FORM 10-Q SB
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 33-37751-D
SOFTLOCK.COM, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 84-1130229
_______________________________ __________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
399 Alexander Street Rochester, NY 14607
___________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(716) 546-1970
________________________________________________________________________________
(Registrant's telephone number, including area code)
n/a
________________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
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
stock, as of the latest practicable date.
Shares Outstanding
Class of Securities at August 14, 1998
___________________ ___________________
Common Stock, par value $0.01 per share 7,885,800
Transitional Small Business Disclosure Format
Yes No X
___ ___
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
Accountants' Disclaimer of Opinion ....................... 3
Balance Sheet ............................................ 4
Statements of Operations ................................. 5
Statements of Cash Flows ................................. 6
Notes to Financial Statements ............................ 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ............ 8
PART II - OTHER INFORMATION
ITEM 2 Changes in Securities and Use of Proceeds .............. 9
ITEM 6. Exhibits and Reports on Form 8-K. ....................... 9
Signatures .............................................. 10
<PAGE>
The Board of Directors
SoftLock.com, Inc.
The accompanying balance sheet of SoftLock.com, Inc. (fka Fieldcrest Corp.)
(a development stage company) as of June 30, 1998 and the related statements
of operations and cash flows for the period then ended were not audited by us
and, accordingly, we do not express an opinion on them
Denver, Colorado
August 10, 1998
/s/ COMISKEY & COMPANY
PROFESSIONAL CORPORATION
3
<PAGE>
SOFTLOCK.COM, INC.
fka Fieldcrest Corp.
(A Development Stage Company)
BALANCE SHEET
June 30, 1998
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,338
--------
Total current assets 3,338
--------
TOTAL ASSETS $ 3,338
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,865
Accounts payable - related party 3,066
Notes payable - related party 3,300
--------
Total current liabilities 10,231
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 2,000,000
shares authorized; no shares issued and
outstanding (as restated) -
Common stock, $0.01 par value; 25,000,000
shares authorized; 788,580 shares issued
and outstanding (as restated) 7,886
Additional paid-in capital 29,028
Deficit accumulated during the development
stage (43,807)
-------
Total stockholders' equity (6,893)
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,338
=======
The accompanying notes are an integral part of the financial statements
4
<PAGE>
SOFTLOCK.COM, INC.
fka Fieldcrest Corp.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Period
December 1,
1989
(Inception) For the three months
to June 30, ended June 30,
1998 1998 1997
------------- ------------ ------------
REVENUES
Investment income $ 2,711 $ - $ -
------------- ------------ ------------
EXPENSES
General & administrative 45,642 9,479 112
Amortization 876 - -
------------- ------------ ------------
Total expenses 46,518 9,479 112
------------- ------------ ------------
NET LOSS (43,807) (9,479) (112)
Accumulated deficit
Balance, beginning of period - (34,328) (30,476)
------------- ------------ ------------
Balance, end of period $ (43,807) $ (43,807) $ (30,588)
============= ============ ============
NET LOSS PER SHARE $ (0.06) $ (0.01) $ (NIL)
============= ============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 708,435 788,580 788,580
============= ============ ============
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
SOFTLOCK.COM, INC.
fka Fieldcrest Corp.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<S> <C> <C> <C>
Period
December 1,
1989
(Inception) For the three months
to June 30, ended June 30,
1998 1998 1997
------------- ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES
Net loss $ (43,807) $ (9,479) $ (112)
Adjustments to reconcile
net loss to net cash used
by operating activities:
Amortization 876 - -
Increase in
accounts payable 3,865 3,326 112
Increase in accounts
payable - related party 3,066 2,899 -
------------- ------------ -----------
Net cash used by
operating activities (36,000) (3,255) -
CASH FLOWS FROM INVESTING
ACTIVITIES
Increase in organizational
costs (876) - -
------------- ------------ -----------
Net cash used by investing
activities (876) - -
CASH FLOWS FROM FINANCING
ACTIVITIES
Loans from related parties 3,300 3,300 -
Issuance of common stock 82,370 - -
Deferred offering costs paid (26,016) - -
Statutory escrow contribution (19,440) - -
------------- ------------ -----------
Net cash provided by financing
activities 40,214 3,300 -
------------- ------------ -----------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 3,338 45 -
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD - 3,293 1,673
------------- ------------ -----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 3,338 $ 3,338 $ 1,673
============ =========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements
6
[FN]
<PAGE>
SOFTLOCK.COM, INC.
fka Fieldcrest Corp.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(Unaudited)
1. Management's representation of interim financial information
------------------------------------------------------------
The accompanying financial statements have been prepared by SoftLock.com,
Inc. (fka Fieldcrest Corp.) ("the Company") without audit pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted as allowed by such rules and
regulations, and management believes that the disclosures are adequate to
make the information presented not misleading. These financial statements
include all of the adjustments which, in the opinion of management, are
necessary to a fair presentation of financial position and results of
operations. All such adjustments are of a normal and recurring nature.
These financial statements should be read in conjunction with the audited
financial statements at March 31, 1998.
2. Notes Payable - related party
-----------------------------
On June 25, 1998, the Company received a loan in the amount of $3,300 from
the spouse of the Company's sole director and officer. This amount, plus
additional amounts advanced after the end of the quarter, are payable within
thirty days of the close of the stock transfer and exchange with SoftLock
Services, Inc. (See Note 3) The note may be repaid, at the option of the
Company, with the issuance of up to 9,733 (post reverse split) shares of
the Company's common stock.
3. Subsequent Events
-----------------
Stock Transfer and Exchange
On July 28, 1998, the Company and SoftLock Services, Inc. ("SoftLock"), a
Delaware corporation, consummated a Plan and Agreement of Reorganization
(the "Agreement") whereby the Company acquired all of the issued and
outstanding shares of common stock of SoftLock in exchange for 354,861,000
(7,097,220 shares after giving effect to a 1 for 50 reverse split, effective
August 10, 1998, discussed below), representing 90% of the total shares
outstanding.
Concurrently with signing of the Agreement, the former officer and director
resigned, and the management of SoftLock took over control of the Board of
Directors and daily management of the Company. See the Company's Form 8-K
dated July 28, 1998 for additional information concerning this transaction.
The transaction will be accounted for as a reverse acquisition, with
SoftLock as the accounting acquiror. Effective August 10, 1998, the
Company will begin reporting using a fiscal year end of December 31,
which is the reporting year of the accounting acquiror.
Amendment to Certificate of Incorporation
In connection with the acquisition, the Company's Board of Directors and
shareholders approved several amendments to the Company's Certificate of
Incorporation to (i) change the name of the Company to "SoftLock.com,
Inc.",(ii) change the authorized number of shares of Common Stock to
25,000,000 and (iii) change the par value of the Common Stock to $.01, and
approved a 1 for 50 reverse stock split of the outstanding shares of Common
Stock. The effective date of the amendments to the Certificate of
Incorporation and the reverse split was August 10, 1998.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources
SoftLock.com, Inc. (fka Fieldcrest Corp.) (the "Registrant") completed the
initial public offering of its securities in August of 1991, receiving gross
proceeds of $47,250. Total costs of the offering amounted to $26,016. The net
proceeds of the offering, therefore, amounted to $21,234. Of this amount,
$19,440 was placed in escrow and refunded on a pro rata basis to shareholders
in the fourth quarter of fiscal 1995, as required by the Colorado Securities
Act.
On July 28, 1998, Fieldcrest Corp. and SoftLock Services, Inc. ("SoftLock"),
a Delaware corporation, consummated a Plan and Agreement of Reorganization (the
"Agreement") whereby the Registrant acquired all of the issued and outstanding
shares of common stock of SoftLock in exchange for 354,861,000 shares of the
Registrant's "restricted" Common Stock (7,097,220 shares after giving effect to
a 1 for 50 reverse split, effective August 10, 1998, discussed below),
representing 90% of the total shares outstanding.
The transaction will be accounted for as a reverse acquisition, with
SoftLock as the accounting acquiror. Future, post-combination filings will be
made on the basis of a fiscal year end of December 31, which is the reporting
year of the accounting acquiror.
In order to fund the Registrant's activities related to the Agreement, the
spouse of the Registrant's president and director advanced a total of $7,300
($3,300 as of June 30, 1998). The terms of the associated promissory note call
for repayment within thirty days from the close of the Agreement. At the
option of the Registrant, this debt may be repaid through the issuance of up
to 9,733 (post reverse split) shares of the Registrant's common stock.
Results of Operations
The net loss for the quarter ended June 30, 1998 is greater than the loss
experienced in the same period of the preceding year. The Registrant
experienced net losses of $9,479 and $112, respectively, during the quarters
ended June 30, 1998 and 1997. The increase in expenses and the resulting
increase in net loss is attributable primarily to travel and other direct
expenses incurred as a result of activities related to the Agreement with
SoftLock.
8
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On June 17, 1998, SoftLock Services, Inc. ("SoftLock"), completed a
private placement for 142,857 shares of its common stock. These
142,857 shares became 642,099 shares of the Registrant as a result of
the consummation of the Plan and Agreement of Reorganization between
the Registrant and SoftLock and the 1 for 50 reverse split effective
August 10, 1998.
The private placement was made in reliance upon the exemption from
registration provided by Section 4(2) of the 1933 Act and/or
Regulation D and Rule 506 adopted thereunder. Based upon information
known to SoftLock, and representations made by each of the purchasers,
SoftLock believes all but two of the 43 purchasers were accredited
investors. Based upon information known to SoftLock and
representations made by each of the purchasers, SoftLock believes
that each purchaser was able to evaluate the merits and risks of an
investment in SoftLock.
No broker/dealers were involved in the sale of these securities and
no commissions were paid.
All of such purchasers represented that they purchased the securities
for investment, and all share certificates issued to the purchasers
were impressed with a restrictive legend advising that the shares
represented by the certificates may not be sold, transferred, pledged
or hypothecated without having first been registered or the
availability of an exemption from registration established.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
99.1 Financial statements of businesses to be acquired and
Pro Forma financial information. Incorporated by reference
to Registrant's Form 8-K dated July 28, 1998 as filed with
the Commission on August 12, 1998.
(b) Reports on Form 8-K
None
9
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this quarterly report on
Form 10-QSB to be signed on its behalf by the undersigned, duly authorized.
Date: August 14, 1998 SOFTLOCK.COM, INC.
By:/s/ Martin Presberg
-------------------------
Martin Presberg,
Vice President of Operations
Principal Financial Officer
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENTS OF LOSS AND ACCUMULATED DEFICIT AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH 10QSB FOR THE QUARTER ENDED JUNE 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 3338
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3338
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3338
<CURRENT-LIABILITIES> 10231
<BONDS> 0
0
0
<COMMON> 7886
<OTHER-SE> (14779)
<TOTAL-LIABILITY-AND-EQUITY> 3338
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9479
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9479)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9479)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
