<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 2000
[_] 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 0-25790
IDEAMALL, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-4518700
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2555 West 190th Street
Torrance, California 90504
(address of principal executive offices)
(310) 354-5600
(Registrant's telephone number, including area code)
Indicated 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 [_]
There were 10,425,425 outstanding shares of Common Stock at August 11, 2000.
1
<PAGE>
IDEAMALL, INC.
INDEX TO FORM 10-Q
PART I-FINANCIAL INFORMATION Page
----
Item 1 - Financial Statements
Consolidated Balance Sheet................................................. 3
Consolidated Statement of Operations....................................... 4
Consolidated Statement of Cash Flows....................................... 5
Condensed Notes to Consolidated Financial Statements....................... 6
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations..................................................... 8
Item 3 - Quantitative and Qualitative Disclosures about Market Risk........ 11
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders............... 12
Item 5 - Other Information................................................. 12
Item 6 - Exhibits and Reports on Form 8-K.................................. 12
SIGNATURE.................................................................. 13
2
<PAGE>
ITEM 1 FINANCIAL STATEMENTS
IDEAMALL, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
<TABLE>
<CAPTION>
June 30, 2000
(unaudited) December 31, 1999
------------- ------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 3,835 $ 24,326
Accounts receivable, net of allowance for doubtful accounts 45,917 47,618
Inventories 26,799 39,359
Prepaid expenses and other current assets 4,094 2,962
Income tax refund receivable 177 177
Notes receivable - 3,331
Deferred income taxes 2,047 2,047
-------- --------
Total current assets 82,869 119,820
Property, plant and equipment, net 15,988 14,569
Goodwill, net 11,576 11,836
Deferred income taxes 3,738 3,738
Other assets 47 42
-------- --------
$114,218 $150,005
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 44,546 $ 86,609
Accrued expenses and other current liabilities 15,221 14,366
Line of credit 14,535 -
Capital leases - current portion 573 142
Notes payable - current portion 6 6
-------- --------
Total current liabilities 74,881 101,123
Capital leases 942 136
Notes payable 144 148
-------- --------
Total liabilities 75,967 101,407
-------- --------
Stockholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares
authorized; none issued and outstanding - -
Common stock, $.001 par value; 15,000,000 shares
authorized; 10,416,726 and 10,404,069 shares issued 11 11
Additional paid-in capital 74,366 74,337
Treasury stock, at cost: 15,000 shares (91) (91)
Retained earnings (accumulated deficit) (36,035) (25,659)
-------- --------
Total stockholders' equity 38,251 48,598
-------- --------
$114,218 $150,005
======== ========
</TABLE>
See condensed notes to consolidated financial statements.
3
<PAGE>
IDEAMALL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited, in thousands except per share data)
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, June 30,
-------------------------- ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $194,725 $161,535 $433,182 $337,824
Cost of goods sold 173,722 142,553 389,175 298,804
-------- -------- -------- --------
Gross profit 21,003 18,982 44,007 39,020
Selling, general and administrative expenses 24,325 19,033 54,211 38,394
-------- -------- -------- --------
Income (loss) from operations (3,322) (51) (10,204) 626
Interest income (expense), net (208) 13 (172) (38)
-------- -------- -------- --------
Income (loss) before income taxes (3,530) (38) (10,376) 588
Income tax provision - 239 - 477
-------- -------- -------- --------
Income (loss) from continuing operations (3,530) (277) (10,376) 111
Loss from discontinued operations - (3,555) - (6,240)
-------- -------- -------- --------
Net income (loss) $ (3,530) $ (3,832) $(10,376) $ (6,129)
======== ======== ======== ========
Earnings (loss) per share
Continuing operations $ (0.34) $ (0.03) $ (1.00) $ 0.01
Discontinued operations - (0.34) - (0.60)
-------- -------- -------- --------
$ (0.34) $ (0.37) $ (1.00) $ (0.59)
======== ======== ======== ========
Diluted earnings (loss) per share
Continuing operations $ (0.34) $ (0.03) $ (1.00) $ 0.01
Discontinued operations - (0.34) - (0.60)
-------- -------- -------- --------
$ (0.34) $ (0.37) $ (1.00) $ (0.59)
======== ======== ======== ========
Basic weighted average number of
shares outstanding 10,411 10,391 10,409 10,365
======== ======== ======== ========
Diluted weighted average number of
shares outstanding 10,411 10,391 10,409 10,365
======== ======== ======== ========
</TABLE>
See condensed notes to consolidated financial statements.
4
<PAGE>
IDEAMALL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
For the six months ended
June 30,
------------------------
2000 1999
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(10,376) $(6,129)
Adjustments to reconcile net income (loss) to net cash
(used in)/provided by operating activities:
Depreciation and amortization 2,901 2,328
Provision for deferred income taxes - 360
Loss from discontinued operations - 6,240
Changes in assets and liabilities, net of divestiture:
Accounts receivable 1,701 (1,988)
Inventories 11,269 20,098
Prepaid expenses and other current assets 1,636 (104)
Other assets (5) 86
Accounts payable (42,063) (8,196)
Accrued expenses and other current liabilities (673) (1,608)
-------- -------
Total adjustments (25,234) 17,216
-------- -------
Net cash (used in)/provided by operating activities (35,610) 11,087
-------- -------
Cash flows from investing activities:
Collection of notes receivable 3,331 -
Purchase of property, plant and equipment (2,698) (2,179)
-------- -------
Net cash provided by /(used in) investing activities 633 (2,179)
-------- -------
Cash flows from financing activities:
Net payments under notes payable (4) (4)
Net borrowings under line of credit 14,535 -
Principal payments of obligations under capital leases (74) (128)
Proceeds from stock issued under stock option plans 29 843
-------- -------
Net cash provided by financing activities 14,486 711
-------- -------
Net (decrease)/increase in cash and cash equivalents (20,491) 9,619
Cash and cash equivalents:
Beginning of the period 24,326 6,442
-------- -------
End of the period $ 3,835 $16,061
======== =======
</TABLE>
See condensed notes to consolidated financial statements.
5
<PAGE>
IDEAMALL, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The consolidated interim financial statements include the accounts of
IdeaMall, Inc., a Delaware corporation, (formerly Creative Computers, Inc.)
and its wholly owned subsidiaries (the Company) and have been prepared
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such regulations. These financial statements should be read in
conjunction with the audited financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999.
In the opinion of management, the accompanying financial statements contain
all adjustments necessary to present fairly the financial position of the
Company at June 30, 2000 and 1999 and the results of operations and cash
flows for the three and six months ended June 30, 2000 and 1999. The results
of operations for the interim periods are not necessarily indicative of the
results of operations for the full year.
Certain reclassifications have been made to the 1999 financial statements to
conform to the 2000 presentation.
2. Discontinued Operations
On December 9, 1998, uBid, Inc., a subsidiary of the Company at that time,
completed an initial public offering (the Offering) of 1,817,000 shares of
common stock. The shares sold to the public in the offering represented
approximately 19.9% of uBid's outstanding common stock. On June 7, 1999,
the Company divested its ownership in uBid by means of a tax-free
distribution of all of its remaining 7.3 million shares of uBid common stock
to the Company's shareholders of record as of May 24, 1999. In accordance
with Accounting Principles Board Opinion No. 30, "Reporting the Results of
Operations," uBid's revenues and expenses have been excluded from the
Company's consolidated revenues and expenses from continuing operations.
uBid's operating results, net of taxes, have been reported as a separate
line item on the Company's consolidated statement of operations under the
caption "Loss from discontinued operations". Net sales for the discontinued
segment were $64.8 million for the period beginning January 1, 1999 and
ending June 7, 1999.
3. Net Income (Loss) Per Share
Basic Earnings Per Share (EPS) excludes dilution and is computed by dividing
net income (loss) by the weighted average number of common shares
outstanding during the reported periods. Diluted EPS reflects the potential
dilution that could occur under the treasury stock method if stock options
and other commitments to issue common stock were exercised. The computation
of Basic and Diluted EPS is as follows:
6
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
------- ------- -------- -------
(in thousands except per share data)
Net income (loss) $(3,530) $(3,832) $(10,376) $(6,129)
======= ======= ======== =======
Weighted average shares - Basic 10,411 10,391 10,409 10,365
------- ------- -------- -------
Weighted average shares-Diluted 10,411 10,391 10,409 10,365
======= ======= ======== =======
Net earnings/(loss) per share-Basic $ (0.34) $ (0.37) $ (1.00) $ (0.59)
======= ======= ======== =======
Net earnings/(loss) per share-Diluted $ (0.34) $ (0.37) $ (1.00) $ (0.59)
======= ======= ======== =======
</TABLE>
4. Segment Information
The Company operates in three reportable segments: 1) a direct marketer of
personal computers, hardware, software, peripheral products and consumer
electronics under the PCMall, MacMall, ComputAbility and CCIT brands,
collectively referred to as the "Core" Business; 2) a multi-category Internet
retailer under the eCOST.com brand, and 3) a portal for Linux-based products
and services provided under the eLinux brand, which commenced operations in
February 2000.
Summarized segment information from continuing operations for the three months
ended June 30, 2000 and 1999 is as follows (in thousands):
<TABLE>
<CAPTION>
Core
Business eCOST.com eLinux Consolidated
-------- ---------- ------ -------------
<S> <C> <C> <C> <C>
Three months ended
June 30, 2000
-------------------------
Net sales $164,660 $28,399 $1,666 $194,725
Gross profit 19,465 1,369 169 21,003
Income (loss)
from operations 357 (2,405) (1,274) (3,322)
Core
Business eCOST.com eLinux Consolidated
-------- --------- ------ ------------
Three months ended
June 30, 1999
-------------------------
Net sales $159,582 $ 1,953 $ - $161,535
Gross profit 18,988 (6) - 18,982
Income (loss) from
operations 618 (669) - (51)
Core
Business eCOST.com eLinux Consolidated
-------- --------- ------ ------------
Six months ended
June 30, 2000
-------------------------
Net sales $360,360 $70,667 $2,155 $433,182
Gross profit 41,744 2,051 212 44,007
Income (loss)
from operations 701 (8,785) (2,120) (10,204)
Core
Business eCOST.com eLinux Consolidated
-------- --------- ------ ------------
Six months ended
June 30, 1999
-------------------------
Net sales $335,870 $ 1,954 $ - $337,824
Gross profit 39,025 (5) - 390,220
Income (loss) from
operations 1,397 (771) - 626
</TABLE>
7
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview and Recent Developments
Net sales of the Company are primarily derived from the sale of personal
computer hardware, software, peripherals, accessories and consumer electronics
to large corporations, small businesses, home offices and individual consumers
through an outbound and inbound telemarketing sales force, the Internet, a
direct sales force, retail showrooms and direct response catalogs.
During 1999, the Company successfully completed a spin-off of its former
subsidiary, uBid, Inc., (uBid) to the Company's stockholders. Consistent with
its strategic focus on the Internet and business-to-business markets, the
Company formed a new subsidiary, eCOST.com, a multi-category Internet retail web
site, in February 1999. In December 1999, the Company formed a new subsidiary,
eLinux, to provide products, news, discussion groups, services and support to
the Linux community. eLinux commenced operations in February 2000. In June
2000, the Company changed its name from Creative Computers, Inc. to IdeaMall,
Inc.
Results of Operations
Unless otherwise stated, all comparisons are results which exclude uBid.
Three Months Ended June 30, 2000 Compared to the Three Months Ended June 30,
1999
Net sales for the quarter ended June 30, 2000 were $194.7 million, a 20.5%
increase over last year's second quarter. eCOST.com accounted for $28.4 million
of sales in the second quarter of 2000, and eLinux accounted for $1.7 million in
the same period. The increase in net sales for the quarter is primarily
attributable to a 54.0% increase in outbound business-to-business revenues and a
93.6% increase in Internet revenues. Net sales for eCOST.com for the three
months ended June 30, 2000 were $28 million, an increase of 1454% from the
comparable quarter of last year. For the core business, which excludes
eCOST.com and eLinux ("Core"), PC/WINTEL sales increased 8.5% for the three
months ended June 30, 2000, from the comparable period last year.
Apple/Macintosh-related sales decreased by 3.9% for the three months ended June
30, 2000, from the same period last year. PC/WINTEL sales represented 60% of
the core business sales for the quarter ended June 30, 2000, compared to 57% for
the same quarter last year.
Gross profit from continuing operations was $21.0 million for the three months
ended June 30, 2000, an increase of $2.0 million over the prior year comparable
quarter. For the Core, gross profit as a percentage of net sales was virtually
unchanged from 1999 at 11.8%, compared with 11.9% in the prior year. Including
eCOST.com and eLinux, gross profit as a percentage of net sales was 10.8%,
reflecting eCOST.com's larger share of consolidated sales. eCOST.com's gross
profit as a percentage of sales increased 4.8% from breakeven in 1999,
reflecting increased sales from higher margin product categories and a shift of
focus on profitability during the second half of Q2. The Company's gross profit
percentage may vary from quarter to quarter, depending on the continuation of
key vendor support programs, including price protections, rebates and return
policies and based on product mix, pricing strategies and other factors.
Selling, general and administrative expenses during the second quarter of 2000
increased by $5.3 million from the second quarter of 1999, due primarily to
advertising and brand development expenses associated with eCOST.com and eLinux.
Total selling, general and administrative expenses for the start-up subsidiaries
in the second quarter of 2000 was $5.2 million. For the Core, selling, general
and administrative expenses as a percent of net sales was virtually unchanged at
11.5% compared with 11.6% in the second quarter last year.
Net interest expense for the three months ended June 30, 2000 was $0.2 million
compared to net interest income of $13,000 for the comparable quarter in 1999.
The net interest expense for 2000 resulted from the expense of borrowing under
the Company's line of credit, partially offset by interest income from the
Company's note receivable from uBid, which was collected in June 2000. Net
interest income for 1999 resulted from the note receivable from uBid and the
investment of excess cash, partially offset by expenses of borrowings under the
Company's floorplan line of credit.
The Company recorded no income tax provision for the three months ended June 30,
2000, compared to a provision of $239,000 in the prior year.
8
<PAGE>
Net loss was $3.5 million for the three months ended June 30, 2000 compared to a
net loss of $3.8 million for the same period last year, inclusive of the
Company's former subsidiary uBid, an Internet start-up. Excluding the operating
losses from the Company's start-ups, eCOST.com and eLinux, net income would have
been $0.2 million, or $0.02 per share, in the second quarter of 2000. For the
three months ended June 30, 1999, the Core earned $0.4 million, or $0.04 per
share.
Six Months Ended June 30, 2000 Compared to the Six Months Ended June 30, 1999
Net sales for the six months ended June 30, 2000 increased 28.2% to $433.2
million. eCOST.com accounted for $70.7 million of sales in the first six months
of 2000, and eLinux accounted for $2.2 million over the first six months of
2000.
Gross profit from all operations increased by $5.0 million to $44.0 million for
the six months ended June 30, 2000, from $39.0 million in the same period of
1999. For the Core, gross profit as a percentage of net sales for the first six
months of 2000 was flat versus the same period last year at 11.6%. Gross profit
from all operations as a percentage of net sales was 10.2%, down from 11.6% in
the prior year, reflecting eCOST.com's larger share of consolidated sales.
eCOST.com's gross profit as a percentage of sales increased to 2.9% from
breakeven in 1999.
Selling, general and administrative expenses increased by $15.8 million to $54.2
million for the six months ended June 30, 2000 from the comparable period in the
prior year. The start-up subsidiaries accounted for $12.4 million of the
increase. Selling, general and administrative expenses, as a percentage of net
sales, was 12.5%, up from 11.4% in the prior year, primarily due to increased
advertising and brand development expenses of the start-up subsidiaries.
Excluding the start-up subsidiaries, selling, general and administrative
expenses as a percentage of net sales for the first six months of 2000 was
11.4%, compared with 11.2% in the same period of the prior year.
Net interest expense for the six months ended June 30, 2000 was $0.2 million
compared to net interest expense of $38,000 for the comparable period in 1999.
The net interest expense for 2000 resulted from the expense of borrowing under
the Company's line of credit, partially offset by interest income from the
Company's note receivable from uBid, which was collected in June 2000. Net
interest expense for 1999 resulted from expenses of borrowings under the
Company's floorplan line of credit, partially offset by interest income from the
note receivable from uBid and the investment of excess cash.
The Company recorded no income tax provision for the six months ended June 30,
2000, compared to a provision of $477,000 in the prior year.
Net loss was $10.4 million for the six months ended June 30, 2000 compared to a
net loss of $6.1 million for the same period last year inclusive of the
Company's former subsidiary uBid, an Internet start-up. Excluding operating
losses from the Company's starts-ups, eCOST.com and eLinux, net income would
have been $0.5 million, or $0.05 per share, for the six months ended June 30,
2000. For the six months ended June 30, 1999, the Core earned $0.9 million, or
$0.08 per share.
Liquidity and Capital Resources
The Company's primary capital need has been the funding of the working capital
requirements created by its growth in sales and the funding of its start-up
subsidiaries. Historically, the Company's primary sources of financing have
been from public offerings and borrowings from its stockholders, private
investors and financial institutions.
As of June 30, 2000, the Company had cash and cash equivalents of $3.8 million
and working capital of $8.0 million. Inventories decreased to $26.8 million at
June 30, 2000 from $39.4 million at December 31, 1999 due to tighter management
of inventory. Accounts receivable decreased to $45.9 million at June 30, 2000
from $47.6 million at December 31, 1999. During the six months ended June 30,
2000, the Company's capital expenditures were $2.7 million, versus $2.2 million
for the comparable period last year.
The Company amended its credit facility as of June 30, 2000 to, among other
things, reduce its covenant to maintain tangible net worth plus subordinated
debt from the combined amount of not less than $23.0 million to $20 million.
The credit facility was reduced to a $40 million credit line. The amended
credit facility also contains additional covenants limiting the amount of future
losses and inventory borrowing while increasing the Company's ability to borrow
against accounts receivable as the Company's business grows. Part of the credit
facility functions in lieu of a vendor trade payable for inventory purchases, is
included in accounts payable, and does not bear interest if paid
9
<PAGE>
within terms specific to each vendor. Part of the credit facility functions as a
working capital line of credit secured by inventory and accounts receivable, and
bears interest at prime. As of June 30, 2000, the Company had $6.7 million in
borrowings under the credit facility included in accounts payable and $14.5
million of working capital advances outstanding, which was used to finance
inventory purchases, receivables, and its start-up subsidiaries. At June 30,
2000, the Company had $18.8 million available for working capital advances and
floorplan inventory financing. The overall credit facility is secured by
substantially all of the Company's assets. As of June 30, 2000, the Company was
in compliance with all such covenants in the amended credit facility.
The Company's ability to comply with the financial covenants of the amended
credit facility will depend in part on its success in continuing to reduce
operating losses of the Company's eCost.com and eLinux subsidiaries and
improving the operating profitability of the Company's core business. The
Company's ability to service its debt also will be dependent on future
performance, which will be affected by, among other things, prevailing economic
conditions and financial, business and other factors, certain of which are
beyond the Company's control.
The Company believes that current working capital, together with cash flows from
operations and available lines of credit, will be adequate to support the
Company's current operating plans for the next twelve months. However, if the
Company requires additional funds, such as for acquisitions or expansion or to
fund future losses, there are no assurances that adequate financing will be
available at acceptable terms, if at all.
In July 1996, the Company announced its plan to repurchase up to 1,000,000
shares of its Common Stock. The shares may be repurchased from time to time at
prevailing market prices, through open market or negotiated transactions,
depending upon market conditions. No limit was placed on the duration of the
repurchase program. There is no guarantee as to the exact number of shares that
the Company will repurchase. Subject to applicable securities laws, repurchases
may be made at such times and in such amounts as the Company's management deems
appropriate. The program can also be discontinued at any time management feels
additional purchases are not warranted. The Company will finance the repurchase
plan with existing working capital. As of June 30, 2000, the Company has
repurchased 15,000 shares under the program.
As part of its growth strategy, the Company may, in the future, acquire other
companies in the same or complementary lines of business. Any such acquisition
and the ensuing integration of the operations of the acquired company would
place additional demands on the Company's management and operating and financial
resources. The Company currently has no definitive agreements with respect to
any acquisitions.
Inflation
Inflation has not had a material impact upon operating results, and the Company
does not expect it to have such an impact in the near future. There can be no
assurances, however, that the Company's business will not be so affected by
inflation.
Business Factors
Except for historical information, all of the statements, expectations and
assumptions contained in the foregoing are forward-looking statements. The
realization of any or all of these expectations is subject to a number of risks
and uncertainties and it is possible that the assumptions made by management may
not materialize. There can be no assurances that the trends for Apple, Macintosh
and PC/Wintel sales will be sustained, that outbound sales trends will continue
in future periods, or that the Company's Internet sales will continue to grow.
There can be no assurance that the Internal Revenue Service will treat the
distribution of uBid shares as a tax-free distribution for federal tax purposes.
In addition, there can be no assurance that the Company's eCOST.com and eLinux
subsidiaries will be developed successfully, achieve market acceptance or be
profitable. There can also be no assurance that the Company will be successful
in its efforts to reduce expenditures for its eCOST.com subsidiary, or that the
impact of any such reductions on sales will be limited to short-term. There can
also be no assurance that the Company will not require additional funding, such
as for acquisitions or expansion or to fund significant downturn in sales that
causes losses, or that adequate financing will be available at acceptable terms,
if at all. There can also be no assurance that the Company will continue to be
in compliance with its bank credit facility covenants in future periods. In
addition to the factors set forth above, other important factors that could
cause actual results to differ materially from the Company's expectations
include competition from companies either currently in the market or entering
the market, competition from other catalog and retail store resellers and price
pressures related thereto, uncertainties surrounding the supply of and demand
for products manufactured by and compatible with Apple Computer, the Company's
reliance on Apple
10
<PAGE>
Computer, IBM, Hewlett Packard, Compaq and other vendors, and risks due to
shifts in market demand and/or price erosion of owned inventory. This list of
risk factors is not intended to be exhaustive. Reference should also be made to
the risk factors set forth from time to time in the Company's SEC reports,
including but not limited to those set forth in the section entitled "Certain
Factors Affecting Future Results" in its Annual Report on Form 10-K for the year
ended December 31, 1999.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's financial instruments include cash and long-term debt. As of June
30, 2000, the carrying values of the Company's financial instruments
approximated their fair values based on current market prices and rates.
It is the Company's policy not to enter into derivative financial instruments.
The Company does not have any significant foreign currency exposure since it
does not transact business in foreign currencies. Therefore, the Company does
not have significant overall currency exposure as of June 30, 2000.
11
<PAGE>
Part II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Company held its 2000 Annual Meeting of Stockholders on May 18,
2000. At the Annual Meeting, the stockholders voted on the following
matters:
1. The reelection as directors of Frank F. Khulusi, Sam U. Khulusi,
Thomas A. Maloof, and Ronald B. Reck, all of whom were reelected at
the Annual Meeting. Each of the directors received the following
votes: FOR 8,903,208, WITHHELD 18,862.
2. The approval of an amendment to the Company's Certificate of
Incorporation to change the name of the Company to "IdeaMall, Inc."
FOR AGAINST ABSTENTIONS
--- ------- -----------
Name Change Proposal 8,894,325 21,307 6,438
3. The ratification of amendments to the Company's Amended and Restated
1994 Employee Incentive Stock Option Plan to (i) increase the number
of shares in the Plan from 1,950,000 to 2,950,000, (ii) add an
"evergreen provision" to automatically increase the number of shares
of common stock available for issuance each year by 3% of the
Company's outstanding common stock, (iii) add non-employee directors
as persons eligible to receive options and other stock-based awards
under the Plan, and (iv) add provisions to ensure that options
qualify as performance-based compensation under Section 162(m) of the
Internal Revenue Code.
FOR AGAINST ABSTENTIONS
--- ------- -----------
Stock Option Plan Amendment 3,780,660 420,596 8,547
4. The ratification of the appointment of PricewaterhouseCoopers LLP as
independent accountants for the Company for the year ending December
31, 2000 (the Accountant's Proposal).
FOR AGAINST ABSTENTIONS
--- ------- -----------
Accountant's Proposal 8,907,681 13,486 903
Item 5. Other Information
-----------------
In June 2000, the Company changed its name from "Creative Computers,
Inc." to "IdeaMall, Inc."
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits. The exhibit index attached hereto is incorporated herein by
reference.
b. Reports on Form 8-K
None.
12
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IDEAMALL, INC.
Date: August 14, 2000 By /s/ TED SANDERS
----------------------------
Ted Sanders
Chief Financial Officer
(Duly Authorized Officer of
the Registrant and Principal
Financial Officer)
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
10.32 (A) Amendment No. 3 to Business Credit and Security Agreement, dated
as of June 30, 2000, between Deutsche Financial Service
Corporation and IdeaMall, Inc.
27 Financial Data Schedule
13
