SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended DECEMBER 31, 1999
or
[ ] 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 000-22281
SCOOP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0726608
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Cyberia House
Church Street, Basingstoke
Hampshire RG21 7QN
United Kingdom
(Address of Principal Executive Offices)
+44 1256 867 800
(Telephone number)
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
Common Stock, Par Value $0.001 Per Share
(Title of class)
Indicate 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) had been subject to such
filing requirements for the past 90 days.
Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
[ ]
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of February 13, 2001: $3,757,649. The amount shown is based on the
closing price of the registrant's Common Stock on the National Quotation
Bureau's Pink Sheets on that date. Shares of Common Stock known by the
registrant to be beneficially owned by 10% shareholders, officers or directors
of the Registrant are not included in the computation. The Registrant, however,
has made no determination that such persons are "affiliates" within the meaning
of Rule 12b-2 under the Securities Exchange Act of 1934.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Number of shares of Common Stock outstanding at February 13, 2001:
85,486,716.
DOCUMENTS INCORPORATED BY REFERENCE
None.
SCOOP, INC.
As used in this report, the terms "Scoop," "Company" and "Registrant" mean
Scoop, Inc. and its subsidiaries.
PART I
ITEM 1. BUSINESS.
INTRODUCTION
Scoop, Inc. ("Scoop" or the "Company") is today a holding company owning
100% of the Common Stock of 24STORE (Europe) Limited, a Company incorporated
under the laws of England, formerly known as 24STORE.com Limited and currently
operating in the United Kingdom and Norway ("24STORE").
THE COMPANY'S HISTORY
The Company commenced business operations in May 1990. The Company's
original business operations focused on the sale of media products and business
information services.
Following an initial public offering, the Common Stock of the Company began
trading on the NASDAQ Small Cap Stock Exchange on April 9, 1997 under the symbol
"SCPI." During 1997 and 1998 the business failed to be profitable.
During the second quarter of 1998, the Company was informed that it no
longer met the minimum requirements for listing on the NASDAQ Small Cap Stock
Exchange and was subsequently de-listed from the exchange on June 24, 1998.
As previously reported by the Company in its Quarterly Report on Form 10QSB
for the quarterly period ended June 30, 1998 (filed August 14, 1998), on July
31, 1998 the Company filed a voluntary petition commencing a case under Chapter
11 of the United States Bankruptcy Code in the United States Bankruptcy Court
for the Central District of California (the "Bankruptcy Court") as Case No. SA
98-20799 RA.
As of December 7, 1999, in accordance with a Plan of Reorganization
approved by the Bankruptcy Court, InfiniCom AB, a company registered in Sweden,
had acquired a total of 60,783,219 shares of Common Stock of the Company
(representing approximately 90% of the outstanding shares of Common Stock of the
Company) in exchange for 100% of the Common Stock of 24STORE.
THE BUSINESS TODAY
24STORE's current business operations are held in the following three
wholly-owned subsidiaries of 24STORE:
* 24STORE AS, a company registered in Norway in 1992, sells computer and
electronics products primarily to the business sector. Based approximately
ten miles from Oslo, Norway, the business was originally a catalogue based
sales operation selling computer peripherals and standard "shrink-wrapped"
software applications. Today the business sells a wide range of computer
hardware, software, and other electronics products, generating revenue with
repeat business from its existing customer base, advertising in national
computer magazines, and from its web site, www.24STORE.com/no.
* LapLand (UK) Limited, a company registered in England in 1991, supplies
primarily business customers with computer and electronics products.
Operating from the Company's executive offices based approximately forty
miles west of London, the company sells a wide range of mobile computing
and related products, sourced from major computer manufacturers. The
business is generated from an active telesales team, working on inquires
from the existing customer base, regular advertising in national computer
magazines, and from the company's web site, www.lapland.co.uk.
* Mobile Planet Limited, a company registered in England in 1992, is a
wholesaler of mobile computing and related products. The company acts as a
distributor in the United Kingdom for major brand name computer
manufacturers, and related peripheral products. Based from the same
facility as LapLand (UK) Limited, the business generates revenues from an
established base of trade accounts.
In addition to the foregoing three operating companies, 24STORE also holds
100% of the outstanding capital stock of Cyberia (UK) Limited, a company
registered in England ("Cyberia"), whose sole purpose is to hold title to the
real property on which the Company's headquarters are located.
PRODUCTS AND SERVICES
The Company's primary products are computer and electronics products. The
products are sourced either directly from the manufacturers or purchased from
national distributors. In both value and volume terms, the largest product line
today is the supply of mobile computers, although the company also supplies
"shrink-wrapped" computer software and other computer hardware including Desktop
PCs and File Servers.
SALES AND MARKETING STRATEGY
The Company's traditional sales methods consisted of mail-order catalogues
and telephone sales of computer and electronic equipment to business customers.
In recent years, these traditional sales methods have been complemented by
steadily increasing web based sales. The Company believes that its future is
based on a combination of these three sales methods.
In addition to its current operating businesses, 24STORE is the registrant
and owner of a unique group of over 200 internet domain names, all commencing
with the "24" prefix. The Company intends to develop its business using these
domain names to diversify the products and services that the Company offers. The
Company believes common usage of the "24" brand will allow synergistic cost
savings to be achieved in a wide range of product and service categories. The
domain names can each be categorized under a number of key areas; some of these
domains, together with their respective products and services categories, are
listed below:
RETAIL SERVICES MEDIA FINANCE
24STORE.COM 24SOLUTIONS.COM 24MEDIA.COM 24FINANCE.COM
24SHOPPING.COM 24SUPPORT.COM 24RADIO.COM 24BANK.COM
24MOBILE.COM 24HELP.COM 24TV.COM 24BID.COM
24FASHION.COM 24OFFICE.COM 24DAILY.COM 24CASH.COM
24WINE.COM 24PEOPLE.COM 24CHAT.COM 24LOAN.COM
24BOOKS.COM 24SERVICES.COM 24MAIL.COM 24TRADING.COM
Using these domain names, the Company's strategy is to:
* Expand its retail and product supply operations by organic and acquisitive
growth into new product categories and new geographies. The Company
currently supplies primarily computing and electronic products but believes
that organic growth can be achieved by utilizing existing supplier
relationships to move into new product categories. The Company will look to
acquire synergistic businesses to move into more diverse product categories
and new geographies.
* Develop service, support and solutions based businesses around the relevant
"24" domain names. The Company envisages that its initial ventures will be
in information technology consulting where it intends to maximize synergies
with its majority shareholder InfiniCom AB, which owns a number of
consulting companies in IT security, systems integration, logistics and
e-commerce sectors. In the longer term the Company intends to move into
other service and support businesses.
* Look to maximize the value of the domains in the media and financial
services sectors. Where the Company has limited relevant experience it will
explore joint venture or licensing opportunities.
COMPETITION
The computer/electronic products markets continue to evolve rapidly and are
extremely competitive, and the Company expects competition to intensify in the
future. The Company competes with a significant number of other companies in the
sale of computer and electronics products. Current and potential competitors of
the Company include, but are not limited to: (1) online vendors of
computer/electronics products, (2) mail order vendors of computer/electronics
products, (3) system integrators and value added resellers, (4) direct sales
operations of computer/electronics manufacturers, and (5) retailers.
The Company believes that the principal competitive factors affecting its
business include its ability to secure merchandise for sale at favorable terms
and attract new customers at a favorable customer acquisition cost through its
mail order, telephonic, and internet sales channels. Although the Company
believes that it can compete favorably in such a competitive atmosphere, the
Company cannot be assured that it will be able to maintain a competitive
position against current and future competitors.
TRADEMARKS AND PROPRIETARY RIGHTS
The Company has relied, and intends to continue to rely, upon the
protection of trademark law. In addition, the Company relies on confidentiality
agreements with its employees to protect its proprietary rights. There can be no
assurance that the steps taken, and anticipated to be taken, by the Company to
protect its intellectual property rights will be adequate or that third parties
will not infringe or misappropriate the Company's domain names, copyrights,
trademarks, trade names, trade secrets, patents (if any) and similar proprietary
rights. In addition, there can be no assurance that other parties will not
assert infringement claims against the Company.
GOVERNMENT REGULATION
The Company is subject, both directly and indirectly, to various laws and
governmental regulations (primarily those imposed by the European Union)
relating to its business operations. There are currently few laws or regulations
directly applicable to commercial activities over the Internet. However, due to
increasing popularity and use of the Internet, it is possible that a number of
laws and regulations may be adopted with respect thereto. These laws and
regulations may cover issues such as user privacy, liability for information
retrieved from or transmitted over the Internet, online content regulation, user
privacy, taxation and domain name registration. Moreover, the applicability to
the Internet of existing laws governing issues such as intellectual property
ownership and infringement, copyright, patent, trademark, trade secret and
personal privacy is uncertain and developing. Any new legislation or regulation
or the application of existing laws and regulations to the Internet could have a
material and adverse effect on the Company's business.
EMPLOYEES
As of January 31, the Company employed a total of 39 persons, including 20
in sales and marketing, 9 in operations and 10 in general and administrative
functions. None of the Company's employees is represented by a labor union or is
subject to a collective bargaining agreement. The Company has never experienced
a work stoppage and believes that its relations with its employees are good.
ITEM 2. PROPERTIES.
The Company's principal executive offices are located in Basingstoke,
United Kingdom, approximately forty miles west of London. The Company, through a
wholly-owned subsidiary named Cyberia (UK) Limited, owns the freehold of its
office and warehouse space in the United Kingdom for use in the ordinary course
of its business. The property, which is approximately 7,800 square feet, was
constructed in 1959, and substantially refurbished in 1998. In addition, for its
business in Norway the Company leases office and warehouse space of
approximately 2,800 square feet located approximately ten miles outside Oslo,
Norway. The lease of the Norwegian property is on a month-to-month basis and
requires notice of three months by either party to terminate.
ITEM 3. LEGAL PROCEEDINGS.
From time to time, the Company is subject to litigation in the ordinary
course of its business. In the opinion of management, none of the currently
pending litigation is likely to have a material adverse effect on the Company's
business, financial condition, or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
In connection with the Company's bankruptcy proceedings which continued
during the year ended December 31, 1999, the Disclosure Statement and Plan of
Reorganization approved by the Bankruptcy Court by an order dated August 5, 1999
were promptly thereafter distributed to the Company's creditors and shareholders
for approval as a part of the bankruptcy process, which approval was
subsequently obtained.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Company's Common Stock is currently quoted on the National Quotation
Bureau's Pink Sheets under the symbol "SCPI." The following table sets forth for
the periods indicated the high and low closing sale price for the Common Stock
as quoted on the NASDAQ Small Cap Stock Exchange, the OTC Bulletin Board and the
National Quotation Bureau's Pink Sheets, as indicated below:
Bid
Quarter Ended High Low
December 31, 2000 $1.500 $0.063
September 30, 2000 $1.375 $0.500
June 30, 2000 $2.650 $0.626
March 31, 2000 $3.680 $0.875
December 31, 1999 $1.620 $0.688
September 30, 1999 $1.370 $0.500
June 30, 1999 $0.500 $2.038
March 31, 1999 $0.969 $0.463
On February 13, 2001 the last reported sales price for the Company's Common
Stock on the National Quotation Bureau's Pink Sheets was $0.625 per share.
As of February 13, 2001, there were 189 shareholders of record.
The declaration of cash dividends is at the discretion of the Board of
Directors of the Company. No cash dividends on the Common Stock have been
declared or paid by the Company to date. The Company does not anticipate paying
cash dividends in the foreseeable future.
Sale of Unregistered Securities
On December 7, 1999, in accordance with the Plan of Reorganization approved by
the Bankruptcy Court, the Company issued and sold to InfiniCom AB 60,783,219
shares of Common Stock of the Company in exchange for 100% of the capital stock
of 24STORE. As additional consideration for InfiniCom's acquisition of such
Common Stock, and as an incentive for the creditors of the Company to approve
and support the foregoing transaction as a part of the bankruptcy process,
InfiniCom paid the sum of $225,000, plus interest thereon, to the Company to be
used for payment to holders of all allowed general unsecured claims to the
extent that the bankruptcy estate of the Company was insufficient to pay in full
the allowed amount. InfiniCom also paid an additional sum of $125,000 to the
Company to reimburse the Company for certain transaction costs associated with
the negotiation, documentation and consummation of the foregoing transaction.
The issuance of securities in connection with the foregoing transaction was
exempt from registration under the Securities Act of 1933 pursuant to Section
4(2) thereof and Regulation D promulgated thereunder.
ITEM 6. SELECTED FINANCIAL DATA.
The following table sets forth selected financial data as of and for each
of the five fiscal years ended December 31, 1999 and is derived from the
Company's audited financial statements. The data set forth below should be read
in conjunction with the Consolidated Financial Statements and related Notes to
Consolidated Financial Statements appearing elsewhere herein and in "Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Year Ended December 31,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
Revenue $22,070,173 $5,453,410 $4,102,762 $3,158,982 $2,400,639
Operating Income/(Loss) ($4,921,367) $130,993 $162,882 $9,119 $35,187
Net Income/Loss ($5,626,018) $112,774 $107,791 ($2,960) $18,230
Income/(Loss) per share, basic and diluted ($0.09) $0.00 $0.00 $0.00 $0.00
weighted average number of shares outstanding 64,703,528 60,783,219 60,783,219 60,783,219 60,783,219
Working capital (deficit) ($8,146,694) $65,794 $110,708 $8,714 $7,664
Total Assets $11,942,175 $1,012,940 $748,961 $814,800 $586,674
Long-Term Debt $2,261,520 $0 $0 $0 $0
Total Shareholders equity (deficit) ($5,579,076) $138,739 $117,495 $19,461 $22,623
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
COMPANY OVERVIEW
Scoop, Inc. ("Scoop" or the "Company") was incorporated in 1996 in the
state of Delaware and began operations as an online news provider. In July 1998,
the Company filed a petition for relief under Chapter 11 of the federal
bankruptcy laws in the United States Bankruptcy Court for the Central District
of California. In September 1999, the Company filed a Plan of Reorganization
("Plan") with the Bankruptcy Court. The Plan was confirmed on October 5, 1999.
Pursuant to the Plan, Scoop was acquired in a reverse merger with 24STORE.com
Limited ("24STORE"), pursuant to which 24STORE's parent company acquired 91% of
the outstanding shares of Scoop, or 60,783,219 of newly issued shares, in
exchange for all the outstanding shares of 24STORE. Since the shareholders of
24STORE became the controlling shareholders of Scoop after the exchange, 24STORE
is treated as the acquiree for accounting purposes. No value has been assigned
to the assets and liabilities of the acquired company, as it is emerging from a
formal bankruptcy plan of reorganization. Proforma operating results as if the
acquisition had taken place at the beginning of the period have not been
presented as there are no operations of the acquiree. The financial position and
results of operations of the acquiree are included in the consolidated
statements of the Company.
24STORE was incorporated on July 28, 1998 in England and Wales, and was a
wholly owned subsidiary of InfiniCom AB, a publicly listed company on the SBI
market in Sweden, whose principal activity is that of a holding company. On
April 9, 1999, 24STORE entered into a Share Purchase Agreement, whereby it
acquired from its parent company several companies registered in Sweden and
Norway. All of the Swedish entities either entered bankruptcy or ceased
operations soon after the transfer. The Norwegian entity, as the only ongoing
concern, has been treated as the predecessor company, and accordingly, its
financial position and results of operations have been presented for the periods
preceding the reverse merger.
On May 6, 1999, 24STORE acquired three companies registered in the United
Kingdom, which companies were related through common ownership.
Reorganization:
On April 9, 1999, 24STORE and its parent company, InfiniCom AB, entered
into a share purchase agreement, whereby 24STORE received all the outstanding
shares of several of InfiniCom's subsidiaries, in exchange for 9,999,980 newly
issued shares of 24STORE and a note payable of $2,368,000. The transaction was
treated as a reorganization, with the transfer of assets and liabilities
accounted for at historical cost, after adjustment to US generally accepted
accounting principles, in a manner similar to that in pooling of interests
accounting, in accordance with APB 16 paragraph 5. The historical costs
transferred include goodwill of approximately $2,312,960, which had been
recognized upon the parent company's original acquisition of the transferred
subsidiaries. Included in this transaction 24STORE issued a note payable to
InfiniCom for $1,581,000 for the costs incurred in the development of certain
software by one of the transferred subsidiaries. These costs were expensed as
research and development during the year ended December 31, 1999.
Acquisitions:
On May 6, 1999, 24STORE purchased all the issued ordinary shares of Lapland
UK, Mobile Planet and Cyberia ("UK Group") in a share purchase agreement with
the shareholders of the acquired companies. The three acquired entities were
each owned by the same two shareholders, unrelated to 24STORE or its parent
company. As a part of the acquisition, 24STORE received all the outstanding
shares of stock of the three companies, for consideration of cash and notes of
approximately $3,420,000 and 700,000 shares of InfiniCom's outstanding shares.
The acquisition has been accounted for using the purchase method of
accounting, and accordingly, the acquisition cost of approximately $4,760,000
has been allocated to the assets acquired and liabilities assumed based on
estimates of their fair value. A total of approximately $3,616,000, representing
the excess of acquisition costs over the fair value of the UK Group's tangible
net assets, has been allocated to goodwill and is being amortized over 5 years.
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated certain financial
data as a percentage of total net sales for the fiscal years ended December 31,
1999, 1998, 1997 and 1996. The operating results in any periods are not
necessarily indicative of the results to be expected for any future period.
YEAR ENDED DECEMBER 31,
1999 1998 1997 1996
---------------------------------------------------------
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 87.6% 80.6% 79.6% 80.3%
Gross profit 12.4% 19.4% 20.4% 19.7%
Operating expenses:
Selling general and administrative 21.9% 17.0% 16.5% 19.4%
Goodwill amortization 3.8%
Impairment loss on investments 9.0%
Total operating expenses 34.7% 17.0% 3.9% 19.4%
--------------------------------------------------------
Net Income (Loss) from operations (22.3)% 2.4% 3.9% 0.3%
Net Interest expense 2.7% 0.0% 0.3% 0.4%
Loss before provision for income taxes (25.0)% 2.4% 3.6% (0.1)%
Provision for income taxes 0.5% 0.3% 0.3% 0.0%
Net Income (Loss) (25.5)% 2.1% 2.6% (0.1)%
COMPARISON OF FISCAL YEARS ENDED DECEMBER 31, 1999, 1998, 1997 and 1996.
NET SALES. Net sales for the years ended December 31, 1999, 1998, 1997 and
1996 were as follows:
YEAR ENDED DECEMBER 31,
-----------------------
1999 1998 1997 1996
----------------------------------------------------------------
Net sales $22,070,173 $5,543,410 $4,102,762 $3,158,982
% increase from 298.1% 35.1% 29.9%
the previous year
Net sales for the years ended December 31, 1999, 1998, 1997 and 1996 were
all derived from operations in Norway. The increase in net sales for the year
ended December 31, 1999 is a result of the acquisition of the UK Group, and the
inclusion of their operations in the consolidated financial statements. The UK
Group's net sales for the period from acquisition to December 31, 1999 amounted
to approximately $16,086,000.
GROSS PROFIT. Gross profit for the years ended December 31, 1999, 1998,
1997 and 1996 were as follows:
YEAR ENDED DECEMBER 31,
-----------------------
1999 1998 1997 1996
-------------------------------------------------------------
Gross profit $2,750,669 $1,061,596 $839,750 $621,320
% increase from 159.1% 26.4% 31.2%
the previous year
Gross margin 12.4% 19.4% 20.4% 19.7%
Gross profit consists of net sales less the cost of sales, which consists
of the cost of merchandise sold to customers. The Gross margins for the years
ended December 31, 1998, 1997, and 1996 were fairly consistent, with Gross
profits increasing in line with the growth in Net sales. The reduction in Gross
margin for the year ended December 31, 1999 reflects the lower gross margins of
the UK Group.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.
Selling, general and administrative ("SG&A") expenses for the years ended
December 31, 1999, 1998, 1997 and 1996 were as follows:
YEAR ENDED DECEMBER 31,
-----------------------
1999 1998 1997 1996
-------------------------------------------------------------
Selling, general and administrative $4,826,875 $930,603 $676,868 $612,201
% increase from the previous year 418.7% 37.5% 10.6%
% of net sales 34.7% 17.0% 16.5% 19.4%
SG&A expenses for the year ended December 31, 1997 increased 10.6% to
$676,868 from $612,201 in the year ended December 31, 1996. The increase in SG&A
for the 1997 fiscal year was attributable to an overall increase in expenditure
generated by the higher level of sales. SG&A expenses for the year ended
December 31, 1998 increased 37.5% from the year before to $930,603. The increase
in SG&A for the 1998 fiscal year was primarily attributable to an increase in
marketing expenses. SG&A expenses for the year ended December 31,1999 increased
418.7% from the year before to $4,826,875. The increase in SG&A for the 1999
fiscal year was primarily attributable to the inclusion of the SG&A expenses of
the UK Group, the legal and accounting fees and costs involved in the
reorganization and reverse merger between the Company and 24STORE, and Research
and Development expenditure related to the Company's web sites incurred in the
Company's Swedish subsidiaries.
GOODWILL AMORTIZATION.
There was no goodwill amortization for the years 1998, 1997, and 1996.
Goodwill amortization for the year ended December 31, 1999 was $839,087. The
1999 goodwill charge is attributable to the acquisition of the UK Group. It is
likely that the Company's business will continue to expand through acquisitions,
which would cause the amortization of goodwill and other intangibles to
increase.
IMPAIRMENT LOSS ON INVESTMENTS.
The Impairment loss on investments for the year ended December 31, 1999 was
$2,006,074. This charge represents a full provision against the Company's
investment in its Norwegian subsidiary 24STORE AS, which although still trading,
has suffered a substantial loss of capital.
INTEREST EXPENSES. Interest expenses, net of interest income for the years
ended December 31, 1999, 1998, 1997 and 1996 were as follows:
YEAR ENDED DECEMBER 31,
-----------------------
1999 1998 1997 1996
-----------------------------------------------------------
Interest income $17,660 $10,660 $4,174 $3,047
% change from the previous year 65.7% 155.3% 37.0%
Interest expenses $617,231 $11,899 $17,329 $15,127
% change from the previous year 5087.7% (31.4)% 14.6%
Interest income represents interest received on cash deposits. Interest
expenses include interest payable on bank overdrafts, mortgages, receivables
financing arrangements, and other loans. The increase in interest expenses in
the year ended December 31, 1999 is primarily attributable to the acquisition of
the UK Group which has a bank loan and operates with receivables financing
arrangements, and interest on loan notes due to related parties as a result of
the reorganization and acquisitions. See discussion in "Item 13 - Certain
Relationships and Related Transactions."
INCOME TAXES. Income taxes, for the years ended December 31, 1999, 1998,
1997 and 1996 were as follows:
YEAR ENDED DECEMBER 31,
-----------------------
1999 1998 1997 1996
-----------------------------------------------------------
Income taxes $105,080 $16,980 $41,936 $------
LIQUIDITY AND CAPITAL RESOURCES
January 1, 1996 to December 31, 1998
Cash and cash equivalents at December 31, 1998 were $242,529 compared to
$142,278 as of December 31, 1997 and $248,473 as of December 31, 1996.
Cash provided by operating activities was $84,513 in 1998 compared to net
cash used by operating activities of $106,195 in 1997 and net cash provided by
operating activities of $163,655 in 1996.
As of December 31, 1998 the Company had working capital of $65,794 compared
to working capital of $110,708 as of December 31, 1997.
Cash provided by investing activities was $15,739 in 1998, compared to no
cash provided by investing activities in 1997 and 1996.
Previous to its acquisition of the UK Group in May 1999, the Company did
not have any credit facilities, and was financed totally by operations, or loans
from its parent company. Also previous to the acquisitions which occurred in the
year ended December 31, 1999 (discussed below) the Company did not have any
major indebtedness to outside sources.
January 1, 1999 to December 31,1999
As of December 31, 1999 the Company had a working capital deficit of
$8,146,694. Included in current assets were Cash and cash equivalents of
$1,860,445, and receivables, net, expected to be collected within one year of
$4,310,494. During the year ended December 31, 1999 cash provided by operating
activities was $1,704,258 and cash used by investing activities was $86,622.
During this period, a portion of the acquisition costs were funded through the
issuance of common stock and Notes payable. Included in current liabilities, as
of December 31, 1999 were short-term notes payable to related parties of
$7,174,297 that were satisified by the issuance of common stock of the Company
on March 31, 2000. See "Item 13 - Certain Relationships And Related
Transactions."
In its United Kingdom operating subsidiaries the Company has (1) a
revolving line of credit based on 70% of eligible receivables and (2) a ten year
mortgage expiring in 2008, secured by the underlying property and (3) a $75,000
overdraft facility. The mortgage, the revolving line of credit and the overdraft
facility bear interest at the prime rate plus 2%.
As of December 31, 2000 the Company had cash and accounts receivable due to
be collected within one year of $5,600,000, and indebtedness and related accrued
interest of $7,100,000, of which $7,100,000 matures in one year.
The Company believes its current resources of cash and cash equivalents,
accounts receivable and available credit line are anticipated to be sufficient
to meet cash needs for working capital and capital expenditures for at least the
next six months. If available cash and cash generated from operations is
insufficient to satisfy liquidity requirements, selling additional equity or
debt securities may be required. The sale of additional equity or convertible
debt securities could result in dilution to the Company's stockholders. There
can be no assurance that financing will be available in amounts or on acceptable
terms, if at all.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the United Stated Financial Accounting Standards Board (FASB)
issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", effective for fiscal years beginning after June 15, 1999. The
Company anticipates that due to its limited use of derivative instruments, the
adoption of SFAS No. 133 will not have a material effect on its financial
statements.
In December 1999, the Securities and Exchange Commission (the "Commission")
issued Staff Accounting Bulletin No. 101, Revenue Recognition in Financial
Statements, which is to be applied beginning with the fourth fiscal quarter of
fiscal years beginning after December 15, 1999, to provide guidance related to
recognizing revenue in circumstances in which no specific authoritative
literature exists. The Company is reviewing the application of the Staff
Accounting Bulletin to the Company's financial statements. However, any
potential accounting changes are not expected to result in a material change in
the amount of revenues we ultimately expect to realize.
RISK FACTORS
Some of the statements in "Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Item 1 - Business" and
elsewhere in this report constitute forward-looking statements. These statements
involve known and unknown risks, uncertainties, and other factors that may cause
the Company's actual results, levels of activity, performance, or achievements
to be materially different from any future results, levels of activity,
performance, or achievements expressed or implied by such forward-looking
statements. In some cases, forward-looking statements can be identified by
terminology such as "may," "will," "should," "expect," "plan," "anticipate,"
"believe," "estimate," "predict," "potential" or "continue" or the negative of
such terms or other comparable terminology. These statements are only
predictions. Actual events or results may differ materially. Although the
Company believes that the expectations reflected in the forward-looking
statements are reasonable, the Company cannot guarantee future results, levels
of activity, performance or achievements. Moreover, neither the Company nor any
other person assumes responsibility for the accuracy and completeness of such
statements. The Company is under no duty to update any of the forward-looking
statements after the date of this report to conform such statements to actual
results.
In addition to the factors discussed elsewhere in this report, the
following additional factors may affect the Company's future operations and
financial results.
COMPETITION FROM DIRECT SALES
The Company may face increased competition from manufacturers that sell
products directly over the Internet or by telephone, such as Dell and Gateway.
Many of these companies have longer operating histories, larger customer bases,
greater brand recognition and significantly greater financial, marketing and
other resources. There can be no assurance that the Company will be able to
compete effectively against such companies and that the purchasing patterns of
the Company's customers will not increasingly shift to the direct sales channels
of distribution. Such increased competition and changes in purchasing patterns
may adversely affect the Company's future operations and financial results.
PROTECTION OF THE COMPANY'S DOMAIN NAMES
The Company currently holds various domain names commencing with the "24"
prefix. The acquisition and maintenance of domain names generally is regulated
by Internet regulatory bodies. The regulation of domain names in the United
States, the United Kingdom and in other countries is subject to change.
Governing bodies may establish additional top-level domains, appoint additional
domain name registrars or modify the requirements for holding domain names. As a
result, the Company may be unable to acquire or maintain relevant domain names
in all countries in which it conducts business. Furthermore, the relationship
between regulations governing domain names and laws protecting trademarks and
similar proprietary rights is unclear. Therefore, the Company may be unable to
prevent third parties from acquiring domain names that are similar to, infringe
upon or otherwise decrease the value of the Company's trademarks and other
proprietary rights. The Company may not successfully carry out its business
strategy of establishing a strong brand for the "24" prefix if the Company
cannot prevent others from using similar domain names or trademarks. This could
impair the Company's ability to increase market share and revenues.
RAPID TECHNOLOGICAL CHANGE
The industry in which the Company competes is characterized by rapid
technological change, frequent introductions of new products and services,
changes in customer demands and evolving industry standards. The introduction or
announcement of new products or services by the Company or one or more of its
competitors embodying new technologies or changes in industry standards or
customer requirements could render the Company's existing products or services
obsolete or unmarketable. Accordingly, the life cycles of the Company's products
are difficult to estimate. The Company's future results of operations will
depend, in part, upon its ability to enhance its products and services and to
introduce new products and services on a timely and cost-effective basis that
will keep pace with technological developments and evolving industry standards,
as well as address the increasingly sophisticated needs of the Company's
customers. Failure of the Company to introduce, for technological or other
reasons, new products and services in a timely and cost-effective manner could
have a material adverse effect on the Company's business, results of operations
and financial condition. Furthermore, the introduction or announcement of new
product or service offerings or enhancements by the Company or the Company's
competitors may cause customers to defer or forgo purchases of the Company's
products or services, which could have a material adverse effect on the
Company's business, results of operations and financial condition.
SYSTEM INTERRUPTION AND SECURITY RISKS
The Company's operations are dependent, in part, on its ability to protect
its systems from interruption by damage from fire, earthquake, power loss,
telecommunication failure, unauthorized entry or other events beyond the
Company's control. The Company's computer equipment constituting its central
computer systems, including its processing operations, are currently located in
Basingstoke, United Kingdom and Oslo, Norway. The Company conducts system
backups daily, which are taken off site each evening. The Company's computer
programs are password protected and firewalls, anti-virus software and
uninterruptable power supplies are in place. However, there can be no assurance
that damage to or failure of any of the Company's central computer systems will
not take place. Any such damage or failure that causes interruptions in the
Company's operations could have a material adverse effect on the Company's
business, results of operations and financial condition. Persistent problems
continue to affect public and private data networks. Computer break-ins and
other disruptions may jeopardize the security of information stored in and
transmitted through the computer systems of the Company and the parties
utilizing the Company's services, which may result in significant liability to
the Company and also may deter potential customers from using the Company's
services. In addition, while the Company attempts to be careful with respect to
the employees it hires and maintain controls through software design and
security systems to prevent unauthorized employee access, it is possible that,
despite such safeguards, an employee of the Company could obtain access, which
would also expose the Company to a risk of loss or litigation and possible
liability to customers or other users. There can be no guarantee that the growth
of the Company's customer base will not strain or exceed the capacity of its
computer and telecommunications systems and lead to degradations in performance
or system failure. Any damage, failure or delay that causes interruptions in the
Company's operations could have a material adverse effect on the Company's
business, results of operations and financial condition.
LIMITED OPERATING HISTORY
The Company has a limited operating history on which to base an evaluation
of its business and prospects. Accordingly, the Company's prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by early stage companies in new and rapidly evolving markets such as
computer and electronic products and online commerce. Because of the Company's
limited operating history, it is difficult to assess whether the Company will
succeed at executing on its business strategy, managing growth, and addressing
the market risks that it faces in a rapidly developing market.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING
The Company may need to raise additional funds in order to fund more rapid
expansion, to develop new or enhanced products and services, to respond to
competitive pressures or to acquire complimentary businesses or technologies. If
additional funds are raised through the issuance of equity securities, the
percentage ownership of the shareholders of the Company will be reduced,
shareholders may experience additional dilution, or such equity securities may
have rights, preferences or privileges senior to those of the holders of the
Company's Common Stock. There can be no assurance that additional financing will
be available when needed on terms favorable to the Company or at all. If
adequate funds are not available or are not available on acceptable terms, the
Company may be unable to develop or enhance its products and services, take
advantage of future opportunities or respond to competitive pressures, which
could have a material adverse effect on the Company's business, results of
operations and financial condition.
CONTROL BY EXISTING SHAREHOLDER
InfiniCom AB beneficially owns approximately 79% of the outstanding shares
of the Company's Common Stock. As a result, this stockholder will be able to
exercise control over matters requiring shareholder approval, including the
election of directors, and the approval of mergers, consolidations and sales of
all or substantially all of the assets of the Company. This may prevent or
discourage tender offers for the Company's Common Stock unless the terms are
approved by such shareholders.
VOLATILITY OF STOCK PRICE
The trading price of the Company's Common Stock has in the past and may in
the future be subject to significant fluctuations. In addition, the stock market
in general has experienced extreme price and volume fluctuations that have
affected the market price for many companies in industries similar to or related
to that of the Company and which have been unrelated to the operating
performance of these companies. These market fluctuations may adversely affect
the market price of the Company's Common Stock.
RECENT SIGNIFICANT CHANGES TO BUSINESS
The Company has experienced significant changes in its business, including
changes resulting from recent acquisitions and other business combinations. Such
changes have placed and may continue to place a significant strain upon the
Company's management, systems and resources. The Company's ability to compete
effectively and to manage future changes will require the Company to continue to
improve its financial and management controls, reporting systems and procedures,
budgeting and forecasting capabilities on a timely basis and adequately train
and manage its employee work force. There can be no assurance that the Company,
or the Company's current management, will be able to manage such changes
successfully. The Company's failure to do so could have a material adverse
effect upon the Company's business, results of operations and financial
condition.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The Company does not hold any derivative financial instruments. However,
the Company is exposed to interest rate risk. The Company believes that the
market risk arising from holdings of its financial instruments is not material.
However, all of the Company's operations are conducted through its subsidiary
24STORE and denominated in either British pounds sterling or Norwegian Krona,
and none of the Company's revenues are generated in U.S. dollars. For
consolidation purposes, the assets and liabilities of 24STORE are converted to
U.S. dollars using year-end exchange rates and results of operations are
converted using a monthly average rate during the year. Fluctuations in the
currency rates between the United Kingdom, Norway and the United States may give
rise to material variances in reported earnings of the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
SCOOP, INC.
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
CONTENTS
Page
Independent Auditors' Report F-1
Financial Statements:
Consolidated Balance Sheets F-2
Consolidated Statements of Income (Operations) F-3
Consolidated Statement of Shareholders' Equity (Deficit) F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6 - F-14
INDEPENDENT AUDITORS' REPORT
Board of Directors
Scoop, Inc.
Los Angeles, California
We have audited the accompanying consolidated balance sheets of Scoop, Inc. and
subsidiary at December 31, 1999, 1998 and 1997 and the related consolidated
statements of income (operations), shareholders' equity (deficit) and cash flows
for the four years in the period ended December 31, 1999. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statements presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Scoop, Inc. and
subsidiary at December 31, 1999, 1998 and 1997 and the results of its operations
and cash flows for each of the four years in the period ended December 31, 1999,
in conformity with United States generally accepted accounting principles.
/s/ Stonefield Josephson, Inc.
CERTIFIED PUBLIC ACCOUNTANTS
Santa Monica, California
December 22, 2000 (except for Note 3,
which is as of January 9, 2001)
F-1
SCOOP, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS December 31, December 31, December 31,
1999 1998 1997
Current assets:
Cash and cash equivalents $ 1,860,445 $ 242,529 $ 142,278
Accounts receivable, less allowance for doubtful
accounts of $155,994 at December 31, 1999 4,310,494 614,799 492,088
Inventories 942,098 82,667 107,808
--------------- ---------------- ---------------
Total current assets 7,113,037 939,995 742,174
Loan receivable, related party 63,364 62,199 -
Property and equipment, net of
accumulated depreciation 1,619,223 10,746 6,787
Goodwill, net of accumulated amortization 3,146,551 - -
--------------- ---------------- --------------
$ 11,942,175 $ 1,012,940 $ 748,961
=============== ================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 5,867,173 $ 788,744 $ 631,466
Due to Lombard Natwest 2,042,893 - -
Income taxes payable 71,770 - -
Short-term notes payable, related parties 7,174,297 - -
Group contribution payable, related party - 85,457 -
Current maturities of notes payable, bank 103,598 - -
--------------- ---------------- --------------
Total current liabilities 15,259,731 874,201 631,466
--------------- ---------------- ---------------
Long-term note payable, related party 1,927,805 - -
--------------- ---------------- --------------
Note payable, bank, less current maturities 333,715 - -
--------------- ---------------- --------------
Shareholders' equity:
Preferred stock $.001 par value; 5,000,000 shares
authorized; no shares issued or outstanding. - - -
Common stock, $.001 par value; 100,000,000 shares
authorized; 66,795,458, 60,783,219 and 60,783,219,
shares issued and outstanding, respectively 7,390 7,390 7,390
Other comprehensive loss (191,794) (99,997) (8,467)
Retained earnings (accumulated deficit) (5,394,672) 231,346 118,572
--------------- ---------------- ---------------
Total shareholders' equity (deficit) (5,579,076) 138,739 117,495
--------------- ---------------- ---------------
$11,942,175 $ 1,012,940 $ 748,961
=============== ================ ===============
See accompanying independent auditors' report and notes to consolidated financial statements.
F-2
SCOOP, INC.
CONSOLIDATED STATEMENTS OF INCOME (OPERATIONS)
Years ended December 31,
------------------------------------------------------------------------------
1999 1998 1997 1996
Revenue $ 22,070,173 $ 5,453,410 $ 4,102,762 $ 3,158,982
Cost of Revenue 19,319,504 4,391,814 3,263,012 2,537,662
--------------- ------------- ------------- ---------------
Gross profit 2,750,669 1,061,596 839,750 621,320
--------------- ------------- ------------- ---------------
Operating expenses:
Selling, general and administrative expenses 4,826,875 930,603 676,868 612,201
Goodwill amortization 839,087 - - -
Impairment loss on investments 2,006,074 - - -
--------------- ------------- ------------- ---------------
7,672,036 930,603 676,868 612,201
--------------- ------------- ------------- ---------------
Income (loss) from operations (4,921,367) 130,993 162,882 9,119
--------------- ------------- ------------- ---------------
Interest income (17,660) (10,660) (4,174) (3,047)
Interest expense 617,231 11,899 17,329 15,126
--------------- ------------- ------------- --------------
599,571 1,239 13,155 12,079
Income (loss) before income taxes (5,520,938) 129,754 149,727 (2,960)
Income taxes, principally current 105,080 16,980 41,936 -
--------------- ------------- ------------- --------------
Net income (loss) $ (5,626,018) $ 112,774 $ 107,791 $ (2,960)
=============== ============= ============= ==============
Net loss per share - basic and diluted (0.09) 0.00 0.00 $ (0.00)
================ ============= ============= ===============
Weighted average number of shares outstanding -
basic and diluted 64,703,528 60,783,219 60,783,219 60,783,219
=============== ============= ============= ===============
See accompanying independent auditors' report and notes to consolidated financial statements.
F-3
SCOOP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Retained
Other earnings/ Total
Common stock comprehensive accumulated shareholders'
Shares Amount income/(loss) (deficit) equity/ (deficit)
Balance at December 31, 1995, as
previously presented, restated
for effect of reverse merger with
24STORE.com, LTD. (see Note 1) 60,783,219 $7,390 $ 1,492 $ 13,741 $ 22,623
Foreign currency translation (202) (202)
Net loss for the year ended
December 31, 1996 (2,960) (2,960)
---------- ------ --------- ------------ -----------
Balance at December 31, 1996 60,783,219 7,390 1,290 10,781 19,461
Foreign currency translation (9,757) (9,757)
Net income for the year ended
December 31, 1997 107,791 107,791
---------- ------ --------- ------------ -----------
Balance at December 31, 1997 60,783,219 7,390 (8,467) 118,572 117,495
Foreign currency translation (91,530) (91,530)
Net income for the year ended
December 31, 1998 112,774 112,774
---------- ------ --------- ------------ -----------
Balance at December 31, 1998 60,783,219 7,390 (99,997) 231,346 138,739
Shares issued in connection with
acquisition of 24STORE.com, LTD. 6,012,238
Foreign currency translation (91,797) (91,797)
Net loss for the year ended
December 31, 1999 (5,626,018) (5,626,018)
---------- ------ --------- ------------ -----------
Balance at December 31, 1999 66,795,457 $7,390 $(191,794) $ (5,394,672) $(5,579,076)
========== ====== ========= ============= ===========
See accompanying independent auditors' report and notes to consolidated financial statements.
F-4
SCOOP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Years ended December 31,
---------------------------------------------------
1999 1998 1997 1996
Cash flows provided by (used for) operating activities:
Net income (loss) (5,626,018) 112,774 107,791 (2,960)
Adjustments to reconcile net income (loss) to net cash
Depreciation 127,751 3,961 3,961 4,211
Amortization of goodwill 839,087 - - -
Impairment loss on investments 2,006,074 - - -
Expense incurred in exchange for note payable 1,581,000 - - -
Foreign currency translation (67,964 (94,100) (29,088) (1,720)
Provision for bad debts 155,994 - - -
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (3,828,292) (142,537) (131,866) (100,979)
Inventories (859,431) 21,698 5,233 27,297
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts payable and accrued expenses 7,321,258 204,153 (104,162) 245,280
Income taxes payable 55,079 (21,436) 41,936 (7,474)
--------- ------- ------- -------
Net cash provided by (used for) operating activities 1,704,538 84,513 (106,195) 163,655
--------- ------- -------- -------
Cash flows provided by (used for) investing activities:
Acquisition of property and equipment - (7,922) - -
Due to/from related parties (1,165) (63,275) - -
Group distributions (85,457) 86,936 - -
--------- ------- -------- -------
Net cash provided by (used for) investing activities (86,622) 15,739 - -
--------- ------- -------- -------
Net increase (decrease) in cash 1,617,916 100,251 (106,195) 163,655
Cash, beginning of year 242,529 142,278 248,473 84,819
--------- ------- -------- -------
Cash, end of year 1,860,445 242,529 142,278 248,474
========= ======= ======== =======
Supplemental disclosure of cash flow information:
Interest paid 178,694 9,971 16,352 15,061
========= ======= ====== ======
Income taxes paid 187,203 16,718 39,890 -
========= ======= ====== ======
Supplemental disclosure of non-cash investing and financing activities:
Issuance of common stock in connection of acquisitions 2,760,070 - - -
========= ======= ====== ======
Issuance of notes payable in connection with acquisitions 9,102,102 - - -
========= ======= ====== ======
See accompanying independent auditors' report and notes to consolidated financial statements.
F-5
SCOOP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(1) Description of Business:
General:
Scoop, Inc. ("Scoop" or the "Company") was incorporated in 1996, in
the state of Delaware, as an online news provider. In July 1998, the
Company filed a petition for relief under Chapter 11 of the federal
bankruptcy laws in the United States Bankruptcy Court for the Central
District of California. In September 1999, the Company filed a Plan of
Reorganization ("Plan") with the Bankruptcy Court. The Plan was
confirmed on October 5, 1999 (Note 3). Pursuant to the Plan, Scoop was
acquired in a reverse merger with 24STORE.com, LTD ("24STORE"), whose
parent company acquired 91% of the outstanding shares of Scoop, or
60,783,219 of newly issued shares, in exchange for all the outstanding
shares of 24STORE. Since the shareholders of 24STORE became the
controlling shareholders of Scoop after the exchange, 24STORE is
treated as the acquirer for accounting purposes. No value has been
assigned to the assets and liabilities of the acquired company, as it
is emerging from a formal bankruptcy plan (Note 3). Proforma operating
results as if the acquisition had taken place at the beginning of the
period have not been presented as there are no operations of the
acquiree. The financial position and results of operations of the
acquiree are included in the consolidated statements of the Company.
24STORE was incorporated July 28, 1998 in England and Wales, and was a
wholly owned subsidiary of InfiniCom AB, a publicly listed company on
the SBI market in Sweden, whose principal activity is that of a
holding company. On April 9, 1999 24STORE entered into a Share
Purchase Agreement, whereby they acquired from their parent company
several companies registered in Sweden and Norway (Note 4). All of the
Swedish entities either entered bankruptcy or ceased operations soon
after transfer. The Norwegian entity, as the only ongoing concern, has
been treated as the predecessor, and accordingly, its financial
position and results of operations have been presented for the periods
preceding the reverse merger.
On May 6, 1999, 24STORE acquired three companies registered in the
United Kingdom, related through common ownership (Note 5).
All of the consolidated entities are in the business of selling and
distributing consumer and commercial electronic products in Europe.
(2) Summary of Significant Accounting Policies:
Principles of Consolidation:
The accompanying consolidated statements include the accounts of
Scoop, Inc. and subsidiary. All significant intercompany transactions
and accounts have been eliminated.
The financial statements of the entities owned outside the United
States are generally measured using the local currency as the
functional currency. Accordingly, assets and liabilities are
translated at year-end exchange rates and operating statement items
are translated at average exchange rates prevailing during the year.
The resulting translation adjustments are recorded as other
comprehensive income. Exchange adjustments resulting from foreign
currency transactions are included in the determination of net income
(loss).
See accompanying independent auditors' report.
F-6
SCOOP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(2) Summary of Significant Accounting Policies, Continued:
Estimates Used in the Preparation of Consolidated Financial Statements:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and the accompanying notes. Actual results could differ
from those estimates.
Revenue Recognition:
The Company recognizes revenue upon the delivery of its product.
Cash and Cash Equivalents:
The Company considers all highly liquid investments with a maturity of
three months or less when purchased, which are not securing any
corporate obligations, to be cash equivalents.
Fixed Assets:
Building, computers, software, furniture and equipment are valued at
cost and depreciated using the straight-line method over the estimated
useful lives of the assets as follows:
Description Useful life
Building 50 years
Furniture and equipment 5 years
Computers 3-4 years
Software 3-4 years
Goodwill:
In connection with various acquisitions (Notes 1 and 5) which were
accounted for under the purchase method of accounting, the Company
recorded goodwill. The goodwill is being amortized using the
straight-line method over the estimated useful lives of five years.
The Company will continually evaluate the existence of goodwill
impairment in accordance with the provisions of SFAS 121, "Accounting
for the Impairment of Long-Lived Assets and Long-Lived Assets to be
disposed of."
Inventory:
Inventory is stated at the lower of cost or market using the FIFO
(first-in, first-out) cost method.
See accompanying independent accountant's review report.
F-7
SCOOP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(2) Summary of Significant Accounting Policies, Continued:
Income Taxes:
Deferred tax assets and liabilities are recognized with respect to the
tax consequences attributable to the differences between the financial
statement carrying values and tax basis of assets and liabilities.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which these
temporary differences are expected to be recovered or settled.
Further, the effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the
enactment date.
Financial Instruments:
The estimated fair values of cash, accounts receivable, accounts
payable, and accrued expenses, none of which are held for trading
purposes, approximate their carrying value because of the short term
maturity of these instruments or the stated interest rates are
indicative of market interest rates.
Advertising Costs:
Advertising costs are expensed as incurred. For the years ended
December 31, 1999, 1998, 1997 and 1996, advertising expenses amounted
to approximately $355,000, $172,000, $147,000 and $172,000,
respectively.
Basic and Diluted Earnings (Loss) Per Share:
Basic earnings (loss) per share are determined by dividing the net
earnings or (loss) by the weighted average shares of Common Stock
outstanding during the period. Diluted earnings or (loss) per share
are determined by dividing the net earnings or (loss) by the weighted
average shares of Common Stock outstanding plus the dilutive effects
of stock options, warrants, and other convertible securities. Basic
and diluted earnings (loss) per share are the same for the years ended
December 31, 1999, 1998, 1997 and 1996 because there were no dilutive
securities outstanding during those periods.
Segment:
Based on the Company's integration and management strategies, the
Company operates in a single business segment. For the years ended
December 31, 1999, 1998, 1997 and 1996, all revenues have been derived
from European operations.
Statement of Cash Flows:
In accordance with Statement of Financial Accounting Standards No. 95,
"Statement of Cash Flows," cash flows from the Company's operations
are calculated based upon the local currencies. As a result, amounts
related to assets and liabilities reported on the statement of cash
flows will not necessarily agree with changes in the corresponding
balances on the balance sheet.
See accompanying independent auditors' report.
F-8
SCOOP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(2) Summary of Significant Accounting Policies, Continued:
Recent Accounting Pronouncements:
In June 1998, the United Stated Financial Accounting Standards Board
(FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", effective for fiscal years beginning after June
15, 1999. The Company anticipates that due to its limited use of
derivative instruments, the adoption of SFAS No. 133 will not have a
material effect on its financial statements.
In December 1999, the Securities and Exchange Commission (the
"Commission") issued Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements, which is to be applied beginning
with the fourth fiscal quarter of fiscal years beginning after
December 15, 1999, to provide guidance related to recognizing revenue
in circumstances in which no specific authoritative literature exists.
The Company is reviewing the application of the Staff Accounting
Bulletin to the Company's financial statements. However, any potential
accounting changes are not expected to result in a material change in
the amount of revenues we ultimately expect to realize.
(3) Bankruptcy of Scoop:
Plan of Reorganization
On September 30, 2000, an order confirming the Second Amended Plan of
Reorganization (the "Plan"), filed with the United States Bankruptcy Court,
Central District of California, for Scoop (legally surviving parent company
which was treated as acquiree for accounting purposes - see Note 1) was
entered. The Plan became effective October 5, 2000. Pursuant to the Plan
all assets were sold, resulting in net cash available for allowed claims
and post petition liabilities for the pre-petition estate of Scoop (Debtor)
of approximately $1,487,000. This amount has been transferred to the
disbursing agent assigned by the Court. As of December 31, 1999 the balance
of restricted cash is approximately $739,000, reflecting payments described
below. Liabilities subject to compromise as of December 31, 1999, are
approximately $755,000. These amounts are not included in the consolidated
financial position of the Company as of December 31, 1999 as all assets
were liquidated in satisfaction of the liabilities of Debtor. Creditors of
Debtor have no claim against post-bankruptcy Scoop and conversely,
post-bankruptcy Scoop has no rights over the assets of Debtor.
The Plan provided for the following:
o Administrative Expenses - Legal fees and court costs are payable in
cash on the Effective Date or the fifth business day after the order
allowing such administrative expense becomes a Final Order. As of
December 31, 1999, approximately $394,000 was paid by the disbursing
agent for administrative expenses. Additional payments totaling
approximately $129,000 have been paid subsequent to December 31, 1999.
o Priority Unsecured Claims - Priority unsecured claims are payable in
cash on the Effective Date or the fifth business day after the order
allowing such claim becomes a Final Order. As of December 31, 1999,
approximately $44,000 was paid by the disbursing agent to the holders
of priority unsecured claims.
See accompanying independent auditors' report.
F-9
SCOOP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(3) Bankruptcy of Scoop, Continued:
o General Unsecured Claims - General unsecured claims are payable in
cash on the pro rata share of the funds available in the Plan Fund, up
to 100% of the amount of its allowed general unsecured claim, after
distributions have been made to, or appropriate reserves established
in the disputed priority claims reserve for, the holders of priority
claims. As of December 31, 1999, an initial distribution of
approximately $310,000 or 30% of the total general unsecured claims
was paid by the disbursing agent to the holders of general unsecured
claims with a balance due of approximately $755,000, resulting in a
gain on extinguishment of debt of approximately $1,022,000.
(4) Reorganization:
On April 9, 1999 24STORE and its parent company, InfiniCom, entered into a
share purchase agreement, whereby 24STORE received all the outstanding
shares of several of InfiniCom's subsidiaries, in exchange for 9,999,980
newly issued shares of 24STORE and a note payable of $2,368,000. The
transaction was treated as a reorganization, with the transfer of assets
and liabilities accounted for at historical cost, after adjustment to U.S.
generally accepted accounting principles, in a manner similar to that in
pooling of interests accounting, in accordance with APB 16 paragraph 5. The
historical costs transferred include goodwill of approximately $2,312,960,
which had been recognized upon the parent company's original acquisition of
the transferred subsidiaries.
Included in this transaction 24STORE issued a note payable to the InfiniCom
for $1,581,000 for the costs incurred in the development of certain
software by one of the transferred subsidiaries. These costs were expensed
as research and development during the year ended December 31, 1999.
(5) Acquisitions:
On May 6, 1999, 24STORE purchased all the issued ordinary shares of Lapland
UK, Mobile Planet and Cyberia ("UK Group") in a share purchase agreement
with the shareholders of the acquired company. The three acquired entities
were each owned by the same two shareholders, unrelated to 24STORE or its
parent company. 24STORE received all the outstanding shares of the three
companies, for consideration of cash and notes of approximately $3,420,000
and 700,000 shares of InfiniCom's outstanding shares (see Note 10).
The acquisition has been accounted for using the purchase method of
accounting, and accordingly, the acquisition cost of approximately
$4,760,000 has been allocated to the assets acquired and liabilities
assumed based on estimates of their fair value. A total of approximately
$3,616,000, representing the excess of acquisition costs over the fair
value of the UK Group's tangible net assets, has been allocated to goodwill
and is being amortized over 5 years. The Company will continually evaluate
the existence, if any, of goodwill impairment in accordance with the
provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of." Accumulated amortization
on all goodwill was $839,087 at December 31, 1999.
See accompanying independent auditors' report.
F-10
SCOOP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(5) Acquisitions, Continued:
The Company's consolidated results of operations have incorporated the UK
Group's activity from the effective date of the acquisition. The following
unaudited pro forma information has been prepared assuming that this
acquisition had taken place at the beginning of the respective periods.
This pro forma information does not purport to be indicative of future
results or what would have occurred had the acquisition been made as of
those dates.
Acquisition Pro Forma - UK Group
(in Thousands, except per share amounts - unaudited)
Year ended Year ended
December 31, December 31,
1998 1997
---- ----
Revenue $30,590 $28,215
Operating income (7,887) 463
Net income (loss) (8,662) 85
Basic and diluted earnings per share
Net income (loss) per share (0.13) 0.00
(6) Property and Equipment:
Property and equipment consist of the following:
December 31, December 31, December 31,
1999 1998 1997
Land and building $1,356,063 $ - $ -
Computer equipment 216,505 10,746 6,787
Vehicles 108,755 - -
Office furniture and equipment 151,613 - -
---------- ------- ------
1,832,936 10,746 6,787
Less accumulated depreciation 213,713 - -
---------- ------- ------
$1,619,223 $10,746 $6,787
========== ======= ======
(7) Major vendor:
Included in accounts payable is approximately $1,159,000 owed to three
suppliers at December 31, 1999. Purchases from these suppliers during 1999
totaled approximately $13,432,000.
See accompanying independent auditors' report.
F-11
SCOOP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(8) Due To Lombard Natwest:
Two of the Company's subsidiaries in the United Kingdom uses a discount
financing company, Lombard Natwest Limited "Lombard", for credit
administration and cash flow purposes. The Company can draw advances from
Lombard based on a pre-determined percentage of accounts receivable.
Advances on receivables in excess of credit limits established for each
account are subject to recourse in the event of nonpayment by the customer.
Lombard holds as security security interests in all receivables, inventory
proceeds, returned merchandise, and general intangibles as well as the
personal guarantees of the officer-stockholders limited to anti-fraud.
A summary of the balances for the various years is as follows:
Year ended
December 31,
1999
Due to Lombard from Mobile Planet $ 978,897
Due to Lombard from Lapland 1,063,996
----------------
Net due to Lombard $ 2,042,893
================
(9) Short-Term Notes Payable, Related Parties:
A summary is as follows:
Notes payable, officers (Note 5) $ 2,817,500
Note payable, InfiniCom (Note 4) 2,368,000
Purchase of software from parent company (Note 4) 1,581,000
Accrued interest on current notes 210,500
Accrued interest on long term notes (Note 10) 147,297
Other notes 50,000
----------------
$ 7,174,297
All notes accrue interest at 2% above base rate of National Westminster
Bank, in the United Kingdom.
The notes payable, officers, including all accrued interest, were paid off
in March 2000, in cash of approximately $1,127,000 and the remainder in
shares of the Company (unaudited).
(10) Note Payable, Related Party:
Long-term note payable, related party, in the amount of $ 1,927,805,
represent amounts owing to InfiniCom, for the value of InfiniCom's shares
given as consideration in relation to the acquisition of the UK Group (Note
5). The note accrues interest at 2% above base rate of National Westminster
Bank. At December 31, 1999 the accrued interest is included in short-term
notes payable, related party (Note 9).
See accompanying independent auditors' report.
F-12
SCOOP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(11) Note Payable, Bank:
One of the Company's subsidiaries in the United Kingdom has a note payable
to its bank. The note is due November 14, 2007 and accrues interest at 2%
above the bank's current base rate. The note is secured by the underlying
building and the cross guarantee of two other subsidiaries. Interest is
accrued on a quarterly basis and is due at the end of the loan.
A summary of the note payable is as follows:
December 31,
1999
Principal $ 437,313
Less current maturities 103,598
-----------
$ 333,715
The following summarizes the aggregate maturities of the note payable:
Year ended December 31,
2000 $ 103,598
2001 102,796
2002 102,796
2003 102,796
2004 25,327
-----------------
$ 437,313
(12) Income Taxes:
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes",
under which the liability method is used to calculate deferred income
taxes. Under this method, deferred tax assets and liabilities are
determined based on the differences between financial reporting and income
tax basis of assets and liabilities and are measured using enacted tax
rates and laws that will be in effect when the differences are expected to
reverse. Deferred tax assets and liabilities are immaterial at December 31,
1998 and 1997. As of December 31, 1999, any deferred tax asset recordable
for the net operating loss carryforward is completely offset by a valuation
allowance.
The Company does not file consolidated tax returns in the United Kingdom.
Tax expense for the year ended December 31, 1999 relates to entities within
the consolidated group on which there is taxable income and tax expense is
appropriate.
See accompanying independent auditors' report.
F-13
SCOOP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
(12) Income Taxes, Continued:
The provision for income taxes differs from the amount computed by applying
the U.S. statutory income tax rate as follows:
December 31, December 31, December 31,
1999 1998 1997
Provision at expected federal
statutory rate (35)% 35% 35%
Impairment loss for which no deduction
is allowable for UK income tax purposes 13 - -
Loss for which no benefit is available 24 - -
Foreign federal and local taxes provided
on a separate return basis at rates lower
than statutory U.S. federal rate - (22) (7)
----- ---- ---
2% 13% 28%
===== ==== ===
(13) Subsequent Events (Unaudited):
On March 24, 2000, the Company, InfiniCom, 24STORE, and the two previous
shareholders ("Officers") of the UK Group agreed to restructure the related
party notes payable (Notes 9 and 10), along with certain other intercompany
debt then outstanding between InfiniCom and 24STORE.
The Company assumed from 24STORE all of the obligations of 24STORE to
InfiniCom arising out of the April 9, 1999 reorganization and May 6, 1999
acquisitions (Notes 4 and 5) and certain other related debt ("Debt
Obligations") in consideration for which 24STORE issued to the Company
16,142,972 additional shares of its capital stock. Secondly, InfiniCom
released and discharged all amounts (including, without limitation,
principal and interest) owing by the Company under the Debt Obligations in
consideration for which the Company issued to InfiniCom 7,819,217 shares of
its common stock.
In relation to the obligations owing to the Officers under the May 6, 1999
acquisitions, the Company issued to each of the Officers 4,953,455 shares
of the Company's outstanding common stock and 24STORE paid to the Officers
the sum of Pounds Sterling 851,506, or approximately $1,351,255, in cash in
consideration for which (i) 24STORE issued to the Company 4,200,000
additional shares of its capital stock and (ii) the Officers released and
discharged the obligations of 24STORE pursuant to the note payable executed
by 24STORE and InfiniCom dated 6 May 1999.
Also as a part of the restructuring, InfiniCom subscribed for and purchased
965,132 newly issued shares of common stock of the Company at a
subscription price of $1.938 per share and the Company subscribed for and
purchased 4,308,580 shares of the capital stock of 24STORE at a
subscription price of Pounds Sterling 0.25 per share, equivalent to an
aggregate subscription price of $1,695,426.
See accompanying independent auditors' report.
F-14
LAPLAND GROUP
COMBINED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1999 AND
YEARS ENDED DECEMBER 31, 1998 AND 1997
CONTENTS
Page
Independent Auditors' Report F-16
Financial Statements:
Combined Balance Sheets F-17
Combined Statements of Income F-18
Combined Statements of Stockholders' Equity F-19
Combined Statements of Cash Flows F-20
Notes to Combined Financial Statements F-21 - F-25
F-15
INDEPENDENT AUDITORS' REPORT
Board of Directors
Lapland Group
London, United Kingdom
We have audited the accompanying combined balance sheets of Lapland Group as of
December 31, 1998 and 1997, and the related combined statements of income,
stockholders' equity and cash flows for the years then ended. These combined
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the combined financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the combined financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Lapland Group at
December 31, 1998 and 1997, and the results of its operations and cash flows for
the years ended December 31, 1998 and 1997, in conformity with generally
accepted accounting principles.
/s/ Stonefield Josephson, Inc.
CERTIFIED PUBLIC ACCOUNTANTS
Santa Monica, California
December 22, 2000
F-16
LAPLAND GROUP
COMBINED BALANCE SHEETS
ASSETS March 31, December 31, December 31,
1999 1998 1997
---- ---- ----
(unaudited)
Current assets:
Cash and cash equivalents $ 510,151 $ 960,281 $ 423,187
Accounts receivable, less allowance for doubtful
accounts of $141,048, $143,960 and $119,586
for March 31, 1999, December 31, 1998 and
December 31, 1997, respectively 3,533,922 3,140,929 2,825,724
Inventory 942,446 1,613,071 897,179
Prepaid expenses and other assets - 75,928 3,682
Receivable from Lombard Natwest - - 448,423
-------------- --------------- ---------------
Total current assets 4,986,519 5,790,209 4,598,195
Property and equipment, net of
accumulated depreciation and amortization 1,283,160 1,334,656 893,799
--------------- ---------------- ---------------
$ 6,269,679 $ 7,124,865 $5,491,994
=============== ================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 3,069,203 $ 3,710,496 $ 4,391,282
Income taxes payable 140,639 115,069 115,878
Due to Lombard Natwest 1,666,094 1,904,989 -
Current maturities of loan payable, bank 103,598 108,491 104,896
--------------- ---------------- ---------------
Total current liabilities 4,979,534 5,839,045 4,612,056
--------------- ---------------- ---------------
Loan payable, bank (Cyberia Limited), less
current maturities 489,692 531,383 481,933
--------------- ---------------- ---------------
Stockholders' equity:
Common stock:
Lapland, $1.60 par value, 50,000 shares authorized,
issued and outstanding
Mobile, $1.60 par value, 5,000 shares authorized,
issued and outstanding
Cyberia, $1.60 par value, 2,000 shares authorized,
issued and outstanding 103,211 103,211 103,211
Other comprehensive loss (47,272) (25,432) (29,055)
Retained earnings 744,514 676,658 323,849
--------------- ---------------- ---------------
Total stockholders' equity 800,453 754,437 398,005
--------------- ---------------- ---------------
$6,269,679 $ 7,124,865 $ 5,491,994
=============== ================ ===============
See accompanying independent auditors' report and notes to combined financial statements.
F-17
LAPLAND GROUP
COMBINED STATEMENTS OF INCOME
Three months Year ended Year ended
ended December 31, December 31,
March 31, 1999 1998 1997
(unaudited)
Revenue $ 6,595,086 $ 22,761,758 $ 22,121,513
Cost of revenue 5,870,749 19,500,367 19,506,200
---------------- --------------- ---------------
Gross profit 724,337 3,261,391 2,615,313
Distribution costs 103,896 487,610 406,957
Operating expenses 517,204 1,992,718 1,808,986
---------------- --------------- ---------------
Income before other interest, other income
and interest expense 103,237 781,063 399,370
Interest and other income (35,909) (18,926) (7,143)
Interest expense 42,209 224,947 106,832
---------------- --------------- ---------------
Income before provision for income taxes 96,937 575,042 299,681
Provision for income taxes 29,081 155,882 109,739
---------------- --------------- ---------------
Net income $ 67,856 $ 419,160 $ 189,942
================ =============== ===============
See accompanying independent auditors' report and notes to combined financial statements.
F-18
LAPLAND GROUP
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
Other Total
Common stock comprehensive Retained stockholders'
Shares Amount income/(loss) earnings equity
------ ------ ------------- -------- ------
Balance at January 1, 1997 50,000 $ 103,211 $ $ 358,255 $ 461,466
Distributions (224,348) (224,348)
Foreign currency translation loss (29,055) (29,055)
Net income for the year ended
December 31, 1997 189,942 189,942
----------- ------------ ------------ ------------ ------------
Balance at December 31, 1997 50,000 103,211 (29,055) 323,849 398,005
Distributions (66,351) (66,351)
Foreign currency translation income 3,623 3,623
Net income for the year ended
December 31, 1998 419,160 419,160
----------- ------------ ------------ ------------ ------------
Balance at December 31, 1998 50,000 103,211 (25,432) 676,658 754,437
Foreign currency translation
loss (unaudited) (21,840) (21,840)
Net income for the three months
ended March 31, 1999 (unaudited) 67,856 67,856
----------- ------------ ------------ ------------ ------------
Balance at March 31, 1999 (unaudited) 50,000 $ 103,211 $ (47,272) $ 744,514 $ 800,453
=========== ============ ============ ============ ============
See accompanying independent auditors' report and notes to combined financial statements.
F-19
LAPLAND GROUP
COMBINED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Three months Year ended Year ended
ended December 31, December 31,
March 31, 1999 1998 1997
-------------- ---- ----
(unaudited)
Cash flows provided by (used for) operating activities:
Net income $ 67,856 $ 419,160 $ 189,942
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation 25,884 98,934 71,713
Foreign currency translation (22,978) 4,435 (17,016)
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (486,025) (298,602) (103,341)
Inventory 631,182 (708,464) 97,875
Prepaid expenses 74,497 (71,974) (3,752)
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts payable and accrued expenses (538,432) (706,063) 1,334,239
Income taxes payable 29,082 (1,438) 118,068
-------------- --------------- -------------
Total adjustments (286,790) (1,683,172) 1,497,786
-------------- --------------- -------------
Net cash provided by (used for) operating activities (218,934) (1,264,012) 1,687,728
-------------- --------------- -------------
Cash flows used for investing activities -
acquisition of property and equipment (11,846) (533,345) (631,645)
-------------- --------------- -------------
Cash flows provided by (used for) financing activities:
Due to/from Lombard Natwest (187,088) 2,347,688 (1,452,398)
Proceeds from loan payable, bank - 53,114 705,936
Payments on loan payable, bank (32,262) - (108,015)
Capital contributions - - 3
Distributions - (66,351) (224,348)
-------------- --------------- -------------
Net cash provided by (used for) financing activities (219,350) 2,334,451 (1,078,822)
-------------- --------------- -------------
Net increase (decrease) in cash (450,130) 537,094 (22,739)
Cash, beginning of year 960,281 423,187 445,926
-------------- --------------- -------------
Cash, end of year 510,151 $ 960,281 $ 423,187
============== =============== =============
Supplemental disclosure of cash flow information:
Interest paid $ 42,112 $ 194,432 $ 115,952
============== =============== =============
Income taxes paid $ 46,806 $ 157,495 $ 100,061
============== =============== =============
See accompanying independent auditors' report and notes to combined financial statements.
F-20
LAPLAND GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1999 AND
YEARS ENDED DECEMBER 31, 1998 AND 1997
(1) Summary of Significant Accounting Policies:
General:
Lapland UK Limited ("Lapland") was incorporated in Wales on July 9,
1990. MTEC Europe Limited was incorporated in England on February 14,
1992. The Company later changed its name to Mobile Planet Limited
("Mobile") on May 22, 1995. Cyberia UK Limited ("Cyberia") was
incorporated in England on September 25, 1997.
Interim Financial Statements:
The accompanying financial statements include all adjustments
(consisting of only normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of the
results of operations for the periods presented. Interim results are
not necessarily indicative of the results to be expected for a full
year. The financial statements should be read in conjunction with the
financial statements included in the annual report of Scoop, Inc. (the
"Company") on Form 10-K for the years ended December 31, 1999, 1998
and 1997.
Principles of Combination:
These combined financial statements include the accounts of Lapland UK
Limited, Mobile Planet, Limited, and Cyberia UK Limited, which are
related through common ownership.
Intercompany transactions and balances, which were material, have been
eliminated in the combination.
Business Activity:
The Company's principal activity is the sale of mobile personal
computers and peripherals.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Fair Value:
Unless otherwise indicated, the fair values of all reported assets and
liabilities which represent financial instruments, none of which are
held for trading purposes, approximate the carrying values of such
amounts.
See accompanying independent auditors' report.
F-21
LAPLAND GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1999 AND
YEARS ENDED DECEMBER 31, 1998 AND 1997
(1) Summary of Significant Accounting Policies, Continued:
Advertising Costs:
Advertising costs are expensed as incurred. For the years ended
December 31, 1998 and 1997, advertising expenses amounted to
approximately $249,188 and $274,004, respectively.
Cash and Cash Equivalents:
For purposes of the statement of cash flows, cash equivalents include
all highly liquid debt instruments with original maturities of three
months or less which are not securing any corporate obligations.
Inventory:
Inventories are valued at the lower of cost (first-in, first-out) or
market.
Property and Equipment:
Property and equipment are stated at cost. Expenditures for
maintenance and repairs are charged to earnings as incurred, whereas,
additions, renewals, and betterments are capitalized. When property
and equipment are retired or otherwise disposed of, the related cost
and accumulated depreciation are removed from the respective accounts,
and any gain or loss is included in operations. Depreciation is
computed using the straight-line method over the estimated useful
lives of the related assets.
Change of Accounting Period:
Lapland and Mobile changed their year end from July 31 and February
28, respectively, to December 31 to be in line with the year end of
their acquirer (see Note 5).
Other Comprehensive Income (Loss):
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"), which establishes new rules for the reporting and display of
comprehensive income and its components. SFAS 130 requires gains or
losses from foreign currency translation to be included in other
comprehensive income or losses, shown separately from retained
earnings. Prior year financial statements have been reclassified to
conform with the requirements of SFAS 130. Other comprehensive loss
amounted to $25,432 and $29,055 for years ended December 31, 1998 and
1997, respectively.
See accompanying independent auditors' report.
F-22
LAPLAND GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1999 AND
YEARS ENDED DECEMBER 31, 1998 AND 1997
(1) Summary of Significant Accounting Policies, Continued:
Income Taxes:
Deferred income taxes are reported using the liability method.
Deferred tax assets are recognized for deductible temporary
differences and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax
basis. Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
New Accounting Pronouncements:
The Company has adopted SFAS No. 131 "Disclosures About Segments of an
Enterprise and Related Information." Adoption of this pronouncement
did not materially affect the financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", effective for fiscal years
beginning after June 15, 1999. The Company anticipates that due to its
limited use of derivative instruments, the adoption of SFAS No. 133
will not have a material effect on its financial statements.
(2) Due From/To Lombard Natwest:
The Companies use a discount financing company, Lombard Natwest Limited
"Lombard", for credit administration and cash flow purposes. The Companies
can draw advances from Lombard based on a pre-determined percentage of
accounts receivable. Advances on receivables in excess of credit limits
established for each account are subject to recourse in the event of
nonpayment by the customer.
Lombard holds as security security interests in all receivables, inventory
proceeds, returned merchandise, and general intangibles as well as the
personal guarantees of the officer-stockholders limited to anti-fraud.
A summary of the balances for the various years is as follows:
Year ended Year ended
December 31, December 31,
1998 1997
---- ----
Due from Lombard to Lapland $ - $ 716,596
Due to Lombard from Mobile Planet (703,889) (268,173)
Due to Lombard from Lapland (1,201,100) -
----------- ---------
Net due from (to) Lombard $(1,904,989) $ 448,423
=========== =========
See accompanying independent auditors' report.
F-23
LAPLAND GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1999 AND
YEARS ENDED DECEMBER 31, 1998 AND 1997
(3) Property and Equipment:
A summary is as follows:
Year ended Year ended
December 31, December 31,
1998 1997
---- ----
Building and improvements $1,012,247 $ 661,498
Furniture and fixtures 143,371 60,456
Computer and equipment 148,657 85,576
Vehicles 209,944 247,024
---------- ----------
1,514,219 1,054,554
Accumulated depreciation 179,563 160,755
---------- ---------
$1,334,656 $ 893,799
========== =========
(4) Loan Payable, Bank (Cyberia Limited):
One of the Company's subsidiaries in the United Kingdom has a loan payable
to its bank. The loan is due September 25, 2007 and accrues interest at 2%
above the bank's current base rate. The loan is secured by the underlying
building and the cross guarantee of two other subsidiaries.
Interest is accrued on a quarterly basis and is due at the end of the loan.
A summary is as follows:
Year ended Year ended
December 31, December 31,
1998 1997
---- ----
Principal $639,874 $586,829
Less current maturities 108,491 104,896
-------- --------
$531,383 $481,933
======== ========
See accompanying independent auditors' report.
F-24
LAPLAND GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1999 AND
YEARS ENDED DECEMBER 31, 1998 AND 1997
(4) Loan Payable, Bank (Cyberia Limited), Continued:
The following summarizes the aggregate maturities of the loan payable,
bank:
Year ended Year ended
December 31, December 31,
1998 1997
---- ----
Year ended December 31,
1998 $ - $104,896
1999 108,491 104,896
2000 105,470 104,896
2001 105,470 104,896
2002 105,470 104,896
2003 105,470 62,349
2004
Beyond five years 109,503 -
-------- --------
$639,874 $586,829
======== ========
(5) Provision for Income Taxes:
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes",
under which the liability method is used to calculate deferred income
taxes. Under this method, deferred tax assets and liabilities are
determined based on the differences between financial reporting and income
tax basis of assets and liabilities and are measured using enacted tax
rates and laws that will be in effect when the differences are expected to
reverse. Deferred tax assets and liabilities are immaterial at December 31,
1998 and 1997.
The provision for income taxes differs from the amount computed by applying
the United States statutory income tax rate as follows:
Year ended Year ended
December 31, December 31,
1998 1997
---- ----
Provision at expected federal statutory rate 34% 34%
UK federal and local taxes provided on a
separate return basis at rates lower than
the U.S. statutory tax rate (7)% (4)%
Nondeductible expenses - 7%
--- ---
27% 37%
=== ===
(6) Subsequent Event:
On May 6, 1999, 100% of the outstanding shares of the Companies were
acquired by 24STORE.com, Ltd for consideration of approximately $4,911,000.
See accompanying independent auditors' report.
F-25
Unaudited Pro Forma Condensed Consolidated Balance Sheet
and Statements of Operations
for the Acquisition of "UK Group"
(In thousands except share and per share data)
On May 6, 1999, 24STORE, the acquirer of Scoop, Inc. purchased all of the
outstanding shares of Lapland UK, Mobile Planet and Cyberia ("UK Group").
24STORE received all of the outstanding shares of the three companies, for
consideration of cash and notes of approximately $3,420,000 and 700,000 shares
of InfiniCom's outstanding shares (the "Acquisition"). The Acquisition has been
accounted for under the purchase accounting method. The aggregate purchase price
was approximately $4,760,000, which includes the costs of the Acquisition. The
aggregate purchase price was allocated to the assets of the Company, based upon
estimates of their respective fair market values. The excess of purchase price
over the fair values of the net assets acquired has been recorded as goodwill.
The following unaudited pro forma condensed consolidated balance sheet and
statements of operations of Scoop, Inc. (the "Company") at March 31, 1999 and
for the year ended December 31, 1998 and the three months ended March 31, 1999,
have been prepared to illustrate the effect of the Acquisition, as though the
Acquisition had occurred on January 1, 1998, for purposes of the pro forma
statements of operations. The pro forma adjustments and the assumption on which
they are based are described in the accompanying Notes to the Unaudited Pro
Forma Condensed Consolidated Balance Sheet and Statements of Operations.
The pro forma condensed consolidated balance sheet and statements of operations
are presented for illustrative purposes only and are not necessarily indicative
of the results of operations of the Company that would have been reported had
the Acquisition occurred on January 1, 1998, nor do they represent a forecast of
the results of operations for any future period. The unaudited pro forma
condensed consolidated statements, including the Notes thereto, should be read
in conjunction with the historical consolidated financial statements of the
Company, which are incorporated herein by reference.
SCOOP, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1999
For Acquisition of UK Group
UK Pro Forma
Scoop Group (2) Adjustments Combined
----- --------- ----------
ASSETS
Cash and cash equivalents $158,569 $ 510,151 $ 668,720
Accounts receivable 601,894 3,533,918 4,135,812
Inventory 80,955 942,446 1,023,401
------- --------- ---------
Total current assets 841,418 4,986,516 5,827,934
------- --------- ---------
-
Property and equipment, net of -
accumulated depreciation and amortization 10,409 1,432,793 394,000 (3) 1,837,202
------- --------- ---------
Goodwill, net of accumulated amortization 3,393,404 (1) 3,393,404
--------- ---------
$851,827 $6,419,309 $3,787,404 $11,058,540
======== ========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $768,046 $4,875,936 $ 5,643,981
Short-term notes payable, related parties 2,817,500 (1) 2,817,500
Current portion of loan payable, bank 593,287 593,287
Due to related parties 22,745 - 22,745
------- ---------- ---------
Total current liabilities 790,790 5,469,223 6,260,013
------- ---------- ---------
-
---------
Long-Term notes payable, related parties - 1,919,989 (1) 1,919,989
Loan payable, bank, less current portion -
Stockholders' equity 61,038 950,086 (950,086) (1) 61,038
-------- ---------- ----------- -----------
$851,828 $6,419,309 $3,787,404 $11,058,540
======== ========== ========== ===========
SCOOP, INC.
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
March 31, 1999
For Acquisition of UK Group
UK Pro Forma
Scoop Group (2) Adjustments Combined
----- --------- ---------
Revenue $1,608,817 $5,390,769 $ 6,999,586
Cost of Revenue 1,323,117 4,815,030 6,138,147
---------- ---------- ----------
Gross profit 285,700 575,739 861,439
Operating expenses:
Distribution costs 93,282 487,610 580,892
General and administrative expenses 266,185 1,992,718 2,258,903
Goodwill amortization - 180,796 (4) 180,796
---------- ---------- ----------
359,466 2,480,328 3,020,590
---------- ---------- ----------
Income from operations (73,767) (1,904,589) (2,159,152)
Interest income - (18,926) (18,926)
Interest expense, net 2,082 224,947 82,906 (5) 309,935
---------- ---------- ----------
2,082 206,021 208,103
---------- ---------- ----------
Net income before taxes (75,848) (2,110,610) (2,367,255)
---------- ---------- ----------
$ -
===========
Provision for income taxes - 155,883 155,883
---------- ---------- ----------
$ -
===========
Net income $(75,848) $(2,266,493) $(2,523,137)
========== ============ ===========
Net loss per share -
basic and diluted 0.00 (0.04)
========== ===========
Weighted average number of shares outstanding -
basic and diluted 60,783,219 66,795,457
========== ===========
SCOOP, INC.
UNAUDITED PRO FORMA CONSOLIDATED
STATEMENT OF OPERATIONS
December 31, 1998
For Acquisition of UK Group
UK Pro Forma
Scoop Group (2) Adjustments Combined
----- --------- ---------
Revenue $5,453,410 $ 22,761,758 $ 28,215,169
Cost of Revenue 4,391,814 19,500,367 23,892,181
---------- ---------- ------------
Gross profit 1,061,596 3,261,392 4,322,988
Operating expenses:
Distribution costs - 487,610 487,610
General and administrative expenses 930,603 1,992,718 2,923,321
Goodwill amortization 723,184 (4) 723,184
------------
930,603 2,480,328 4,134,115
---------- ---------- ------------
Income from operations 130,993 781,064 188,872
Interest income 10,660 (18,926) (8,266)
Interest expense, net (11,898) 224,947 331,624 (5) 544,673
---------- ---------- ------------
(1,239) 206,021 536,407
---------- ---------- ------------
Net income before taxes (loss) 129,754 575,042 (347,534)
---------- ---------- ------------
$ -
============
Taxes 16,980 155,883 172,863
---------- ---------- ------------
$ -
============
Net income $ 112,774 $ 419,160 $ (520,397)
========== =========== ============
Net loss per share -
basic and diluted 0.00 (0.01)
========== ============
Weighted average number of shares outstanding -
basic and diluted 60,783,219 66,795,457
========== ============
Scoop, Inc.
Notes to Pro Forma Condensed Consolidated Financial Statements (unaudited)
Note A - The pro forma adjustments to the condensed consolidated balance sheet
are as follows:
(1) To reflect the acquisition of UK Group and the allocation of the
purchase price on the basis of the fair value of the assets acquired.
The components of the purchase price and its allocation to the assets
and liabilities of UK Group are as follows (in thousands):
Components of purchase price:
Notes payable to former shareholders of UK Group $ 2,818
Notes payable to parent company, InfiniCom for value
of InfiniCom shares given as consideration 1,920
--------------
$ 4,738
==============
Allocation of purchase price:
Stockholders' equity of UK (950)
Step up for fair market value of building acquired (394)
--------------
Cost in excess of net assets acquired $ 3,394
==============
Note B - The pro forma adjustments to the condensed consolidated statements of
income are as follows:
(2) The financial statements of the UK Group included in the
unaudited pro forma consolidated financial statement information
were translated from British pounds to U.S. dollars at the rate
of 1.612, 1.619 and 1.653 for the March 31, 1999 Unaudited
Consolidated Balance Sheet, the March 31, 1999 Unaudited
Statement of Operations and the December 31, 1998 Unaudited
Statement of Operations, respectively.
(3) Reflects an adjustment to a building owned by UK Group to record
it on the books at fair market value
(4) To reflect the amortization of goodwill over 5 years
(5) Reflects an adjustment to record the increase to interest expense
resulting from the notes payable arising out of the acquisitions
(See Note 1), at an interest rate of 7% per annum
SCOOP, INC.
UNAUDITED QUARTERLY FINANCIAL INFORMATION
The Company's last filed Form 10-QSB was for the quarterly period ended June 30,
1998. The following interim financial data covers the quarterly periods ended
September 30, 1998, March 31, 1999, June 30, 1999 and September 30, 1999, for
which the Company did not file reports on Form 10-QSB due to the continuation of
the Company's proceedings under Chapter 11 of the United States Bankruptcy Code
during such periods.
The following interim financial data is unaudited. However, in the opinion of
management, the interim data includes all adjustments, consisting of normal
recurring adjustments necessary for a fair presentation of the results for the
interim periods. The financial statements included herein have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission. 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 rules and
regulations, although the Company believes that the disclosures included herein
are adequate to make the information presented not misleading. The accounting
policies followed by the Company and other information are contained in the
notes to the Company's financial statements.
SCOOP,INC.
CONSOLIDATED BALANCE SHEET
September 30, 1999 June 30, 1999 March 31, 1999 September 30, 1998
------------------ ------------- -------------- ------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 118,804 $ 66,296 $ 158,569 $ 203,476
Accounts receivable 4,869,370 3,883,736 601,894 607,994
Inventory 1,135,463 933,250 80,955 107,274
Prepaid expenses and other assets - - - -
------------ ---------- --------- ---------
Total current assets $ 6,123,637 $4,883,281 $ 841,418 $ 918,744
------------ ---------- --------- ---------
Loan Receivable, related parties - 60,434 - -
---------- ---------- --------- ---------
Property and equipment, net of
accumulated depreciation and amortization 1,698,458 1,637,788 10,409 6,760
---------- ---------- --------- ---------
Goodwill, net of accumulated depreciation 5,442,598 5,223,255 - -
---------- ---------- --------- ---------
$ 13,264,694 $ 11,804,758 $ 851,827 $ 925,504
============ ============ ========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities :
Accounts payable and accrued expenses $ 9,330,634 $ 7,926,427 $ 768,046 $ 664,741
Short-term notes payable, related parties 4,010,761 - -
Income taxes payable - - - -
Due to related parties 4,320,669 - 22,745 -
Current portion of loan payable - - - -
Current portion of loan payable, bank 103,598 103,598 - -
------------ ------------ --------- ---------
Total current liabilities 13,754,902 12,040,785 790,790 664,741
Long-term debt, related parties 1,962,682 1,878,251 - -
------------ ------------ --------- ---------
Loan payable, bank, net of current portion 449,787 451,029 - -
------------ ------------ --------- ---------
Shareholders' deficit:
Preferred stock; $0.001 par value,
5,000,000 authorized, no shares
issued and outstanding - - - -
Common stock; $0.001 par value, 100,000,000
authorized 66,795,457, 66,795,457, 60,783,219
and 60,783,219 shares, respectively, issued and
outstanding 7,390 7,390 7,390 7,390
Additional paid in capital - - - -
Other comprehensive income (241,378) (190,719) (101,851) (9,363)
Retained Earnings/Accumulated deficit (2,668,689) (2,455,304) 155,498 262,736
------------ ----------- ---------- --------
Total shareholders' deficit (2,902,677) (2,638,633) 61,037 260,763
------------ ----------- ---------- --------
$ 13,264,694 $11,731,431 $ 851,827 $ 925,504
============ =========== ========= =========
SCOOP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Three months ended Nine months ended Nine months ended
September 30, 1999 September 30, 1998 September 30, 1999 September 30, 1998
------------------ ------------------ ------------------ ------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue: $ 5,286,060 $ 1,396,641 $ 14,470,067 $ 3,808,904
Cost of Revenue 4,653,463 991,519 12,727,563 2,943,673
------------------ ------------------ ------------------ ------------------
Gross profit 632,597 405,123 1,742,505 865,230
Distribution costs 169,146 - 382,589 -
Operating expenses:
Depreciation 53,208 418 81,302 1,211
Amortization 11,711 - 543,970 -
Loss on investments - - - -
Other administrative expenses 425,147 292,199 3,221,709 693,649
------------------ ------------------ ----------------- -----------------
Total operating expenses 490,067 292,617 3,846,981 694,859
------------------ ------------------ ----------------- -----------------
Net income before interest and other
income and interest expense (26,615) 112,505 (2,487,066) 170,371
Interest and other income (637) (1,761) (1,767) (6,095)
Interest expense 165,552 4,207 393,274 10,589
------------------ ------------------ ----------------- -----------------
Net income before provision for income taxes (191,530) 110,059 (2,878,573) 165,877
Provision for income taxes 21,853 14,407 21,460 21,713
------------------ ------------------ ----------------- -----------------
Net income (loss) $ (213,383) $ 95,653 $ (2,900,033) $ 144,164
================== ================== ================== ==================
Net loss per share -
basic and diluted $ (0.00) $ 0.00 $ (0.04) $ 0.00
================== ================== ================= =================
Weighted average number of shares
outstanding -
basic and diluted 66,795,457 60,783,219 66,465,114 60,783,219
================== ================== ================= =================
SCOOP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Three months ended Six months ended Six months ended
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------------ ------------------ ----------------- -----------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue: $ 9,184,007 $ 1,180,217 $ 9,184,007 $ 2,368,629
Cost of Revenue 6,465,283 942,443 8,074,100 1,916,844
------------------ ------------------ ------------------ ------------------
Gross profit 2,718,724 237,774 1,109,908 451,785
Distribution costs (72,256) - 213,444 -
Operating expenses:
Depreciation 28,094 401 28,094 792
Amortization 532,258 - 532,258 -
Other administrative expenses 2,796,562 170,620 2,796,562 394,174
------------------ ------------------ ----------------- -----------------
Total operating expenses 3,356,915 171,021 3,356,915 394,966
------------------ ------------------ ----------------- -----------------
Net loss before interest and other
income and interest expense (565,935) 66,753 (2,460,451) 56,819
Interest and other income (1,130) (1,761) (1,130) (4,256)
Interest expense 227,722 2,714 227,722 6,267
------------------ ------------------ ----------------- -----------------
Net income before provision for income taxes (792,527) 65,800 (2,687,043) 54,808
Provision for income taxes (393) 8,591 (393) 7,174
------------------ ------------------ ----------------- -----------------
Net income (loss) $ (792,134) $ 57,209 $ (2,686,650) $ 47,634
================== ================== ================= =================
Net loss per share -
basic and diluted $ (0.01) $ 0.00 $ (0.04) $ 0.002
================== ================== ================= ==================
Weighted average number of shares
outstanding -
basic and diluted 65,815,201 60,783,219 66,299,943 60,783,219
================== ================== ================= =================
SCOOP, INC.
STATEMENTS OF OPERATIONS
Three months ended Three months ended
March 31, 1999 March 31, 1998
------------------ ------------------
(Unaudited) (Unaudited)
Revenue: $ 1,608,817 $ 1,188,412
Cost of Revenue 1,323,117 974,401
-------------- --------------
Gross profit 285,700 214,011
Distribution expenses 93,282 -
Operating expenses:
Depreciation 986 391
Other administrative expenses 265,199 223,554
-------------- --------------
Total operating expenses 266,185 223,945
-------------- --------------
Net loss before interest expense (73,767) (9,934)
Interest income - (2,495)
Interest expense 2,082 3,553
-------------- --------------
Net income before provision for income
taxes (75,848) (10,992)
Provision for income taxes - 1,417
-------------- --------------
Net loss $ (75,848) $ (9,575)
============== ==============
Net loss per share -
basic and diluted $ (0.00) $ (0.00)
============== ==============
Weighted average number of shares
outstanding - basic and diluted 60,783,219 60,783,219
============== ==============
SCOOP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Three months ended Nine months ended Nine months ended
September 30, 1998 September 30, 1997 September 30, 1998 September 30, 1997
------------------ ------------------ ------------------ ------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue: $ 1,396,641 $ 1,048,403 $ 3,808,904 $ 3,145,209
Cost of Revenue 991,519 833,817 2,943,673 2,501,450
------------- ------------- ------------- -------------
Gross profit 405,123 214,586 865,230 643,759
Distribution costs -
Operating expenses: 292,617 172,964 694,859 518,893
------------- ------------- ------------- -------------
Net income before interest and other
income and interest expense 112,505 41,622 170,371 124,866
Interest and other income (1,761) (1,067) (6,095) (3,200)
Interest expense 4,207 4,428 10,589 13,285
------------- ------------- ------------- -------------
Net income before provision for income
taxes 110,059 38,260 165,877 114,782
Provision for income taxes 14,407 10,716 21,713 82,634
------------- ------------- ------------- -------------
Net income $ 95,653 $ 27,545 $ 144,164 $ 82,634
============= ============= ============= =============
Net loss per share -
basic and diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00
============= ============= ============= =============
Weighted average number of shares
outstanding - basic and diluted 60,783,219 60,783,219 60,783,219 60,783,219
============= ============= ============= =============
SCOOP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Nine months ended Nine months ended
September 30, 1999 September 30, 1998
------------------ ------------------
(Unaudited) (Unaudited)
Cash flows provided by (used for) operating activities:
Net income (loss) $ (2,900,030) $ 144,164
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation 81,302 1,211
Amortization 543,970 -
Shares issued in acquisition - -
Foreign currency translation (27,369) (1,915)
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 99,482 (118,563)
Prepaid expenses and other current assets - -
Inventory 9,330 -
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts payable and accrued expenses 2,156,192 36,472
Income taxes payable (86,603) -
-------------- --------------
Total adjustments 2,776,305 (82,796)
-------------- --------------
Net cash provided by operating activities (123,725) 61,368
Cash flows provided by (used for) investing activities:
Acquisition of property and equipment -
Acquisition of property and equipment - (170)
Group distribution, common ownership - -
-------------- --------------
Due to related parties -
--------------
Net cash used for investing activities - (170)
-------------- --------------
Net increase (decrease) in cash (123,725) 61,198
Cash, beginning of year 242,529 142,278
-------------- --------------
Cash, end of year $ 118,804 $ 203,476
-------------- --------------
Supplemental disclosure of non-cash investing and
financing activities:
Interest paid $ 215,503 $ 7,716
============== ==============
Income taxes paid $ 230,891 $ 12,937
============== ==============
SCOOP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Six months ended Six months ended
June 30, 1999 June 30, 1998
--------------- ----------------
(Unaudited) (Unaudited)
Cash flows provided by (used for) operating activities:
Net income (loss) $ (2,686,651) $ 47,634
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation 28,094 3,961
Amortization 532,258 -
Foreign currency translation (105,436) (6,491)
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 242,039 115,002
Inventory 6,721 -
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts payable and accrued expenses 1,908,032 (200,239)
Income taxes payable (16,551) -
-------------- ------------
Total adjustments 2,595,157 (87,767)
-------------- ------------
Net cash provided by operating activities (91,493) (40,133)
Cash flows provided by (used for) investing activities:
Acquisition of property and equipment - (267)
Group distribution, common ownership (84,738) -
-------------- ------------
Net cash used for investing activities (84,738) (267)
-------------- ------------
Net increase (decrease) in cash (176,232) (40,400)
Cash, beginning of period 242,529 142,278
-------------- ------------
Cash, end of period $ 66,298 $ 101,878
-------------- ------------
Supplemental disclosure of non-cash investing and financing activities:
Interest paid $ 140,576 $ 7,576
============== ============
Income taxes paid $ 150,613 $ 12,703
============== ============
SCOOP, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Three months ended Three months ended
March 31, 1999 March 31, 1998
-------------- --------------
(Unaudited) (Unaudited)
Cash flows provided by (used for) operating activities:
Net loss $ (75,848) $ (9,575)
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation 128 391
Foreign currency translation (3,893) (4,765)
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 868 57,769
Inventory 93 -
Changes in assets and liabilities:
(Increase) decrease in assets:
accounts payable and accrued expenses (5,308) (67,029)
-------------- --------------
Total adjustments (8,112) (13,634)
-------------- --------------
Net cash provided by operating activities (83,960) (23,209)
Cash flows provided by (used for) investing activities:
Due to/from related parties (59) -
-------------- --------------
Net cash used for investing activities (59) -
-------------- --------------
Net increase (decrease) in cash (84,019) (23,209)
Cash, beginning of year 242,588 142,278
-------------- --------------
Cash, end of year $ 158,569 $ 119,069
-------------- --------------
Supplemental disclosure of cash flow information:
Interest paid $ 2,662 $ 2,537
============== ==============
Income taxes paid $ - $ 4,254
============== ==============
SCOOP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Nine months ended Nine months ended
September 30, 1998 September 30, 1997
------------------ ------------------
(Unaudited) (Unaudited)
Cash flows provided by (used for) operating activities:
Net income (loss) $ 144,164 $ 82,634
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation 1,211 1,900
Foreign currency translation (1,915) (24,665)
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (118,563) (69,188)
Inventory - 2,675
Prepaid expenses and other receivables - 1,783
Changes in assets and liabilities-
(Increase) decrease in assets -
accounts payable and accrued expenses 36,472 (58,118)
--------------- ---------------
Total adjustments (82,795) (145,612)
--------------- ---------------
Net cash provided by operating activities 61,369 (62,978)
Cash flows provided by (used for) investing activities:
Acquisition of property and equipment (171) -
--------------- ---------------
Net cash used for investing activities (171) -
--------------- ---------------
Net increase (decrease) in cash 61,198 (62,978)
Cash, beginning of year 142,278 248,473
--------------- ---------------
Cash, end of year $ 203,476 $ 185,495
--------------- ---------------
Supplemental disclosure of non-cash investing and
financing activities:
Interest paid $ 7,719 $ 12,475
=============== ===============
Income taxes paid $ 12,942 $ 30,431
=============== ===============
SCOOP, INC.
QUARTERLY FINANCIAL INFORMATION
(1) Summary of Significant Accounting Policies:
Interim Financial Statements:
The accompanying financial statements include all adjustments
(consisting of only normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of the
results of operations for the periods presented. Interim results are
not necessarily indicative of the results to be expected for a full
year. The financial statements should be read in conjunction with the
financial statements included in the annual report of Scoop, Inc. and
Subsidiaries (the "Company") on Form 10-KSB for the year ended
December 31, 1999, 1998, and 1997.
(2) Significant transactions:
Reorganization:
On April 9, 1999, 24STORE and its parent company entered into a share
purchase agreement, whereby 24STORE received all the outstanding
shares of several of InfiniCom's subsidiaries, in exchange for
9,999,980 newly issued shares of 24STORE and a note payable of
$2,368,000. The transaction was treated as a reorganization, with the
transfer of assets and liabilities accounted for at historical cost,
after adjustment to U.S. generally accepted accounting principles, in
a manner similar to that in pooling of interest accounting, in
accordance with APB 16 paragraph 5. The historical costs transferred
include goodwill of approximately $2,312,960, which had been
recognized upon the parent company's original acquisition of the
transferred subsidiaries.
Included in this transaction 24STORE issued a note payable to the
InfiniCom for $1,581,000 for the costs incurred in the development of
certain software by one of the transferred subsidiaries. These costs
were expensed as research and development during the year ended
December 31, 1999.
Acquisitions:
On May 6, 1999, 24STORE purchased all the issued ordinary shares of
Lapland UK, Mobile Planet and Cyberia ("UK Group") in a share purchase
agreement with the shareholders of the acquired company. The three
entities were each owned by the same two shareholders, unrelated to
24STORE or its parent company. 24STORE received all the outstanding
shares of the three companies, for consideration of cash and notes of
approximately $3,420,000 and 700,000 shares of InfiniCom's outstanding
shares.
SCOOP, INC.
QUARTERLY FINANCIAL INFORMATION
Acquisitions, Continued:
The acquisition has been accounted for using the purchase method of
accounting, and accordingly, the acquisition cost of approximately
$4,760,000 has been allocated to the assets acquired and liabilities
assumed based on estimates of their fair value. A total of
approximately $3,616,000, representing the excess of acquisition costs
over the fair value of the UK Group's tangible net assets, has been
allocated to goodwill and is being amortized over 5 years. The Company
will continually evaluate the existence, if any, of goodwill impairment
in accordance with the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
Of." Accumulated amortization on all goodwill was $839,087 at December
31, 1999.
The Company's consolidated results of operations have incorporated the
UK Group's activity from the effective date of the acquisition. The
following unaudited pro forma information has been prepared assuming
that this acquisition had taken place at the beginning of the
respective periods. This pro forma information does not purport to be
indicative of future results or what would have occurred had the
acquisition been made as of those dates.
Acquisition Pro Forma - UK Group
(in Thousands, except per share amounts - unaudited)
Year ended Year ended
December 31, December 31,
1998 1997
------------ ------------
Revenue $ 30,590 $ 28,215
Operating income (7,887) 463
Net income (loss) (8,662) 85
Basic and diluted earnings per share
Net income (loss) per share (0.13) 0.00
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The name, position with the Company, age and tenure of each director and
executive officer are as follows:
Lennart Orkan 56 Director and Chairman of the Board 2000
Larsake Sandin 52 Director 2000
Akbar Seddigh 56 Director 2000
Martin Clarke 35 President and 2000
Chief Executive Officer
Michael Neame 39 Chief Financial Officer, 2000
Chief Accounting Officer
and Secretary
Lennart Orkan, Ph.D., Director and Chairman of the Board. Dr. Orkan has
approximately 25 years of experience in business and banking. Currently, Dr.
Orkan is the President and CEO of Strator B.D.N. International AB, a company
based in Sweden which provides consulting services to public and private
companies on mergers and acquisitions, recapitalization, and other forms of
corporate reorganization. The Strator Group has associated companies and
affiliates in a number of European countries and in North America. Dr. Orkan is
also the founder and the majority owner of the company. Since 1980, Dr. Orkan
has been the Chairman of the Board and/or a Board Member of many medium-sized
and large Scandinavian and foreign private corporations. From 1974 until 1980,
Dr. Orkan was the head of the two largest departments of the Swedish Savings
Bank Association in addition to being the General Manager of the Swedish Savings
Banks Institute and the vice-Chairman of the International Savings Bank
Institute in Geneva, Switzerland. From 1980 until 1984, Dr. Orkan was the
General Manager of Lantbrukets Utredningsinstitut, the Swedish Institute for
Agro-Business Development and Research, a highly respected research institute
and consulting group for economic studies and business development services.
From 1984 until 1985, Dr. Orkan served as the President and CEO of the
Cooperative Bank of Sweden West, the largest cooperative bank in Sweden. From
1985 until 1988, Dr. Orkan was the President and CEO of Praktikertjanst AB, the
dominating group in the areas of private health and dental care and medical
technical services in Scandinavia.
Larsake Sandin, Director. Mr. Sandin has approximately 25 years of
experience in the information technology field as founder, director and manager
of several companies in Sweden, the United Kingdom and the United States. Mr.
Sandin is currently the Founding Director and a Business Consultant of Acom CMC
Ltd in London, the Founding Director of The Server Group in Scandinavia
Stockholm, also located in London, the CEO and a director of InfiniCom AB, the
majority shareholder of Scoop, Inc. From 1976 until 1989, Mr. Sandin served as
Business Manager of AB Programator, a company located in Stockholm. From 1989
until 1991, Mr. Sandin was the Managing Director of Philips Tele & Data Systems,
a subsidiary of Philips Norden AB of Stockholm, in which capacity Mr. Sandin
accomplished a significant restructuring of the company. From 1992 until 1995,
Mr. Sandin was employed by Digital Equipment Corporation, where he was the
Director of Retail Banking Worldwide in Boston, the Director of Financial
Industry Expertise Center Europe in London, and the Director of Retail Banking
Europe in Stockholm. In addition to his employment experience, Mr. Sandin has
been and continues to be a director of many publicly and privately held
companies in Sweden. In the past, Mr. Sandin was the Chairman of the Board of
Philips Radio Communications AS, Digital Equipment BCFI AB, Rostvold AS and
Ericsson-Programatic AB.
Akbar Seddigh, Director. Mr. Seddigh has approximately 25 years of
experience in the business field. Currently, Mr. Seddigh is the Chairman of the
Board and President of Ortivus US, Inc.; the Chairman of the Board of ELEKTA AB,
Cascade Computing AB, Neoventa AB and Samba Sensor AB; and Board Member of
Nordbanken, Taby, Affarsstrategerna AB, Artimplant AB, and Minidoc AB in
addition to other responsibilities. From 1976 through 1981, Mr. Seddigh worked
as the chief Executive Officer of a subsidiary of The Swedish Atomic Energy. In
1985, Mr. Seddigh founded Ortivus AB and acted as Chief Executive Officer of the
company until November, 1999. Since November 1999, Mr. Seddigh has acted as Vice
Chairman in addition to his role on the Board of Directors of the company.
Ortivus AB was listed on the Stockholm Stock Exchange in January 1997 and deals
in devising new medical concepts including Myocardial Ischemia Dynamic Analysis
(MIDA) and telemedicine (Mobimed).
Martin Clarke, President and Chief Executive Officer. Mr. Clarke came to
24STORE via the acquisition of LapLand (UK) Limited the company he co-founded
with Michael Neame in 1991. Responsible for Sales and Marketing, he was
instrumental in the growth which led to recognition of the company by the UK's
Sunday Times Newspaper as one of the UK's "Hot 100" fastest growing companies.
Prior to LapLand Mr. Clarke was European Sales and Marketing Director for Orchid
(Europe) Limited, the European subsidiary of a San Francisco based manufacturer
of computer peripherals and motherboards quoted on the London stock market.
Trained in aerospace and defense systems electronics, he moved on to a sales
career with a number of leading information technology companies. Mr. Clarke
joined Orchid (Europe) Limited in November 1988 with responsibility for UK
sales; promotion followed to European Sales Manager in March 1989 with
responsibility for all European distribution territories. Mr. Clarke was
appointed European Sales and Marketing Director in 1990.
Michael Neame, Chief Financial Officer, Chief Accounting Officer and
Secretary. Mr. Neame came to 24STORE via the acquisition of LapLand (UK) Limited
the company for which he had been Managing Director since 1991. Mr. Neame was
responsible for the Finance and Logistics operations of the organization from
inception to date. Prior to LapLand he was Managing Director of Orchid (Europe)
Limited, the European subsidiary of a San Francisco based manufacturer of
computer peripherals and motherboards. Mr. Neame joined Orchid in May 1988 as
Financial Controller, promotion followed to Financial Director in March 1989 and
Managing Director in October 1989, with responsibility for all European
subsidiaries. Orchid Technology was quoted on the London stock market. Mr. Neame
is a Fellow of the Chartered Institute of Management Accountants, having trained
as an accountant with a number of Blue Chip UK & International companies
including Sainsbury's, GEC, and ITW Inc.
Each director of the Company will hold office until such director's
successor is elected and qualified or until such director's earlier resignation
or removal. Each executive officer of the Company will hold office until such
officer's successor is elected and qualified or until such officer's earlier
resignation or removal in accordance with the Company's bylaws.
There currently exist no arrangement or understanding between any executive
officer and between any other person pursuant to which any person is to be
selected as an executive officer. No family relationships exist between any
current or prospective executive officer or director.
During the last five (5) years, no director or officer of the Company has:
(1) had any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the
time of the bankruptcy or within two (2) years prior to that time;
(2) been convicted in a criminal proceeding or is subject to a pending
criminal proceeding;
(3) been subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction
permanently or temporarily enjoining such person from participating,
or otherwise limiting such person's right to engage, in any type of
business, securities or banking activities;
(4) been subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any federal or state authority
barring or suspending such person from participating, or otherwise
limiting for more than 60 days such person's right to engage, in any
type of securities or banking activities; or
(5) been found by a court of competent jurisdiction in a civil action, by
the Commission or by the Commodity Futures Trading Commission to have
violated a federal or state securities law or a federal commodities
law, and the judgment or finding has not been subsequently reversed,
suspended or vacated.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the directors and executive officers of the Company and persons who beneficially
own more than ten percent of the Company's Common Stock (collectively, the
"Reporting Persons") to report their ownership of and transactions in the
Company's Common Stock to the Securities and Exchange Commission (the
"Commission"). Copies of these reports are also required to be supplied to the
Company. To the Company's knowledge, during the fiscal year ending December 31,
1999 the Reporting Persons complied with all applicable Section 16(a) reporting
requirements, except that InfiniCom AB (publ) ("InfiniCom"), who became an owner
of more than ten percent of the Company's Common Stock during such fiscal year,
did not file a report on Form 3 on a timely basis. However, since the end of
such fiscal year, InfiniCom has filed its report on Form 3.
ITEM 11. EXECUTIVE COMPENSATION.
Summary Compensation Table.
The following table sets forth compensation earned, whether paid or
deferred, during the fiscal years ended December 31, 1999, 1998 and 1997 by the
Company's Chief Executive Officer and the Executive Officers of the Company
whose compensation was $100,000 or greater during the fiscal year ended December
31, 1999.
Annual Long-Term Compensation
Compensation Awards
Restricted Securities All Other
Salary Bonus Stock Underlying Compensation
Name and Principal Position Year ($) ($) Awards ($) Options (#) ($)
- ----------------------------------------------------------------------------------------------------------------------
Martin Clarke(1) President and 1999 $165,984 $ -- $ -- $ -- $19,672
Chief Executive 1998 $143,105 $ -- $ -- $ -- $37,215
Officer 1997 $ 95,200 $ -- $ -- $ -- $30,437
Michael Neame(2) Chief Financial 1999 $166,869 $ -- $ -- $ -- $19,672
Officer and 1998 $116,950 $ -- $ -- $ -- $28,851
Secretary 1997 $ 66,667 $ -- $ -- $ -- $21,639
Rand Bleimeister(3) Chairman of 1999 $ 3,741 $ -- $ -- $ -- $ --
the Board, 1998 $132,695 $ -- $ -- $ -- $ --
Chief Executive 1997 $ 56,344 $ -- $ -- $350,000 $ --
Officer and
Chief Financial
Officer
(1) Mr. Clarke was appointed as President and Chief Executive Officer of the Company on March 17, 2000. Mr. Clarke's
annual compensation amounts relate to compensation paid by 24STORE and its subsidiaries for the periods indicated
prior to the reverse acquisition of the Company by InfiniCom AB.
(2) Mr. Neame's annual compensation amounts relate to compensation paid by 24STORE and its subsidiaries for the periods
indicated prior to the reverse acquisition of the Company by InfiniCom AB.
(3) Mr. Bleimeister joined the Company on September 2, 1997 and thus his compensation for 1997 reflects a partial year
of service. As the Company commenced its Chapter 11 proceedings in July of 1998, Mr. Bleimeister's compensation for
1998 reflects a partial year of service. However, during the latter half of 1998 and during 1999 Mr. Bleimeister
was compensated at the hourly rate of $125 for the first 10 hours of the week and $105 per hour for any hour over
ten for services rendered in connection with the Chapter 11 case. Thus, Mr. Bleimeister's 1998 salary reflects his
partial salary plus the consulting fees earned throughout the remainder of the year. Mr. Bleimeister resigned from
all positions with the Company on January 14, 2000.
Option Grants in Last Fiscal Year
The Company did not grant any options during the last fiscal year.
ITEM 12. BENEFICIAL OWNERSHIP OF COMMON STOCK BY CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth information, as of February 13, 2001,
concerning the Common Stock of the Company beneficially owned (i) by each
director and each Named Executive Officer of the Company, (ii) by all directors
and executive officers of the Company as a group and (iii) by each stockholder
known by the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock. The beneficial owners named have, to the knowledge of
the Company, sole voting and dispositive power with respect to the shares
beneficially owned, subject to community property laws where applicable.
Shares Beneficially Owned
Name and Address Shares Percent
InfiniCom AB (publ)
Gustavslundsvagen 151A
S-16751 Bromma
Sweden................................................................. 67,335,910 78.8
Rand Bleimeister
1800 Century Park East
Los Angeles, California 90067.......................................... 59,626 *
Larsake Sandin
Frensham Court, Summerfield Lane
Surrey GU10 3AN
England................................................................ 0 0
Lennart Orkan
Foreningsvagen 2
SE-13237 Saltsjo-Boo
Sweden................................................................. 0 0
Akbar Seddigh
Centralvagen 18
18357 Taby
Sweden................................................................. 0 0
Martin Clarke
Kingston
Reading Road North
Fleet
Hampshire
GU13 8RR
United Kingdom......................................................... 4,953,455 5.8
Michael Neame
21 Archery Fields
Odiham, Hook
Hampshire
RG29 1AE
United Kingdom......................................................... 4,953,455 5.8
All executive officers and directors as a group (6 persons)............ 9,966,536 11.7
* Less than one percent.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On May 6, 1999, Michael Neame ("Neame") and Martin Clarke ("Clarke") sold to
24STORE 100% of the outstanding capital stock of each of the companies
comprising the UK Group. In connection with, and as partial consideration for,
the foregoing sale, InfiniCom issued a promissory note in favor of Neame and
Clarke which was secured by a lien on the shares of LapLand, Mobile Planet and
Cyberia. On March 31, 2000, the Company, InfiniCom, 24STORE, Neame and Clarke
agreed to restructure the foregoing debt, along with certain other intercompany
debt then outstanding between InfiniCom and 24STORE. In connection with the
restructuring, the Company issued to each of Neame and Clarke 4,953,455 shares
of the Company's Common Stock and certain debt obligations relating to the sale
of the UK Group were discharged. Neame and Clarke were each granted put options
by InfiniCom whereby Neame and Clarke were given the right to require InfiniCom
to purchase from Neame and/or Clarke the shares of the Company's Common Stock
acquired by them in the restructuring subject to certain terms and conditions.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Financial Statements, Financial Statement Schedules and Exhibits
(1) Financial Statements
The financial statements listed below and included under Item 8, are
filed as part of this report.
Consolidated Financial Statements of Scoop, Inc.
(i) Independent Auditors' Report
(ii) Consolidated Balance Sheet at December 31, 1999, December 31,
1998 and December 31, 1997
(iii)Consolidated Statement of Income (Operations) for each of the
four years ended December 31, 1999
(iv) Consolidated Statement of Shareholders' Equity (Deficit) for each
of the four years ended December 31, 1999
(v) Consolidated Statement of Cash Flows for each of the four years
ended December 31, 1999
(vi) Notes to the Conslidated Financial Statements
Consolidated Financial Statements of Lapland Group
(i) Independent Auditors' Report
(ii) Consolidated Balance Sheet at March 31, 1999, December 31, 1998
and December 31, 1997
(iii)Consolidated Statement of Income (Operations) for each of the
two years ended December 31, 1998 and the three months ended
March 31, 1999 (unaudited)
(iv) Consolidated Statement of Shareholders' Equity (Deficit) for each
of the two years ended December 31, 1998 and the three months
ended March 31, 1999 (unaudited)
(v) Consolidated Statement of Cash Flows for each of the two years
ended December 31, 1998 and the three months ended March 31, 1999
(unaudited)
(vi) Notes to the Conslidated Financial Statements
Scoop, Inc. Unaudited Pro Forma Condensed Consolidated Financial
Information
(i) Consolidated Balance Sheet at March 31, 1999 (For Acquisition of
UK Group)
(ii) Consolidated Statement of Operations for the periods ended March
31, 1999 and December 31, 1998 (For Acquisition of UK Group)
Scoop, Inc. Unaudited Quarterly Financial Information
(i) Consolidated Balance Sheets at September 30, 1999, June 30, 1999,
March 31, 1999 and September 30, 1998
(ii) Consolidated Statements of Operations for the three months ended
March 31, 1999 and March 31, 1998, for the six months ended June
30, 1999 and June 30, 1998 and for the nine months ended
September 30, 1999, September 30, 1998 and September 30, 1997
(iii)Consolidated Statements of Cash Flows for the three months ended
March 31, 1999 and March 31, 1998, for the six months ended June
30, 1999 and June 30, 1998 and for the nine months ended
September 30, 1999, September 30, 1998 and September 30, 1997
(2) Financial Statement Schedules
All schedules have been omitted because either they are not
applicable, not required or because the information required is
included in the consolidated financial statements, including the notes
thereto.
(b) Exhibits
Exhibit Number Description
2.1 Second Amended Plan of Reorganization of Scoop, Inc. (Filed
as Exhibit 2.1 to the Company's Current Report on Form 8-K
(filed April 5, 2000) and incorporated herein by this
reference).
2.2 Stock Purchase Agreement, dated as of April 23, 1999,
between InfiniCom AB and Scoop, Inc. (Filed as Exhibit 2.2
to the Company's Current Report on Form 8-K (filed April 5,
2000) and incorporated herein by this reference).
2.3 Agreement, dated as of November 1, 1999, between InfiniCom
AB and Scoop, Inc. (Filed as Exhibit 2.3 to the Company's
Current Report on Form 8-K (filed April 5, 2000) and
incorporated herein by this reference).
3.1* Certificate of Incorporation of the Company.
3.2* Certificate of Amendment of the Certificate of Incorporation
of the Company.
3.3* Bylaws of the Company.
3.4* Certificate of Amendment of the Bylaws of the Company.
4.1 Form of Common Stock Certificate (Filed as Exhibit 4.1 to
the Company's Registration Statement on Form SB-2
(Registration No. 333-15129) and incorporated herein by this
reference).
10.1* Service Agreement dated May 6, 1999 between 24STORE
Limited and Martin Clarke.
10.2* Service Agreement dated May 6, 1999 between 24STORE
Limited and Michael John Neame.
10.3* Lease Agreement dated December 16, 1996 between Betokem AS,
as Lessor, and Compo Data AS, as Lessee (English
Translation)
10.4* Invoice Discounting Agreement dated October 10, 1996 between
Mobile Planet Limited and Lombard Natwest Discounting
Limited.
10.5* Invoice Discounting Agreement dated October 10, 1996 between
Lapland U.K. Limited and Lombard Natwest Discounting
Limited.
10.6* Advice of Borrowing Terms dated September 25, 1997 between
National Westminster Bank PLC and Cyberia (UK) Limited.
21* List of Subsidiaries of the Company.
* filed herewith
(c) Current Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
SCOOP, INC.
By: /s/ Lennart Orkan
------------------------------------
Name: Lennart Orkan
Title: Chairman of the Board
Date: February 21, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Martin Clarke
------------------------------------
Name: Martin Clarke
Title: President and
Chief Executive Officer
By: /s/ Michael Neame
------------------------------------
Name: Michael Neame
Title: Chief Financial Officer and
Principal Accounting Officer
By: /s/ Lennart Orkan
------------------------------------
Name: Lennart Orkan
Title: Director, Chairman of
the Board
By: /s/ Larsake Sandin
------------------------------------
Name: Larsake Sandin
Title: Director
By: /s/ Akbar Seddigh
------------------------------------
Name: Akbar Seddigh
Title: Director