 10, 2000 there were 7,194,142 shares of the Registrant's no par
value common stock outstanding with approximately 3,100 shareholders of record.
Transitional small business issuer format: No
<PAGE>
SAFE HARBOR STATEMENT UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements involve risks and uncertainties that may cause the
Company's actual results to differ materially from the results discussed in the
forward-looking statements. Factors that might cause such differences include,
but are not limited to, the uncertainty in the Company's ability to continue to
operate profitably in the future; failure of the Company to meet its future
additional capital requirements; loss of key personnel; failure of the Company
to respond to evolving industry standards and technological changes; inability
of the Company to compete in the industry in which it operates; failure of the
Company to successfully integrate the operations of newly acquired businesses;
lack of market acceptance of the Company's products, including products under
development; failure of the Company to secure adequate protection for the
Company's intellectual property rights; and the Company's exposure to product
liability claims. The forward-looking statements are qualified in their entirety
by the cautions and risk factors set forth in Exhibit 99, under the caption
"Cautionary Statement," to this Quarterly Report on Form 10-QSB for the quarter
ended June 30, 2000.
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PART I. FINANCIAL INFORMATION
--------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
SINGLEPOINT SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 610,374 $ 2,171,648
Accounts receivable, less allowance for doubtful
accounts of $165,000 and $190,000, respectively 1,211,610 2,013,371
Other receivables 176,699 94,211
Inventories 1,159,564 1,322,336
Prepaid expenses and other 67,616 161,252
Current portion of investment in
sales-type leases 13,207 20,753
----------- -----------
Total current assets 3,239,070 5,783,571
Property and equipment, net 556,228 823,286
Leased equipment, net 88,385 123,285
Software development costs, net 57,806 1,092,283
Purchased technology and other intangibles, net 10,095,391 12,371,739
Investments 500,000 --
Other assets, net 289,689 131,835
----------- -----------
TOTAL ASSETS $14,826,569 $20,325,999
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
2
<PAGE>
SINGLEPOINT SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 2,437,863 $ 2,103,764
Current portion of notes payable 3,579,089 5,390,270
Accrued liabilities, compensation and payroll taxes 620,215 1,103,004
Accrued consideration related to acquistions 5,238,128 7,264,519
Accrued interest and penalties 1,370,164 802,801
Accrued dividends 425,402 259,919
Deferred revenue 1,280,427 997,141
Net liabilities of discontinued operation 7,908,018 5,300,000
------------ ------------
Total current liabilities 22,859,306 23,221,418
------------ ------------
Notes payable, less current portion 14,514 68,012
------------ ------------
Total liabilities 22,873,820 23,289,430
STOCKHOLDERS' EQUITY (DEFICIT)
Voting, convertible preferred stock - Series A, no par value; 887,980
shares authorized; 63,956 on June 30, 2000 and 86,896 on December 31,
1999 issued and outstanding; total liquidation preference of outstanding
shares-$23,984 $ 30,012 $ 40,765
Voting, convertible preferred stock - Series B, no par value; 123,077
shares authorized; 51,023 on June 30, 2000 and 51,632 on December 31,
1999 issued and outstanding; total liquidation preference of outstanding
shares-$1,658,248 1,658,270 1,678,069
Convertible preferred stock - Series C, no par value; 1,675
shares authorized; none on June 30, 2000 and 1,675 shares
on December 31, 1999 issued and outstanding -- 1,368,712
Convertible preferred stock - Series D, no par value;
2,775 shares authorized; 2,653 shares on June 30, 2000 and none
on December 31, 1999 issued and outstanding; total liquidation
preference of outstanding shares-$2,653,000 1,836,659 --
Convertible preferred stock - Series E, no par value;
2,675 shares authorized; 2,675 shares on June 30, 2000 and none
on December 31, 1999 issued and outstanding; total liquidation
preference of outstanding shares-$2,675,000 2,097,605 2,097,605
Convertible preferred stock - Series F, no par value;
2,000 shares authorized; 2,000 shares on June 30, 2000 and none
on December 31, 1999 issued and outstanding; total liquidation
preference of outstanding shares-$2,000,000 1,373,475 --
Common stock, no par value; 17,479,818 shares authorized;
6,460,662 on June 30, 2000 and 5,404,099 shares on December 31, 1999
issued and outstanding -- --
Additional paid-in-capital 38,244,617 35,117,564
Notes receivable-officers (126,000) (235,500)
Accumulated deficit (53,161,889) (43,030,646)
------------ ------------
Total stockholders' equity (deficit) (8,047,251) (2,963,431)
------------ ------------
$ 14,826,569 $ 20,325,999
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
3
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SINGLEPOINT SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
----------------------------- ----------------------------
2000 1999 2000 1999
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Net sales:
Systems $ 1,610,150 $ 1,516,851 $ 2,481,482 $ 3,033,442
Maintenance, consulting and other 1,039,524 1,182,790 2,258,689 2,246,415
------------ ------------ ------------ ------------
Total net sales 2,649,674 2,699,641 4,740,171 5,279,857
Cost of sales:
Systems 427,735 15,498 590,599 216,783
Maintenance, consulting and other 162,658 693,789 484,413 1,243,084
------------ ------------ ------------ ------------
Total cost of sales 590,393 709,287 1,075,012 1,459,867
------------ ------------ ------------ ------------
Gross profit 2,059,281 1,990,354 3,665,159 3,819,990
Operating expenses:
Selling, general and administrative 3,546,598 1,951,802 7,148,053 3,633,149
Research and development 119,275 555,726 358,825 892,550
Other operating expenses 311,111 -- 2,537,613 --
------------ ------------ ------------ ------------
Loss from operations (1,917,703) (517,174) (6,379,332) (705,709)
Other income (expense):
Interest expense (105,705) (126,732) (222,356) (205,240)
Interest income 12,803 745 13,806 2,272
Other expenses (758,365) (421,687) (884,264) (562,690)
------------ ------------ ------------ ------------
Total other income (expense), net (851,267) (547,674) (1,092,814) (765,658)
------------ ------------ ------------ ------------
Loss from continuing operations (2,768,970) (1,064,848) (7,472,146) (1,471,367)
Discontinued operations:
Loss from discontinued operations, net of tax -- (914,318) -- (914,318)
Loss on disposal of discontinued operations, net of tax (829,614) -- (2,493,614) --
------------ ------------ ------------ ------------
Loss before cumulative effect of change in accounting principle (3,598,584) (1,979,166) (9,965,760) (2,385,685)
------------ ------------ ------------ ------------
Cumulative effect of change in method of depreciation -- -- -- 231,936
------------ ------------ ------------ ------------
Net loss (3,598,584) (1,979,166) (9,965,760) (2,153,749)
Accrual of cumulative dividends on preferred stock (140,347) (45,000) (256,465) (88,675)
Attribution of beneficial conversion feature on preferred stock -- (471,532) (3,466,797) (758,973)
------------ ------------ ------------ ------------
Net loss attributable to common stockholders $ (3,738,931) $ (2,495,698) $(13,689,022) $ (3,001,397)
============ ============ ============ ============
Basic loss per common share:
Loss from continuing operations $ (0.477) $ (0.392) $ (1.890) $ (0.622)
Loss from discontinued operations (0.136) (0.226) (0.421) (0.245)
------------ ------------ ------------ ------------
Loss before cumulative effect of change in accounting principle (0.613) (0.618) (2.311) (0.868)
Cumulative effect of change in accounting principle -- -- -- 0.062
------------ ------------ ------------ ------------
Net loss $ (0.613) $ (0.618) $ (2.311) $ (0.805)
============ ============ ============ ============
Diluted loss per common share:
Loss from continuing operations $ (0.477) $ (0.392) $ (1.890) $ (0.622)
Loss from discontinued operations (0.136) (0.226) (0.421) (0.245)
------------ ------------ ------------ ------------
Loss before cumulative effect of change in accounting principle (0.613) (0.618) (2.311) (0.868)
Cumulative effect of change in accounting principle -- -- -- 0.062
------------ ------------ ------------ ------------
Net loss $ (0.613) $ (0.618) $ (2.311) $ (0.805)
============ ============ ============ ============
Shares used in calculations:
Basic 6,096,047 4,037,528 5,923,047 3,727,057
Diluted 6,096,047 4,037,528 5,923,047 3,727,057
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
4
<PAGE>
SINGLEPOINT SYSTEMS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------
2000 1999
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(9,965,760) $(2,153,749)
Adjustments to reconcile net loss to
net cash used in operating activities:
Stock issued for services 74,521 --
Loss on write-off of purchased technology 1,800,000 --
Loss on operations of discontinued operations -- 914,318
Loss on disposal of discontinued operations 2,368,614 --
Advances to discontinued operations -- (2,230,454)
Depreciation and amortization 2,053,586 2,040,221
Cumulative effect of change in accounting principle -- (231,936)
Loss on sales of property and equipment (184,342) --
Changes in operating assets and liabilities:
Accounts receivable 156,487 (1,301,459)
Other receivables (82,488) (75,964)
Inventories 162,772 (138,683)
Prepaid expenses and other 93,636 (246,468)
Accounts payable 434,348 247,267
Accrued liabilities (163,773) 46,919
Accrued consideration related to acquisition (511,872) --
Accrued interest and penalties 967,363 --
Deferred revenue 126,331 158,768
----------- -----------
Cash used by operating activities (2,670,577) (2,971,220)
----------- -----------
Cash flows from investing activities:
Cash received from sales-type leases 7,546 43,186
Purchase of property and equipment (131,610) (296,206)
Purchase of leased equipment -- (42,185)
Investment in software development costs -- (1,762,327)
Investment in purchased technology (100,000) --
Investment in other assets (24,856) (12,731)
----------- -----------
Cash used by investing activities (248,920) (2,070,263)
----------- -----------
Cash flows from financing activities:
Proceeds from note receivable - officer 109,500 --
Proceeds from issuance of preferred stock 2,369,725 1,504,000
Proceeds from issuance of common stock 443,677 1,295,004
Proceeds from short-term notes payable -- 1,764,729
Payments of short-term notes payable (1,511,181) --
Proceeds from long-term notes payable -- 1,391,464
Payments of long-term notes payable (53,498) --
----------- -----------
Cash provided by financing activities 1,358,223 5,955,197
----------- -----------
Net increase (decrease) in cash (1,561,274) 913,714
Cash and cash equivalents at beginning of period 2,171,648 664,066
----------- -----------
Cash and cash equivalents at end of period $ 610,374 $ 1,577,780
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
5
<PAGE>
SINGLEPOINT SYSTEMS CORPORATION AND SUBSIDIARIES
FOOTNOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
General
The Company, through its subsidiaries, Global MAINTECH, Inc. ("GMI") and
Singlepoint Systems, Inc. ("SSI"), supplies world class systems and services to
corporate data centers; manufactures and sells event notification software to
corporate clients; provides professional services to help companies implement
enterprise management solutions; and manufactures and sells printed circuit
board design software and plotters.
The Company's Breece Hill Technologies, Inc. ("BHT") subsidiary, which was
acquired in April 1999 and formerly represented the Company's tape library
storage products segment, is presented as a discontinued operation.
Basis of Presentation
The interim consolidated financial statements are unaudited, but in the
opinion of management, reflect all adjustments necessary for a fair presentation
of results for such periods. All such adjustments are of a normal recurring
nature.
The results of operations for any interim period are not necessarily
indicative of results for the full year. These financial statements should be
read in conjunction with the audited consolidated financial statements, which
are contained in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1999.
Continuation as a Going Concern
The accompanying consolidated financial statements are prepared assuming
the Company will continue as a going concern. During the year ended December 31,
1999 and the six months ended June 30, 2000, the Company incurred losses from
operations of $14,920,021 and $6,379,332, respectively. At June 30, 2000, the
Company had a working capital deficit of $19,620,236 and a stockholders' deficit
of $8,047,251.
The Company is currently in negotiation to resolve approximately $5,200,000
of current liabilities included in the Company's June 30, 2000 consolidated
financial statements by issuance of equity securities for certain acquisition
earn out obligations with Enterprise Solutions, Inc. ("ESI"). The completion of
the disposal of BHT and resolution of earnout liabilities will aid in
alleviating the Company's working capital deficit. During the fourth quarter of
1999 the Company appointed a new Chief Executive Officer and other executive
management who took action to reduce future operating expenses in an effort to
improve operating margins in 2000. In January and February 2000, the Company
issued Series D and F Convertible Preferred Stock with combined gross proceeds
of $2,400,000. In the first quarter of 2000 the Company implemented additional
budgetary controls and established performance criteria. In the second quarter
of 2000 the Company reduced the cost of sales and improved the gross profit. The
Company also expects to reach a satisfactory extension of its borrowing
arrangements with its primary secured lender.
These actions are significant and their impact on future results is
uncertain as of the date of the consolidated financial statements. In addition,
the ability of the Company to attract additional capital if events do not occur
as expected by the Company is uncertain. While the Company believes in the
viability of its strategy to improve operating margins and believes in its
financial plan to improve the Company's working capital position, there can be
no assurances to that effect.
Other Operating Expenses
Other operating expenses is primarily comprised of a charge taken by the
Company in February 2000 related to certain technology acquired during the
quarter ended March 31, 2000. In February 2000, the Company contracted to
purchase the full rights to certain software currently used by the Company in
its Virtual Command Center (VCC) product from a company owned by an employee of
Singlepoint Systems Corporation for aggregate consideration with a value of
$1,800,000. This consideration is comprised of (a) $400,000 in cash, $100,000 of
which was paid in February and the remainder payable in installments through
December 31, 2001; (b) 70,600 shares of common stock valued at approximately
$600,000, 17,650 shares of which were issued in February 2000 and the remainder
to be issued through December 31, 2000; and (c) options to purchase 100,000
shares of the Company's common stock at $7.3125 per share during the five year
term of such options, the aggregate value of which, determined by use of a
Black-Scholes valuation model, was approximately $800,000. The software
technology acquired, Global Watch MVS, can be sold on a stand-alone basis or as
part of the VCC product. The Company determined in the fourth quarter of 1999
that the expected future cash flows from certain software related assets were
impaired and, as a result, certain software assets were written down to their
recoverable amount. Since the Global Watch MVS software has insufficient history
to provide evidence of satisfactory future cash flows, the Company expensed the
cost of the software technology acquired.
In the second quarter of 2000, the Company accrued $135,500 relating to
employee terminations costs associated with the relocation of the Company
headquarters from Minneapolis to San Jose. The Company accrued $135,000 for
6
<PAGE>
the future lease payments for a software development package, which the Company
is no longer utilizing.
Loss Per Share
Basic loss per common share is computed by dividing the net loss
attributable to common stockholders by the weighted average number of shares of
common stock outstanding during the period. The net loss attributable to common
stockholders is determined by increasing net loss by the accrual of dividends on
preferred stock for the respective period and by the value of any embedded
beneficial conversion feature present in issuances of preferred stock
attributable to the respective period.
Diluted loss per common share is computed by dividing the net loss
attributable to common stockholders by the sum of the weighted average number of
common shares outstanding plus shares derived from other potentially dilutive
securities. For the Company, potentially dilutive securities include (a)
"in-the-money" stock options and warrants, (b) the amount of weighted average
common shares which would be added by the conversion of outstanding convertible
preferred stock and convertible debt, (c) the number of weighted average common
shares which would be added upon the satisfaction of certain conditions with
respect to arrangements involving contingently issuable shares, and (d) the
number of weighted average common shares that may be issued subject to
contractual arrangements entered into by the Company that may be settled in
common stock or in cash at the election of either the Company or the holder.
During the quarter and six months ended June 30, 2000 and June 30, 1999,
potentially dilutive shares were excluded from the diluted loss per common share
computation, as their effect was antidilutive. The weighted average number of
antidilutive option and warrant shares excluded from the calculation of diluted
loss per common share for the three and six months periods ended June 30, 2000
and June 30, 1999 are listed in the table below.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Weighted Average Antidilutive Option
Shares 1,552,030 1,290,986 1,494,459 1,109,026
Weighted Average Antidilutive
Warrant Shares 1,993,030 1,891,112 2,004,590 1,999,833
</TABLE>
At June 30, 2000 and June 30, 1999, the numbers of common shares issuable
(and excluded from the calculation of diluted loss per common share) upon
conversion of the then outstanding preferred shares and convertible debt were
the following:
<TABLE>
<CAPTION>
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
Number of Common Shares Issuable Upon Conversion of
Series A Convertible Preferred Stock 12,791 17,379
Series B Convertible Preferred Stock 442,199 367,790
Series C Convertible Preferred Stock -- 370,507
Series D Convertible Preferred Stock 1,624,791 --
Series E Convertible Preferred Stock 1,755,284 --
Series F Convertible Preferred Stock 1,294,871 --
Number of Common Shares Issuable Upon Conversion of
Debt 121,773 173,811
</TABLE>
In addition to the above convertible securities, at June 30, 2000, 400,000
shares of the Company's BHT subsidiary's Series B Preferred Stock were
outstanding. Such shares are convertible to 80,000 shares of the Company's
common stock. Similar to the items discussed above, such shares were excluded
from the calculation of diluted loss per common share because their inclusion
would have been antidilutive.
As part of the acquisition of the Global Watch MVS software the Company
will issue an additional 52,950 shares of the Company's common stock through
December 2000.
The Company is a party to a number of arrangements that may be settled in
common stock or in cash at the election of either the Company or the other party
to the arrangement as stipulated in such contracts. These contractual
arrangements include accrued dividends with respect to the Company's preferred
stock, a minimum
7
<PAGE>
earn out payment related to certain assets acquired from BHT, ESI and various
other contractual arrangements. The settlement of such contractual obligations,
if sought by either party through the issuance of common shares, would have
required 425,402 shares for accrued dividends, 89,468 shares for the Lavenir
Technology, Inc. late registration penalty, 1,530,191 shares for the BHT earn
out payment and 1,750,000 shares for the ESI earn out payment as of June 30,
2000. These shares were excluded from the calculation of diluted loss per common
share because their inclusion would have been antidilutive.
Capitalized Software Development Costs
Under the criteria set forth in SFAS No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed," capitalization of
software development costs begins upon the establishment of technological
feasibility of the software. The establishment of technological feasibility and
the ongoing assessment of the recoverability of these costs require considerable
judgment by management with respect to certain external factors, including, but
not limited to, anticipated future gross product revenues, estimated economic
life, and changes in software and hardware technology. Capitalized software
development costs are amortized utilizing the straight-line method over the
estimated economic life of the software not to exceed three years.
The Company regularly reviews the carrying value of software development
assets and a loss is recognized when the unamortized costs are deemed
unrecoverable based on the estimated cash flows to be generated from the
applicable software.
Purchased Technology and Other Intangibles
The Company has recorded the excess of purchase price over net tangible
assets as purchased technology and customer lists based on the fair value of
these intangibles at the date of purchase. These assets are amortized over their
estimated economic lives of three to five years using the straight-line method.
Recorded amounts for purchased technology are regularly reviewed and
recoverability assessed. The review considers factors such as whether the
amortization of these capitalized amounts can be recovered through forecasted
undiscounted cash flows.
Discontinued Operations-Breece Hill Technologies, Inc.
On December 27, 1999, the Company approved a formal plan with regards to
the disposal of its Breece Hill Technologies, Inc. (BHT) subsidiary, which was
acquired on April 14, 1999 and which formerly represented the Company's tape
storage products business segment. Accordingly, the estimated loss from the
disposal of this segment and the financial position, results of operations and
cash flows of BHT have been separately presented as discontinued operations, and
eliminated from the continuing operations amounts in the consolidated financial
statements. The loss on disposal of discontinued operations was increased
$2,493,614 for the six months ended June 30, 2000 to reflect a revised
calculation of liability for the earn-out period of March 15, 1999 through March
14, 2000. No further adjustment was deemed necessary for the loss from
discontinued operations for the six months ended June 30, 2000 since such loss
was provided at December 31, 1999.
Acquisitions
Enterprise Solutions, Inc.: The Company, through its wholly owned
subsidiary Singlepoint Systems, Inc. ("SSI"), purchased substantially all of the
assets of Enterprise Solutions, Inc., an Ohio corporation ("ESI"), pursuant to
an Asset Purchase Agreement effective as of November 1, 1998 ("ESI Agreement")
by and among the Company, GMI, SSI and ESI. The transaction was treated as an
asset purchase for accounting purposes and involved contingent consideration
based on operating results through April 30, 2000.
The ESI Agreement provides for payment of the earn out amount to be made by
SSI to ESI no later than 60 days after the expiration of the earn out period.
ESI has consented to an extension of the required payment date of the earn out
amount to no later than 120 days after the expiration of the earn out period.
The Company is currently negotiating the final settlement with ESI and believes
that they have adequately accrued for the earn-out payment.
Lavenir Technology, Inc.: On September 29, 1999, the Company, through its
GMI subsidiary, purchased substantially all the assets and rights to certain
hardware and software products, trademarks and copyrights of Lavenir Technology,
Inc., a California corporation ("LTI"), pursuant to an Agreement and Plan of
Reorganization ("LTI Agreement") by and among the Company, GMI and LTI. Subject
to the LTI Agreement, the Company also assumed certain liabilities of LTI,
including LTI's outstanding debt, ongoing leases, and contract obligations. The
assets and rights acquired relate primarily to a suite of CAD/CAM software and
certain hardware products sold for use in the printed circuit board industry.
The Company received net assets with a fair value of approximately $315,000 as a
result of the LTI asset acquisition and allocated the remaining purchase price
of $4,985,000 to purchased technology intangible assets with useful lives of
three to five years.
8
<PAGE>
Under the terms of the LTI Agreement, the total purchase price of
$5,300,000 was comprised of the following: (a) 266,000 shares of the Company's
common stock initially paid to LTI on the closing date, (b) $400,000 originally
in the form of a payable due on January 31, 2000, and (c) additional shares of
the Company's common stock issuable as of March 31, 2000 sufficient to cause the
aggregate value of the shares previously issued and the original $400,000
liability to total $5,300,000 as of the March 31, 2000. In November 1999 the
Company renegotiated the $400,000 liability due on January 31, 2000 to a
$100,000 amount due on January 31, 2000 and 100,000 shares of the Company's
common stock to be issued in January 2000. In June of 2000 the Company issued
404,085 of the Company's common stock to LTI as final payment under the terms of
the LTI Agreement.
On June 29, 2000 the Company approved a written action to issue 89,468
shares of the Company's Common Stock to LTI in order to compensate LTI for the
late registration of the 770,085 shares of the Company's Common Stock discussed
above. LTI agreed to accept the 89,468 shares of the Company's Common Stock in
place of the interest penalty of $156,569 for the period from April 15, 2000 to
July 20, 2000.
Singlepoint Limited: The Company, through its wholly owned subsidiary
Singlepoint Systems, Inc. ("SSI"), acquired all of the outstanding stock of
Singlepoint Limited ("SSI Ltd"), a distributor of SSI products and services in
England, pursuant to a Share Purchase Agreement effective as of May 27, 1999
("SSI Ltd Agreement"} by and among SSI and SSI Ltd. In return for the SSI Ltd
shares, the Company paid $80,000 and forgave $50,000 of trade receivables. In
addition, under the terms of the related acquisition agreement, the Company is
required to pay an earn-out payment based upon net income of SSI Ltd for a
period subsequent to the acquisition date through April 30, 2000. The Company
and SSI LTD have signed a letter of intent to dissolve this transaction and for
the shares of SSI Ltd to revert back to the previous shareholders. As a result,
the Company will not be obligated to pay the final earn-out payment.
Unaudited 1999 Pro Forma Financial Information: The following table
summarizes unaudited pro forma 1999 consolidated financial information with
respect to results of operations of the Company as if the acquisitions of the
assets, licenses, and various rights and assumption of the described liabilities
with respect to the transactions with LTI and SSI Ltd described above had
occurred as January 1, 1999:
Six Months Ended
June 30, 1999
----------------
Net Sales $ 7,070,252
Loss from Continuing Operations (2,154,502)
Diluted Loss per Common Share from Continuing Operations (0.9108)
Common Stock Issuance
During the six months ended June 30, 2000 the Company issued 291,430 shares
of common stock as a result of exercises of stock options. The Company received
$558,496 in proceeds for these exercises. The Company also issued 504,085 shares
of common stock to LTI in settlement of a previously negotiated acquisition
liability, 17,650 shares for the purchase of Global Watch MVS, 150,000 shares in
connection with the issuance of Series D Convertible Preferred Stock, 36,106
shares to satisfy a previous commitment and 47,290 for the conversion of Series
A, B, and D Convertible Preferred Stock.
Preferred Stock Issuance
Issuance of Series D Convertible Preferred Stock: On January 19, 2000, the
Company issued 2,725 shares of Series D Convertible Preferred Stock ("Series D
Stock") in a private placement. The shares were issued as follows: (1) 700
shares to new investors for $700,000 in the aggregate; (2) 300 shares to certain
investors upon conversion of $300,000 of promissory notes issued by the Company;
(3) 1,600 shares to the holders of the Company's then outstanding Series C
Convertible Preferred Stock in exchange for all of their Series C shares; and
(4) 125 shares to the placement agent, of which 75 shares were issued in
exchange for all of the Company's Series C Stock held by the placement agent and
of which 50 shares were compensation for placement agent services. At any time
after the issuance of the Series D Stock, each share of Series D Stock is
convertible into the number of shares of common stock calculated by dividing the
per share purchase price of $1,000 by the conversion price. The conversion price
equals the lesser of 75% of the average of the three lowest closing bid prices
of the common stock during the 15 trading days immediately before the conversion
date or $5.4375. The beneficial conversion feature present in the issuance of
the Series D Stock as determined on the date of issuance of the Series D Stock
totaled $2,386,830 of which $1,863,858 was treated as a reduction in earnings
available (increase in loss attributable) to common stockholders upon the date
of issuance of the Series D Stock since such shares may be converted at any time
following issuance. The other $522,972 was attributed to Series C Stock and was
treated as a reduction in earnings available to common stockholders in the year
ended December 31, 1999. Holders of Series D Stock are entitled to receive
dividends at an annual rate of 8% of the per share purchase price. The dividends
are payable,
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upon conversion of the Series D Stock, in either cash or shares of common stock,
at the option of the Company. The number of shares of common stock issuable as a
dividend payment will equal the total dividend payment then due divided by the
conversion price calculated as of the date that the dividend payment is due.
In addition, in connection with the Series D Stock offering the holders of
warrants issued in the Series C offering were issued warrants to purchase 20,000
shares of the Company's common stock in exchange for the warrants issued to them
in the Series C offering. Each new warrant issued entitles its holder to
purchase the Company's Common Stock at $8.30 per share at any time before the
fifth anniversary of the date of issuance of the warrant. In conjunction with
the Series D Stock offering, the Company also issued 30,000 shares of common
stock to the Placement Agent and 120,000 shares of Common Stock to the holders
of the Series C Stock.
The Company agreed to use its best efforts to file a registration statement
with regard to sales of the shares of common stock underlying the Series D Stock
and the warrants and to pay a penalty if such registration statement is not
effective by the 120th day after issuance of the Series D Stock. This penalty is
equal to 2% of the purchase price of the Series D Stock for the first 30-day
period following such 120-day period and 3% of such purchase price for every
30-day period thereafter until the registration statement has been declared
effective. The registration statement was declared effective July 24, 2000.
Issuance of Series F Convertible Preferred Stock: On February 23, 2000, the
Company issued 2,000 shares of its Series F Convertible Preferred Stock (the
"Series F Stock") to certain accredited investors in a private offering. At any
time after the issuance of the Series F Stock, each share of Series F Stock is
convertible into that number of shares of common stock equal to the stated value
of each such share ($1,000) divided by the lesser of $6.75 or 75% of the average
of the three lowest closing bid prices of the Common Stock during the 15 trading
days immediately preceding the conversion date. The beneficial conversion
feature present in the issuance of the Series F Stock as determined on the date
of issuance of the Series F Stock totaled $1,291,429 and is treated as a
reduction in earnings available (increase in loss attributable) to common
stockholders upon the date of issuance of the Series F Stock since such shares
may be converted at any time following issuance. All outstanding shares of
Series F Stock will be automatically converted into Common stock on February 23,
2002. The holders of Series F Stock are entitled to receive dividends at an
annual rate of 8% of the stated value ($1,000) of the Series F Stock, subject to
the prior declaration or payment of any dividend to which the holders of the
Company's Series A Stock, Series B Stock, Series D Stock or Series E Stock are
entitled. Dividends on shares of the Series F Stock are cumulative, payable in
either cash or shares of common stock, at the option of the Company, and are
payable only upon conversion of the Series F Stock.
In connection with such offering, the Company also issued warrants to the
investors to purchase 50,000 shares of common stock. Each warrant is a four-year
callable warrant to purchase common stock at $11.00 per share.
Due to certain provisions in effect with respect to the Series E Stock
offering, as a result of the Series F Stock offering, the conversion formula
with respect to the Series E Stock was modified. Based upon this modification,
an additional beneficial conversion feature was created with respect to the
Series E Stock. The value of this additional conversion benefit of $311,510 was
treated as a reduction in earnings available (increase in loss attributable) to
common stockholders in the first quarter of 2000.
The Company agreed to use its best efforts to file a registration statement
with regard to sales of the shares of common stock underlying the Series F Stock
and the warrants and to pay a penalty if such registration statement is not
effective by the 120th day after issuance of the Series F Stock. This penalty is
equal to 2% of the purchase price of the Series F Stock for the first 30-day
period following such 120-day period and 3% of such purchase price for every
30-day period thereafter until the registration statement has been declared
effective.
Patent infringement claim and settlement:
The Company was named as a defendant in a patent infringement claim filed
in February 2000. The claim alleged, among other things, that the Company's VCC
product, when monitoring a mainframe computer, infringed on a patent held by the
plaintiffs. The Company believed that the plaintiffs' claims were without merit,
but in order to avoid protracted and potentially costly litigation, the Company
settled the claim on March 16, 2000.
Reclassifications
Certain amounts previously reported in 1999 have been reclassified to
conform to the 2000 presentation.
Use of estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management of the Company to make a
number of estimates and assumptions relating to the reporting of
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assets and liabilities and the 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 these
estimates.
Significant Events
On March 28, 2000 Singlepoint Systems, Inc. ("SSI") signed a Software
License Agreement with XO Technology, Inc. ("XOT"), a privately held software
company, whereby SSI agreed to grant XOT a non exclusive, worldwide, perpetual,
irrevocable, sublicensable right and license to reproduce, modify, make
derivatives, perform, display and distribute the AlarmPoint, Release 3.2
("Software") for a License Fee of $500,000. The Software was accepted by XOT on
June 30, 2000 and the License Fee was paid with a minority interest in XOT
Common Stock. In addition, SSI agreed to provide consulting support for a
Co-Development Fee of $250,000 payable in twelve equal monthly installments over
a one-year period. XOT may also purchase Annual Non Exclusive License Renewals
for three additional years for a fee of $250,000 per year and an Exclusive
License Purchase Option for a fee of $4,000,000. The Company is recognizing
revenue related to this arrangement over the expected life of the license
beginning June 30, 2000.
In November of 1999, the Company received notice from Infinite Graphics
Incorporated ("IGI") of IGI's intent to terminate the licenses granted to the
Company and to seek recovery of the assets purchased by the Company under a
February 1998 agreement due to the Company's inability to pay IGI the
outstanding $1,864,519 balance of contingent consideration. In December of 1999,
the Company recorded a charge of approximately $2,470,000 to write down the net
balance of purchased technology and intangible assets, assumed legal costs and
an estimated loss on operations. The Company has allowed the rights to the
purchased technology and intangible assets to revert back to IGI during the
second quarter and therefore has eliminated the accrued consideration with
respect to these rights, and the related capitalized software and purchased
technology has been written-off. These amounts were written down to net
realizable value at December 31, 1999 and accordingly there was no charge in
2000.
In May 1999, the Company entered into a Loan and Security Agreement and has
since executed certain amendments (collectively, the "1999 Debt Agreement") that
provided for (a) a senior revolving loan maturing in May 2000, (b) a convertible
term loan, and (c) a term loan. Various amendments were made to the 1999 Debt
Agreement throughout 1999. The Company utilized $1,900,000 of proceeds under
this agreement to pay its then outstanding subordinated notes payable.
Borrowings under the 1999 Debt Agreement are secured by all of the assets of the
Company, exclusive of those of its BHT subsidiary. The Company is currently not
in compliance with the 1999 Debt Agreement and has entered into a Workout
Agreement with the lender. The Workout Agreement established a forbearance
period through December 31, 1999 during which, among other things, collection of
accounts receivable is made through a bank lockbox, lockbox proceeds are
immediately applied to outstanding borrowings, interest rates on borrowings
subject to the 1999 Debt Agreement are increased 3% per annum, certain
modifications to the borrowing base formula are in effect, and 50% of proceeds
from equity issuances and 75% of proceeds from other debt issuances are to be
paid to the lender. The Company has been unable to comply with all of the terms
of the Workout Agreement. The Company is continuing to negotiate terms of the
Workout Agreement.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The consolidated financial statements that accompany this discussion show
the operating results from continuing operations of the Company for the quarters
ended June 30, 2000 and June 30, 1999, and for the six months ended June 30,
1999 and June 30, 2000. These results include the operations of GMI and its
subsidiaries. The Company's Breece Hill Technologies segment is treated as a
discontinued operation.
Net Sales for the second quarter of 2000 were $2,649,674 compared to Net
Sales for the second quarter of 1999 of $2,699,641. The $49,967 (1.85%) decrease
is due to a decrease in Net Sales resulting from the divestitures of Infinite
Graphics, Inc. ("IGI"), Magnum Technologies, Inc. ("MTI") and Asset Sentinel,
Inc. ("ASI"), which were partially offset by the increase in Net Sales resulting
from the acquisition of Lavenir Technologies, Inc. ("LTI").
Net Sales for the six months ended June 30, 2000 were $4,740,171 compared
to Net Sales for the six months ended June 30, 1999 of $5,279,857. The $539,686
(10.22%) decrease is due to a decrease in Net Sales resulting from the
divestitures of IGI, MTI and ASI, which were partially offset by the increase in
Net Sales resulting from the acquisition of Lavenir Technologies, Inc. ("LTI").
Cost of Sales for the second quarter of 2000 were $590,393 compared to Cost
of Sales for the second quarter of 1999 of $709,287. The $118,894 (16.76%)
decrease is primarily due to a decrease in software amortization, which was the
result of a write off of portions of capitalized software costs in the fourth
quarter of 1999. This was partially offset by an increase in Costs of Sales
resulting from the acquisition of LTI.
Cost of Sales for the six months ended June 30, 2000 were $1,075,012
compared to Cost of Sales for the six months ended June 30, 1999 of $1,459,867.
The $384,855 (26.36%) decrease is primarily due to a decrease in software
amortization, which was the result of a write off of portions of capitalized
software costs in the fourth quarter of 1999. This was partially offset by an
increase in Costs of Sales resulting from the acquisition of LTI.
As a result, the Gross Profit for the second quarter of 2000 was $2,059,281
compared to the Gross Profit for the second quarter of 1999 of $1,990,354, which
represented an increase in Gross Profit of $68,927 (3.46%). The Gross Margin for
the second quarter of 2000 was 77.72% compared to the Gross Margin for the
second quarter of 1999 of 73.73%.
The Gross Profit for the six months ended June 30, 2000 was $3,665,159
compared to the Gross Profit for the six months ended June 30, 1999 of
$3,819,990, which represented a decrease in Gross Margin of $154,831 (4.05%).
The Gross Margin for the second quarter of 2000 was 77.32% compared to the Gross
Margin for the six months ended June 30, 1999 of 72.35%.
Selling, General and Administrative expenses (SG&A) for the second quarter
of 2000 were $3,546,598 compared to Selling, General and Administrative expenses
for the second quarter of 1999 of $1,951,802. The $1,594,796 (81.71%) increase
is primarily due to increases in payroll and payroll related expenses,
amortization of purchase technology and building leases that resulted from
acquisitions made by the Company since June 30. 1999. Professional services
including legal and accounting expenses also increased. Legal expenses increased
due to the divestitures and earn outs of business units. Accounting expenses
increased due to the complexity of acquisition and divestiture activities.
Selling, General and Administrative expenses (SG&A) for the six months
ended June 30, 2000 were $7,148,053 compared to Selling, General and
Administrative expenses for the six months ended June 30, 1999 of $3,633,149.
The $3,514,904 (96.75%) increase is primarily due to increases in payroll and
payroll related expenses, amortization of purchase technology and building
leases that resulted from acquisitions made by the Company since June 30. 1999.
Professional services including legal and accounting expenses also increased.
Legal expenses increased due to the divestitures and earn outs of business
units. Accounting expenses increased due to the complexity of acquisition and
divestiture activities.
Research and Development expenses for the second quarter of 2000 were
$119,275 compared to Research and Development expenses for the second quarter of
1999 of $555,726. The $436,451 (78.54%) decrease is primarily related to the
restructuring of the resources for research and development.
Research and Development expenses for the six months ended June 30, 2000
were $358,825 compared to Research and Development expenses for the six months
ended June 30, 1999 of $892,550. The $533,725 (59.80%) decrease is primarily
related to the restructuring of the resources for research and development.
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Other Operating Expenses for the second quarter of 2000 were $311,111
compared to Other Operating Expenses for the second quarter of 1999 of $0. The
$311,111 increase is due to expenses for corporate relocation and lease for
software development that is no longer being utilized.
Other Operating Expenses for the six months ended June 30, 2000 were
$2,537,613 compared to Other Operating Expenses for the six months ended June
30, 1999 of $0. The $2,537,613 increase is due to expenses for corporate
relocation and lease for software development that is no longer being utilized.
Other Income (Expense) for the second quarter of 2000 was $851,267 compared
to Other Income (Expense) for the second quarter of 1999 of $547,674. The
$303,593 (55.43%) increase in expense is due to the increase in penalties caused
by the late registration of the Company's preferred and common stock.
Other Income (Expense) for the six months ended June 30, 2000 was
$1,092,814 compared to the Other Income (Expense) for the six months ended June
30, 1999 of $765,658. The $327,156 (42.73%) increase in expense is due to the
increase in penalties caused by the late registration of Company preferred and
common stock.
Liquidity and Capital Resources
As of June 30, 2000, the Company had negative working capital of
$19,620,236 compared to negative working capital of $17,437,847 as of December
31, 1999. The decrease in working capital of $2,182,389 is primarily due to a
decrease in cash of $1,561,274, a decrease in accounts receivable of $801,761,
an increase in accrued interest and penalties of $567,363 and an increase in net
liabilities of discontinued operations of $2,608,018, which was partially offset
by a decrease in current portion of notes payable of $1,811,181 and a decrease
in accrued consideration related to acquisitions of $2,026,391.
Net cash used in operating activities for the six months ended June 30,
2000 was $2,670,577 compared to Net cash used in operating activities of
$2,971,220 for the six months ended June 30, 1999. The major adjustments to
reconcile the net loss in the six months of 2000 to net cash used in operating
activities were loss on write off of purchased technology of $1,800,000, loss on
disposal of discontinued operations of $2,368,614 and depreciation and
amortization of $2,053,586. Cash provided by changes in operating assets and
liabilities was $1,182,804 with operating assets providing $330,407 primarily in
decreases in accounts receivable and inventories, and operating liabilities
providing $852,397 primarily in increases in accounts payable and accrued
interest and penalties, which was partially offset by a decrease in accrued
consideration related to acquisition.
Cash used by investing activities for the six months ended June 30, 2000
was $248,920 compared to Cash used by investing activities of $2,070,263 for the
six months ended June 30, 1999. The $248,920 reflects purchases in property and
equipment of $131,610 and investment in purchased technology of $100,000.
Cash provided by financing activities for the six months ended June 30,
2000 was $1,358,223 compared to cash provided by financing activities of
$5,955,197 for the six months ended June 30, 1999. The $1,358,223 reflects
proceeds from the issuance of convertible preferred stock for series D and
series F for $2,369,725, common stock issuance provided $443,677 and proceeds
from notes receivable provided $109,500. These proceeds were partially offset by
the reduction in short-term notes payable of $1,511,181.
Presently, the Company will need to raise additional capital to support
operations through the third quarter. The Company expects that its Breece Hill
subsidiary will not be a substantial drain on the cash resources of the Company
and believes Breece Hill will be sold sometime during the year 2000. The Company
believes its working capital will improve as the Company's profitability
improves. The Company expects its profitability to improve as a result of
further increases in sales and the expense reduction programs implemented during
fourth quarter 1999. Nevertheless, the Company can provide no assurance as to
its future profitability, access to the capital markets or the completion of its
projected asset and business sales.
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PART II. OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
The Company is currently involved in the following litigation: Global
MAINTECH, Inc. (now Singlepoint Systems Corporation) and Breece Hill
Technologies, Inc. v. Tandberg Data ASA; and Tandberg Data Inc. v. Breece Hill
Technologies, Inc.
On February 3, 2000, the Company entered into a stock purchase agreement
with Tandberg Data ASA, Hambrecht & Quist Guaranty Finance LLC, Greyrock Capital
and Cruttenden Roth, Incorporated, under which Tandberg agreed to purchase the
Company's Breece Hill Technologies subsidiary. The closing of the transaction
was contingent upon approval by the shareholders of both the Company and
Tandberg. The Company's shareholders approved the transaction at a special
meeting held on April 5, 2000. Shortly thereafter, Tandberg informed the Company
that it did not believe that its shareholders would approve the transaction and,
in a meeting on May 4, 2000, Tandberg's shareholders failed to approve the
acquisition.
On July 17, 2000, the Company and Breece Hill filed a lawsuit against
Tandberg in the United States District Court for the District of Minnesota
(Global MAINTECH, Inc. (now Singlepoint Systems Corporation) and Breece Hill
Technologies, Inc. v. Tandberg Data ASA) for various claims arising out of
Tandberg's shareholders' failure to approve the acquisition. On August 4, 2000,
Tandberg Data, Inc. filed suit against Breece Hill, also in the United States
District Court for the District of Minnesota, alleging that Breece Hill failed
to pay for approximately $800,000 in tape drives that Tandberg Data had
delivered to Breece Hill. Breece Hill denies Tandberg Data, Inc.'s claims and
damages. Breece Hill has brought a counterclaim in the same suit for various
claims arising out of promises Tandberg, Inc., made in connection with the
proposed acquisition of Breece Hill, and Tandberg ASA's failure to consummate
the acquisition.
The Company is seeking a judgment against Tandberg in an amount in excess
of $75,000 to be determined at trial for damages resulting from Tandberg's
breach of the stock purchase agreement and its failure to acquire Breece Hill.
The Company and Breece Hill are further seeking a judgment against Tandberg in
an amount in excess of $75,000 to be determined at trial for damages resulting
from Tandberg's failure to honor its promises to the Company and Breece Hill.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
(a) On May 25, 1999, the Company, Global MAINTECH, Inc. (now Singlepoint
Systems Corporation), Singlepoint Systems, Inc., and Breece Hill Technologies,
Inc., as borrower, and Hambrecht & Quist Guaranty Finance, LLC ("H&QGF"), as
lender, entered into a Loan and Security Agreement (the "Loan Agreement")
pursuant to which the Company and its affiliates are indebted to H&QGF in the
amount of approximately $5,500,000. In 1999, the Company defaulted on its
obligations under Sections 1.4, 8(a), 8(f), 8(g), 8(j) of the Loan Agreement,
and Section 1.3 of the Schedule to the Loan Agreement. In an attempt to permit
the Company to cure its defaults under the Loan Agreement, on November 5, 1999,
the Company and H&QGF executed a Workout Agreement (the "Workout Agreement").
The Company is currently in default under Section 2, 3, and 4 of the Workout
Agreement.
The Company's default under Section 1.3 of the Schedule to the Loan
Agreement was due to its failure to pay $800,000 of principal under the terms of
the Loan Agreement. The default under Section 1.4 of the Loan Agreement was the
failure to pay $133,333.33 in principal. The default under Section 8(a) was the
failure to pay $2,423.29 in interest. The default under Section 8(a) was the
failure to pay interest of $28,508.20. The Company was also in default under the
Loan Agreement by failing to pay interest of $16,561.64 and $12,421.23.
The Company is in default under: Section 2 of the Workout Agreement due to
its failure to establish a lockbox; Section 3 of the Workout Agreement due to
its failure to pay 50% of all equity proceeds to H&QCF and Section 4 of the
Workout Agreement due to its failure to pay to H&QGF $1.8 million after failing
to execute a sale agreement for Breece Hill Technologies.
(b) The Company is currently more than 30 days in default of its
obligations to register for resale shares of Common Stock issuable upon
conversion of the Company's Series F convertible preferred stock, and to reserve
for issuance 200% of the number of shares issuable upon conversion of the Series
E and F convertible preferred stock. The Company intends to cure these defaults
promptly by increasing the number of shares the
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Company is authorized to issue, and reserving for issuance and registering for
resale the required number of shares of Common Stock.
ITEM 5. OTHER INFORMATION
On August 11, 2000, the Company changed its name from Global MAINTECH
Corporation to Singlepoint Systems Corporation. The Company's new ticker symbol
is "SSCN."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27--Financial Data Schedule
99--Cautionary Statement
(b) Reports on Form 8-K
None.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SINGLEPOINT SYSTEMS CORPORATION
August 14, 2000 By: /s/ Chares A. Smart
-------------------------------------
Charles A. Smart
Chief Financial Officer and Treasurer
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SINGLEPOINT SYSTEMS CORPORATION
August 14, 2000 By: /s/ Trent Wong
-------------------------------------
Trent Wong
Chief Executive Officer
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