UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB/A
AMENDMENT NO. 1
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTER ENDED JUNE 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT
COMMISSION FILE NUMBER: 033-03275-D
ISHOPPER.COM, INC.
------------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
NEVADA 87-0431533
--------------------------------- --------------------------------
(STATE OR OTHER JURISDICTION (IRS EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
8722 SOUTH 300 WEST, SUITE 106
SANDY, UT 84070
----------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(801)984-9300
-------------
(ISSUER'S TELEPHONE NUMBER)
Indicate by check mark whether the Registrant (1) has files all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934, during the preceding 12 months (or such shorter period
that the Registrant was required to file such report(s)), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
There were 13,785,700 shares of common stock, $0.001 par value, outstanding
as of August 21, 2000.
<PAGE>
ISHOPPER.COM, INC.
FORM 10-QSB\A
QUARTER ENDED JUNE 30, 2000
TABLE OF CONTENTS
PAGE
----
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited) -
June 30, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Operations (Unaudited)
for the Three Months and Six Months Ended June 30,
2000 and 1999 4
Condensed Consolidated Statement of Stockholders' Equity
(Unaudited)For the Six Months Ended June 30, 2000 5
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the Six Months Ended June 30, 2000 and 1999 6
Notes to the Condensed Consolidated Financial Statements
(Unaudited) 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 13
PART 11 - OTHER INFORMATION
Item 6. Exhibits and Reports for Form 8-K 15
Signatures 17
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ISHOPPER.COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
June 30, December 31,
2000 1999
----------- ----------
CURRENT ASSETS
Cash $ 142,718 $ 13,935
Investments 82,387 -
Trade accounts receivable
(net of allowance
for doubtful accounts of
$148,918 and $138,028,
respectively) 705,429 130,886
Prepaid expenses - 30,515
Deferred income tax benefit - 236,060
Inventory 132,644 -
Merchant reserve account 97,183 108,981
Other current assets 7,203 -
----------- ----------
TOTAL CURRENT ASSETS 1,167,564 520,377
----------- ----------
PROPERTY AND EQUIPMENT, NET 277,711 141,983
----------- ----------
OTHER ASSETS
Deposit 29,114 -
Software to be sold and marketed
(net of accumulated
amortization of $150,000) 2,850,000 -
Goodwill (net of accumulated
amortization of $404,621) 11,606,192 -
----------- ----------
TOTAL OTHER ASSETS 14,485,306 -
----------- ----------
TOTAL ASSETS $15,930,581 $ 662,360
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 1,230,012 $ 193,633
Accrued liabilities 2,303,671 156,762
Short term debt 1,515,101 216,000
----------- ----------
TOTAL CURRENT LIABILITIES
5,048,784 566,395
----------- ----------
STOCKHOLDERS' EQUITY
Common stock - $0.01 par value;
100,000,000 shares
authorized; 13,408,135 and
7,854,377 shares issued and
outstanding, respectively 13,408 7,854
Additional paid-in-capital 15,937,988 3,314,125
Receivable from shareholders (1,753,000) (2,150,900)
Unearned compensation (102,844) -
Accumulated deficit (3,213,755) (1,075,114)
------------ ----------
TOTAL STOCKHOLDERS' EQUITY 10,881,797 95,965
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDER'S
EQUITY $15,930,581 $ 662,360
=========== ==========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE> 3
ISHOPPER.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------------------- ----------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SALES $ 1,656,105 $ 1,393,817 $ 2,781,309 $ 2,557,240
COST OF SALES 1,203,386 88,083 1,568,858 196,871
----------- ----------- ----------- -----------
GROSS PROFIT 452,719 1,305,734 1,212,451 2,360,369
----------- ----------- ----------- -----------
OPERATING EXPENSES
General and administrative 1,191,127 925,690 2,432,736 1,867,717
Bad Debt (66,431) 118,311 82,666 279,353
Depreciation 14,913 7,361 25,463 8,787
Amortization of software cost 150,000 - 150,000 -
Amortization of goodwill 400,921 - 404,621 -
---------- ------------ ----------- -----------
TOTAL OPERATING EXPENSES 1,690,530 1,051,362 3,095,486 2,155,857
---------- ------------ ----------- -----------
INCOME (LOSS) FROM OPERATIONS (1,237,811) 254,372 (1,883,035) 204,512
---------- ------------ ----------- -----------
OTHER INCOME (EXPENSE)
Other expense (267) - (267) -
Interest income 2,128 9,026 14,674 11,940
Interest expense (17,577) (1,897) (33,953) (2,210)
---------- ------------ ----------- -----------
TOTAL OTHER INCOME (EXPENSE) (15,716) 7,129 (19,546) 9,730
---------- ------------ ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES (1,253,527) 261,501 (1,902,581) 214,242
INCOME TAX EXPENSE - - (236,060) -
---------- ------------ ------------ -----------
NET INCOME (LOSS) $(1,253,527) $ 261,501 $(2,138,641) $ 214,242
=========== ============ =========== ===========
BASIC AND DILUTED INCOME (LOSS) PER SHARE $ (0.11) $ 4.21 $ (0.18) $ 3.45
=========== ============ =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES USED IN PER SHARE CALCULATION 11,793,702 62,114 11,574,232 62,114
=========== ============ =========== ===========
</TABLE>
<PAGE> 4
The accompanying notes are an intergral part of these condensed
consolidated financial statements.
ISHOPPER.COM,INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
Total
Common Stock Additional Receivable Unearned Stock-
------------------- Paid-in From Compen- Accumulated holders
Shares Amount Capital Shareholders sation Deficit Equity
--------- ------- ----------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 31, 1999 7,854,377 $ 7,854 $ 3,314,125 $(2,150,900) $ - $ (1,075,114) $ 95,965
Conversion of notes payable 3,048,058 3,048 48,769 - - - 51,817
Acquisition of StinkyFeet.com 7,500 8 33,592 - - - 33,600
Acquisition of Uniq Studios, Inc 1,550,000 1,550 6,942,450 - - - 6,944,000
Acquisition of Totalinet.net.Inc 150,000 150 671,850 - - - 672,000
Acquisition of Atlantic Technologies
International, Inc 238,200 238 1,074,962 - - - 1,075,200
Acquisition of Internet Software
Solutions, Inc 60,000 60 268,740 - - - 268,800
Acquisition of KT Solutions, Inc 500,000 500 3,583,500 - (116,667) - 3,467,333
Collection of receivable from
shareholders - - - 397,900 - - 397,900
Amortization of unearned
compensation - - - - 13,823 - 13,823
Net loss for the period - - - - - (2,138,641) (2,138,641)
---------- ------- ------------ ------------ ---------- ------------ ------------
BALANCE - JUNE 30, 2000 13,408,135 $13,408 $15,937,988 $ (1,753,000) $ (102,844) $ (3,213,755) $ 10,881,797
========== ======= =========== ============ ========== ============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial staements.
<PAGE> 5
iSHOPPER.COM,INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
For the Six Months
Ended June 30,
--------------------------
2000 1999
----------- -----------
Cash Flows From Operating Activities
Net loss $(2,138,641) $ 214,242
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 25,463 8,787
Amortization of software costs 150,000 -
Amortization oF goodwill 404,621 -
Amortization of unearned compensation 13,823 -
Marketing expense paid with note payable 30,500 -
Changes in operating assets and liabilities,
net of effects from acquisitions:
Accounts receivable (134,176) (250,693)
Deferred income taxes 236,060 -
Other 34,978 (67,970)
Trade accounts payable 451,198 158,334
Accrued liabilities 269,054 84,983
----------- -----------
Net Cash Used in Operating Activities (657,120) 147,683
----------- -----------
Cash Flows From Investing Activities
Payments to purchase businesses (10,000) -
Cash acquired in business purchases 9,410 -
Capital expenditures (74,940) (49,722)
----------- -----------
Net Cash Used in Investing Activities (75,530) (49,722)
----------- -----------
Cash Flows From Financing Activities
Proceeds from borrowing under notes
payable 503,533 -
Principal payments on notes payable
and purchase obligations (40,000) -
Proceeds from borrowing under note
payable to related party 31,000 35,000
Payment on note payable to related party (31,000) -
Collections on receivable from
shareholders 397,900 -
------------ -----------
Net Cash Provided by (Used in)
Financing Activities 861,433 35,000
------------ -----------
Net Increase in Cash and Cash
Equivalents 128,783 132,961
Cash and Cash Equivalents at Beginning
of Period 13,935 20,468
------------ -----------
Cash and Cash Equivalents at End of
Period $ 142,718 $ 153,429
============ ===========
Supplemenetal Cash Flow Information:
Cash paid for interest $ 28,923 $ -
============ ===========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
<PAGE> 6
ISHOPPER.COM,INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(CONTINUED)
NONCASH INVESTING AND FINANCING ACTIVITIES:
StinkyFeet.com, Inc. was acquired on January 31,
2000 by the payment of $10,000, by incurring
liabilities of $30,000 and by issuing 7,500
shares of common stock valued at $33,600.
TrafficX.com and enSurge.com were acquired on
March 31, 2000 by the payment of $5,500 and by
incurring a $25,000 liability.
Uniq Studios, Inc. was acquired on April 4, 2000
by issuing 1,550,000 shares of common stock
valued at $6,944,000.
Totalinet.net, Inc. was purchased on April 7,
2000 by the issuing of 150,000 shares of common
stock valued at $672,000.
Atlantic Technologies International, Inc. was
acquired on June 1, 2000 by issuing 238,200
shares of common stock and stock options to
purchase 1,800 shares of common stock, both
valued at $1,075,200.
Internet Software Solutions, Inc. was acquired on
June 1, 2000 by issuing solely 60,000 shares of
common stock valued at $268,800.
KT Solutions was acquired on June 1, 2000 by
issuing 500,000 shares of common stock valued at
$2,240,000 and by issuing options to purchase
300,000 shares of common stock valued at $1,344,000.
Notes payable in the amount of $51,817 were
converted into 3,048,059 shares of common stock
during the six months ended June 30, 2000.
The accompanying notes are an integral part of these condensed
consolidted financial statements
<PAGE> 7
ISHOPPER.COM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Condensed Financial Statements-The accompanying condensed
consolidated financial statements are unaudited. In the opinion of
management, all necessary adjustments (which include only normal
recurring adjustments) have been made to present fairly the financial
position, results of operations and cash flows for the periods
presented. Certain information and disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. Accordingly,
these condensed consolidated financial statements should be read in
conjunction with the Company's financial statements and notes thereto
included in the Form 10-KSB dated December 31, 1999. The results of
operations for the six months ended June 30, 2000 are not necessarily
indicative of the operating results to be expected for the full year.
Business Condition - The accompanying financial statements have been
prepared in conformity with generally accepted accounting principles,
which contemplates continuation of the Company as a going concern.
However, the Company has suffered losses from operations and has had
negative cash flows from operating activities for all periods since
inception in 1998 and during the six months ended June 30, 2000, which
conditions raise substantial doubt about the Company's ability to
continue as a going concern. The Company's continued existence is
dependent upon its ability to obtain additional financing.
Management's plans include a private placement offering of up to
$3,000,000 from the issuance of common stock. There is no assurance
that additional financing will be realized.
NOTE 2 - ACQUISITIONS
The Company has issued restricted common stock in the following
acquisitions. The Company's common stock began trading over the OTC
Bulletin Board market in December 1999. Trading has consisted of
approximately 12,000 to 16,000 shares per month. Accordingly,
management of the Company does not believe the prices at which the
common stock was sold over the thinly-traded OTC Bulletin Board
represent the fair value of the common stock. Throughout 2000, the
Company has been in the process of offering up to 600,000 restricted
shares of its common stock in a private placement offering at $4.48
per share after offering costs. The offering price has been
established by an independent brokerage firm and the private placement
offering is intended to be issued to several investors. Accordingly,
management believes the fair value of the restricted common shares is
most clearly determined by the price of the private placement
offering. That price, $4.48 per common share, has been used to value
the common shares issued in the following acquisitions.
<PAGE> 8
StinkyFeet.com, Inc.
On January 31, 2000, the Company completed the acquisition of
StinkyFeet.com, Inc. The acquisition was accomplished by the Company
issuing 7,500 shares of common stock and agreeing to pay $40,000 at
the rate of $10,000 per month over four months. The common shares
issued were valued at fair value of $33,600, or $4.48 per share. The
assets acquired and liabilities assumed were recorded at their fair
values with the excess of the purchase price over the net assets
acquired of $66,600 allocated to goodwill, which is being amortized
over three years by the straight-line method.
TrafficX.com and enSurge.com
On March 31, 2000, the Company acquired the TrafficX.com and
enSurge.com Web domain names, proprietary computer code, software and
related products associated with those names by the payment of $5,500
and an obligation to pay $25,000 in equal monthly payments of $5,000
each from May 1, through September 1, 2000. The domain names and
software is an Internet banner network service which is provided
either at no charge to customers or bundled with other software sold.
Accordingly, the cost of the acquired domain names and software were
accounted for as marketing costs and were charged to general and
administrative expense when incurred. The Company has not made the
required payments for May through August and is therefore in default
under the acquisition agreement.
Uniq Studios, Inc.
On April 4, 2000, the Company entered into a Stock Exchange Agreement
with Uniq Studios, Inc. ("Uniq") whereby the Company agreed to acquire
all of the outstanding capital shares of Uniq in exchange for
1,500,000 restricted shares of the Company's common stock. The
Company granted options to the four shareholders of Uniq, who are also
key employees of Uniq, to purchase 500,000 additional restricted
shares of the Company's common stock at a price equal to 80% of the
market bid price for the Company's common stock on April 4, 2000, the
closing date of the Stock Exchange Agreement. Two hundred fifty
thousand options are exercisable upon Uniq achieving annual revenue of
$2,500,000 by April 2001 and upon Uniq achieving a breakeven income.
The remaining 250,000 options are exercisable upon Uniq achieving
annual revenue of $7,500,000 by April 2002 and continued
profitability. In addition, the Company issued 50,000 shares of
common stock as finders fees which are also included in the purchase
price. Uniq Studios, Inc. was formed immediately prior to the
exchange discussed above by the transfer of all rights, title, assets
and business interests of Uniq Studios, LLC and Uniq Multimedia, LLC
(formerly known as Uniq Enterprises, LLC) to Uniq Studios, Inc.
The acquisition of Uniq was recorded using the purchase method of
accounting. The common shares issued were valued at fair value of
$6,944,000, or $4.48 per share. The 500,000 contingently issuable
options will be recorded at their fair value when the conditions for
their issuance are met, and will increase goodwill when recorded. The
assets acquired and liabilities assumed were recorded at their fair
values with the excess of the purchase price over the net assets
acquired of $5,460,273 allocated to goodwill, which is being amortized
over five years by the straight-line method.
Totalinet.net, Inc.
On April 7, 2000, the Company issued 100,000 shares of common stock
and agreed to issue an additional 100,000 shares of common stock upon
Totalinet.net, Inc. accomplishing four performance criteria, in
exchange for the common stock of Totalinet.net, Inc. The acquisition
was accounted for as a purchase business combination. The 100,000
common shares issued were valued at fair value of $448,000, or $4.48
per share. Fifty thousand of contingently issuable common shares
were issuable at June 30, 2000 from the Company, waiving the related
performance criteria and were valued at $224,000, or $4.48 per share.
The remaining 50,000 contingently issuable common shares will be
recognized as an increase to goodwill based upon their fair value when
they are issued. The Company advanced Totalinet.net, Inc. $31,000 in
March 2000 as a loan. The assets acquired and liabilities assumed
were recorded at their fair values with the excess of the purchase
price over the net assets acquired of $764,760 allocated to goodwill,
which is being amortized over five years by the straight-line method.
<PAGE> 9
Atlantic Technologies International, Inc.
On May 31, 2000, the Company entered into a Stock Exchange Agreement
with the shareholders of Atlantic Technologies International, Inc.
("ATI") whereby the Company agreed to acquire all of the outstanding
capital shares of ATI in exchange for 397,000 restricted shares of the
Company's common stock and granted options to the shareholders of ATI,
to purchase 3,000 additional restricted shares of the Company's common
stock at $0.10 per share. Of the 400,000 shares and options, 238,200
shares were issued and 1,800 options immediately vested. The
remaining 158,800 shares will be held in escrow and 1,200 options will
not vest until and upon satisfaction of the following milestones:
79,400 shares and 600 options will be released and vest,
respectively, upon obtaining $6,000,000 in annual sales and
79,400 shares and 600 options will be released and vest,
respectively, upon obtaining profitable operations within twelve
months.
The acquisition of ATI was recorded using the purchase method of
accounting. The 238,200 common shares issued and the 1,800 vested
options were recorded at their fair values totaling $1,075,200. The
remaining 158,800 common shares and 1,200 options will be recorded as
an increase to goodwill based upon their fair values when they are
issued. The assets acquired and liabilities assumed were recorded at
their fair values with the excess of the purchase price in excess of
the net assets acquired of $1,074,225 allocated to goodwill, which is
being amortized over five years by the straight-line method.
Internet Software Solutions, Inc.
On May 31, 2000, the Company entered into a Stock Exchange Agreement
with the shareholders of Internet Software Solutions, Inc. ("ISSI")
whereby the Company agreed to acquire all of the outstanding capital
shares of ISSI in exchange for 100,000 restricted shares of the
Company's common stock. Of the 100,000 shares, 60,000 shares were
issued and 40,000 shares will be held in escrow until and upon
satisfaction of certain performance milestones:
The acquisition of ISSI was recorded using the purchase method of
accounting. The 60,000 common shares issued were recorded at fair
value of $268,800, or $4.48 per share. The remaining 40,000 common
shares will be recorded as an increase to goodwill based upon their
fair value when they are issued. The assets acquired and liabilities
assumed were recorded at their fair values with the excess of the
purchase price over the net assets acquired of $302,678 allocated to
goodwill, which is being amortized over five years by the straight-
line method.
KT Solutions, Inc.
On June 1, 2000, the Company entered into a Stock Exchange Agreement
with KT Solutions, Inc. ("KT") whereby the Company agreed to acquire
all of the outstanding capital shares of KT in exchange for 500,000
restricted shares of the Company's common stock and granted options to
purchase 250,000 additional restricted shares of the Company's common
stock. In addition, the Company issued warrants to purchase 50,000
shares of common stock at $0.10 per share as a finders' fee, which are
also included in the purchase.
The acquisition of KT was recorded using the purchase method of
accounting. The 500,000 common shares issued and the 300,000 options
issued were recorded at their fair values of $2,240,000 ($4.48 per
share) and $1,120,000, respectively. The value of the options was
determined using the Black-Scholes option pricing model with the
following assumptions: risk free interest rate of 6.0%, expected
dividend yield of 0%, volatility of 577% and expected life of 5 years.
The assets acquired and liabilities assumed were recorded at their
fair values with the excess of the purchase price over the net assets
acquired of $4,342,278 allocated to goodwill, which is being amortized
over five years by the straight-line method.
<PAGE> 10
The following unaudited pro forma financial statement date presents the
results of operations of the Company as if the acquisitions discussed
above had occurred at the beginning of each period. The pro forma
results have been prepared for comparative purposes only and do not
purport to be indicative of future results or what would have occurred
had the acquisition been made at the beginning of the applicable period.
For the Six Months
Ended June 30,
--------------------------------
2000 1999
------------ ------------
Revenue $ 4,018,603 $ 4,810,885
Net loss (3,238,358) (1,407,461)
Basic and diluted loss per
common share (0.24) (0.76)
============ ============
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at June 30, 2000 and
December 31, 1999:
June 30, December 31,
2000 1999
-------- --------
Furniture and fixtures $164,539 $ 49,884
Vehicles 28,500 -
Computer equipment 147,981 141,379
Software for internal use 1,500 -
-------- --------
342,520 191,263
Less: Accumulated depreciation (64,809) (49,280)
-------- --------
Net Property and Equipment $277,711 $141,983
======== ========
Depreciation expense for the six months ended June 30, 2000 and 1999
was $25,463 and $8,787, respectively
NOTE 4 - NOTES PAYABLE
June 30, December 31,
Notes payable consist of the following: 2000 1999
---------- ----------
6.06% Notes payable, due November 1997, in default,
secured by mining claims held previously
by Sunwalker $ 126,000 $ 126,000
5% Convertible debenture, unsecured, no payment
terms 8,183 60,000
8% Notes payable, due September, 2000,
unsecured 846,000 -
Non-interest bearing obligations incurred in
connection with acquisition of businesses,
due in monthly payments from $5,000
to $15,000 per month through September
2000, unsecured 534,918 30,000
----------- --------
Total Notes Payable $ 1,515,101 $216,000
=========== ========
The Company assumed $60,000 of 5% convertible promissory notes in
October 1999 in connection with the acquisition of Sunwalker
Development, Inc. The notes are convertible at $0.017 per share. On
the date of the acquisition, the fair value of the Company's common
stock was $0.01 per share. During the six months ended June 30,
2000, $51,817 of the convertible promissory notes were converted into
3,048,058 shares of common stock. The remaining $8,183 of convertible
promissory notes were converted into 377,565 shares of common stock
in August 2000.
<PAGE> 11
NOTE 5 - PROVISION FOR INCOME TAXES
Including operating losses acquired in acquisition, the Company has
operating loss carry forwards of approximately $2,995,000 at June 30,
2000. The operating loss carryforwards expire from 2000 through 2015.
Substantially all of the operating loss carryforwards are limited in
the availability for use by the consolidated company. The net deferred
tax asset consisted of the following at June 20, 2000:
Deferred Tax Assets
Operating loss carryforwards $1,117,057
Allowance for doubtful accounts 55,546
Accrued liabilities 478,179
Stock-based compensation 5,175
---------
Total Deferred Tax Assets 1,655,957
---------
Valuation Allowance (583,733)
---------
Deferred Tax Liabilities
Property and equipment (9,174)
Software to be sold and marketed (1,063,050)
----------
Total Deferred Tax Liabilities (1,072,224)
----------
Net Deferred Tax Asset $ -
==========
NOTE 6 - COMMITMENTS AND CONTINGENCIES
In 1999, the Company entered into an operating lease for certain
office equipment. Future minimum lease payments under the operating
lease as of June 30, 2000 are as follows:
Year Ending December 31:
2000 $ 777
2001 1,290
-----------
Total $ 2,067
===========
In April 2000, an unrelated third party filed a lawsuit against the
Company in the amount of $53,399 for goods and services received by
iShopper plus interest at 18%. The amount due under the claim has
been accrued in the accompanying consolidated financial statements and
included in trade account payable.
In April 2000, another unrelated third party filed a lawsuit against
iShopper in the amount of $10,136 for goods and services received by
iShopper. The Company intends to vigorously contest this claim. In
Management's opinion, loss under this claim is unlikely and,
accordingly, no provision has been made in the accompanying financial
statements.
<PAGE> 12
NOTE 7 - SUBSEQUENT EVENTS
During July and August 2000, the Company borrowed $45,000 under a
promissory note payable to an officer. The note is unsecured, bears
interest at 8% per annum and is due August 2001. During July 2000, the
Company borrowed $160,000 under promissory notes payable to two third-
party entities. The notes are unsecured, bear interest at 8% per annum
and are due July 2001.
During August 2000, $8,183 of convertible notes payable were converted
into 377,565 shares of common stock.
<PAGE> 13
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
When used in this discussion, the words "expect(s)", "feel(s)",
"believe(s)", "will", "may", "anticipate(s)" and similar expressions
are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, which could cause
actual results to differ materially from those projected. Readers are
cautioned not to place undue reliance on these forward-looking
statements, and are urged to carefully review and consider the various
disclosures elsewhere in this Form 10-QSB.
Results of Operations
Sales for the three months ended June 30, 2000 and 1999 were
respectively, 1,656,105 and $1,393,817, which represents a 19%
increase. The Company's principal source of revenue for the first
quarter of 2000 and revenues for 1999 were sales from the web sites
and merchant accounts sold. The Company's current quarter sources of
revenue have changed due to the acquisition of several companies.
Revenue sources for the three months ending June 30, 2000 consisted of
sales from web site development, merchant accounts, software services,
software and hardware sales. Service revenues consist of fees for
application development and implementation. Sales per entity
consisted as follows: Outbound Enterprises, Inc. - $1,189,717,
iShopper Internet Services, Inc. - $8,895, Uniq Studio's, Inc. -
$121,500, Totalinet.net, Inc. - $50,279, Atlantic Technologies
International, Inc. - $187,402, and KT Solutions - $118,312.
Cost of sales for the three months ended June 30, 2000 and 1999
were, respectively, $1,203,386 and $88,083. The increase in cost of
sales is due to change in our sales direction. These costs were
mainly from commission expenses paid to a third party sales group. As
we acquire other companies, our cost of sales mixture will change and
will decrease. The gross profit for the three months ended June 30,
2000 and 1999 were, respectively, $452,718 and $1,305,734.
General & Administrative expenses for the three months ended June
30, 2000 and 1999 were, respectively, $1,191,127 and $925,690. The
current quarters costs consisted mainly of corporate overhead of
$555,313. The remaining costs of $635,814 are from operations and
purchases of other companies.
Due to the Company's acquisitions, amortization expense has
increased dramatically. Depreciation and Amortization expense for the
three months ended June 30, 2000 and 1999 were, respectively, $565,834
and $7,361. Of the current year expense $550,921 represent
amortization of goodwill due to purchase acquisitions.
Liquidity and Capital Resources
The Company has financed its operations to date primarily through
private placements of equity securities, loans, and current sales.
The Company has had net losses annually since inception (1998) and we
have incurred net losses through June 30, 2000. However, on June 30,
2000, the Company had a capital equity of $10,881,797, due to several
acquisitions. The Company's growth strategy is through acquisitions,
which has inherent and expected overhead and transition costs for one
to six periods. Due to this, the Company has had continued losses,
however, through this continued growth, we expect this trend of losses
to level off and the overhead and costs will become more manageable.
The Company's financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. The Company's losses
from operations and negative cash flows from operating activities
raise substantial doubt about the Company's ability to continue as a
going concern. The Company's continued existence is dependent upon
its ability to obtain additional financing. Management's plans
include a private placement offering of up to $3,000,000 from the
issuance of common stock and the collection of receivables from
shareholders of $1,753,000. There is no assurance that additional
financing will be realized or collection of the receivables from
shareholders.
<PAGE> 14
We had negative working capital of $(3,881,219) on June 30, 2000
compared to $(46,018) at December 31, 1999. The Company plans on
converting some debt to equity and raising funds through our private
placement. We also currently have receivables from shareholders in the
amount of $1,753,000, which we expect to collect in the next six
months. This funding should be sufficient to cover our operations and
working capital requirements for the next six months.
The direction of the Company continues to move toward purchasing
and acquiring Internet and technology based businesses that will
complement our current business activities. We are currently in the
process of raising approximately $3 million through a private
placement memorandum. This capital infusion will be used for the
above noted purchases and any future working capital needs.
The Company's working capital and other capital requirements for
the foreseeable future will vary based upon the number of companies
acquired and if those acquisitions are cash or stock related. The
Company is working to obtain additional funding from several sources,
including the private placement. This funding looks promising,
however, there can be no assurance that additional funding will become
available.
Through our operating subsidiaries, we are developing various
Internet-based services and we are executing an overall business plan
that requires significant additional capital for among other uses:
. acquisitions,
. expansion into new domestic and international markets,
. additional management and personnel.
Furthermore, our funding of working capital and current operating
losses will require some additional capital investment.
LEGAL PROCEEDINGS
The Company is a defendant in various lawsuits which are
incidental to the Company's business. Management, after consultation
with its legal counsel, believes that the ultimate disposition of
these matters will not have a material effect upon the Company's
consolidated results of operations or financial position.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was held on June 16,
2000. At the meeting, the following persons were re-elected as
Directors of the Company to serve until the next Annual Meeting or
until their successors are elected and qualified.
<PAGE> 15
Withhold
Nominee For Authority
----------------------- --------- ---------
Douglas S. Hackett 7,280,200 3,454,735
George Denney 7,280,200 3,454,735
William E. Chipman, Sr. 7,280,200 3,454,735
Adam Maher 7,280,200 3,454,735
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following Exhibits are filed herewith pursuant to Rule 601 of
Regulation S-B or are incorporated by reference to previous filings.
2.1 Agreement and Plan of Merger dated October 7,
1999, by and between Sunwalker Development, Inc.
and ECenter, Inc. (2)
2.2 Agreement and Plan of Merger dated January 31,
2000, by and among iShopper.com, Inc. and
StinkyFeet.com, Inc. (2)
2.3 Stock Exchange Agreement by and among iShopper.com.Inc.,
and Uniq Studios, Inc.,(2)
2.4 Stock Exchange Agreement by and among iShopper.com.Inc.,
and Totalinet.net,Inc.(2)
2.5 Business purchase and stock acquisition agreement dated
June 1, 2000 by and among iShopper.com,Inc., and
Atlantic Technologies International, Inc.(3)
2.6 Business Purchase and Stock Acquisition Agreement dated
June 1, 2000 by and among iShopper.com, Inc., and
Internet Software Solutions, Inc. (3)
2.7 Stock Exchange Agreement dated June 1, 2000 by and
among iShopper.com,Inc., and KT Solutions, Inc.(4)
3.1 Certificate of Incorporation for iShopper.com, Inc., as
amended, filed with the Form 10-Q dated September 30,
1999 (1)
3.2 Amended and Restated Bylaws of iShopper.com, Inc.,
filed with the Form 10-Q dated September 30, 1999. (1)
10.1 Business Purchase and Stock Acquisition Agreement
dated November 1, 1999, by and among iShopper.com,Inc.,
and Nowseven.com, Inc.,(2)
10.2 Employment Agreement dated November 22, 1999, between
iShopper.com, Inc., and Douglas S. Hackett (2)
10.3 Memo of Understanding dated December 1, 1999,
between iShopper.com,Inc., and William E. Chipman, Sr. (2)
10.4 Memo of Understanding dated December 1, 1999,
between iShopper.com,Inc., and Lance King. (2)
27 Financial Data Schedule. (5)
(1) Incorporated by reference to the same numbered exhibits as
filed with the Company's September 30, 1999 Form 10-QSB
filed November 23, 1999
(2) Incorporated by reference to the same numbered exhibits
as filed with the Company's 1999 Annual Report on Form 10-
KSB filed April 13, 2000.
(3) Incorporated by reference to the Company's Form 8-K filed June
22, 2000 as amended on August 18, 2000.
(4) Incorporated by reference to the Company's Form 8-K filed August
22, 2000.
(5) Filed herewith.
(b)Reports on Form 8-K
<PAGE> 16
During the period covered by this report, the Company filed the
following reports on Form 8-K:
On May 10, 2000, as amended on June 26, 2000, reporting the April 4,
2000 acquisition of Uniq Studios, Inc.
On June 16, 2000 as amended on August 22, 2000, reporting the June 1,
2000 acquisitions of Atlantic Technologies International, Inc and
Internet Software Solutions, Inc..
On August 22, 2000 report the June 1, 2000 acquisition of KT
Solutions, Inc.
OTHER ITEMS
There were no other items to be reported under Part II of this
report.
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.
iShopper.com, Inc.
Date: September 1, 2000 /s/ Douglas S. Hackett
---------------------------------
Douglas S. Hackett
President, Chief Executive Officer
and Director
