<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 September 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 10,433,866 outstanding shares of Common Stock at November 13, 2000.
1
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IDEAMALL, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I-FINANCIAL INFORMATION
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 ......................................................... 7
Item 3 - Quantitative and Qualitative Disclosures about Market Risk ............ 11
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K ...................................... 12
SIGNATURE ...................................................................... 13
</TABLE>
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ITEM 1 FINANCIAL STATEMENTS
IDEAMALL, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share data)
<TABLE>
<CAPTION>
September 30,
2000 December 31,
(unaudited) 1999
------------ -----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ................................. $ 8,762 $ 24,326
Accounts receivable, net of allowance for doubtful accounts 52,122 47,618
Inventories ............................................... 34,398 39,359
Prepaid expenses and other current assets ................. 2,791 2,962
Income tax refund receivable .............................. 182 177
Notes receivable .......................................... -- 3,331
Deferred income taxes ..................................... 2,047 2,047
--------- ---------
Total current assets ................................. 100,302 119,820
Property, plant and equipment, net ........................ 16,132 14,569
Goodwill, net ............................................. 11,446 11,836
Deferred income taxes ..................................... 3,738 3,738
Other assets .............................................. 58 42
--------- ---------
$ 131,676 $ 150,005
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable .......................................... $ 60,576 $ 86,609
Accrued expenses and other current liabilities ............ 13,388 14,366
Line of credit ............................................ 18,709 --
Capital leases - current portion .......................... 573 142
Notes payable - current portion ........................... 6 6
--------- ---------
Total current liabilities ............................ 93,252 101,123
Capital leases ............................................ 705 136
Notes payable ............................................. 143 148
--------- ---------
Total liabilities .................................... 94,100 101,407
--------- ---------
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; 10,430,166 and 10,404,069 shares issued .... 11 11
Additional paid-in capital ................................ 74,395 74,337
Treasury stock, at cost: 15,000 shares .................... (91) (91)
Retained earnings (accumulated deficit) ................... (36,739) (25,659)
--------- ---------
Total stockholders' equity ........................... 37,576 48,598
--------- ---------
$ 131,676 $ 150,005
========= =========
</TABLE>
See condensed notes to consolidated financial statements.
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IDEAMALL, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited, in thousands except per share data)
<TABLE>
<CAPTION>
For the three months For the nine months
ended ended
September 30, September 30,
---------------------- ----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales .................................. $ 188,306 $ 172,377 $ 621,488 $ 510,201
Cost of goods sold ......................... 166,963 154,162 556,138 452,966
--------- --------- --------- ---------
Gross profit ............................... 21,343 18,215 65,350 57,235
Selling, general and administrative expenses 21,607 21,319 75,817 59,713
--------- --------- --------- ---------
Income (loss) from operations .............. (264) (3,104) (10,467) (2,478)
Interest income (expense), net ............. (410) 147 (583) 109
--------- --------- --------- ---------
Income (loss) before income taxes .......... (674) (2,957) (11,050) (2,369)
Income tax provision (benefit) ............. 30 (424) 30 53
--------- --------- --------- ---------
Income (loss) from continuing operations ... (704) (2,533) (11,080) (2,422)
Loss from discontinued operations .......... -- -- -- (6,240)
--------- --------- --------- ---------
Net income (loss) .......................... $ (704) $ (2,533) $ (11,080) $ (8,662)
========= ========= ========= =========
Earnings (loss) per share
Continuing operations ............. $ (0.07) $ (0.24) $ (1.06) $ (0.23)
Discontinued operations ........... -- -- -- (0.60)
--------- --------- --------- ---------
$ (0.07) $ (0.24) $ (1.06) $ (0.83)
========= ========= ========= =========
Diluted earnings (loss) per share
Continuing operations ............. $ (0.07) $ (0.24) $ (1.06) $ (0.23)
Discontinued operations ........... -- -- -- (0.60)
--------- --------- --------- ---------
$ (0.07) $ (0.24) $ (1.06) $ (0.83)
========= ========= ========= =========
Basic weighted average number of
shares outstanding .................... 10,423 10,400 10,413 10,376
========= ========= ========= =========
Diluted weighted average number of
shares outstanding .................... 10,423 10,400 10,413 10,376
========= ========= ========= =========
</TABLE>
See condensed notes to consolidated financial statements.
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IDEAMALL, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
For the nine months
ended
September 30,
--------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ....................................... $(11,080) $ (8,662)
Adjustments to reconcile net income (loss) to
net cash (used in)/provided by operating activities:
Depreciation and amortization ........................... 4,444 3,603
Provision for deferred income taxes ..................... -- 53
Loss from discontinued operations ....................... -- 6,240
Changes in assets and liabilities, net of divestiture:
Accounts receivable ................................ (4,504) (7,283)
Inventories ........................................ 4,961 23,918
Prepaid expenses and other current assets .......... 94 (40)
Other assets ....................................... (16) 99
Accounts payable ................................... (26,033) (3,220)
Accrued expenses and other current liabilities ..... (978) (1,644)
Income taxes refund receivable ..................... (5) --
-------- --------
Total adjustments .................................. (22,037) 21,706
-------- --------
Net cash (used in)/provided by operating activities ......... (33,117) 13,044
-------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment ............... (4,228) (3,158)
Collection of notes receivable .......................... 3,331 --
-------- --------
Net cash provided by /(used in) investing activities ........ (897) (3,158)
-------- --------
Cash flows from financing activities:
Payments under notes payable ............................ (5) (5)
Net borrowings under line of credit ..................... 18,709 --
Principal payments of obligations under capital leases .. (312) (188)
Proceeds from stock issued under stock option plans ..... 58 849
-------- --------
Net cash provided by (used in) financing activities ......... 18,450 656
-------- --------
Net (decrease)/increase in cash and cash equivalents ........ (15,564) 10,542
Cash and cash equivalents:
Beginning of the period ................................. 24,326 6,442
-------- --------
End of the period ....................................... $ 8,762 $ 16,984
======== ========
</TABLE>
See condensed notes to consolidated financial statements.
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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 September 30, 2000 and 1999 and the results of operations and
cash flows for the three and nine months ended September 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:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -----------------------
2000 1999 2000 1999
----------- --------- ----------- --------
(in thousands except per share data)
<S> <C> <C> <C> <C>
Net income (loss) ................... $ (704) $ (2,533) $ (11,080) $ (8,662)
========== ========= =========== ========
Weighted average shares - Basic ..... 10,423 10,400 10,413 10,376
========== ========= =========== ========
Weighted average shares-Diluted ..... 10,423 10,400 10,413 10,376
========== ========= =========== ========
Net earnings/(loss) per share-Basic . $ (0.07) $ (0.24) $ (1.06) $ (0.83)
========== ========= =========== ========
Net earnings/(loss) per share-Diluted $ (0.07) $ (0.24) $ (1.06) $ (0.83)
========== ========= =========== ========
</TABLE>
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The effect of stock options is antidilutive and accordingly is excluded
from diluted earnings per share. For the three and nine months ended
September 30, 2000, antidilutive shares were 126,000 and 202,000. For the
three and nine months ended September 30, 1999, antidilutive shares were
56,000 and 241,000.
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 and
nine months ended September 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 September 30, 2000
-------------------------------------
Net sales $ 167,640 $ 18,455 $ 2,211 $ 188,306
Gross profit 19,728 1,363 252 21,343
Income (loss) from operations 738 (534) (468) (264)
Core
Business eCOST.com eLinux Consolidated
----------------------------------------------------------------
Three months ended September 30, 1999
-------------------------------------
Net sales $ 164,393 $ 7,984 $ -- $ 172,377
Gross profit 18,183 32 -- 18,215
Income (loss) from operations (1,264) (1,840) -- (3,104)
Core
Business eCOST.com eLinux Consolidated
----------------------------------------------------------------
Nine months ended September 30, 2000
------------------------------------
Net sales $ 528,000 $ 89,122 $ 4,366 $ 621,488
Gross profit 61,472 3,414 464 65,350
Income (loss) from operations 1,439 (9,318) (2,588) (10,467)
Core
Business eCOST.com eLinux Consolidated
----------------------------------------------------------------
Nine months ended September 30, 1999
-------------------------------------
Net sales $ 500,263 $ 9,938 $ -- $ 510,201
Gross profit 57,208 27 -- 57,235
Income (loss) from operations 133 (2,611) -- (2,478)
</TABLE>
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,
7
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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. In February 1999,
the Company formed a new subsidiary, eCOST.com, a multi-category Internet retail
web site. 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 September 30, 2000 Compared to the Three Months Ended
September 30, 1999
Net sales for the quarter ended September 30, 2000 were $188.3 million, a 9.2%
increase over last year's third quarter. eCOST.com accounted for $18.5 million
of sales in the third quarter of 2000, and eLinux accounted for $2.2 million in
the same period. The increase in net sales for the quarter is primarily
attributable to a 29% increase in outbound business-to-business ("Outbound
Business") revenues and a 16.3% increase in Internet revenues. Net sales for
eCOST.com for the three months ended September 30, 2000 were $18.5 million, an
increase of 131.1% from the comparable quarter of last year. For the Core
business, which excludes eCOST.com and eLinux, PC/WINTEL sales increased 3.8%
for the three months ended September 30, 2000, from the comparable period last
year. Apple/Macintosh-related sales remained virtually unchanged for the three
months ended September 30, 2000, from the same period last year. PC/WINTEL sales
represented 61.1% of the Core business sales for the quarter ended September 30,
2000, compared to 60.0% for the same quarter last year.
Gross profit from continuing operations was $21.3 million for the three months
ended September 30, 2000, an increase of $3.1 million over the prior year
comparable quarter. For the Core business, gross profit as a percentage of net
sales increased to 11.8%, compared with 11.1% in the prior year. Including
eCOST.com and eLinux, gross profit as a percentage of net sales increased to
11.3% from 10.6% in the prior year, due primarily to the focus on profitability
of eCOST.com. eCOST.com's gross profit as a percentage of sales increased to
7.4% from 0.4% in 1999, reflecting increased sales from higher margin product
categories and a shift in pricing strategy to focus on profitability. 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 were $21.6 million for the three
months ended September 30, 2000, virtually unchanged from $21.3 million in the
prior year. As a percent of sales, selling, general and administrative expenses
decreased to 11.5% from 12.4% in the prior year, primarily due to reductions in
advertising expenses associated with eCOST.com. Total selling, general and
administrative expenses for the start-up subsidiaries in the third quarter of
2000 was $2.6 million. For the Core business, selling, general and
administrative expenses as a percent of net sales decreased to 11.3% compared
with 11.8% in the third quarter last year.
Net interest expense for the three months ended September 30, 2000 was $0.4
million compared to net interest income of $0.1 million for the comparable
quarter in 1999. The net interest expense for 2000 resulted primarily from the
expense of borrowing under the Company's line of credit. 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 a $30,000 income tax provision for the three months ended
September 30, 2000, compared to a benefit of $0.4 million in the prior year.
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Net loss was $0.7 million for the three months ended September 30, 2000 compared
to a net loss of $2.5 million for the same period last year. Excluding the
operating losses from the Company's start-ups, eCOST.com and eLinux, net income
would have been $0.5 million, or $0.05 per share, in the third quarter of 2000
compared to a net loss of $0.7 million, or $0.07 per share for the three months
ended September 30, 1999.
Nine Months Ended September 30, 2000 Compared to the Nine Months Ended September
30, 1999
Net sales for the nine months ended September 30, 2000 increased 21.8% to $621.5
million. eCOST.com accounted for $89.1 million of sales in the first nine months
of 2000, and eLinux accounted for $4.4 million in the first nine months of 2000.
Gross profit from all operations increased by $8.1 million, or 14.1%, to $65.4
million for the nine months ended September 30, 2000, from $57.2 million in the
same period of 1999. For the Core business, gross profit as a percentage of net
sales for the first nine months of 2000 increased to 11.6% from 11.4% for the
same period last year. Gross profit from all operations as a percentage of net
sales was 10.5%, down from 11.2% in the prior year, reflecting eCOST.com's lower
margins in the first half of 2000. eCOST.com's gross profit as a percentage of
sales increased to 3.8% from 0.3% in 1999.
Selling, general and administrative expenses increased by $16.1 million to $75.8
million for the nine months ended September 30, 2000 from the comparable period
in the prior year. The start-up subsidiaries accounted for $13.1 million of the
increase. Selling, general and administrative expenses, as a percentage of net
sales, was 12.2%, up from 11.7% in the prior year, primarily due to advertising
and brand development expenses of the start-up subsidiaries incurred during the
first half of 2000. Excluding the start-up subsidiaries, selling, general and
administrative expenses as a percentage of net sales for the first nine months
of 2000 was unchanged at 11.4%, compared with the same period of the prior year.
Net interest expense for the nine months ended September 30, 2000 was $0.6
million compared to net interest income of $0.1 million for the comparable
period in 1999. The net interest expense for 2000 resulted primarily 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 interest
income from the note receivable from uBid and the investment of excess cash,
partially offset by borrowings under the Company's floorplan line of credit.
The Company recorded an income tax provision of $30,000 for the nine months
ended September 30, 2000, compared to a provision of $53,000 in the prior year.
Net loss was $11.1 million for the nine months ended September 30, 2000 compared
to a net loss of $8.7 million for the same period last year, inclusive of a $6.2
million net loss of the Company's former subsidiary uBid, an Internet start-up.
Excluding operating losses from the Company's starts-ups, eCOST.com, eLinux, and
uBid, net income would have been $1.0 million, or $0.10 per share, for the nine
months ended September 30, 2000, compared to net income of $0.2 million, or
$0.02 per share for the nine months ended September 30, 1999.
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 development of the Outbound
Business. 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 September 30, 2000, the Company had cash and cash equivalents of $8.8
million and working capital of $7.1 million. Inventories decreased to $34.4
million at September 30, 2000 from $39.4 million at December 31, 1999 due to
tighter management of inventory. Accounts receivable increased to $52.1 million
at September 30, 2000 from $47.6 million at December 31, 1999 due to higher
credit sales. During the nine months ended September 30, 2000, the Company's
capital expenditures were $4.2 million, versus $3.2 million for the comparable
period last year.
9
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The Company has a $40 million credit facility. 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 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 September 30, 2000, the Company had $6.8 million in borrowings
under the credit facility included in accounts payable and $18.7 million of
working capital advances outstanding, which was used to finance inventory
purchases, receivables, and its start-up subsidiaries. At September 30, 2000,
the Company had $14.5 million available for working capital advances and
floorplan inventory financing. The overall credit facility is secured by
substantially all of the Company's assets. The credit facility has certain
covenants requiring a minimum tangible net worth and limitations on future
losses and leverage. As of September 30, 2000, the Company was in compliance
with all credit facility covenants.
The Company's ability to comply with the financial covenants of the 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 September 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.
10
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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 Business 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 the 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 or
vendor credit 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 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
September 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 September 30, 2000.
11
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Part II - OTHER INFORMATION
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
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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: November 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
-------------- -----------
27 Financial Data Schedule
13
