U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2001
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-27865
AUCTIONANYTHING.COM, INC.
(Exact name of small business issuer as specified in it charter)
DELAWARE 13-264091
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(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
35 WEST PINE STREET, SUITE 211, ORLANDO, FLORIDA 32801
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(Address of principal executive offices)
(407) 481-2140
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(Issuer's telephone number)
Indicate the number of shares outstanding of each of the Issuer's classes of
common stock, as of the latest practicable date: 41,978,306 shares of common
stock, $0.001 par value as of June 1, 2001.
Transitional Small Business Disclosure Format (check one);
Yes [ ] No [X]
AUCTIONANYTHING.COM, INC.
INDEX
PART 1. FINANCIAL INFORMATION 2
Item 1. Financial Statements
Balance Sheet - April 30, 2001 3
Statements of Operations (unaudited) for the
Three Months Ended April 30, 2001 and 2000 4
Statement of Cash Flows (unaudited) for the Three
Months Ended April 30, 2001 and 2000 and 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of
Operation 7-8
PART II. OTHER INFORMATION
Item 5. Other Information
Item 6. Exhibits and reports on Form 8-K 9
Signatures 10
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Basis of Financial Statements
The unaudited condensed consolidated financial statements have been prepared in
conformity with generally accepted accounting principles and include all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented. All such
adjustments are, in the opinion of management, of a normal recurring nature.
The results of operations for the three months are not necessarily indicative of
those for the full year. In the opinion of management, the accompanying
unaudited financial statements contain all adjustments necessary to fairly
present the financial position and the results of operations for the periods
indicated.
Certain information and footnote disclosures normally included in condensed
consolidated financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's annual report
on Form 10-KSB for the year ended January 31, 2001.
2
AUCTIONANYTHING.COM, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
April 30, 2001
Unaudited
Assets
Current assets:
Cash and cash equivalents $ 4,251
Accounts receivable 18,428
Other assets 5,000
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Total current assets 27,679
Equipment, less accumulated depreciation of $71,469 36,091
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$ 63,770
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Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued expenses $ 148,718
Unearned revenue 2,035
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Total current liabilities 150,753
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Stockholders' deficit:
Common stock, par value $.001; 50,000,000
shares authorized, 28,790,696
issued and outstanding 28,791
Additional paid-in capital 1,256,084
Accumulated deficit (1,371,858)
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Total stockholders' deficit (86,983)
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$ 63,770
================
See accompanying notes to financial statements.
3
AUCTIONANYTHING.COM, INC.
Condensed Consolidated Statements of Operations
Unaudited
Three Months Ended Three Months Ended
April 30, April 30,
2001 2000
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Revenues:
Auction sales $ -- 66,900
Internet service revenue 6,720 12,123
Internet business solutions 15,382 6,621
Custom development fees 8,450 --
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30,552 85,644
Cost of sales -- 54,253
Cost of services 7,022 7,883
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7,022 62,136
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Gross profit 23,530 23,508
Operating expenses:
Salaries and employee benefits 39,935 115,145
Professional fees 12,732 60,423
Other selling, general and administrative (6,301) 10,706
Depreciation and amortization 5,354 23,284
Advertising 17 13,207
Insurance 46 13,774
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Total operating expenses 51,783 236,539
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Operating loss (28,253) (213,031)
Other income 95 1,448
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Net loss $ (28,158) (211,583)
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Weighted average shares outstanding 28,790,696 28,238,980
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Loss per share - basic and diluted $ (0.01) (0.07)
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See accompanying notes to financial statements.
4
AUCTIONANYTHING.COM, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
Unaudited
Three months Three months
ended ended
April 30, April 30,
2001 2000
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Cash flows used in operating activities:
Net loss $ (28,158) (211,583)
Adjustments to reconcile net loss to net cash provided by (used in)
Operating activities:
Depreciation and amortization 5,354 23,284
Changes in assets and liabilities:
Accounts receivable (5,789) 3,478
Inventory -- 55,686
Other assets 40 13,502
Accounts payable and accrued expenses 30,085 62,978
Unearned revenue -- (203)
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Net cash provided by (used in) operating activities 1,532 (52,858)
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Cash flows used in investing activities:
Capital expenditures -- (1,139)
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Net cash used in investing activities -- (1,139)
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Net increase (decrease) in cash and cash equivalents 1,532 (53,997)
Cash and cash equivalents at beginning of period 2,719 144,011
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Cash and cash equivalents at end of period $ 4,251 90,014
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Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 95 1,448
================ =================
See accompanying notes to financial statements.
5
AuctionAnything.com, Inc.
Notes to Condensed Consolidated
Financials Statements Three months ended April
30, 2001 and three months ended April 30, 2000
unaudited
Summary of Significant Accounting Policies
General
The accompanying unaudited condensed consolidated financial statements as of
April 30, 2001 and for the three months ended April 30, 2001 should be read in
conjunction with the Company's audited financial statements for the year ended
January 31, 2001.
The accompanying unaudited condensed consolidated financial statements have been
prepared assuming that the Company will continue operations on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. However, the Company has an
accumulated deficit of ($1,371,858) as of April 30, 2001. The Company's ability
to continue as a going concern is dependent upon the attainment of a profitable
level of operations. The Company's ability to attain profitable operations is
contingent upon its ability to grow its business.
Description of Business
AuctionAnything.com, Inc. (the "Company") operates a variety of internet-related
services. Currently, the Company has two main revenue generating operations,
which are provided collectively by AuctionAnything.com, Inc. and North Orlando
Sports Promotions, Inc. ("NOSP"), a wholly owned subsidiary of
AuctionAnything.com, Inc.: 1) Internet Business Solutions ("IBS"): a service
which establishes and hosts auction and/or E-commerce web sites for other
businesses and organizations primarily in both the business-to-business and
business-to-consumer markets; 2) an Internet service provider ("ISP") service,
known as Tish.net.
The Company no longer sells company-owned inventory through the auction sites
SportsAuction.com and AutographAuctions.com. All company-owned inventory was
liquidated during the quarter ended July 31, 2000. These sites have been
licensed out for management by independently owned companies and in return the
Company receives commission fees based on successful sales.
Revenue Recognition
The Company sells merchandise to customers under one of two types of sales
transactions. The Company either purchases merchandise and sells it to customers
or sells merchandise to customers under consignment arrangements and earns a
commission. Revenue from sales of purchased merchandise is recognized and title
passes when the Company receives verification of the credit card transaction or
verification of the check clearing and the related merchandise is shipped.
Commission income from consignment sales is calculated as a percentage of the
final sales value at the close of the auction and recognized when the Company
receives verification of the credit card transaction or verification of the
check. Commission is paid to the consignor after the merchandise has been
shipped. The Company earns revenues for IBS services as a percentage of all
successful sales. These revenues are recognized when the Company receives
verification of a successful sale. Custom development fees are earned when an
IBS client requests additional website development done to enhance their site.
This revenue is recognized at the inception of development. Internet service
revenue is recognized on a pro rata basis over the term of the contract.
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Item 2. Management's Discussion and Analysis or Plan of Operations
Forward Looking Statements
Certain statements in this Management's Discussion and Analysis of
Financial Condition and Results of Operations constitute forward looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, as amended, including without limitation, statements regarding industry
trends, strategic business development, pursuit of new markets, competition,
results from operations, and are subject to the safe harbor provisions created
by that statute. Each forward looking statement involves known and unknown
risks, uncertainties and other factors which 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.
These forward looking statements were based on various factors and were derived
utilizing numerous important assumptions and other important factors that could
cause actual results to differ materially from those in the forward-looking
statements. Important assumptions and other factors that could cause actual
results to differ materially from those in the forward looking statements,
include, but are not limited to: competition in the Company's existing and
potential future product lines of business; the Company's ability to obtain
financing on acceptable terms if and when needed; uncertainty as to the
Company's future profitability, uncertainty as to the future profitability of
acquired businesses, uncertainty as to any future expansion of the company.
Other factors and assumptions not identified above were also involved in the
derivation of these forward looking statements, and the failure of such
assumptions to be realized as well as other factors may also cause actual
results to differ materially from those projected. The Company assumes no
obligation to update these forward looking statements to reflect actual results,
changes in assumptions or changes in other factors affecting such forward
looking statements.
Financial Condition and Changes in Financial Condition
As a result of the Company's focus on the business development of its Internet
Business Solutions (IBS) suite of products, significant decreases in Internet
service (ISP) have been realized during the three months ended April 30, 2001.
The Company's financial position and results of operations are subject to
fluctuations due to a variety of factors. The Company's historical results of
operations are not necessarily indicative of future results.
Comparison of three months ended April 30, 2001 and April 30, 2000
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Auction Sales
Auction sales decreased from $66,900 during the three months ended April 30,
2000 to $0 during the three months ended April 30, 2001. This decrease resulted
principally from the discontinuation of this portion of its business.
Internet Service Revenue
Internet service revenue decreased from $12,123 during the three months ended
April 30, 2000 to $6,720 during the three months ended April 30, 2001. This
decrease resulted principally from decreased volume of ISP clients as a result
of the Company's planned discontinuation in this portion of its business.
Internet Business Solutions
Internet Business Solutions revenue increased from $6,621 during the three
months ended April 30, 2000 to $15,382 during the three months ended April 30,
2001. This increase resulted primarily from the Company's focus on the growth of
this portion of its business.
Custom Development Fees
Custom Development Fees revenue increased from $0 during the three months ended
April 30, 2000 to $8,450 during the three months ended April 30, 2001. This
increase resulted primarily from the introduction of the Internet Business
Solutions and the increased need for site customization from the Company's
clients.
7
Cost of Sales and Cost of Internet Connections
Cost of sales decreased from $54,253 during the three months ended April 30,
2000 to $0 during the three months ended April 30, 2001. This decrease resulted
from the Company's discontinuance of the auction sales portion of its business.
Cost of services decreased from $7,883 for the three months ended April 30, 2000
to $7,022 for the three months ended April 30, 2001. The decrease resulted from
the cancellation of some line hook-ups no longer necessary as the number of
clients in this portion of the business is decreasing.
Operating Expenses
Operating expenses decreased from $236,539 during the three months ended April
30, 2000 to $51,783 during the three months ended April 30, 2001. The decrease
resulted principally from the decrease in salaries and employee benefits from
$115,145 during the three months ended April 30, 2000 to $39,935 during the
three months ended April 30, 2001. This decrease is due to the discontinuation
of the auction sales portion of the business and the elimination of personnel
necessary to manage the auctions and inventory. As of April 30, 2000 there were
11 employees and as of April 30, 2001 there were 3 employees.
Advertising fees decreased from $13,207 during the three months ended April 30,
2000 to $17 during the three months ended April 30, 2001. Professional fees
decreased from $60,423 during the three months ended April 30, 2000 to $12,732
during the three months ended April 30, 2001. Insurance expense decreased from
$13,774 during the three months ended April 30, 2000 to $46 during the three
months ended April 30, 2001. Each of these decreases is due to the
discontinuation of the auction sales portion of the business and the associated
administrative costs.
Depreciation and amortization expense decreased from $23,284 during the three
months ended April 30, 2000 to $5,354 during the three months ended April 30,
2001. This decrease is primarily due to the full amortization of goodwill taken
at fiscal year end January 31, 2001.
Other Income
Other income decreased from $1,448 during the three months ended April 30, 2000
to $95 during the three months ended April 30, 2001. This decrease was the
result of a reduced amount of Company funds deposited in interest bearing
checking accounts.
Risk Factors that may Affect Results of Operation and Financial Condition
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In addition to the other information in this Form 10-QSB, the risk factors
previously filed in the Company's annual report on Form 10-KSB for the fiscal
year ended January 31, 2000 should be carefully considered in evaluating the
Company and the business because these factors may have a significant impact on
the business, operating results and financial condition.
Liquidity and Capital Resources
Since inception, the Company's operating and investing activities have used more
cash than they have generated. Because of the continued need for substantial
amounts of working capital to fund the growth of the business, the Company
expects to continue to experience significant negative operating and investing
cash flows for the foreseeable future. Subsequently the Company may need to
raise additional capital in the form of another private placement to meet the
immediate operating and investing cash requirements. The Company may also seek
outside funding, if necessary, to meet the long-term goals of the Company in
regard to its growth. If additional funds are raised through the issuance of
equity, equity-related or debt securities, these securities may have rights,
preferences or privileges senior to those of the rights of the common stock, and
the stockholders may experience additional dilution to their equity ownership.
8
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
In May 2001, the Company, repurchased an aggregate of 8,021,694 shares of its
common stock owned from Dennis Kurir, a former director of the Company, and a
company which he controls, for an aggregate purchase price of $140,000. These
shares have been cancelled and returned to the treasury of the Company with the
status of authorized but unissued shares.
In conjunction with this repurchase, the Company borrowed $140,000 from two
unaffiliated third parties to fund the amounts paid to Mr. Kurir and his
affiliated company. The Company has issued two unsecured demand promissory notes
in the principal amount of $70,000, bearing interest at 9% per annum, to each of
these lenders.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following documents are filed herewith or have been included as exhibits to
previous filings with the Commission and are incorporated herein by this
reference:
None
(b) Reports on Form 8-K
The Company filed a Form 8-K on June 6, 2001 disclosing an Agreement and Plan of
Reorganization and Stock Purchase Agreement with Disease S.I., Inc.
The Company filed a Form 8-K on June 7, 2001 to report the dismissal of KPMG LLP
as independent auditors of the Company. The Company appointed Feldman Sherb
Co., P.C. as independent auditors effective June 4, 2001.
9
SIGNATURES
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.
AUCTIONANYTHING.COM, INC.
by /s/Brian S. John
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Brian S. John, Vice President
Date: June 18, 2001
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