UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________________ to ____________________
Commission file number 000-28547
800America.com, Inc.
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(Exact name of small business issuer as specified in its charter)
Nevada 87-0567884
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(State or other jurisdiction of (IRS Employer
incorporation or jurisdiction) Identification No.)
1929 S. 21st Avenue
Nashville, TN 37212
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(Address of principal executive offices)
(800) 999-5048
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(Issuers telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the 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 16,162,943 shares of common stock $0.001 par value per share, issued
and outstanding as of September 30, 2001.
Transitional Small Business Disclosure Format (Check one) : Yes [ ] No [X]
PART I -- FINANCIAL INFORMATION
Item 1.
800America.com, Inc.
Condensed Consolidated Balance Sheet
Unaudited
September 30, 2001 and December 31, 2000
September 30 December 31
2000 2001
ASSETS ------------ -----------
Current Assets
Cash in Bank $9,107,264 $2,117,746
Accounts Receivable 212,907 995,634
Allowances for Doubtful Acccounts (154,000) (139,000)
Prepaid Advertising 75,000
Due from Affiliate 47,749
Deferred Tax Asset 47,260 47,260
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Total Current Assets 9,213,431 3,144,389
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Property and Equipment
Equipment 852,562 743,831
Software 2,377,150 887,150
Auto 20,738 20,738
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3,250,450 1,651,719
Accumulated Depreciation (1,145,034) (567,832)
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Total Property and Equipment 2,105,416 1,083,887
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Other Assets
Intangible Assets (Net) 176,666 193,333
Investment iGain, Inc. 50,000
Investment - UPS 1
Note Receivables Stockholders' 82,818
Investment Inshop 174,395
Other Assets 132,500
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Total Other Assets 616,380 193,333
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Total Assets 11,935,227 4,421,609
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable Trade 93,672 24,946
Accrued Expenses 40,706
Income Tax Payable 866,567 386,872
Due on Purchase 1
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Total Current Liabilities 1,000,946 411,818
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Stockholders' Equity
Preferred Stock No Par Value
5,000,000 Shares Authorized 0 Issued
Common Stock - 0.001 Par Value
50,000,000 Shares Authorized
13,412,999 Shares Outstanding at
December 31, 2000
16,162,943 Shares Outstanding at
September 30, 2001 16,162 13,412
Additional Paid in Capital 2,756,147 1,943,134
Retained Earnings 8,161,972 2,053,245
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Total Stockholders' Equity 10,934,281 4,009,791
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Total Liabilities and Stockholders' Equity $11,935,227 $4,421,609
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See Accompanying Notes to Condensed Consolidated Financial Statements
800America.com, Inc.
Condensed Consolidated Statements of Income
Unaudited
Periods Ended September 30, 2001 and September 30, 2000
2001 2001 2000 2000
Three Nine Three Nine
Months Months Months Months
Revenues $5,941,924 $15,244,673 $3,922,359 $9,501,802
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Cost and Expense
Rebates 1,362,744 4,876,154
Advertising 1,536,486 2,683,605 400,820 1,060,112
Depreciation - Amortization 166,901 593,869 74,971 154,273
Bad Debts 0 15,000 9,837 180,837
General and Administrative 1,615,074 3,307,403 815,463 1,213,464
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Total 3,318,461 6,599,877 2,663,835 7,484,840
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Net Income from Operations 2,623,463 8,644,796 1,258,524 2,016,962
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Other Income
Interest 65,094 108,600 5,189 10,406
Sale of Assets 0 500,000 0 0
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65,094 608,600 5,189 10,406
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Income Tax Expense (935,100) (3,200,000) (448,305) (689,305)
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Net Income 1,753,457 6,053,396 815,408 1,338,063
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Basic Earning Per Share $0.11 $0.38 $0.07 $0.11
Diluted Earnings Per Share $0.09 $0.33 $0.06 $0.10
See Accompanying Notes To Condensed Consolidated Financial Statements
800America.com, Inc.
Condensed Consolidated Statements of Cash Flows
Unaudited
Nine Months Ended September 30,
2001 2000
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Cash Flows From Operating Activities
Net Income $6,053,396 $1,338,063
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities
Depreciation and Amortization 578,869 154,273
Bad Debts Allowance - Increase 15,000 73,000
Accounts Receivable (Increase) Decrease 797,727 (707,292)
Other Assets (Increase) Decrease 122,749 215,600
Accounts Payable Increase (Decrease) 68,845 181,181
Income Tax Payable - Increase (Decrease) 479,695 301,570
Accrued Expenses 40,706 19,266
Due on Purchase 1
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Cash Provided by Operations 8,156,988 1,575,661
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Cash Flows From Investing Activities
Purchase of Equipment (108,731) (437,422)
Purchase of Software (1,490,000)
Advance to Operating Activities (384,506)
Purchase UPS (1)
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Cash Used by Investments Activities (1,983,238) (437,422)
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Cash Flows From Financing Activities
Sale of Previously Unissued Stock (Net) 6,315,768
Repurchase Stock From Above Sales (5,500,000)
Additional Paid in Capital 250,000
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Cash Provided by Financing Activities 815,768 250,000
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Net Increase in Cash 6,989,518 1,388,239
Beginning Cash Balance 2,117,746 392,464
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Ending Cash Balance $9,107,264 $1,780,703
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See Accompanying Notes to Condensed Consolidated Financial Statements
800AMERICA . COM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Financial Statement Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the U.S.
for interim financial information. In the opinion of management, all
adjustments, which are necessary for a fair presentation, have been included.
The results for interim periods are not necessarily indicative of results, which
may be expected for any other interim period, or for the full year. For further
information, refer to the December 31, 2000 consolidated financial statements
and notes thereto include in 800America.com, Inc. 10KSB.
Note 2 - Related Party Transactions
Compensation paid Chief Executive Officer $201,666 for nine months
ended September 30, 2001 and $55,000 for the six months ended June 30, 2000.
Note 3 - Supplemental Cash Flow Information
Nine months ended 9/30/01 9/30/00
Interest paid 0 0
Income tax paid $2,319,100 $387,735
Note 4 - None Cash Transactions
1,817,493 Shares Common Stock
for operating activity Inshop.Com 1,817
200,000 Shares Common Stock
eBiz4Biz.com 200
450,000 Shares of Common Stock
for assets of cs-live.com 450
Note 5 - Purchase of Subsidiary's
The Company purchased eBiz4Biz. Com which was not operational but had
succeeded in developing some advance computer software. The agreement was dated
January 20, 2001 but the purchase was not completed until May 16, 2000.
The agreement contemplated the purchase method of accounting.
The period for which the results of operations of the acquisition are
included in the income statement for the eight months ending September 30, 2001.
Goodwill was not recognized. The only asset of eBiz4Biz is advanced technology
software.
The Company purchased Fileshooter.com (Fileshooter). Fileshooter was
dormant since its inception until purchased by 800America.com, Inc. on June 30,
2001. Fileshooter, like eBiz4Biz.com was fully integrated into 800America.com
Inc. operations. Method of accounting will be the purchase method. No goodwill
is recognized. The only asset of Fileshooter.com is advanced technology
software. The Company purchased substantially all of the assets of cs-live.com.
The above purchases were completed for a combination of stock and cash
of approximately $1,550,000.
The Company acquired all of the capital stock of Universal Payments
Systems (UPSI). Company management owned and developed UPSI. The purchase price
was $1.
In September 2001, the Company acquired substantially all of the
assets, including the name, of cs-live.com inc. The purchase price was $50,000
and 450,000 shares of common stock. The company also assumed certain operating
liabilities. cs-live inc. changed it name to Intelligent Web Technologies, Inc.
The Company has made advance to Intelligent Web Technologies, Inc. of
approximately $82,818 at September 30, 2001. The advance is secured by the
shares of common stock paid as a part of the purchase price.
Note 6 - Private Offering - Stock Sale
The Company sold previously unissued stock in a private offering for
approximately $6,315,768 net of offering cost. The Company repurchased, at sale
price, $5,500,000 of the stock sold from one investor.
Note 7 - Subsequent Events
Contingent Liability
In October 2001, the Company acquired all of the capital stock of
iGain, Inc. The purchase price was 1,050,000 shares of common stock. The Company
agreed to repurchase, at the option of the holders, 1,000,000 shares of common
stock issued in the merger (less $51,028 shares as explained below) for a price
of $2.60 per share. The conditions for which the Company will repurchase the
shares is the earlier of (i) if the current Chief Executive Officer is no longer
serving in that capacity, (ii) the Company conducts a public offering of its
securities and receives at least $7,000,000 in proceeds, or (iii) one year from
the closing date of the merger. In connection with the merger, the Company
agreed to repurchase a total of 51,028 of the shares within 30 days of the
closing for $2. 25 per share. If all the shares were repurchased within one year
from the closing date of the merger the total redemption price would be
$2,582,140.
Item 2. Managements Discussion and Results or Plan of Operation.
General
The Company operates several Internet web sites in three segments: Business to
Business; Business to Consumers and Technology. The Companys goal is to bring
buyers and sellers together in an efficient and easy format and generate income
based on the transactions. This approach to customer acquisition and retention
has provided the Company with a strong following of users. The Company is an
innovator in developing proprietary technologies needed for easy navigation for
business-to-business-and business-to-consumer environments. The Company's
technologies coupled with its unique customer approach continue to strengthen
relationships with its customers. These technologies are providing the
foundation needed to scale and grow the e-commerce businesses profitably across
geographic regions and multiple product lines.
The Company is the home of many Internet shoppers. It offers shoppers a
convenient way to navigate easily among hundreds of stores. The portal offers
incentives to visit continuously the site through promotions and giveaways. The
Company funds TV advertising in over 50 cities around the world.
Sites operated by the Company include a shopping portal 12 click,
RothmanCloseouts.com, InternetWebGuide.com, FileShooter.com, InShop.com,
eBiz4biz.com, cs-live.com, iGain.com and UPS payment.com.
Results of Operations
Quarter Ended September 30, 2001 Compared to Quarter Ended September 30, 2000.
The Company had revenues of $5,941,924 for the quarter ended September 30, 2001
compared to revenues of $3,922,359 for the quarter ended September 30, 2000. Net
income for the quarter ended September 30, 2001 was $2,623,463 compared to net
income of $1,258,524 for the quarter ended September 30, 2000. Total operating
expenses for the quarter ended September 30, 2001 were $3,318,461 resulting in
operating income for the quarter of $2,623,463. This compares to total operating
expenses of $2,663,835 for the quarter ended September 30, 2000, resulting in
operating income of $1,258,524. The Company has instituted a policy of not
paying rebates as of January 1, 2001 and hence represented none of the total
operating expenses. This compared to customer rebates of $1,362,744 for the
quarter ended September 30, 2000 that represented approximately 51% of total
operating expenses. Because of the Companys limited operating history with its
various web sites, management cannot predict, based upon past performance,
whether the above listed cost and expense categories are relatively stable or
subject to a substantial degree of volatility. Management continues to expect
that advertising costs will be a significant part of its operating structure.
Management expects that revenues from Business to Consumers divisions will
continue to increase in the fourth quarter. Management expects that all other
divisions will have increased revenues and profits.
Liquidity And Capital Resources
The Companys cash and cash equivalents as of September 30, 2001 were $9,107,264.
At September 30, 2001, the Company had current assets of $9,213,431 and current
liabilities of $1,000,945 resulting in working capital at September 30, 2001
(current assets less current liabilities) of $8,212,486.
In September 2001, the Company acquired substantially all of the assets,
including the name, of cs-live.com inc. The purchase price was $50,000 and
450,000 shares of common stock. The Company also assumed certain operating
liabilities. cs-live inc. changed its name to Intelligent Web Technologies, Inc.
The Company has made advances to Intelligent Web Technologies, Inc. of
approximately $300,000. The advances are secured by the shares of common stock
paid as part of the purchase price.
During the period the Company acquired all the capital stock of Universal
Payment Systems, Inc. (UPSI). The purchase price was $1.00. UPSI was purchased
from Management of the Company.
Also, during the period the Company raised a total of approximately $6,700,000
from the sale of its common stock in two private placements. Subsequently, the
Company rescinded $5,500,000 to an investor.
The Company believes that its current capital resources and liquidity are
adequate for at least the next twelve months. Other than costs in connection
with the further development of its web sites, the Company does not have any
plans for significant capital or operating expenditures above its current level
unless it determines to develop additional web sites that could result in
additional development costs. The Company may also make additional acquisitions
which might be financed at least in part with Company funds.
Nine Months Ended September 30, 2001 Compared With September 30, 2000 Results of
Operations
The Company had revenues of $15,244,673 for the nine months ended September 30,
2001 compared with revenues of $9,501,802 for the nine months ended September
30, 2000. This represents a 60% increase. The increase was primarily the result
of increased sales. Net income from operations was $8,644,800 for the nine
months ended September 30, 2001 compared with net income of $2,016,962 for the
nine months ended September 30, 2000. Total operating expenses were $6,600,000
for the nine months ended September 30,2001 compared with $7,485,000 for the
nine months ended September 30,2000. This is a decrease of 12% and is primarily
a result of the discontinuance of the rebate program.
Liquidity And Capital Resources
Net cash provided for operating activities was $8,157,000 for the nine months
ended September 30, 2001 compared with net cash of $1,575,661 for the nine
months ended September 30, 2000. The increase in net cash was primarily
attributable to an increase in revenues, sale of operating assets, the proceeds
from the sale of common stock in a private placement and a decrease in operating
costs as a result of ending the rebate program. During the nine month period
ended September 30, 2001, the Company sold assets for $500,000 and purchased two
companies for approximately $1,550,000 in cash and common stock. During the nine
months ended September 30, 2000, the Company obtained $250,000 through the sale
of equity securities in a private placement.
Events Subsequent to September 30, 2001
In October, 2001, the Company acquired all of the capital stock of iGain, Inc.
The purchase price was 1,050,000 shares of common stock. The Company agreed to
repurchase, at the option of the holders, 1,000,000 shares of the common stock
issued in the merger for a price at $2.60 per share (the Put Shares). The
conditions for which the Company will repurchase the Put Shares is (i) if the
current Chief Executive Officer is no longer serving in that capacity, (ii) the
Company conducts a public offering of its securities and receives at least
$7,000,000 in proceeds, or (iii) one year from the closing date of the merger.
In connection with the merger, the Company agreed to repurchase a total of
51,028 of the Put Shares within 30 days of the closing for $2.25 per share. The
Company is the beneficiary of a term life insurance policy that covers the
demise of the current Chief Executive Officer. The amount of the policy is
$10,000,000.
Forward Looking Statements
This report on Form 10-QSB contains certain forward-looking statements that are
based on what the Company believes are reasonable beliefs and assumptions of
management. Often, these statements can be recognized because of the use of
words such as believe, anticipate, intend, estimate and expect in the
statements. Such forward-looking statements obviously involve known and unknown
risks, uncertainties, and other factors that may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is a party to litigation incurred in connection with the ordinary
operation of its business. The Company does not believe that any adverse result
in the various litigation matters would have a material effect on the Companys
operations or financial condition.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
800America.com, Inc.
Date: November 14, 2001 By: /s/ David E. Rabi
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David E. Rabi
President (Principal Executive Officer,
Chief Financial Officer and Chief
Accounting Officer)