<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _______ TO _______
Commission File Number 0-23152
@POS.COM, INC.
---------------------------------------------------------------
Exact Name of small business issuer as specified in its charter
DELAWARE 33-0253408
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3051 NORTH FIRST STREET, SAN JOSE, CA 95134
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (408) 468-5400
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 issuer was required to file such reports), and (2) has been
subject to filing requirements for the past 90 days. Yes [X] No [ ]
Number of shares of issuer's common stock outstanding as of
January 21, 2000: 3,538,397
Transitional Small Business Disclosure Format: Yes [ ] No [X]
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<PAGE> 2
@POS.COM, INC.
FORM 10-QSB
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet at December 31, 1999 3
Consolidated Statements of Operations for the
Three Months Ended December 31, 1999 and 1998 4
Consolidated Statements of Operations for the
Six Months Ended December 31, 1999 and 1998 5
Consolidated Statements of Cash Flows for the
Six Months Ended December 31, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
Signature 16
</TABLE>
2
<PAGE> 3
PART I: FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
@POS.COM, INC.
CONSOLIDATED BALANCE SHEET (unaudited)
as of December 31, 1999
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and equivalents $ 632,186
Accounts receivable, net 584,314
Inventories, net 2,258,456
Prepaid expenses and other current assets 572,854
------------
Total current assets 4,047,810
------------
Property and equipment 2,613,560
Less: Accumulated depreciation (784,471)
------------
Property and equipment, net 1,829,089
------------
Total assets $ 5,876,899
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Capital lease obligations, current 179,288
Notes payable 1,397,000
Bank Overdraft 605,456
Deferred Revenues 80,100
Accounts payable 943,886
Accrued liabilities and other 965,577
------------
Total current liabilities 4,171,307
------------
Capital lease obligations, non-current 750,998
Stockholders' equity:
Series B convertible Preferred Stock 563
Series D convertible Preferred Stock 1,273
Common stock 3,539
Additional paid-in capital 15,788,996
Accumulated deficit (14,839,777)
------------
Total stockholders' equity 954,594
------------
Total liabilities and stockholders' equity $ 5,876,899
============
</TABLE>
The accompanying notes are an integral part of this
consolidated financial statement.
3
<PAGE> 4
@POS.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Revenues $ 1,431,232 $ 4,061,130
Cost of revenues 1,067,572 2,091,805
----------- -----------
Gross margin 363,660 1,969,325
----------- -----------
Operating expenses:
Selling, general and administrative 1,812,003 1,164,558
Research and development 1,567,476 803,293
----------- -----------
Total operating expenses 3,379,479 1,967,851
----------- -----------
Operating income/(loss) (3,015,819) 1,474
Interest expenses (117,668) (41,450)
Interest income 19,198 66,771
----------- -----------
Income/(loss) before income taxes (3,114,289) 26,795
Income taxes -- 1,263
----------- -----------
Net income/(loss) $(3,114,289) $ 25,532
=========== ===========
Net income/(loss) per share (Note 2)
Basic $(1.00) $ 0.01
Diluted $(1.00) $ 0.00
Weighted average shares outstanding
Basic 3,105,330 1,923,965
Diluted 3,105,330 6,160,629
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE> 5
@POS.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- ------------
<S> <C> <C>
Revenues $ 3,665,982 $ 10,107,909
Cost of revenues 2,589,343 5,633,215
----------- ------------
Gross margin 1,076,639 4,474,694
----------- ------------
Operating expenses:
Selling, general and administrative 4,009,829 2,307,333
Research and development 3,360,371 1,764,298
----------- ------------
Total operating expenses 7,370,200 4,071,631
----------- ------------
Operating income/(loss) (6,293,561) 403,063
Interest expenses and other (146,031) (61,962)
Interest income 45,726 125,094
----------- ------------
Income/(loss) before income taxes (6,393,866) 466,195
Income taxes -- 1,263
----------- ------------
Net income/(loss) $(6,393,866) $ 464,932
=========== ============
Net income/(loss) per share (note 2)
Basic $(2.45) $ 0.24
Diluted $(2.45) $ 0.07
Weighted average shares outstanding
Basic 2,612,754 1,908,940
Diluted 2,612,754 6,222,398
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
5
<PAGE> 6
@POS.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income(loss) $(6,393,866) 464,932
Adjustments to reconcile net income(loss) to
net cash used in operating activities:
Depreciation and amortization 221,482 70,845
Provision for bad debts 22,501 33,109
Issuance of Common Stock Purchase Warrants 267,555 138,422
Changes in operating assets and liabilities:
Accounts receivable 5,646,299 (1,768,386)
Inventories (678,062) 1,115,411
Prepaid expenses and other current assets (201,421) (14,337)
Accounts payable (1,133,228) (1,397,810)
Accrued liabilities 356,029 70,389
Deferred revenues 80,100 (1,152,450)
----------- -----------
Net cash used in operating activities (1,812,611) (2,439,875)
----------- -----------
Cash flows from investing activities:
(574,839) (118,215)
----------- -----------
Net cash used in investing activities (574,839 (118,215)
----------- -----------
Cash flows from financing activities:
Borrowings - credit line 700,000 --
Repayments - credit line (103,000) (290,195)
Proceeds from issuance of Common Stock 247,782 --
----------- -----------
Net cash provided(used) by financing
Activities 844,782 (290,195)
----------- -----------
Net decrease in cash and cash equivalents (1,542,668)
(2,848,285)
Cash and cash equivalents at beginning of
Period 2,174,854 6,465,898
----------- -----------
Cash and cash equivalents at end of period $ 632,186 $ 3,617,613
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
6
<PAGE> 7
@POS.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The financial information included herein for the three month and six month
periods ended December 31, 1999 and 1998 are unaudited; however, such
information reflects all adjustments consisting only of normal recurring
adjustments which are, in the opinion of management, necessary for a fair
presentation of the financial position, results of operations and cash flows for
the interim periods.
The interim consolidated financial statements presented herein have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-QSB. These interim
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto included in the Form 10-KSB of
@POS.com, Inc. (the "Company") for the year ended June 30, 1999.
The results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full year.
2. NET INCOME/(LOSS) PER SHARE
Basic net income/(loss) per share is computed by dividing net income/(loss)
available to common stockholders (numerator) by the weighted average number of
common shares outstanding (denominator) during the period and excludes the
dilutive effect of stock options and convertible securities. Diluted net income
per share gives effect to all dilutive common shares and other dilutive
securities outstanding during the period, including the assumed conversion of
the Preferred Stock into Common Stock using the if converted method. In
computing diluted net income per share, the average stock price for the period
is used in determining the number of shares assumed to be purchased from the
exercise of stock options.
7
<PAGE> 8
The following table sets forth the computation of basic and diluted earnings per
share for the three months and six months periods ended December 31, 1999 and
1998 as follows:
<TABLE>
<CAPTION>
Three Months ended Six Months ended
December 31, December 31,
1999 1998 1999 1998
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Numerator for basic and
diluted earnings per
share - net income/(loss) $(3,114,289) $ 25,532 $(6,393,866) $ 464,932
--------------------------- ---------------------------
Denominator for basic
earnings per share -
weighted average common
shares 3,105,330 1,923,965 2,612,754 1,908,940
Effect of dilutive securities
Series B Preferred Stock -- 1,441,339 -- 1,456,365
Series C Preferred Stock -- 1,150,307 -- 1,150,307
Series D Preferred Stock -- 1,273,149 -- 1,273,149
Employee stock options
and Warrants -- 371,869 -- 433,637
--------------------------- ---------------------------
Denominator for diluted
earnings per share
adjusted weighted average
shares 3,105,330 6,160,629 2,612,754 6,222,398
--------------------------- ---------------------------
Income/(loss) per share
Basic $(1.00) $ 0.01 $(2.45) $ 0.24
Diluted $(1.00) $ 0.00 $(2.45) $ 0.07
Potentially dilutive
securities excluded from
computations as the
effect would be
antidilutive 3,439,010 -- 4,230,557 --
</TABLE>
3. INVENTORIES
Inventories are carried at the lower of cost, as determined on a first-in,
first-out basis, or market. At December 31, 1999, the Company's inventories were
as follows:
<TABLE>
<S> <C>
Raw materials 1,402,086
Work in process 270,792
Finished goods $ 869,223
Inventory reserve (283,645)
----------
Total $2,258,456
----------
</TABLE>
8
<PAGE> 9
4. Comprehensive Income(LOSS)
As of July 1, 1998, the Company adopted Statements of Financial Accounting
Standard ("SFAS") No. 130, "Reporting Comprehensive Income". SFAS No. 130
establishes standards for reporting and display of comprehensive income/(loss)
and its components in a full set of general purpose financial statements. The
objective of SFAS No. 130 is to report a measure of all changes in equity of an
enterprise that results from transactions and other economic events of the
period other than transactions with shareholders. Comprehensive income/(loss) is
the total of net income(loss) and all other non-owner changes in equity. For the
quarters and the first halves of the fiscal years ended December 31, 1999 and
1998, the Company's comprehensive income(loss) was equal to net income(loss).
5. SEGMENT INFORMATION
During fiscal 1999, the Company adopted SFAS No. 131, "Disclosures About
Segments of an Enterprise and Related Information." SFAS No. 131 requires a new
basis of determining reportable business segments (i.e., the management
approach). This approach requires that business segment information used by
management to assess performance and manage company resources be the source of
information disclosure. On this basis, the Company is organized and operates as
one business segment, the design, development, manufacture, and marketing of
Point-Of-Sale services and solutions.
During the second quarter and the first half of the fiscal year ended December
31, 1999, the Company did not generate significant revenues in foreign
countries.
6. RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," which the
Company will be required to adopt for fiscal year 2000. This statement
establishes a new model for accounting for derivatives and hedging activities.
Under SFAS No. 133, all derivatives must be recognized as assets and liabilities
and measured at fair value. The Company expects that the adoption of SFAS No.
133 have no impact on the Company's consolidated financial position or results
of operations.
9
<PAGE> 10
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the accompanying
unaudited consolidated financial statements of @POS.com, Inc. and its wholly
owned subsidiaries, including the notes thereto (see Part I, Item 1).
This quarterly report on Form 10-QSB ("Form 10-QSB") for @POS.com, Inc. (the
"Company") contains forward-looking statements made within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Exchange Act of 1934, as amended. Words such as "anticipates," "expects,"
"intends," "plans," "seeks," "estimates," and similar expressions identify such
forward looking statements. These statements are not guarantees of future
performance and are subject to certain risks and uncertainties that could cause
actual results to differ materially from those expressed or forecasted. Factors
that might cause such a difference include, but are not limited to, those
discussed in the section entitled "Business," "Operating Results," "Liquidity
and Capital Resources," and "Outlook" on pages 3-5 and 7-9 in the annual report
on Form 10-KSB ("Annual Report") filed with the Securities and Exchange
Commission ("Commission") on September 30, 1999. Readers should not rely unduly
on forward-looking statements, which reflect only the opinion of the Company's
management as of the date hereof. Unless required by law, the Company undertakes
no obligation to revise forward-looking statements. Readers should also
carefully review the risk factors set forth in other reports or documents the
Company files from time to time with the Commission, particularly the quarterly
reports on Form 10-QSB, and any current reports on Form 8-K.
RESULTS OF OPERATIONS (THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THREE
MONTHS ENDED DECEMBER 31, 1998)
The 65% decrease in revenues from the second quarter of fiscal 1999 (three
months ended December 31, 1998) to the second quarter of fiscal 2000 (three
months ended December 31, 1999) is largely due to decreased sales of the
Company's advanced PenWare 3100 inter-active electronic transaction terminal.
During the second quarter of fiscal 2000, the Company was transitioning its
focus on web-enabling the Point of Sales ("POS") and its iPOS TC product which
was introduced in the fourth quarter of fiscal 1999. Customers were reluctant to
implement new transaction payment systems during the introduction period and the
holiday season. In addition, sales were also affected by the Year 2000 issue.
The Company believes that certain customers were holding back on purchasing the
PenWare 3100 until subsequent to the year 2000.
On September 30, 1999, the Company issued 400,000 shares of warrants to purchase
the Company's Common Stock to a customer in connection with a pilot agreement
under which the customer would purchase a certain number of units of the iPOS TC
from the Company for a pilot project. The fair value of the warrants, as
calculated under the Black Scholes method, was determined to be approximately
$416,000. Of this amount, $268,000 was recorded as a sales discount in the
current period ended December 31, 1999. The remaining $148,000 will be recorded
as additional sales discount in the future when the remaining revenue from this
agreement is recognized.
10
<PAGE> 11
Gross margin for the second quarter of fiscal 2000 was 25%, compared to 48% in
the second quarter of fiscal 1999. The decrease in margin were due to the
warrant issuance costs as previously mentioned. The Company increased its
inventory reserve by $150,000 in the current quarter for certain inventory that
will be sold to HP Verifone at a price lower than its current book value in
connection with a licensing agreement announced on January 17, 2000.
Selling, general and administrative expenses increased by 56% from the second
quarter of fiscal 1999 to the second quarter of fiscal 2000. The increase is
largely the result of higher personnel expenses to support business growth. The
Company had established its channel and product marketing groups in an effect to
create market awareness for its e-commerce business and creation of a brand
identity that is consistent with the new business strategy. The Company also
increased its spending on trade show participation and public relations
activities. The Company expects that it will continue to make investments in
selling, general and administrative costs.
Research and development expenses increased to $1.57 million in the second
quarter of fiscal 2000 from $.8 million in the second quarter of fiscal 1999, an
increase of 95%. This increase is primarily attributable to increases in
headcount, particularly key engineering talent. Expenses for technology
consulting, materials and non-recurring engineering activities also rose
significantly in connection with the Company's product development and design
effort. During the first half of fiscal 2000, the Company started the
implementation of certain pilot programs based on its advanced iPOS TC
technology to attract customers to its new e-commerce offering. Research and
development expenses are generally charged to operations as incurred. In
accordance with SFAS 86, the Company capitalizes software development costs when
technological feasibility has been established. Costs eligible for
capitalization during fiscal 2000 and 1999 were insignificant, thus the Company
expensed all software development costs to research and development.
RESULTS OF OPERATIONS (SIX MONTHS ENDED DECEMBER 1999 COMPARED TO SIX MONTHS
ENDED DECEMBER 1998)
Changes in revenues, costs and expenses from the first six months of fiscal 1999
to the first six months of fiscal 2000 are the result of the same factors and
trends as those outlined above for the three-month comparison.
11
<PAGE> 12
CASH AND SOURCES OF LIQUIDITY
The Company's operating activities consumed $1.8 million in cash during the
first half of fiscal 2000, compared to $2.4 million during the first half of
fiscal 1999. The decreased cash usage in the first half of fiscal 2000 was due
largely to increased effort to collect accounts receivable.
The Company's financing activities generated $0.84 million in the first half of
fiscal 2000 compared to cash outlay of $0.29 million in the first half of fiscal
1999. The increase in cash inflow resulted from proceeds from exercises of stock
option and the borrowing of $0.7 million from a line of credit, compared to the
repayment of $0.29 million of indebtedness in the first half of fiscal 1999. The
line of credit expired on December 28, 1999 and was extended through March 15,
2000. The Company was in violation of certain covenants under this line of
credit and was in default with the bank. On January 27, 2000 the Company
obtained a $2 million bridge loan from the same bank. Borrowings under the
bridge loan bear interest at the prime rate plus 3.5 percent until March 15,
2000. The loan can be extended for an additional period of 45 days if certain
covenants are met. On January 31, 2000, The Company used $912,000 of the
proceeds from the bridge loan to pay down the line of credit. As of December 31,
1999, the Company's principal sources of liquidity include cash of $.6 million.
The Company had no other long or short-term debt and no significant capital
commitments other than those under capital leases totaling $.9 million as of
December 31, 1999 and a bank overdraft of $.6 million.
SUBSEQUENT EVENTS
On January 15, 2000, the Company announced the establishment of ReceiptCity.com
as a wholly owned subsidiary, which will focus on development of end-to-end
application services to merchants. The Company contributed to ReceiptCity.com
its ongoing research technology, certain key employees and certain assets for 8
million shares of ReceiptCity.com Common Stock. On January 24, 2000
ReceiptCity.com completed a private placement of equity of 1,356,050 shares of
Common Stock for gross proceeds of $2.6 million. The proceeds from the private
placement will be used for working capital purposes for ReceiptCity.com.
On January 17, 2000, the Company announced a strategic alliance with HP's
VeriFone where HP VeriFone will be licensed to manufacture, sell and support
Internet-enabled payment solutions based on the Company's technology. The
Company will offer a full suite of electronic services, including real-time
personalized advertising and customer surveys, an electronic receipt service for
merchants, and a Web site where consumers can store and manager their receipts.
As previously discussed, the Company has recorded a $150,000 inventory reserve
associated with this agreement.
OUTLOOK
The Company believes that it will require additional financing for fiscal 2000.
In addition to the bridge loan obtained on January 27, 2000, the Company is
pursuing other debt or equity transactions which upon completion, would provide
additional financing for working capital and future expansion. However, there is
no assurance that additional funding will be available.
12
<PAGE> 13
The Company believes that it has the technical and marketing skills and product
offerings necessary for future success. However, the Company has yet to sustain
consistent profitability and the sales trends are inherently difficult to
predict at this stage of development. Sales forecast shortfalls, delayed product
introductions, and manufacturing and financing constraints, together with other
risk factors, could lead to adverse fluctuations in revenues and profits in any
particular quarter.
Impact of Currency and Inflation.
The Company purchases the majority of its materials and services in U.S.
dollars, and most of its foreign sales are transacted in U.S. dollars. The
Company did not hold or purchase any foreign exchange contracts for the purchase
or sale of foreign currencies. The Company may choose to enter into such
contracts from time to time should conditions appear favorable. Effects of
inflation on Company's financial results have not been significant.
RISK FACTORS AFFECTING THE COMPANY'S BUSINESS, OPERATING RESULTS AND FINANCIAL
CONDITION
In addition to other information in this Form 10-QSB and the risk factors
discussed in the Company's latest Annual Report filed with the Securities and
Exchange Commission, investors evaluating the Company and its business should
carefully consider the following risk factors, which may have a significant
impact on the Company's business, operating results and financial condition. The
risk factors set forth below and elsewhere in this Form 10-QSB and in the
Company's Annual Report could cause actual results to differ materially from
those projected in any forward-looking statements. These risk factors include
but are not limited to the following;
UNPREDICTABLE AND FLUCTUATING OPERATING RESULTS; The Company has yet to sustain
consistent profitability and sales trends are inherently difficult to predict at
this stage of development. Sales forecast shortfalls, delayed product
introductions, and manufacturing and financing constraints, together with other
risk factors, could lead to adverse fluctuations in revenues and profits in any
particular quarter.
HIGHLY COMPETITIVE MARKETS AND RAPIDLY DEVELOPING AND CHANGING TECHNOLOGIES AND
MARKET CONDITION; The Point-of-Sale device market is constantly changing. These
changes include, among others: rapid technological advances; evolving industry
standards in electronic fund transfer and point-of-sale products; changes in
customer requirements; and frequent new product introductions and enhancements.
The Company may not successfully keep up with the new products and technological
advances of others. If the Company is not able to develop and market new
products and product enhancements that achieve market acceptance on a timely and
cost effective basis, it could materially and adversely affect the Company's
business, financial condition and results of operations.
13
<PAGE> 14
DEPENDENCY ON LARGE CUSTOMERS; The Company relies upon large retail customers
with a large number of Point-of-Sale terminals for a significant percentage of
our revenues. The Company continues to diversify its customer base by developing
strategic alliances and partnerships to open more distribution channels and
limit its reliance on large customers. While the Company continues to transact
business with its current customers and attract new ones, the Company's revenues
will decrease significantly if it loses a large customer. Furthermore, there are
no assurances the Company will be successful in attracting new customers.
CLAIMS OF INFRINGEMENT ON OTHERS' PROPRIETARY RIGHTS; Although the Company
believes that its services and products do not infringe on the intellectual
property rights of others, the Company can not prevent someone else from
asserting a claim against the Company in the future for violating their
technology rights. Third parties making infringement claims may have
significantly greater resources than the Company does to pursue litigation, and
the Company cannot be certain that it would prevail in an infringement action.
The Company received a letter of inquiry from NCR Corporation ("NCR") accusing
the Company of infringing on certain NCR patents. This matter is under
investigation by the Company's legal counsel.
SINGLE COMPONENT MANUFACTURER/SUPPLIERS; the Company depends on other
manufacturers and suppliers for some of its products and certain components used
in our products. The components it obtains from other manufacturers and
suppliers are only available from a limited number of sources. Certain
components and products are currently purchased from single supplier. While the
Company maintains sufficient inventory of certain products and continually
evaluate alternative sources of supply, the failure of any such single supplier
to meet its commitment on schedule could adversely affect the Company.
ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL; the Company's future performance
depends upon the continued service of a number of senior management and key
technical personnel. The loss or interruption of the services of one or more key
employees could have a material adverse effect on our business, financial
condition and results of operations. The Company's future also will depend upon
its ability to attract and retain highly skilled technical, managerial and
marketing personnel. Competition for qualified personnel is significant and
intense, and is likely to intensify in the future. The Company competes for
qualified personnel against numerous companies, including larger, more
established companies with significantly greater financial resources than the
Company's. Significant competition exists for such personnel. If the Company is
unable to hire and retain qualified personnel in the future, it could materially
and adversely affect its business, financial condition and results of operations
14
<PAGE> 15
YEAR 2000 ISSUE
The Year 2000 compliance issue (in which systems do not properly recognize
date-sensitive information when the year changes from 1999 to 2000) creates
risks for the Company: if internal data management, accounting and/or
manufacturing or operational software and systems do not adequately or
accurately process or manage day or date information beyond the year 1999, there
could be an adverse impact on the Company's operations. To address the issue,
the Company assembled in fiscal 1999 a task force to review and assess internal
software, data management, accounting, and manufacturing and operational systems
to ensure that they do not malfunction as a result of the Year 2000 date
transition.
The Company's failure to ensure, at all or in a timely or reasonable manner,
that the Company's products are Year 2000-compliant may cause disruption in the
ability of the Company's customers to derive expected productivity from those
products or to integrate the products fully and functionally into certain
automated manufacturing environments.
To date, the Company has experienced no material Year 2000 issues, and the
Company expects minimal future Year 2000 issues based on the performance to date
of the internal systems and the products it supplies to its customers.
15
<PAGE> 16
PART II: OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
@POS.com, INC.
Date: February 14, 2000 By: /s/ DAVID M. LICURSE, SR.
------------------------------------
David M. Licurse, Sr.
Chief Financial Officer and
Vice President of Operations
(principal accounting officer)
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-1-1999
<PERIOD-END> DEC-31-1999
<CASH> 632,186
<SECURITIES> 0
<RECEIVABLES> 704,972
<ALLOWANCES> 120,658
<INVENTORY> 2,258,456
<CURRENT-ASSETS> 4,047,810
<PP&E> 2,613,560
<DEPRECIATION> 784,471
<TOTAL-ASSETS> 5,876,899
<CURRENT-LIABILITIES> 4,171,307
<BONDS> 0
0
1,836
<COMMON> 3,539
<OTHER-SE> 949,219
<TOTAL-LIABILITY-AND-EQUITY> 5,876,899
<SALES> 3,665,982
<TOTAL-REVENUES> 3,665,982
<CGS> 2,589,343
<TOTAL-COSTS> 2,589,340
<OTHER-EXPENSES> 7,370,200
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 146,031
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