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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number 0-14731
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EMARKETPLACE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 33-0558415
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
255 WEST JULIAN STREET, SUITE 100
SAN JOSE, CALIFORNIA 95110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(408) 295-6500
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Indicate by check mark whether the registrant: (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
YES [X] NO [ ]
As of October 31, 1999, there were 12,691,460 shares of the
Registrant's Common Stock outstanding.
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<PAGE>
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EMARKETPLACE, INC.
QUARTERLY REPORT ON FORM 10-QSB/A
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 1999
INDEX
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PAGE
PART I FINANCIAL INFORMATION NUMBER
------
ITEM 1. Financial Statements:
Condensed Consolidated Balance Sheet as of September 30, 1999.... 3
Condensed Consolidated Statements of Operations for the three
months ended September 30, 1999 and 1998..................... 4
Condensed Consolidated Statements of Cash Flows for the three
months ended September 30, 1999 and 1998..................... 5
Notes to Condensed Consolidated Financial Statements............. 6
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ....................................... 13
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings................................................ 21
ITEM 2. Changes in Securities and Use of Proceeds........................ 21
ITEM 3. Defaults Upon Senior Securities.................................. 21
ITEM 4. Submission of Matters to a Vote of Security Holders.............. 21
ITEM 5. Other Information................................................ 21
ITEM 6. Exhibits and Reports on Form 8-K................................. 22
Signatures....................................................... 23
2
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PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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EMARKETPLACE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1999
(Unaudited)
ASSETS:
CURRENT ASSETS:
Cash and Cash Equivalents $ 810,942
Restricted Cash 2,690,124
Accounts Receivable 76,825
Prepaids and Other Current Assets 328,000
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TOTAL CURRENT ASSETS 3,905,891
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PROPERTY AND EQUIPMENT 51,953
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OTHER ASSETS:
Intangible Assets 10,197,629
Deposits 126,507
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TOTAL OTHER ASSETS 10,324,136
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TOTAL ASSETS $ 14,281,980
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LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Notes Payable to Related Party $ 178,600
Accounts Payable 1,051,007
Other Accrued Liabilities 357,712
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TOTAL CURRENT LIABILITIES 1,587,319
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STOCKHOLDERS' EQUITY:
Common Stock 1,269
Common Stock Subscribed at Par 70
Capital in Excess of Par Value 15,358,668
Common Stock Subscription Notes Receivable (71,101)
Deferred Compensation (478,718)
Accumulated Deficit (2,115,527)
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TOTAL STOCKHOLDERS' EQUITY 12,694,661
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 14,281,980
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See Notes to Condensed Consolidated Financial Statements
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EMARKETPLACE, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1 9 9 9 1 9 9 8
------------ ------------
<S> <C> <C>
REVENUE $ 2,882,249 $ --
------------ ------------
OPERATING COSTS AND EXPENSES:
Cost of Revenue 2,677,629 --
Selling, General and Administrative 914,281 412
Product Development 99,167 --
Amortization of Goodwill and Other Acquired Intangibles 580,332 --
------------ ------------
TOTAL OPERATING COSTS AND EXPENSES 4,271,409 412
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LOSS FROM OPERATIONS (1,389,160) (412)
INTEREST INCOME 2,788 1,130
INTEREST EXPENSE (11,908) --
------------ ------------
NET INCOME (LOSS) BEFORE MINORITY INTEREST $ (1,398,280) $ 718
------------ ------------
Minority Interest in Consolidated Subsidiary 18,181 --
------------ ------------
NET INCOME (LOSS) $ (1,380,099) $ 718
============ ============
NET LOSS PER SHARE:
Basic and Diluted $ (0.11) $ 0.00
============ ============
Weighted Average Common Shares Outstanding 12,691,460 6,460,000
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
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EMARKETPLACE, INC. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1 9 9 9 1 9 9 8
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income (Loss) $(1,380,099) $ 718
Adjustments to Reconcile Net Loss to Net Cash Provided
(Used) by Operating Activities:
Consulting Services Paid for by Issuance of Common Stock 197,114 --
Amortization of Deferred Compensation Associated with
Issuance of Stock Options and Warrants 167,778 --
Depreciation 6,069 --
Amortization 580,332 --
Interest Accrued on Stockholder Notes 10,519 (1,130)
Minority Interest in Consolidated Subsidiary (18,181) --
Changes in Assets and Liabilities:
Accounts Receivable (19,507) --
Other Assets (273,682) --
Accounts Payable 274,151 412
Accrued Liabilities 36,716 --
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NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (418,790) --
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INVESTING ACTIVITIES:
Purchase of Fixed Assets (14,067) --
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FINANCING ACTIVITIES:
Repayment of Loans Assumed in Acquisitions (12,167) --
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (12,167) --
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (445,024) --
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIODS 1,255,966 --
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIODS $ 810,942 $ --
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for the periods:
Interest $ 308 $ --
Income Taxes -- --
Restricted Cash received in Subscription for Common Stock $ 2,690,124 $ --
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of Common Stock of Consolidated Subsidiary in
exchange for services $ 20,000 $ --
</TABLE>
See Notes to Consolidated Financial Statements.
5
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EMARKETPLACE, INC. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Organization and Basis of Presentation
ORGANIZATION:
eMarketplace, Inc. (formerly Computer Marketplace, Inc.) (the "Company") was a
California corporation that was incorporated on July 19, 1983, as Quality
Associates, Inc. and changed its name to Computer Marketplace in June 1987. In
March 1993, Computer Marketplace changed its name to Computer Marketplace, Inc.
("Computer Marketplace") and its state of incorporation from California to
Delaware. In September 1999, the name of the Company was again changed to
eMarketplace, Inc. ("eMarketplace"). Until April 1999, the Company was primarily
engaged in the wholesale distribution of new and used computer equipment to
dealers, computer maintenance companies, leasing companies, equipment brokers,
and end users, despite the fact that the Company was in the process of winding
down its business because it failed to operate profitably since the fiscal year
ended June 1994. Computer Marketplace's wholly owned subsidiary, Medical
Marketplace, which was engaged in the distribution of used medical equipment to
health care providers, was reflected as disposed of at the time of the merger
between Computer Marketplace and E-Taxi, Inc. ("E-Taxi"). The disposal of this
subsidiary was completed during the quarter ended September 30, 1999 (see Note
11A).
On April 23, 1999, the Company acquired E-Taxi, Inc. ("E-Taxi") in a business
combination accounted for as a "reverse acquisition." As consideration for
9,074,000 shares of E-Taxi's common stock and 400,000 shares of E-Taxi's Series
A Preferred Stock, the Company issued an aggregate of 9,074,000 shares of common
stock, par value $.0001 per share, and 400,000 shares of Series A Preferred
Stock, par value $.0001 per share. For accounting purposes, E-Taxi is deemed to
be the acquirer, and the Company is deemed to be acquired, under the purchase
method of accounting. Therefore, the financial information presented herein
represents the historical results of E-Taxi and the results of the Company from
April 23, 1999 (date of acquisition) only. E-Taxi was incorporated in the state
of Delaware on April 14, 1998 to develop a vertical Internet portal for the
small office, home office ("SOHO") market.
The acquisition of E-Taxi by the Company signified the adoption by the Company
of a new corporate strategy to develop, operate and acquire Internet businesses
that provide content, commerce and online services to demographically-targeted
audiences.
In April 1999, immediately prior to the Company's acquisition of E-Taxi, E-Taxi
acquired TechStore, L.L.C. ("TechStore"), an online retailer of computer
hardware and software, in a business combination accounted for as a purchase.
The results of operations include the results of TechStore from the date of
acquisition.
BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements include all adjustments (consisting only of normal
recurring accruals necessary for a fair presentation of the consolidated
financial position of the company as of September 30, 1999, and 1998, the
consolidated results of its operations for the three months ending September 30,
1999 and 1998 and its cash flows for the three months ending September 30, 1999
and 1998. Although the Company believes that the disclosures in these financial
statements are adequate to make the information presented not misleading,
certain information and footnote information normally included in financial
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statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. Results of operations for the period ended
September 30, 1999 are not necessarily indicative of results to be expected for
the full year. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Form 10-KSB for the
year ended June 30, 1999.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SALE OF STOCK BY A SUBSIDIARY - Changes in the Company's proportionate share of
subsidiary equity are accounted for as equity transactions.
BASIS OF CONSOLIDATION - The accompanying consolidated financial statements
include the accounts of eMarketplace and various subsidiaries in which the
Company holds a majority ownership interest. The subsidiaries are: E-Taxi, Inc.,
TechStore, LLC, Office Express, Inc. and TopTeam, Inc. All material intercompany
balances and transactions have been eliminated.
REVENUE RECOGNITION - The Company records product sales revenue when goods have
been shipped.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid instruments
with a maturity of three months or less when purchased to be cash equivalents.
There are no cash equivalents at September 30, 1999.
PROPERTY AND EQUIPMENT AND DEPRECIATION - Property and equipment are stated at
cost. Depreciation is computed using the straight-line method over the estimated
useful lives of the related assets, which range from three to seven years.
INTANGIBLES AND AMORTIZATION - Intangible assets are stated at cost.
Amortization is computed using the straight-line method over the estimated
useful lives of the related assets, which is generally four to five years.
IMPAIRMENT - Long-lived assets of the Company are reviewed at least annually as
to whether their carrying value has become impaired pursuant to Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS No. 121
requires long-lived assets, if impaired, to be remeasured at fair value,
whenever events or changes in circumstances indicate that the carrying amount of
the asset may not be recoverable. Management also reevaluates the periods of
amortization of long-lived assets to determine whether events and circumstances
warrant revised estimates of useful lives.
NET LOSS PER SHARE OF COMMON STOCK - Net loss per share of common stock is
computed reflecting the shares issued in the reverse acquisition as outstanding
for all periods presented and on the basis of the weighted average shares of
common stock outstanding. Potential common shares arising from the effect of
dilutive stock options and warrants using the treasury stock method are included
if dilutive. For fiscal years 2000 and 1999, the per share results were computed
without consideration for contingently issuable shares underlying stock options
and warrants as the effect on the per share results would be anti-dilutive.
COMPREHENSIVE INCOME - The Company does not have any transactions included in
comprehensive income.
SEGMENTS - Effective July 1, 1998, the Company adopted the provisions of SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information."
The Company identifies its operating segments based on business activities,
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management responsibility and geographical location. During the periods ended
September 30, 1999 and 1998, the Company operated in a single business segment,
primarily in the United States. Through September 30, 1999, foreign operations
have not been significant in either revenue or investment in long-lived assets.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(3) ACQUISITIONS
On April 23, 1999, the Company acquired E-Taxi, Inc. ("E-Taxi") in a business
combination accounted for as a "reverse acquisition." As consideration for
9,074,000 shares of E-Taxi's common stock and 400,000 shares of E-Taxi's Series
A Preferred Stock, the Company issued an aggregate of 9,074,000 shares of common
stock, par value $.0001 per share, and 400,000 shares of Series A Preferred
Stock, par value $.0001 per share. For accounting purposes, E-Taxi is deemed to
be the acquirer, and the Company is deemed to be acquired, under the purchase
method of accounting. Therefore, the financial information presented herein
represents the historical results of E-Taxi and the results of the Company from
April 23, 1999 (date of acquisition) only. The total purchase price, including
stock valued at approximately $9.5 million and acquisition related expenses of
approximately $95,700 was allocated to net liabilities of the Company of
$(472,972), and $9,972,630 of goodwill, which is being amortized using the
straight-line method over its estimated useful life of five years.
Effective July 1, 1999 the Company completed the sale of its wholly owned
subsidiary, Medical Marketplace, Inc., on terms more favorable to the Company
than originally anticipated at the time of the transaction between E-Taxi and
the Company, resulting in a decrease to the amount of goodwill recorded as a
result of the acquisition by $557,788 in the period ended September 30, 1999
(see Note 11A).
In April 1999, E-Taxi acquired TechStore, an online retailer of computer
hardware and software, in a business combination accounted for using the
purchase method of accounting. The results of operations include the results of
TechStore from the date of acquisition. The purchase price, which consisted of
stock valued at $1,492,000, cash of $66,667 and acquisition related expenses of
approximately $38,300, was allocated $(170,300) to net tangible liabilities
acquired, $140,000 to developed technology, $160,000 to established workforce,
$280,000 to trademarks, and $1,187,300 to goodwill. The value and estimated
lives of the identified intangible assets was determined by a third-party
valuation. The intangible assets are being amortized over their estimated useful
lives of four years.
(4) INTANGIBLE ASSETS
Intangible assets consists of the following as of September 30, 1999:
Goodwill $ 10,602,135
Acquired Technology 140,000
Established Workforce 160,000
Trademarks 280,000
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Total 11,182,135
Less: Accumulated Amortization (984,506)
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TOTAL $ 10,197,629
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(5) NOTES PAYABLE - RELATED PARTY
$100,000 is payable to a director of the Company, and consists of two secured
promissory notes, each for $50,000 bearing interest at 10% and due in July and
September of 1999, dated on January 26, 1999 and April 15, 1999, respectively.
On October 11, 1999, the Company received an extension on these notes payable
aggregating $100,000 until December 31, 1999.
These notes are fully collateralized by all real and personal property of the
Company. In conjunction with these notes, the Company granted the director fully
vested options to purchase a total of 200,000 shares of common stock at $0.50
per share. Prior to it's reverse merger with E-Taxi, the Company recorded the
difference between the market value of the options on the date of grant and the
exercise price, totaling $125,000, as a non-cash financing expense associated
with these options.
$67,000 is payable to an officer of the Company and consists of the following:
Secured Promissory Note $ 50,000 10% interest
Promissory Note 10,000 12% interest
Promissory Note 7,000 12% interest
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TOTAL $ 67,000
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These notes are payable within three days of demand. The secured promissory note
is fully collateralized by all real and personal property of the Company. In
conjunction with these notes, the Company granted the officer fully vested
options to purchase a total of 100,000 shares of common stock at $.60 per share.
Prior to it's reverse acquisition with E-Taxi, the Company recorded the
difference between the market value of the options on the date of grant and the
exercise price, totaling $33,000, as a non-cash financing expense associated
with these options.
As of September 30, 1999 the Company has accrued $11,600 in interest payable on
these five promissory notes.
(6) EMPLOYMENT CONTRACTS
The Company has employment contracts with two officers of one of its wholly
owned subsidiaries. These contracts are for a term of five years. Under the
terms of the contracts, the two officers are each eligible for cash performance
bonuses based on the subsidiary's revenue and earnings before interest, taxes
and deprecation ("EBITD"), up to a maximum of 100% of their base salary. The
base salary of $75,000 is subject to review and adjustment annually. In
addition, each officer is entitled to a $500 per month automobile allowance. In
connection with these employment agreements, the Company also granted each of
the two officers a Restricted Stock Award for 500,000 shares each which vest
100% on March 31, 2000 subject to continued employment and attainment of certain
revenue and EBITD targets. Because the likelihood of attainment of the targets
is considered by management to be remote, these shares have not been issued as
of September 30, 1999 and no expense has been recorded associated with these
shares.
(7) PRIVATE PLACEMENT - COMMON STOCK SUBSCRIBED
On July 16, 1999, the Company commenced a private offering (the "Offering") of
up to 1,200,000 shares of its Common Stock (each a "Share" and collectively the
"Shares"). The Offering was being conducted under the exemptions from the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
provided by Section 4(2) of the Act and the provisions of Rule 506 of Regulation
D. Sales of the Shares were made only to "accredited investors," as such term
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is defined in Rule 501(a) under the Act. The Shares were being offered at a
purchase price of $3.875 per share and on a "best efforts all or none" basis
with respect to the first 400,000 Shares (the "Minimum Offering"), and on a
"best efforts" basis thereafter with respect to the remaining 800,000 Shares
(the "Maximum Offering"). The Offering was originally scheduled to terminate on
August 30, 1999, but was extended at the option of the Company. Subscriptions
for less than 20,000 Shares (or $77,550) may be accepted at the discretion of
the Company. Upon completion of the Minimum Offering and the Maximum Offering,
the Company expects to receive gross proceeds of approximately $1,550,000 and
$4,650,000, respectively, before deducting commissions (placement agent) and
expenses of the Offering (consisting of accounting and legal fees, "blue sky"
fees and other related expenses). The Company completed an initial closing of
the Offering on October 12, 1999, recording initial proceeds of approximately
$2,884,000, of which $2,690,124 has been classified as Restricted Cash and
Stockholders' Equity on the Company's Balance Sheet as of September 30, 1999.
Following the closing, the Company removed the "Restricted Cash" classification
from the proceeds of the Offering. The proceeds of the Offering will be used to
fund working capital needs of the Company and its subsidiaries. (See Subsequent
Events Note 11B).
(8) NEW AUTHORITATIVE PRONOUNCEMENTS
The FASB has had on its agenda a project to address certain practice issues
regarding Accounting Principles Board ["APB"] Opinion No. 25, "Accounting for
Stock Issued to Employees." The FASB plans on issuing various interpretations of
APB Opinion No. 25 to address these practice issues. The proposed effective date
of these interpretations would be the issuance date of the final Interpretation,
which is expected to be in early 2000. If adopted, the Interpretation would be
applied prospectively but would be applied to plan modification and grants that
occur after December 15, 1998. The FASB's tentative interpretations are as
follows:
* APB Opinion No. 25 has been applied in practice to include in its
definition of employees, outside members of the board or directors and
independent contractors. The FASB's interpretation of APB Opinion No. 25
will limit the definition of an employee to individuals who meet the common
law definition of an employee [which also is the basis for the distinction
between employees and nonemployees in the current U.S. tax code]. Outside
members of the board of directors and independent contractors would be
excluded from the scope of APB Opinion No. 25 unless they qualify as
employees under common law. Accordingly, the cost of issuing stock options
to board members and independent contractors not meeting the common law
definition of an employee will have to be determined in accordance with
FASB Statement No. 123, "Accounting for Stock-Based Compensation," and
usually recorded as an expense in the period of the grant [the service
period could be prospective, however, depending on the terms of the
options].
* Options [or other equity instruments] of a parent company issued to
employees of a subsidiary should be considered options, etc. issued by the
employer corporation in the consolidated financial statements, and,
accordingly, APB Opinion No. 25 should continue to be applied in such
situations. This interpretation would apply to subsidiary companies only;
it would not apply to equity method investees or joint ventures.
* If the terms of an option [originally accounted for as a fixed option] are
modified during the option term to directly change the exercise price, the
modified option should be accounted for as a variable option. Variable
grant accounting should be applied to the modified option from the date of
the modification until the date of exercise. Consequently, the final
measurement of compensation expense would occur at the date of exercise.
The cancellation of an option and the issuance of a new option with a lower
exercise price shortly thereafter [for example, within six months] to the
same individual should be considered in substance a modified [variable]
option.
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* Additional interpretations will address how to measure compensation expense
when a new measurement date is required.
(9) PENDING ACQUISITION
As of June 14, 1999, the Company's wholly owned subsidiary, E-Taxi entered into
(i) a Stock Purchase Agreement (the "Stock Purchase Agreement") with all of the
shareholders of SSPS, Inc., a California corporation ("SSPS"), pursuant to which
E-Taxi has agreed to purchase, and the shareholders of SSPS have agreed to sell,
approximately 94.6% of the outstanding shares of capital stock of SSPS, and (ii)
a Membership Interest Purchase Agreement with all of the members of Impact Team
International, LLC, a California limited liability company and an affiliate of
SSPS ("Impact"), pursuant to which E-Taxi has agreed to purchase, and the
members of Impact have agreed to sell, all of the outstanding membership
interests of Impact. SSPS, and its operating divisions TRISTEP, GIG2GIG.COM, and
IT WORLDNET.COM, and Impact, provide short term and long term temporary
workforce solutions primarily to rapidly growing technology firms.
The closing of the transactions contemplated by the Stock Purchase Agreement and
the Membership Interest Purchase Agreement (the "Closing") are subject to the
satisfaction of certain conditions, including without limitation, the execution
and delivery of employment agreements with certain members of the senior
management team of SSPS, the release of a principal stockholder of SSPS of his
guaranty of certain indebtedness of SSPS, the waiver of certain rights of first
refusal to purchase the shares of SSPS capital stock owned by a principal
stockholder, the termination and release of certain obligations of SSPS under
existing employment agreements and other customary conditions to closing. At the
Closing, the Company will issue approximately 2.9 million shares of its Common
Stock and pay cash and notes of approximately $1.5 million for SSPS. The Company
has also agreed to provide the sellers of the SSPS shares and the Impact
interests with demand and piggyback registration rights. It is presently
anticipated that the Company's acquisition of SSPS and Impact will close second
quarter of fiscal 2000 (See Subsequent Events Note 11D).
(10) NEW SUBSIDIARIES AND OTHER AGREEMENTS
On August 12, 1999, TopTeam, Inc., a newly formed subsidiary of the Company
("TopTeam"), entered into letters of intent with Full Moon Interactive Group,
Inc. and Orrell Communications, Inc., and on September 7, 1999, TopTeam entered
into letters of intent with Paradigm 3 Marketing, De Vries Data Systems, Inc.,
Image Network and Muccino Design Group, Inc. Under the letters of intent, it is
contemplated that together the Company and TopTeam will acquire all of the
outstanding capital stock of these interactive architect companies in exchange
for the payment of cash and the issuance of shares of common stock of both the
Company and TopTeam. The closing of each of the proposed transactions is subject
to the completion of legal, business and accounting due diligence and the
execution and delivery of definitive acquisition agreements.
In August 1999, Office Express, Inc. a newly formed subsidiary of the Company,
began its operations to sell office products and supplies through its Web site.
(11) SUBSEQUENT EVENTS
(A) SALE OF SUBSIDIARY - MEDICAL MARKETPLACE - On October 12, 1999, the Company
entered into a definitive agreement to sell 100% of its interest in Medical
Marketplace to a third party effective July 1, 1999 for $65,000 in cash and
notes. In connection with the sale of the capital stock of Medical Marketplace,
the Company received $40,000 in cash and a promissory note in the aggregate
principal amount of $25,000. The note is secured by the assets and stock of
Medical Marketplace and bears interest at a rate of 8% per annum. Interest and
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principal shall be paid quarterly commencing on January 1, 2000 in eleven (11)
payments of two thousand eighty five dollars ($2,085) (with the twelfth and
final payment being in the amount of $2,065) plus interest on the outstanding
balance. In addition, in the event that (i) the Company receives not less than
$225,000 in proceeds from a specified account receivable (the "Specified
Receivable") or (ii) all liabilities of Medical Marketplace have terminated to
the satisfaction of Seller, the obligations to the Company under the Note shall
be deemed satisfied in full. Further, the outstanding principal amount of the
Note shall be reduced (i) proportionately based upon the proceeds received by
the Company with respect to the Specified Receivable divided by $225,000 and
(ii) to the extent that Medical Marketplace incurs any tax liabilities from the
non-payment of taxes by Medical Marketplace prior to June 30, 1999, subject to
certain limitations. Because of the uncertainties surrounding ultimate
collection of the $25,000 note, the full amount of the note has been reserved
for as of September 30, 1999.
(B) SUBSCRIPTION FOR COMMON STOCK - On July 16, 1999, the Company commenced a
private offering (the "Offering") of up to 1,200,000 shares of its Common Stock
(each a "Share" and collectively the "Shares"). In connection with this
Offering, the Company received $2,690,124 as of September 30, 1999, which has
been classified as Restricted Cash and Stockholders' Equity on the accompanying
Balance Sheet. During the period October 1 through November 30, 1999 the Company
received additional proceeds of approximately $511,500 which will be used for
the working capital needs of the Company and its subsidiaries (see Note 7).
(C) EXECUTION OF DEFINITIVE AGREEMENTS TO ACQUIRE INTERACTIVE ARCHITECT FIRMS -
On November 15, 1999, the Company announced that it and its newly formed
subsidiary, TopTeam, Inc. had entered into definitive agreements to acquire five
leading internet consulting companies - Full Moon Interactive Group, Inc.,
Orrell Communications, Inc., Devries Data Systems, Inc. Muccino Design Group,
Inc. and Image Network, Inc. (collectively, the "Interactive Architect Firms").
Under the Stock Purchase and Contribution Agreements, i) TopTeam will own all of
the outstanding capital stock of the Internet Architect Firms; and ii)
eMarketplace will own approximately 50% of the total TopTeam shares outstanding,
exclusive of eMarketplace's rights to purchase 3.6 million shares of common
stock of TopTeam at $7.50 per share. The closing of the proposed transactions is
subject to the satisfaction of customary conditions.
(D) POSSIBLE CHANGE IN ACQUISITION PLANS - The Company has learned that SSPS,
Inc. has experienced a recent slowdown in its operations, resulting in an
increase in its current liabilities. As a direct consequence, the Company is
reconsidering proceeding with the SSPS Stock Purchase Agreement or,
alternatively, restructuring the terms of such an acquisition (See Note 9).
12
<PAGE>
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
- --------------------------------------------------------------------------------
FORWARD LOOKING STATEMENTS
The following Management's Discussion and Analysis contains
forward-looking statements, which involve risks and uncertainties. The Company's
actual results may differ materially from those anticipated in these
forward-looking statements as a result of the acquisition of TechStore and
E-taxi, and the proposed acquisition of SSPS, which is expected to close during
the second quarter of fiscal 2000, and other factors, including, without
limitation, those risk factors set forth under "Risk Factors" in the Company's
Annual Report on Form 10-KSB.
OVERVIEW
eMarketplace, Inc. (the "Company") consists of eMarketplace, Inc. and
its subsidiaries. Until April 1999, the Company was primarily in engaged in the
purchase and sale of new and used computer equipment, and through its Medical
Marketplace, Inc. subsidiary, the purchase and sale of used medical equipment.
In April 1999, the Board of Directors, in connection with their shift in
business strategy, announced its intention to divest of Medical Marketplace,
resulting in the classification of the business as a discontinued operation, and
was reflected as disposed of at the time of the merger with E-Taxi.
In April 1999, the Company adopted a new corporate strategy focused on
developing, acquiring and operating Internet businesses by acquiring E-Taxi,
Inc. ("E-Taxi"). The Company is presently pursuing a business plan to become an
Internet holding company engaged primarily in the development and operation of a
network of Internet properties ("Portfolio Companies") that provide content,
commerce and online services to demographically-targeted audiences.
On April 23, 1999, the Company acquired E-Taxi, which is accounted for
as a "reverse acquisition." As consideration for the 9,074,000 shares of
E-Taxi's common stock and 400,000 shares of the E-Taxi's Series A Preferred
Stock, the Company issued an aggregate of 9,074,000 shares of common stock, par
value $.0001 per share, and 400,000 shares of Series A Preferred Stock, par
value $.0001 per share. For accounting purposes, E-Taxi is deemed to be the
acquirer, and the Company is deemed to be acquired, under the purchase method of
accounting. Therefore, the financial information presented herein represents the
historical results of E-Taxi and the results of the Company from April 23, 1999
(date of acquisition) only. E-Taxi was incorporated in the State of Delaware on
April 14, 1998 to develop a vertical Internet portal for the small office, home
office ("SOHO") market.
Immediately prior to the closing of the E-Taxi Acquisition, E-Taxi
closed (i) a private offering of its shares of preferred stock and common stock
raising an aggregate of approximately $1,400,000 and (ii) the acquisition of
TechStore. LLC, a California limited liability company ("TechStore"), is an
online retailer of computer hardware and software.
13
<PAGE>
The acquisition was accounted for as a purchase. The results of
operations include the results of TechStore from the date of acquisition.
As of June 14, 1999, E-Taxi entered into (i) a Stock Purchase Agreement
(the "Stock Purchase Agreement") with all of the shareholders of SSPS, Inc., a
California corporation ("SSPS"), pursuant to which E-Taxi has agreed to
purchase, and the shareholders of SSPS have agreed to sell, approximately 94.6%
of the outstanding shares of capital stock of SSPS, and (ii) a Membership
Interest Purchase Agreement with all of the members of Impact Team
International, LLC, a California limited liability company and an affiliate of
SSPS ("Impact"), pursuant to which E-Taxi has agreed to purchase, and the
members of Impact have agreed to sell, all of the outstanding membership
interests of Impact. SSPS, and its operating divisions TRISTEP, GIG2GIG.COM, and
IT WORLDNET.COM, and Impact, provide short term and long term temporary
workforce solutions primarily to rapidly growing technology firms.
The closing of the transactions contemplated by the Stock Purchase
Agreement and the Membership Interest Purchase Agreement (the "Closing") are
subject to the satisfaction of certain conditions, including without limitation,
the execution and delivery of employment agreements with certain members of the
senior management team of SSPS, the release of a principal stockholder of SSPS
of his guaranty of certain indebtedness of SSPS, the waiver of certain rights of
first refusal to purchase the shares of SSPS capital stock owned by a principal
stockholder, the termination and release of certain obligations of SSPS under
existing employment agreements and other customary conditions to closing. At the
Closing, the Company will issue approximately 2.9 million shares of its Common
Stock and pay cash and notes of approximately $1.5 million for SSPS. The Company
has also agreed to provide the sellers of the SSPS shares and the Impact
interests with demand and piggyback registration rights. However, the Company
has learned that SSPS, Inc. has experienced a recent slowdown in its operations,
resulting in an increase in its current liabilities. As a direct consequence,
the Company is reconsidering proceeding with the SSPS Stock Purchase Agreement
or, alternatively, restructuring the terms of such an acquisition.
In August 1999, the Company's newly formed subsidiary, Office Express,
Inc., launched its web site, WWW.OFFICEEXPRESS.COM. Offering over 20,000 brand
name office products, the site enables online customers to purchase office
products and supplies at competitive prices. Products are generally shipped for
next day delivery for most domestic US destinations and the site features
advanced online customer service features, including customer shopping lists,
which allows users to manage lists of frequently purchased items.
On August 12, 1999, TopTeam, Inc., a newly formed subsidiary of the
Company ("TopTeam"), entered into letters of intent with Full Moon Interactive
Group, Inc. and Orrell Communications, Inc., and on September 7, 1999, TopTeam
entered into letters of intent with Paradigm 3 Marketing, De Vries Data Systems,
Inc., Image Network and Muccino Design Group, Inc. Under the letters of intent,
it is contemplated that together the Company and TopTeam will acquire all of the
outstanding capital stock of these interactive architect companies in exchange
for the payment of cash and the issuance of shares of common stock of both the
Company and TopTeam. The closing of each of the proposed transactions is subject
to the completion of legal, business and accounting due diligence and the
execution and delivery of definitive acquisition agreements.
14
<PAGE>
RESULTS OF OPERATIONS
Because the Company had no revenues and nominal expenses for the
quarter ended September 30, 1998 (total operating expenses were $412), any
comparison of fiscal 2000 results to fiscal 1999 would not be meaningful and
have been excluded from the following discussion. The E-Taxi Acquisition was
accounted for as a reverse acquisition. The historical financial statements
reflect the operations of E-Taxi for all periods prior to April 1999. In
addition, any forward-looking information does not include the impact, if any,
of the proposed acquisition of SSPS or any other potential acquisitions
discussed above.
The Company may experience significant fluctuations in operating
results in future periods due to a variety of factors, including but not limited
to, the following factors which are discussed at more length elsewhere in this
Annual Report on Form 10-KSB:
- - The Company has incurred operating losses and there can be no assurance
that these losses will be reduced in the future.
- - The Company has a limited operating history on which to base estimates
of future performance.
- - The Company may need additional financing in order to carry out its
business plans.
- - The Company's business model is unproven and could fail.
- - The Company is dependent on continued growth of the Internet and
Internet infrastructure.
- - The completion of proposed acquisitions cannot be assured.
- - The Company must manage its growth and the integration of acquired
businesses, which diverts management's' attention from the day-to-day
operations of existing businesses.
- - Competition for Internet products and services is intense.
- - Some of the Company's businesses may be dependent on the efficient and
uninterrupted operation of their computer and communications hardware
systems.
- - The market in which the Company operates is subject to rapid
technological change, which could render the Company's products and
services obsolete.
QUARTER ENDED SEPTEMBER 30, 1999
NET LOSS
The Company recorded a net loss of $1,380,099 for the quarter ended
September 30, 1999 because the revenue generated was not sufficient to cover
cost of revenues and expenses generated. Management believes that (i) the
discontinuation of its computer resale operations; (ii) the divestiture of
Medical Marketplace; (iii) the operations of TechStore for a complete 12 month
period; and (iv) interest income resulting from interest on financing proceeds
15
<PAGE>
could result in improved profitability. There can be no assurance that the
Company will be successful in reducing net losses.
REVENUE
Total revenue for the quarter ended September 30, 1999 was $2,882,249,
which consists almost exclusively of revenue from the sale of computer hardware
and software and consumer electronics by the Company's wholly owned subsidiary,
TechStore, through its web site. Revenue is expected to increase in fiscal 2000
with the continued growth of TechStore's business. However, the Company may not
be successful in growing these businesses, in which case, its revenues and
operations would be harmed.
COST OF REVENUE
Total cost of revenue for the quarter ended September 30, 1999 was
$2,677,629 or 92.9% of revenue. Cost of revenue includes the cost of product
sold, credit card processing fees and freight costs. The Company utilizes vendor
drop-shipments directly to customers, and therefore does not maintain inventory.
The Company expects margins to remain low in the near future as it uses
competitive pricing as a means to obtain increased economies of scale.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Total selling, general and administrative expenses for the quarter
ended September 30, 1999 were $914,281 or 31.7% of revenue. Selling, general and
administrative expenses consist of salaries and other personnel related
expenses, facilities related expenses, legal and other professional fees,
advertising costs and travel expenses. The fiscal quarter ended September, 1999
also included $364,892 in non-cash expenses associated with stock options issued
to an accounting consultant, warrants issued to a business advisor and stock
issued to minority investors in a Consolidated Subsidiary in exchange for
services valued at $20,000. The Company expects to incur approximately $80,000
per quarter for six more quarters for the amortization of the deferred
compensation associated with the warrant. Selling, general and administrative
expenses over the next year will include the expenses of TechStore for a full
year, advertising expenses to market the Company's expanded product offerings,
administrative expenses associated with conforming to public reporting
requirements of the Company, and expenses associated with the Company's
acquisition and expansion strategy discussed in the "Business" section of the
Company's annual report on Form 10-KSB as filed with the Securities and Exchange
Commission.
PRODUCT DEVELOPMENT EXPENSES
Product development expenses were $99,167 for the quarter ended
September 30, 1999. Product development expenses consist of personnel and
related expenses associated with the development of the Company's web sites, and
is expected to increase over the remainder of the year.
16
<PAGE>
AMORTIZATION OF GOODWILL AND OTHER ACQUIRED INTANGIBLES
During the fourth quarter of fiscal 1999, the Company incurred $580,332
in amortization expenses associated with the acquisition of TechStore and the
reverse merger between the Company and E-Taxi. The intangible assets associated
with these acquisitions, consisting in total of $10,602,135 in goodwill,
$140,000 in acquired technology $160,000 in established workforce and $280,000
in trademarks, are being amortized over their estimated useful lives of four to
five years. In the event that the Company continues to acquire other companies,
amortization of acquisitions will continue to have an impact on the Company's
results of operations in the future. Based on acquisitions completed as of
September 30, 1999, and assuming no impairment of the value resulting in an
acceleration of the amortization, future amortization will reduce net income
from operations by approximately $2.3 million in each fiscal year 2000 through
2003, and $1.4 million in 2004. If the Company completes additional acquisitions
in the future, this will likely result in additional amortization charges of the
resulting goodwill from the acquisition.
INTEREST INCOME AND EXPENSE
Interest expense, net of interest income, was $9,120 for the quarter
ended September 30, 1999. Interest expense related primarily to interest on
loans to the Company and interest income resulted primarily from interest earned
on the remaining balance of the $1.4 million proceeds on the private placement
completed by E-Taxi in April 1999.
VARIABILITY OF PERIODIC RESULTS AND SEASONALITY
Results from any one period cannot be used to predict the results for
other fiscal periods. Revenues fluctuate from period to period, however,
management does not see any seasonality or predictability to these fluctuations.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1999, the Company had a cash balance of $810,942 and
working capital of $2,318,572. The primary source of working capital to the
Company during the quarter ended September 30, 1999 was the proceeds of
approximately $2.7 million from Subscription for the Company's Common Stock
received in connection with the Private Placement. Of the Company's $1,255,966
cash balance at June 30, 1999, $418,790 was used to fund current operations,
$14,067 was used to acquire fixed assets and $12,167 was used to repay loans
assumed in acquisitions. The Company believes that its projected cash flow from
operations, cash balances as of September 30, 1999 of approximately $800,000,
and the proceeds from the Company's subsequent capital raising activities will
be sufficient to meet the working capital needs of the Company through June 30,
2000.
The Company's principle commitments at September 30, 1999 consist of
monthly operating rental payments, compensation of employees and accounts and
notes payable. Also, at the closing of the proposed acquisition of SSPS, which
is anticipated to be in the second quarter of fiscal 2000, the Company has
committed to pay cash and notes of approximately $1.5 million for SSPS.
17
<PAGE>
On July 16, 1999, the Company commenced a private offering (the
"Offering") of up to 1,200,000 shares of its common stock (each a "Share" and
collectively the "Shares"). The Offering is being conducted under an exemption
from the registration requirements of the Securities Act of 1933, as amended
(the "Act"), provided by Section 4(2) of the Act and the provisions of Rule 506
of Regulation D. Sales of the Shares will be made only to "accredited
investors," as such term is defined in Rule 501(a) under the Act. The Shares are
being offered at a purchase price of $3.875 per share and on a "best efforts all
or none" basis with respect to the first 400,000 Shares (the "Minimum
Offering"), and on a "best efforts" basis thereafter with respect to the
remaining 800,000 Shares (the "Maximum Offering"). The Offering was originally
scheduled to terminate on August 30, 1999, but has been extended at the option
of the Company. Subscriptions for less than 20,000 Shares (or $77,550) may be
accepted at the discretion of the Company. Upon completion of the Minimum
Offering and the Maximum Offering, the Company expects to receive gross proceeds
of approximately $1,550,000 and $4,650,000, respectively, before deducting
commissions (placement agent) and expenses of the Offering (consisting of
accounting and legal fees, "blue sky" fees and other related expenses). On
October 12, 1999, the Company conducted an interim closing receiving gross
proceeds of $2,883,872 from the sale of 744,225 shares of Common Stock. The
proceeds of the Offering will be used to fund the working capital needs of the
Company and its subsidiaries.
The Company will rely upon its projected cash flow from operations and
additional debt and equity financing for its long-term capital needs.
YEAR 2000 COMPLIANCE
Many currently installed computer systems are not capable of
distinguishing 21st century dates from 20th century dates or have been
programmed with default dates ending in 99, the common two-digit reference for
1999. As a result, as the Company transitions from the 20th century to the 21st
century, computer systems and used by many companies and organizations in a wide
variety of industries will produce erroneous results or fail unless they have
been modified or upgraded to process date information correctly. Significant
uncertainty exists concerning the scope and magnitude of problems associated
with the year 2000 issue.
STATE OF READINESS. Although the Company has not conducted a formal
audit internally or by any third party, based on its current assessment, the
Company believes its internal systems are year 2000 compliant. The Company has
confirmed that the accounting systems used by it and its wholly owned
subsidiaries are year 2000 compliant. However, such a review has not yet been
completed on potential acquisition targets. The Company is beginning to
communicate with its significant suppliers to determine their year 2000
readiness. The Company has not completed its year 2000 investigation and overall
compliance initiative.
COSTS. To date, the Company has not incurred any material costs
directly associated with its year 2000 compliance efforts, except for
compensation expenses associated with its salaried employees who have devoted
some of their time to the year 2000 assessment. The Company does not expect the
total cost of year 2000 problems to be material to its business. During the
18
<PAGE>
months prior to the century change, the Company will continue to evaluate new
software and information systems provided to it by third parties and any new
infrastructure systems that the Company acquires to determine whether they are
year 2000 compliant. Despite the Company's current assessment, the Company may
not identify and correct all significant year 2000 problems on a timely basis.
Year 2000 compliance efforts may involve significant time and expense and
unremediated problems could substantially harm its business. The Company
currently has no contingency plans to address the risks associated with
unremediated year 2000 problems.
RISKS. The Company is not currently aware of any year 2000 readiness
problems relating to its internally developed proprietary systems that would
substantially harm its business. The Company may discover year 2000 readiness
problems in these systems that will require substantial revision. In addition,
third-party software, hardware or services incorporated into the Company's
material systems may need to be revised or replaced, all of which could be
time-consuming and expensive. The Company's failure to fix or replace its
internally developed proprietary software or third-party software, hardware or
services on a timely basis could result in lost revenues, increased operating
costs, the loss of customers and other business interruptions, any of which
could substantially harm the Company's business. In addition, governmental
agencies, utility companies, Internet access companies, third-party service
providers and others outside of the Company's control may not be year 2000
ready. The failure by these entities to be year 2000 ready could result in a
systemic failure beyond the Company's control, such as a prolonged Internet,
telecommunications or electrical failure, which could also prevent the Company
from delivering goods to the Company's customers, decrease the use of the
Internet or prevent users from accessing the Company's web sites.
In particular, the Company has identified the following vendors and
service providers as significant to its business: Wells Fargo Bank for credit
card processing, Masterlink, Inc. for Internet services, Tech Data Corporation
for inventory and Deutsche Financial Services for banking and financing
services. The Company has not yet received any written assurance from these
vendors and service providers as to their readiness for year 2000 issues.
However, the Company does monitor the progress of these companies in their year
2000 preparations by reviewing their respective web sites, each of which
contains detailed information about their year 2000 preparations. Because the
Company has not received written assurances, the Company has assumed that these
vendors and services may not be ready for the year 2000 before January 1, 2000,
and that their processing capabilities could fail at that time. Based on this
assumption, the Company believes such a failure would be the most reasonably
likely worst case year 2000 scenarios. If the credit card service fails, the
Company would seek to complete credit card transaction manually using temporary
staff. If service were not restored promptly, the Company believes switching to
another financial institution for automated credit card processing would require
approximately 15 days. Similarly, finding alternative vendors for inventory, web
site hosting and banking could take approximately 15 to 30 days.
CONTINGENCY PLAN. As discussed above, the Company is engaged in an
ongoing year 2000 assessment and has not yet developed any contingency plans.
19
<PAGE>
ABSENCE OF DIVIDENDS
The Company has never declared or paid, nor does it intend to pay in the
foreseeable future, cash dividends on its Common Stock, but intends instead to
retain any future earnings to finance expansion and operations.
20
<PAGE>
- --------------------------------------------------------------------------------
PART II. OTHER INFORMATION
- --------------------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
At September 30, 1999, the Company had a cash balance of $810,942 and working
capital of $2,318,572. The primary source of working capital to the Company
during the quarter ended September 30, 1999 was the proceeds of approximately
$2.7 million from Subscription for the Company's Common Stock received in
connection with the Private Placement. Of the Company's $1,255,966 cash balance
at June 30, 1999, $418,790 was used to fund current operations, $14,067 was used
to acquire fixed assets and $12,167 was used to repay loans assumed in
acquisitions. The Company believes that its projected cash flow from operations,
cash balances as of September 30, 1999 of approximately $800,000, and the
proceeds from the Company's subsequent capital raising activities will be
sufficient to meet the working capital needs of the Company through June 30,
2000.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 12, 1999, the Company received written consents in lieu of a meeting
of stockholders from holders of 6,873,734 shares of Common Stock representing
approximately 51.6% of the total issued and outstanding shares of voting stock
of the Company approving (i) the adoption of the Company's 1999 Stock Plan and
(ii) an amendment to the Company's Certificate of Incorporation changing the
Company's name to "eMarketplace, Inc."
ITEM 5. OTHER INFORMATION
Not applicable.
21
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.01 Financial data schedule (EDGAR only)
(b) Reports on Form 8-K
1. The Company filed a Current Report on Form 8-K on July 6,
1999 in regards to the proposed acquisition of SSPS, Inc.
by E-Taxi (Item 5).
2. The Company filed a Current Report on Form 8-K/A on July
9, 1999 amending its report on Form 8-K dated April 23,
1999 (Item 7).
3. The Company filed a Current Report on Form 8-K on August
11, 1999 regarding the change of the Company's name from
Computer Marketplace, Inc. to eMarketplace, Inc. (Item 5).
22
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURE
- --------------------------------------------------------------------------------
In accordance with the requirements of the Securities Exchange Act, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
EMARKETPLACE, INC.
Date: December 15, 1999 By: /s/ L. WAYNE KILEY
----------------------------------------
L. Wayne Kiley
President, Chief Executive Officer,
(Chief Accounting Officer) and Director
23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
eMarketplace's quarterly report on Form 10QSB/A for the quarter ended September
30, 1999 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000900475
<NAME> EMARKETPLACE, INC.
<MULTIPLIER> 1
<CURRENCY> USD USD
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> JUN-30-2000 JUN-30-1999
<PERIOD-START> JUL-01-1999 JUL-01-1998
<PERIOD-END> SEP-30-1999 SEP-30-1998
<EXCHANGE-RATE> 1 1
<CASH> 810,942 0
<SECURITIES> 0 0
<RECEIVABLES> 81,857 0
<ALLOWANCES> (5,032) 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 3,905,891 0
<PP&E> 352,525 0
<DEPRECIATION> (300,572) 0
<TOTAL-ASSETS> 14,281,980 0
<CURRENT-LIABILITIES> 1,587,319 8,383
<BONDS> 0 0
0 0
0 0
<COMMON> 1,269 646
<OTHER-SE> 12,693,392 (9,029)
<TOTAL-LIABILITY-AND-EQUITY> 14,281,980 0
<SALES> 2,882,249 0
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<CGS> 2,677,629 0
<TOTAL-COSTS> 4,271,409 412
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 11,908 0
<INCOME-PRETAX> (1,380,099) 718
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,380,099) 718
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,380,099) 718
<EPS-BASIC> (0.11) 0.00
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