SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
FOR QUARTER ENDED SEPTEMBER 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
Commission file number 0-18410
NETCURRENTS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 95-4233050
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9720 WILSHIRE BLVD., SUITE 700, BEVERLY HILLS, CA 90212
(Address of Principal Executive Offices) (Zip Code)
(310) 860-0200
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.001 par value 32,484,365 shares as of October 31, 2000
<PAGE>
NETCURRENTS, INC.
This amendment to the Company's Quarterly Report for the period ended
September 30, 2000, is being filed to correct a typographical error which stated
that the basic diluted loss per share for the three months ended September 30,
1999, was $0.67. The correct figure is $0.07.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
<S> <C> <C>
PART I FINANCIAL INFORMATION
ITEM 1. Financial Information
Consolidated Balance Sheet as of September 30, 2000
and December 31, 1999...........................................3
Consolidated Statements of Operations For The
Three Months Ended September 30, 2000 and 1999
and for the Nine Months Ended September 30, 2000 and 1999.......5
Consolidated Statements of Shareholders' Equity
For the Nine Months Ended September 30, 2000....................7
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2000
and September 30, 1999..........................................9
Notes to Consolidated Financial Statements.....................11
</TABLE>
Page 2
<PAGE>
NETCURRENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 (UNAUDITED) AND DECEMBER 31, 1999 (AUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION> ASSETS
September 30, December 31,
2000 1999
--------------- ----------------
(UNAUDITED)
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 4,886,751 $ 798,855
Accounts receivable, net of allowance for doubtful
accounts of nil and nil 433,123 555,667
Prepaid advertising expenses - 583,392
Prepaid assets 66,532 40,342
Subscription receivable - 200,000
--------------- ----------------
Total current assets 5,386,406 2,178,256
FILM COSTS 224,986 224,988
FIXED ASSETS, at cost, net 800,233 131,559
GOODWILL, less accumulated amortization of $211,782
and $144,282 774,413 841,913
INVESTMENTS 281,000 725,050
OTHER ASSETS 31,213 38,043
--------------- ----------------
TOTAL ASSETS $ 7,498,251 $ 4,139,809
=============== ================
</TABLE>
Page 3
<PAGE>
NETCURRENTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 (UNAUDITED) AND DECEMBER 31, 1999 (AUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, December 31,
2000 1999
--------------- ----------------
(UNAUDITED)
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable and accrued expenses $ 767,611 $ 1,202,141
Dividends payable 130,713 108,313
Due to related parties - 44,046
Capital lease obligation - 4,320
Convertible debentures - 619,824
Deferred revenue - 63,025
--------------- ----------------
Total current liabilities 898,324 2,041,669
Total liabilities 898,324 2,041,669
--------------- ----------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, Series A, C, D, E, and F, $0.001 par value
5,400,000 shares authorized
1,100,000 and 2,625,000 shares issued and outstanding 1,100 2,625
Preferred stock, Series G, $0.001 par value
4,000 shares authorized
30 and 1,875 shares issued and outstanding 30,000 1,875,000
Common stock, $0.001 par value
50,000,000 shares authorized
32,151,004 and 23,070,869 shares issued and outstanding 32,151 23,071
Treasury stock, at cost
93,536 shares (1,010,192) (1,010,192)
Subscription receivable (4,165,539) (398,800)
Additional paid-in capital 47,412,078 30,704,372
Accumulated other comprehensive income (173,313) 225,050
Accumulated deficit (35,526,358) (29,322,986)
--------------- ----------------
Total shareholders' equity 6,599,927 2,098,140
--------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 7,498,251 $ 4,139,809
=============== ================
</TABLE>
Page 4
<PAGE>
NETCURRENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED)
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
-------------------------------------- -------------------------------------
2000 1999 2000 1999
------------------ ----------------- ----------------- -----------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUES $477,103 $120,251 $1,089,883 $2,655,904
COSTS OF SALES
Costs of projects sold - 3,009 - 839,132
Write-off projects in development - - - 301,037
------------------ ----------------- ----------------- -----------------
NET REVENUES 477,103 117,242 1,089,883 1,515,735
SELLING GENERAL AND ADMINISTRATIVE
Recovery of accounts receivable (137,658) - (137,658) -
Salaries and Benefits 1,363,431 - 2,500,633 -
Selling and Marketing Expenses 94,625 - 1,231,467 -
Professional Fees 330,879 - 854,713 -
Consulting Fees 134,764 - 569,109 -
Occupancy Costs 95,114 - 206,330 -
General and administrative expenses 490,217 893,299 1,756,720 2,253,725
------------------ ----------------- ----------------- -----------------
2,371,012 893,299 6,981,314 2,253,725
LOSS FROM OPERATIONS (1,893,909) (776,057) (5,891,431) (737,990)
------------------ ----------------- ----------------- -----------------
OTHER INCOME (EXPENSE)
Interest and dividend income 112,028 - 340,622 1,753
Interest and financing expense (1,681) - (8,742) (12,447)
Write-off of notes receivable and
other assets (31,790) - (87,195) (166,965)
Amortization of goodwill (22,500) (22,500) (67,500) (46,782)
Settlement expense (57,151) - (294,551) -
Gain on sale of investment - - 168,250 -
Other income (expense) (5,390) - 485 (11,098)
------------------ ----------------- ----------------- -----------------
Total other income (expense) (6,484) (22,500) 51,369 (235,539)
------------------ ----------------- ----------------- -----------------
</TABLE>
Page 5
<PAGE>
NETCURRENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED)
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------------- -----------------------------------
2000 1999 2000 1999
--------------------- --------------- -------------------- --------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
LOSS BEFORE PROVISION FOR INCOME TAXES (1,900,393) (798,557) (5,840,062) (973,529)
PROVISION FOR INCOME TAXES - (14,744) (20,097) (14,744)
--------------------- --------------- -------------------- --------------
NET (LOSS) $(1,900,393) $(813,301) $(5,860,159) $(958,785)
DIVIDEND REQUIREMENT OF SERIES A PREFERRED STOCK (106,250) (106,250) (318,750) (318,750)
DIVIDEND REQUIREMENT OF SERIES E PREFERRED STOCK - - - (66,250)
DIVIDEND REQUIREMENT OF SERIES G PREFERRED STOCK (2,213) - (24,463) -
--------------------- --------------- -------------------- --------------
(LOSS) APPLICABLE TO COMMON SHAREHOLDERS (2,008,856) (919,551) (6,203,372) $(1,343,785)
UNREALIZED (LOSS) ON INVESTMENT (81,200) - (398,363) -
--------------------- --------------- -------------------- --------------
COMPREHENSIVE INCOME (LOSS) APPLICABLE TO COMMON
SHAREHOLDERS $ (2,090,056) $ (919,551) $ (6,,601,735) $(1,343,785)
===================== =============== ==================== ==============
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE $ (0.07) $ (0.07) $ (0.22) $ (0.10)
===================== =============== ==================== ==============
WEIGHTED-AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING BASIC AND FULLY DILUTED 30,674,692 13,683,659 30,674,692 13,683,659
===================== =============== ==================== ==============
</TABLE>
Page 6
<PAGE>
NETCURRENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PREFERRED STOCK
--------------------------------------------------------------------------------
SERIES A, C, D, E, AND F SERIES G
----------------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1999 2,625,000 $ 2,625 1,875 $ 1,875,000
ISSUANCE OF COMMON SHARES
IN PAYMENT OF
DIVIDENDS ON SERIES A
PREFERRED STOCK
ISSUANCE OF COMMON
STOCK FOR THE
EXERCISE OF WARRANTS
ISSUANCE OF COMMON STOCK
FOR PRIVATE PLACEMENT
ISSUANCE OF SERIES G
PREFERRED STOCK 1,090 1,090,000
ISSUANCE OF SERIES E
PREFERRED STOCK
RETIREMENT OF COMMON STOCK
GROSSO-JACOBSON
ISSUANCE OF COMMON
STOCK FOR EXERCISE
OF OPTIONS
ISSUANCE OF COMMON
STOCK FROM THE
PREFERRED SERIES F
CONVERSION (225,000) (225)
ISSUANCE OF COMMON STOCK
FROM THE PREFERRED
SERIES G CONVERSION (2,935) (2,935,000)
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK
------------------------------------ TREASURY SUBSCRIPTION
SHARES AMOUNT STOCK RECEIVABLE
------------------ -------------- -------------- ------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1999 23,070,869 $ 23,071 $ (1,010,192) $ (398,800)
ISSUANCE OF COMMON SHARES IN
PAYMENT OF DIVIDENDS ON
SERIES A PREFERRED STOCK 105,013 105
ISSUANCE OF COMMON
STOCK FOR THE
EXERCISE OF WARRANTS 151,583 152
ISSUANCE OF COMMON
STOCK FOR PRIVATE
PLACEMENT 1,700,000 1,700
ISSUANCE OF SERIES G
PREFERRED STOCK
ISSUANCE OF SERIES E
PREFERRED STOCK
RETIREMENT OF COMMON STOCK
GROSSO-JACOBSON (328,286) (328)
ISSUANCE OF COMMON
STOCK FOR EXERCISE
OF OPTIONS 1,497,161 1,497 (1,190,385)
ISSUANCE OF COMMON
STOCK FROM THE
PREFERRED SERIES F
CONVERSION 225,000 225
ISSUANCE OF COMMON
STOCK FROM THE
PREFERRED SERIES G
CONVERSION 2,336,318 2,336
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
ADDITIONAL COMPRE-
PAID-IN HENSIVE ACCUMULATED
CAPITAL INCOME DEFICIT TOTAL
------------------ ------------- --------------- ---------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1999 $ 30,704,372 $ 225,050 $ (29,322,986) $ 2,098,140
ISSUANCE OF COMMON SHARES IN
PAYMENT OF DIVIDENDS ON
SERIES A PREFERRED STOCK 318,645 318,750
ISSUANCE OF COMMON
STOCK FOR THE
EXERCISE OF WARRANTS 212,308 212,460
ISSUANCE OF COMMON
STOCK FOR PRIVATE
PLACEMENT 7,648,300 7,650,000
ISSUANCE OF SERIES G
PREFERRED STOCK 1,090,000
ISSUANCE OF SERIES E
PREFERRED STOCK
RETIREMENT OF COMMON STOCK
GROSSO-JACOBSON 328 -
ISSUANCE OF COMMON
STOCK FOR EXERCISE
OF OPTIONS 2,094,629 905,741
ISSUANCE OF COMMON
STOCK FROM THE
PREFERRED SERIES F
CONVERSION 311,525 311,525
ISSUANCE OF COMMON STOCK
FROM THE PREFERRED
SERIES G CONVERSION 2,932,664 -
</TABLE>
Page 7
<PAGE>
NETCURRENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PREFERRED STOCK
-----------------------------------------------------------------
SERIES A, C, D, E, AND F SERIES G
----------------------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
----------------- -------------- ----------------- ---------
<S> <C> <C> <C> <C>
ISSUANCE OF COMMON
STOCK FOR CONVERSION
OF SERIES C PREFERRED
STOCK FOR EXERCISE
OF OPTIONS (1,300,000) $ (1,300) $
ISSUANCE OF COMMON
STOCK FOR
SETTLEMENT
ISSUANCE OF COMMON
STOCK FOR CONVERSION
DEBENTURES
DIVIDENDS PAID ON
SERIES A PREFERRED
STOCK
DIVIDENDS PAID ON
SERIES G PREFERRED
STOCK
UNREALIZED LOSS ON
INVESTMENT
INTEREST ON SUBSCRIPTION
RECEIVABLE
NET LOSS
------------ -------------- ----------- ----------
BALANCE, SEPT 30,2000 1,100,000 $ 1,100 30 $ 30,000
============ ============== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
COMMON STOCK
------------------------------------ TREASURY SUBSCRIPTION
SHARES AMOUNT STOCK RECEIVABLE
------------------ ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
ISSUANCE OF COMMON
STOCK FOR CONVERSION
OF SERIES C PREFERRED
STOCK FOR EXERCISE
OF OPTIONS 2,800,000 $ 2,800 $ $ (2,540,958)
ISSUANCE OF COMMON
STOCK FOR
SETTLEMENT 80,000 80
ISSUANCE OF COMMON
STOCK FOR CONVERSION
DEBENTURES 513,346 513
DIVIDENDS PAID ON
SERIES A PREFERRED
STOCK
DIVIDENDS PAID ON
SERIES G PREFERRED
STOCK
UNREALIZED LOSS ON
INVESTMENT
INTEREST ON SUBSCRIPTION
RECEIVABLE (35,396)
NET LOSS
------------------- --------------- -------------- -------------------
BALANCE, SEPT 30,2000 32,151,004 $ 32,151 $ (1,010,192) (4,165,539)
=================== =============== ============== ===================
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
ADDITIONAL COMPRE-
PAID-IN HENSIVE ACCUMULATED
CAPITAL INCOME DEFICIT TOTAL
-------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
ISSUANCE OF COMMON
STOCK FOR CONVERSION
OF SERIES C PREFERRED
STOCK FOR EXERCISE
OF OPTIONS $ 2,448,500 $ $ $ (90,958)
ISSUANCE OF COMMON
STOCK FOR
SETTLEMENT 96,320 96,400
ISSUANCE OF COMMON
STOCK FOR CONVERSION
DEBENTURES 644,487 645,000
DIVIDENDS PAID ON
SERIES A PREFERRED
STOCK (318,750) (318,750)
DIVIDENDS PAID ON
SERIES G PREFERRED
STOCK (24,463) (24,463)
UNREALIZED LOSS ON
INVESTMENT (398,363) (398,363)
INTEREST ON SUBSCRIPTION
RECEIVABLE (35,396)
NET LOSS (5,860,159) (5,860,159)
-------------- ----------- ------------- ---------
BALANCE, SEPT 30,2000 $ 47,387,128 $ (173,313) $(35,526,358) $ 6,599,927
============== =========== ============= ============
</TABLE>
Page 8
<PAGE>
NETCURRENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
Nine Months Nine Months
Ended Ended
September 30, September 30,
2000 1999
------ ------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (5,860,159) $ (958,785)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization of fixed assets 113,452 84,316
Write-off o projects in development - 301,037
Amortization of goodwill 67,500 46,782
Amortization of acquisition costs - (5,320)
Write-off of notes receivable and other assets - 654,428
Issuance of common stock for services - 280,000
Issuance of common stock for settlement 96,400 -
Gain on sale of investments (168,250) -
(Increase) decrease in
Accounts receivable 122,672 1,498,802
Other assets and prepaid expenses (19,360) (48,938)
Prepaid advertising expenses 583,392 -
Increase (decrease) in
Accounts payable and accrued expenses (434,527) (2,741,572)
Deferred revenue (63,025) (270,669)
-------- ---------
Net cash used in operating activities (5,561,905) (1,159,919)
----------- -----------
</TABLE>
Page 9
<PAGE>
NETCURRENTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the For the
Nine Months Nine Months
Ended Ended
September 30, September 30,
2000 1999
------------- -------------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures on fixed assets $ (782,126) $(16,014)
Additions to film costs - 16,226
(Increase) decrease in receivables from related
parties - 284,821
Additions to goodwill - 809,785
Company acquisitions - 252,122
(Increase) in short-term investments - (800,000)
Increase in obligations under capital leases - 28,247
Increase in acquisition costs - 114,589
Loans to acquired company - (900,000)
Payments on receivables - related party - 2,265
Loans to related parties - (25,000)
Proceeds from sale of investments 213,809 -
------------ --
Net cash provided by (used in) investing activities (568,317) (232,959)
------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on notes payable - related parties (44,046) (1,210,802)
Borrowings from notes payable - related parties - 35,086
Payments on capital lease obligation (4,320) (49,821)
Payment on subscription receivable 200,000 -
Proceeds from issuance of preferred stock 311,525 2,680,975
Proceeds from issuance of common stock 8,754,933 804,070
Offering costs - (192,500)
Proceeds from convertible debentures, net of
offering costs 1,000,026 -
------------ -------------
Net cash provided by financing activities 10,218,118 2,067,008
------------ -------------
Net increase in cash and cash equivalents 4,087,896 674,130
------------ -------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 798,855 (442,645)
------------ -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,886,751 $ 231,485
============ =============
</TABLE>
Page 10
<PAGE>
(1) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
NetCurrents, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
in accordance with the instructions to Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all material adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the nine months ended September 30, 2000 are not necessarily
indicative of the results that may be expected for the year ended December 31,
2000. The information contained in this Form 10-QSB should be read in
conjunction with the audited financial statements filed as part of the Company's
Form 10-KSB for the six months ended December 31, 1999.
(2) GOODWILL
Goodwill was recorded in connection with the acquisition of MWI
Distribution, Inc. in July 1998 and is being amortized over a period of five
years.
(3) DIVIDENDS ON PREFERRED STOCK
During the three months ended September 30, 2000, the Company issued shares
of its Common Stock at a market value to pay a required $106,250 quarterly
dividend on the Series A Preferred Stock and the required $22,250 quarterly
dividend on the Series G Preferred Stock.
(4) LOSS PER SHARE
Loss per share for the three and six months ended September 30, 2000, has
been computed after deducting the dividend requirements of the Series A and
Series G Preferred Stock. It is based on the weighted average number of common
and common equivalent shares reported outstanding during the entire period ended
on September 30, 2000.
Page 11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
NetCurrents, Inc. (Registrant)
Dated: November 15, 2000 /S/ IRWIN MEYER
--------------------------
Irwin Meyer,
Chief Executive Officer
Dated: November 15, 2000 /S/ MICHAEL ISCOVE
--------------------------
Michael Iscove
Chief Financial Officer
