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 June 30, 2001
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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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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(Issuer's 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
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There were 16,911,627 shares of common stock $0.001 par value per share to be
issued, issued and outstanding as of August 13, 2001.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
800America . com, Inc.
Consolidated Balance Sheet
Unaudited
June 30, 2001 and December 31, 2000
June 30 December 31
Assets 2001 2000
Current Assets
Cash in Bank 5,370,914 2,117,746
Accounts Receivable 1,022,310 995,634
Allowance for Doubtful Accounts -154,000 -139,000
Deferred Tax Asset 52,360 47,260
Prepaid Advertising 75,000
Advances to Affiliates 47,749
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Total Current Assets 6,291,584 3,144,389
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Property and Equipment
Equipment 842,562 743,831
Software 887,150 887,150
Auto 20,738 20,738
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1,750,450 1,651,719
Accumulated Depreciation 988,133 567,832
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Net Property and Equipment 762,317 1,083,887
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Other Assets
Intangibles (Net) 186,676 193,333
Advances to Subsidiary 1,068,065
Investment in Subsidiary 1,500,000
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Total Other Assets 2,754,741 193,333
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Total Assets 9,808,642 4,421,609
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Liabilities and Stockholders Equity
Current Liabilities
Accounts Payable - Trade 154,241 24,946
Accrued Expenses 53,748
Income Tax Payable 1,288,906 386,872
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Total Current Liabilities 1,496,895 411,818
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Stockholders Equity
Preferred Stock $0.001 Par Value
5,000,000 Shrs Authorized 0 Issued
Common Stock $0.001 Par Value
50,000,000 Shrs Authorized, 13,412,000
Shares issued December 31, 2000
15,429,493 Shrs Issued June 30, 2001 15,429 13,412
Additional Paid In Capital 1,943,134 1,943,134
Retained Earnings 6,353,184 2,053,245
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Total Stockholders Equity 8,311,747 4,009,791
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Total Liabilities and Stockholders' Equity 9,808,642 4,421,609
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The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
800America . com, Inc.
Consolidated Statement of Income
Unaudited
Three and Six Months Periods Ended June 30, 2001 and June 30, 2000
2001 2001 2000 2000
Three Six Three Six
Months Months Months Months
Revenues 5,001,972 9,302,749 3,188,641 5,579,465
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Cost and Expenses
Rebates 2,209,441 3,513,410
Advertising 719,759 1,147,119 323,604 659,292
Depreciation Amortization 290,013 426,968 26,193 79,302
Bad Debts 15,000 15,000 98,000 171,000
General and Administration 822,479 1,692,329 237,970 398,001
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Total Cost and Expenses 1,847,251 3,281,416 2,895,208 4,821,005
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Net Income from Operations 3,154,721 6,021,333 293,433 758,460
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Other Income
Interest 24,698 43,506 3,032 5,187
Sale of Assets 500,000 500,000
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Total Other Income 524,698 543,506 3,032 5,187
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Income Tax Expense 1,234,806 2,264,900 53,000 241,000
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Net Income $2,444,613 $4,299,939 $ 243,465 $ 522,647
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Basic Earnings Per Share Common Stock $0.16 $0.28 $0.02 $0.04
Diluted Earnings Per Share Common Stock $0.14 $0.25 $0.02 $0.04
The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
800America . com, Inc.
Consolidated Statement of Cash Flows
Unaudited
Six Months Ended June 30
2001 2000
Cash Flows from Operating Activities
Net Income from Operations $4,299,939 $522,647
Adjustments to Reconcile Net Income
to Cash Flows from Operations
Depreciation and Amortization 426,965 79,302
Bad Allowance - Increase 15,000 73,000
Account Receivable (Increase) -26,676 -743,711
Prepaid Advertising - Decrease 75,000 121,600
Advances to Affiliates - Decrease 47,749
Deferred Tax Asset (Increase) -5,100
Account Payable - Increase 129,295 39,047
Rebates - Increase 296,909
Accrued Expenses - Increase 53,738 1,947
Deposit on Equipment - Decrease 94,000
Income Tax Payable - Increase 902,034 241,000
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Net Cash Provided by Operating Activity 5,917,944 725,741
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Cash Flows from Investing Activities
Equipment Purchase -98,731 -445,817
Software Purchase -464,953
Investments and Advances to Subsidiaries -2,568,065
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Net Cash Used in Investing Activities -2,666,796 -910,770
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Cash Flows from Financing activities
Additional Paid in Capital 250,000
Common stock Issued for Acquisition
of New Operating Divisions 2,017
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Net Cash Provided by Financing Activities 2,017 250,000
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Net Increase in Cash 3,253,166 64,971
Beginning Balance 2,117,746 392,564
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Ending Balance $5,370,912 $457,535
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The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
800America . com, Inc.
Changes in Consolidated Stockholders Equity
Unaudited
Six Months Ended June 30, 2001
Common Common Additional Total
Stock Stock Paid In Retained Stockholders
Shares Amount Capital Earning Equity
Balance December 31, 2000 13,412,000 $ 13,412 $1,943,134 $2,053,245 $4,009,791
Common Stock Issued to
Acquire Affiliates 2,017,493 2,017 2,017
Net Income 4,299,939 4,299,939
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Balance June 30, 2001 15,429,493 15,429 1,943,134 6,353,184 8,311,747
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Balance December 31, 1999 12,250,000 12,250 952,312 -37,716 926,846
Additional Paid in Capital
January 18,2000 250,000 250,000
Common Stock Issued for
Rothman Closeouts.com 200,000 200 199,800 200,000
Net Income 522,647 522,647
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Balance June 30, 2000 12,450,000 $ 12,450 $1,402,112 $ 484,931 $1,899,493
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The Accompanying "Notes to Financial Statements"
Are An Integral Part of These Financial Statements
800America . com, Inc.
Selected Notes to Reviewed 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 fully year. For further
information, refer to the December 31, 2000 consolidated financial statements
and notes thereto included in 800America . com, Inc. 10KSB.
Note 2 - Related Party Transactions
Compensation paid Chief Executive Officer $160,000 for six months ended
June 30, 2001 and $55,000 for the six months ended June 30, 2000.
Note 3 - Supplemental Cash Flow Information
Six months ended 6/30/01 6/30/00
Interest paid 0 0
Income Tax Paid $1,476,966 0
Note 4 - Non Cash Transactions
1,817,493 Shares Common Stock
for operating activity Inshop. Com 1,817
200,000 Shares Common Stock
eBiz4Biz . com 200
Note 5 - Purchase of Subsidiary
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, 2001.
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 five months ending June 30, 2001.
Goodwill was not recognized.
The Company purchased Fileshooter . com . Fileshooter . com was dormant
since its inception until purchased by 800America . com, Inc. on June 30, 2001.
The Company 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 above purchases were completed for a combination of stock and cash
of approximately $1,500,000.
Note 6 - Sale of Operating Divisions
The Company sold the following operating divisions for cash:
Steeplehouse . com $250,000
21 Avenue Productions . com 100,000
Inde4u. com 150,000
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Total $500,000
The Company has no recorded cost on any of these three divisions.
Item 2. Management's 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 Company's 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, RothmanCloseouts.com,
InternetWebGuide.com, FileShooter.com, InShop.com and eBiz4biz.com.
Results of Operations
Quarter Ended June 30, 2001 Compared to Quarter Ended June 30, 2000.
The Company had revenues of $5,001,972 for the quarter ended June 30, 2001
compared to revenues of $3,188,641 for the quarter ended June 30, 2000. Net
income for the quarter ended June 30, 2001 was $2,444,613 compared to net income
of $243,465 for the quarter ended June 30, 2000. Total operating expenses for
the quarter ended June 30, 2001 were $1,847,251 resulting in operating income
for the quarter of $3,154,721. This compares to total operating expenses of
$2,895,208 for the quarter ended June 30, 2000, resulting in operating income of
$293,433. 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 $2,209,441 for the quarter ended June 30, 2000
that represented approximately 76% of total operating expenses. Because of the
Company's 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. With the addition of an office in
Beijing China the revenues of RothmansCloseouts, one of the Company's most
profitable web sites, have been greatly enhanced. Management expects that
revenues from Business to Consumers divisions will slightly decrease in the
third quarter. This is in line with the national trend. Management expects that
all other divisions will have increased revenues and profits.
Liquidity And Capital Resources
Net cash provided by operating activities was $4,217,920 for the quarter ended
June 30, 2001 compared to net cash provided by operating activities of $363,145
for the quarter ended June 30, 2000. Net cash used in investing activities was
$2,078,161 for the quarter ended June 30, 2001 compared to $367,363 for the
quarter ended June 30, 2000.
The Company's cash and cash equivalents as of June 30, 2001 were $5,370,912. At
June 30, 2001, the Company had current assets of $6,291,584 and current
liabilities of $1,496,895 resulting in working capital at June 30, 2001 (current
assets less current liabilities) of $5,794,689.
During the quarter the Company completed the purchase of Ebiz4biz.com and
acquired the remaining interest in Filehooter, Inc. it did not already own. The
Company paid a total of approximately $1,500,000 in cash and common stock in
connection with these transactions. The Company expects that these operations
will add revenues to the Company's operations.
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.
Six Months Ended June 30, 2001 Compared With June 30, 2000
Results of Operations
The Company had revenues of $9,302,749 for the six months ended June 30, 2001
compared with revenues of $5,579,463 for the six months ended June 30, 2000.
This represents a 67% increase. The increase was primarily the result of
increased sales and the elimination of the Company's rebate program, beginning
in January of 2001. Net income was $4,299,939 for the six months ended June 30,
2001 compared with net income of $522,647 for the six months ended June 30,
2000. Total operating expenses were $3,281,416 for the six months ended June
30,2001 compared with $4,821,005 for the six months ended June 30,2000. This is
a decrease of 32% and is primarily a result of the discontinuance of the rebate
program.
Liquidity And Capital Resources
Net cash provided for operating activities was $5,917,944 for the six months
ended June 30, 2001 compared with net cash of $725,741 for the six months ended
June 30, 2000. The increase in net cash was primarily attributable to an
increase in revenues and a decrease in operating costs as a result of ending the
rebate program. During the six month period ended June 30, 2001, the Company
sold assets for $500,000 and purchased two companies for approximately
$1,500,000 in cash and common stock. During the six months ended June 30, 2000,
the Company obtained $250,000 through the sale of equity securities in a private
placement.
Events Subsequent to June 30, 2001
In July 2001, the Company completed a private placement of its equity
securities. The Company received approximately $2,700,000 in gross proceeds.
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 Company's
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: August 14, 2001 By: /s/ Elie Rabi
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Elie Rabi
President (Principal
Executive Officer, Chief
Financial Officer and Chief
Accounting Officer)