UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended February 29, 2000
( ) For the transition period from __________ to __________
Commission file number: ________________
ROMPUS INTERACTIVE CORP.
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0750004
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
190 Robert Speck Parkway, P.O. Box 190
Mississauga, Ontario, Canada L4Z 3K3
(905) 896-4048 -telephone
(905) 896-7069 - facsimile
(Address of principal executive offices)
Check whether the issuer: (1) 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 issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
--- ---
The issuer had 7,601,573 shares of its $.0001 par value Common Stock issued and
outstanding as of April 12, 2000.
Transitional Small Business Disclosure Format (check one)
Yes No X
--- ---
ROMPUS INTERACTIVE CORP.
INDEX
PART I. FINANCIAL INFORMATION
PAGE NO.
--------
Item 1. Financial Statements
Condensed Consolidated Statement of Operations for
the Three Months Ended February 29, 2000 and for
February 28, 1999
Condensed Consolidated Statement of Operations for
the Six Months Ended February 29, 2000 and for
February 28, 1999
Condensed Consolidated Balance Sheets as of February 29, 2000
and August 31, 1999
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended February 29, 2000 and for February 28, 1999
Notes to the Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) Reports on Form 8-K
2
- --------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statement of Operations for
the Three Months Ended February 29, 2000 and for
February 28, 1999
Condensed Consolidated Statement of Operations for the
Six Months Ended February 29, 2000 and for February 28, 1999
Condensed Consolidated Balance Sheets as of February 29, 2000
and August 31, 1999
Condensed Consolidated Statements of Cash Flows for the
Six Months Ended February 29, 2000 and for February 28, 1999
Notes to the Condensed Consolidated Financial Statements
3
- -----------------------------------------------------------------------------------------------------
ROMPUS INTERACTIVE CORP.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in U.S. Dollars)
(Unaudited)
- -----------------------------------------------------------------------------------------------------
Three Month Period
Ended February 29,
--------------------------------
2000 1999
-------------- --------------
Sales $ 165,739 $ 4,263
Cost of sales 94,873 2,073
-------------- --------------
Gross margin 70,866 2,190
-------------- --------------
Expenses
Selling, general and administrative 653,930 533
Depreciation and amortization 8,769 -
Compensation and professional
services (Note 2) - -
Financing - -
Foreign exchange loss 42,861 1,145
-------------- --------------
705,560 1,678
-------------- --------------
(Loss) earnings before other income (634,694) 512
Other income 6,585 -
-------------- --------------
Net (loss) earnings $ (628,109) $ 512
============== ==============
- -----------------------------------------------------------------------------------------------------
Net (loss) earnings per share, basic
and diluted $ (0.08) $ 0.00
============= ==============
Weighted average shares, basic
and diluted 7,601,573 7,601,573
============= ==============
- -----------------------------------------------------------------------------------------------------
See accompanying notes to the condensed consolidated
financial statements.
4
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ROMPUS INTERACTIVE CORP.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Expressed in U.S. Dollars)
(Unaudited)
- -----------------------------------------------------------------------------------------------------
Six Month Period
Ended February 29, Apr. 4, 1995 to
------------------------------- Feb.29, 2000
2000 1999 Cumulative
-------------- ------------ --------------
Sales $ 304,920 $ 4,263 $ 445,932
Cost of sales 164,309 3,477 313,301
-------------- ------------ --------------
Gross margin 140,611 786 132,631
-------------- ------------ --------------
Expenses
Selling, general and administrative 1,360,252 3,723 1,738,882
Depreciation and amortization 12,534 - 35,661
Compensation and professional
services (Note 2) 3,788,000 - 5,587,982
Financing - - 1,500,000
Foreign exchange loss 43,806 - 61,037
-------------- ------------ --------------
5,204,592 3,723 8,923,562
-------------- ------------ --------------
Loss before other income (5,063,981) (2,937) (8,790,931)
Other income 26,205 - 26,205
-------------- ------------ --------------
Net loss $ (5,037,776) $ (2,937) $ (8,764,726)
============== ============ ==============
- -----------------------------------------------------------------------------------------------------
Net loss per share, basic
and diluted $ (0.66) $ (0.00)
============== ============
Weighted average shares, basic
and diluted 7,601,573 7,601,573
============== ============
- -----------------------------------------------------------------------------------------------------
See accompanying notes to the condensed consolidated
financial statements.
5
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ROMPUS INTERACTIVE CORP.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars)
(Unaudited) February 29, August 31,
2000 1999
- ------------------------------------------------------------------------------------------------------
ASSETS
Current
Cash $ 397,384 $ 494,614
Accounts receivable 238,699 26,224
Work in process 7,588 10,147
Prepaids 44,325 18,680
Refundable investment tax credits - 4,646
------------- -------------
687,996 554,311
Capital assets 85,936 34,354
Other assets 7,190 5,478
------------- -------------
$ 781,122 $ 594,143
============= =============
- ------------------------------------------------------------------------------------------------------
LIABILITIES
Current
Accounts payable and accrued liabilities $ 300,847 $ 311,758
Accrued compensation and professional services 3,844,365 -
Due to related parties 169,489 166,198
------------- -------------
4,314,701 477,956
------------- -------------
SHAREHOLDERS' DEFICIENCY
Preferred stock 900 900
Common stock 760 760
Contributed surplus 5,229,487 5,229,487
Subscription receivable - (1,388,010)
Deficit (8,764,726) (3,726,950)
------------- -------------
(3,533,579) 116,187
-------------- -------------
$ 781,122 $ 594,143
============= =============
- ------------------------------------------------------------------------------------------------------
See accompanying notes to the condensed consolidated
financial statements.
6
- -----------------------------------------------------------------------------------------------------
ROMPUS INTERACTIVE CORP.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Expressed in U.S. Dollars)
Six Months Ended February 29 2000 1999
(Unaudited)
- -----------------------------------------------------------------------------------------------------
Cash flows from (applied to)
OPERATING
Net loss $ (5,037,776) $ (2,937)
Accrued compensation and professional
services expense 3,788,000 -
Depreciation and amortization 12,534 -
--------------- -------------
(1,237,242) (2,937)
Changes in
Receivables (212,475) (866)
Work in process (2,559) -
Prepaid expenses (25,645) -
Accounts payable and accrued liabilities (10,911) 2,882
Refundable investment tax credits 4,646 11,338
--------------- -------------
(1,484,186) 10,417
--------------- -------------
FINANCING
Decrease in subscription receivable 1,388,101 -
Advances to related parties - (1,183)
--------------- -------------
1,388,101 (1,183)
--------------- -------------
INVESTING
Purchase of other assets (1,245) -
Purchase of capital assets (60,391) (25,900)
--------------- -------------
(61,636) (25,900)
--------------- -------------
FOREIGN CURRENCY TRANSLATION ADJUSTMENT 60,491 12,687
--------------- -------------
Net decrease in cash and cash equivalents
during the year (97,230) (3,979)
Cash and cash equivalents, beginning of period 494,614 29,261
--------------- -------------
Cash and cash equivalents, end of period $ 397,384 $ 25,282
=============== =============
- -----------------------------------------------------------------------------------------------------
See accompanying notes to the condensed consolidated
financial statements.
7
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ROMPUS INTERACTIVE CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
February 29, 2000
(Unaudited)
- --------------------------------------------------------------------------------
1. GENERAL
The unaudited condensed consolidated financial statements have been prepared on
the same basis as the audited consolidated financial statements and, in the
opinion of management, reflect all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation for each of the periods
presented. The results of operations for interim periods are not necessarily
indicative of results to be achieved for full fiscal years.
As contemplated by the Securities and Exchange Commission (SEC) under Rule 10-01
of Regulation S-X, the accompanying consolidated financial statements and
related footnotes have been condensed and do not contain certain information
that will be included in the Company's annual consolidated financial statements
and footnotes thereto. For further information, refer to the consolidated
financial statements and related footnotes for the year ended August 31, 1999
included in the Company's Annual Report on Form 10-KSB.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Rompus Interactive
Corp. (Rompus) and its wholly owned subsidiary, Rompus CD-ROM Production Ltd.
(Rompus-BC).
On July 30, 1999, Rompus, acquired 100% of the outstanding common stock of
Rompus-BC from various shareholders (the Acquisition). The Acquisition resulted
in the owners and management of Rompus-BC having effective control of the
combined entity.
Under reverse takeover accounting, the post reverse-acquisition comparative
historical financial statements of the "legal acquirer" (Rompus), are those of
the "legal acquiree" (Rompus-BC) (i.e. the accounting acquirer).
INCOME TAXES
Income taxes for the interim periods were computed using the effective tax rate
estimated to be applicable for the full fiscal year, which is subject to ongoing
review and evaluation by management.
LOSS PER SHARE
The Company reports earnings per share in accordance with the provisions of SFAS
No. 128, EARNINGS PER SHARE. SFAS No. 128 requires presentation of basic and
diluted earnings per share in conjunction with the disclosure of the methodology
used in computing such earnings per share. Basic earnings per share excludes
dilution and is computed by dividing income available to common shares by the
weighted average common shares outstanding during the period. Diluted earnings
per share takes into account the potential dilution that could occur if
securities or other contracts to issue common stock were exercised and converted
into common stock.
8
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ROMPUS INTERACTIVE CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
February 29, 2000
(Unaudited)
- --------------------------------------------------------------------------------
1. GENERAL (CONTINUED)
At February 29, 2000, there were 9,000,000 Exchangeable shares of Rompus-BC
outstanding. Each of these Exchangeable shares is exchangeable for one Common
share of Rompus. These shares were not included in the computation of diluted
earnings per share because to do so would be antidilutive.
There were stock options outstanding at February 29, 2000, to purchase 1,500,000
shares of common stock which were not included in the computation of diluted
earnings per share because to do so would be antidilutive.
Basic weighted average shares outstanding for the period were 7,601,573 (1999 -
7,601,573)
- --------------------------------------------------------------------------------
2. INDUSTRY SEGMENT AND FOREIGN SALES INFORMATION
Management has determined that it operates in one industry segment.
For the six months ended February 29, 2000, the Company's sales were distributed
as follows:
Canada $ 178,555 (1998 - $4,263)
United States $ 124,765 (1998 - $Nil)
Puerto Rico $ 1,600 (1998 - $Nil)
9
- --------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION (CONTINUED)
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Rompus Interactive Corp. (the "Company" or "Rompus") was first incorporated
as Mercur Enterprises, Inc. in August, 1991 in the state of Florida. Reinstated
in August, 1995, the Company changed its name to AutoMetreks, Inc. on January 3,
1997, and traded on the OTC/BB under the symbol ATMT until April 5, 1999. The
Company changed its name to OnLine Hearing Dot Com, Co. on April 6, 1999. The
Company's wholly owned subsidiary, Rompus CD-ROM Production Ltd., is
incorporated under the laws of the province of British Columbia ("Rompus-BC").
Effective July 30, 1999, the Company entered into a share exchange with
Rompus-BC wherein the Company acquired all of the common stock of Rompus-BC in
exchange for common and preferred stock of the Company. On July 30, 1999, the
Company changed its name to Rompus Interactive Corp. The Company commenced
trading on the OTC/BB as IDCD and currently trades on the over-the-counter
market as IDCD.
With headquarters in Mississauga, Ontario, Canada, the Company's business
focuses on providing innovative multimedia solutions to companies in e-commerce
and Internet marketing. The Company has developed an innovative product known as
the i.d.romTM. An i.d.rom is a CD-ROM shaped like a business card, on which 40
MB of data can be stored. When placed in a standard computer, it automatically
plays its multimedia content then connects to the issuer's web site. This
product allows a company, regardless of its size or its industry to market its
image and products anywhere using leading edge multimedia technology. The
concept is simple yet unique. Rompus is able to provide businesses worldwide
with the technical, design and manufacturing means to better meet the demands of
their markets. It does this by producing interactive multimedia presentations to
fulfill its clients' communications needs, and delivering them in the i.d.rom
package.
PLAN OF OPERATIONS
The following discussion contains figures relating to plans,
expectations, future results, performance, events or other matters that are
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended. When used in the Plan of Operations (see section
below), words such as "estimate", "project", "intend", "expect", "anticipate"
and similar expressions are intended to identify forward-looking statements.
Such forward-looking statements involve numerous risks and uncertainties
pertaining to technology, development of the Company's products, and markets for
such products, timing and level of customer orders, competitive products and
pricing, changes in economic conditions and markets for the Company's products
and other risks and uncertainties. Actual results, performance and events are
likely to differ and may differ materially and adversely. Investors are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this report, being April 13, 2000. The Company
undertakes no obligation to release or deliver to investors revisions to these
forward-looking statements to reflect events or circumstances after the date of
this report, the occurrence of unanticipated events or other matters.
Operational references refer to the Company's operating subsidiary, Rompus-BC.
The Company began operations in February 1998 for the purpose of
developing its multimedia proprietary product: the i.d.rom. The Company has a
limited operating history on which to evaluate its prospects. The risks,
expense, and difficulties encountered by startup companies must be considered
when evaluating the Company's prospects. The Company's plan of operations for
the next twelve months is to further develop its products while
10
seeking strategic alliances with media and Internet-related companies in order
to demonstrate its technology to companies and consumers.
Beginning in July 1999, certain executive officers and managers
accepted reduced salaries on a temporary basis to protect the cash assets of the
Company. The unpaid portions of such salaries have been accrued, and in order to
continue to preserve the Company's cash flow and cash reserves, portions of
certain key executives' salaries will continue to be accrued until the Company
obtains sufficient funds to make such payments without adverse effect to the
Company's cash position. The unpaid portions are tied to company performance.
The Company believes that its existing funds, in combination with funds
anticipated to be raised in private offerings of debt and equity and the
revenues generated by its operations will be sufficient to fund its operations
for the next twelve months. However, there is no guarantee that the Company will
be able to raise sufficient capital or, if such capital is available, that it
will be on terms acceptable to the Company. Additionally, the Company's
estimates of the costs to advertise and market its product might be low. The
operating expenses of the Company cannot be predicted with certainty. They will
depend on several factors, including the amount of marketing expenses, the
acceptance of the Company's products in the market, and competition for such
product. Management may be able to control the timing of development expenses in
part by speeding up or slowing down marketing development and distribution
activities.
A significant portion of the money recently raised in private
placements of the Company's securities will be used to launch its products
through a variety of sales channels as well as to create a provocative
advertising and public relations campaign.
The Company's forecasted plan of operations for the twelve months
ending November 30, 2000 consist of the following key figures:
- Revenues totaling $10,523,000
- Costs of Sales $ 5,577,000
- Sales Commissions $ 1,497,000
- Wages and Salaries $ 789,225
- Promotion and Advertising $ 825,000
- Research and Development Costs $ 340,000
- Office and General $ 300,000
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the Company's
financial condition and results of operations. Detailed information is contained
in the financials included with this document. This section contains
forward-looking statements that involve risks and uncertainties, such as
statements of the Company's plans, objectives, expectations and intentions. The
cautionary statements made in this document should be read as being applicable
to all related forward-looking statements wherever they appear in this document.
Since inception, the Company has funded its capital requirements by
financing activities, substantially through the sale of its equity securities.
The Company anticipates that revenues generated by orders for the i.d.rom(TM)
should be sufficient to fund the Company's operations by the beginning of fiscal
year II, beginning in September 2000. As the operating entity, Rompus-BC, has
only recently had operational activities so there is no comparative period
available for analysis by management.
The Company's product, i.d.rom-TM-, was launched for marketing purposes
in September, 1999 and only limited test marketing was conducted prior to that.
Therefore, the financial statements for the quarter ending February 29, 2000
only reflect some actual operations, start-up expenses and financing costs.
11
The current sales activity is quite high but has occurred only
recently. The Company is actively seeking additional financing to sustain its
rate of growth of personnel and related infrastructure. The degree of success
and timing of same will dictate whether the Company continues to grow or must
reduce operations in order to live within cash availability and cash generated
by sales. Until this is resolved, management is trying to defer major expenses
while focusing on generating cash through sales.
Sales expectations are excellent and all indicators show that the
forecasted Revenues for the year ending August 31, 2000 should be met. However,
the selling cycle has been much longer than anticipated and the next few months
will be critical to the Company's success.
In the meantime, concerted efforts are underway to obtain financing
commitments, which appear to be forthcoming during the months of April and May
2000. Until then, the Company continues to operate as conservatively as
possible.
12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
To the best knowledge of management, there are no litigation matters
pending or threatened against the Company which are not in the ordinary course
of business.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
(27) Financial Data Schedule
(b) Reports on Form 8-K
None.
13
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.
ROMPUS INTERACTIVE CORP.
Date: April 13, 2000 /s/ Shawn Smith
------------------------------------
Shawn Smith, Chief Executive Officer
Date: April 13, 2000 /s/ John Drewry
------------------------------------
John Drewry, Chief Financial Officer
14