SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 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)
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
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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
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares of Common Stock outstanding at February 13, 2001: 85,486,716.
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
SCOOP, INC.
BALANCE SHEET
March 31, 2000
--------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 624,111
Accounts receivable, net of reserve of $103,277 4,120,913
Inventory 1,069,401
---------------
Total current assets 5,814,425
Loan receivable, related parties 97,367
Property and equipment, net of
accumulated depreciation and amortization 1,578,202
Goodwill, net of accumulated amortization 2,923,674
---------------
$ 10,413,668
===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities-
Accounts payable and accrued expenses $ 5,650,510
Income taxes payable 70,602
Short term loans, related party 245,630
Current portion of loan payable 102,796
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Total current liabilities 6,069,538
Loan payable, bank 410,823
Shareholders' equity:
Preferred stock; $0.001 par value,
5,000,000 authorized, no shares
issued and outstanding -
Common stock; $.001 par value,
100,000,000 shares authorized
85,486,716 shares issued and outstanding 26,081
Additional paid in capital 9,860,176
Other comprehensive loss 3,186
Accumulated deficit (5,956,136)
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Total shareholders' equity 3,933,307
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$ 10,413,668
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SCOOP, INC.
STATEMENTS OF OPERATIONS
Three months ended Three months ended
March 31, 2000 March 31, 1999
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(Unaudited) (Unaudited)
Revenue: $ 7,869,308 $ 1,608,817
Cost of Revenue 7,094,096 1,323,117
-------------- --------------
Gross profit 775,212 285,700
Operating expenses:
Distribution costs 150,622 93,281
General and administative 782,693 986
Goodwill Amortization 177,048 -
Depreciation 29,099 265,199
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Total operating expenses 1,139,462 359,466
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Net loss before interest and
other income and interest expense (364,250) (73,766)
Interest and other income (3,115) -
Interest expense 200,329 2,082
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Net loss before provision
for income taxes (561,464) (75,848)
Provision for income taxes - -
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Net loss $ (561,464) $ (75,848)
=============== =============
Net loss per share -
basic and diluted $ (0.01) $ (0.00)
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Weighted average number of shares
outstanding -
basic and diluted 68,217,618 60,783,219
============== =============
SCOOP, INC.
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Three months ended Three months ended
March 31, 2000 March 31, 1999
-------------- --------------
(Unaudited) (Unaudited)
Cash flows provided by (used for)
operating activities:
Net income (loss) $ (561,464) $ (75,848)
Adjustments to reconcile
net income (loss) to net cash
provided by (used for)
operating activities:
Depreciation 29,099 128
Amortization of goodwill 177,048 -
Foreign currency translation (21,799) (3,893)
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 47,931 868
Inventory (143,984) 93
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts payable and accrued expenses (1,191,379) (5,308)
Income taxes payable (20,558) -
-------------- --------------
Total adjustments (1,123,642) (8,112)
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Net cash used for operating activities (1,685,106) (83,960)
Cash flows provided by (used for)
investing activities:
Acquisition of property and equipment (13,540) -
Due to/from related parties (37,485) (59)
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Net cash used for investing activities (51,025) (59)
-------------- --------------
Cash flows provided by (used for)
financing activities:
Proceeds from sale of common stock 1,870,426 -
Payment on long-term debt, related parties (1,351,255) -
Payment on long-term debt, bank (19,374) -
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Net cash provided by financing
activities 499,797 -
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Net increase (decrease) in cash (1,236,335) (84,019)
Cash, beginning of period 1,860,445 242,588
-------------- --------------
Cash, end of period $ 624,111 $ 158,569
============== ==============
Supplemental disclosure of cash flow
information:
Interest paid $ 42,609 $ 2,662
============== ==============
Income taxes paid $ - $ -
============== ==============
Supplemental disclosure of non-cash
investing and financing activities:
Shares issued in satisfaction of debt $ 8,008,441
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SCOOP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000
(1) Description of business:
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-K for the year ended December
31, 1999.
General:
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 (the
"Bankruptcy Court"). In September 1999, the Company filed a Plan of
Reorganization (the "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"), whose parent
company, InfiniCom AB, acquired approximately 91% of the outstanding
shares of the Company, or 60,783,219 newly issued shares, in exchange
for all the outstanding shares of 24STORE. No value has been assigned
to the assets and liabilities of the acquired company, as it is
emerging from a formal bankruptcy plan. 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 it acquired from InfiniCom several companies
registered in Sweden and Norway. This transaction was treated as a
reorganization. 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 of 24STORE with
the Company.
On May 6, 1999, 24STORE acquired three companies registered in the
United Kingdom, which companies were related through common ownership.
All of the consolidated subsidiaries of the Company are in the business
of selling and distributing consumer and commercial electronic products
in Europe.
SCOOP, INC.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 2000
(2) Summary of Significant Accounting Policies:
Principles of Consolidation:
---------------------------
The accompanying consolidated statements include the accounts of Scoop,
Inc. and subsidiaries. All significant intercompany transactions and
accounts have been eliminated.
The financial statements of 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).
(3) Interim financial information (Unaudited):
On March 24, 2000, the Company, InfiniCom, and the two previous
shareholders ("Officers") of the UK Group agreed to restructure the
related party Notes Payable, along with certain other intercompany debt
then outstanding between InfiniCom and Scoop. 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 satisfaction of the $2,817,500 Note Payable owing to the Officers
under the May 6, 1999 acquisitions, the Company paid to the Officers
the sum of 851,506 Pounds Sterling, or approximately $1,351,255, in
cash and issued to each of the Officers 4,953,455 shares of the
Company's outstanding common stock.
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.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's interim
results of operations and financial condition. This discussion should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999, filed with the Securities and Exchange
Commission.
RESULTS OF OPERATIONS
For the Three Months ended March 31, 2000:
NET SALES. Net sales for the three months ended March 31, 2000 were $7,869,308
compared to $1,608,817 for the three months ended March 31, 1999 representing an
increase of 389%. The increase reflects the acquisition on May 6, 1999 of three
UK entities, as detailed in the Company's December 31, 1999 10K.
GROSS PROFIT. Gross profits for the three months ended March 31, 2000 were
$775,212 compared to $285,700 for the three months ended March 31, 1999
representing an increase of 171%. Gross profits as a percentage of sales were
9.8% for the three months ended March 31, 2000 compared to 17.8% for the three
months ended March 31, 1999. The changes in Gross profit between periods are a
result of the acquisition mentioned above, and the change as a percentage of
Sales is reflective of the decreased sales margins realized by the UK entities
as compared to the Norwegian entity.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses for the three months ended March 31, 2000 were
$962,415 compared to $359,466 for the three months ended March 31, 1999. This
increase of 168% reflects the inclusion of the results of operations of the
acquired entities, as mentioned above.
GOODWILL AMORTIZATION. Goodwill amortization, reflecting the excess of purchase
price of the May 1999 acquisition over fair value of assets acquired, for the
three months ended March 31, 2000 was $177,048. There was no goodwill
amortization for the three months ended March 31, 1999.
INTEREST EXPENSE. Interest expense, net of interest income for the three months
ended March 31, 2000 was $197,214 compared to $2,082 for the three months ended
March 31, 1999 representing an increase of 9,372%. The increase in interest
expense in the three months ended March 31, 2000 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
"Part II, Item 5 - Other Information."
INCOME TAXES. There were no income taxes in the three months ended March 31,
2000 or in the three months ended March 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at March 31, 2000 were $624,111 compared to $1,860,445
as of December 31, 1999. This decrease is due to several factors: a portion to
weakening foreign exchange rates in translation into United States dollars,
position of cash advances on revolving line of credit at year end, and timing of
payments to creditors at year end and interim period.
Cash used for operating activities for the three months ended March 31, 2000 was
$1,685,106 compared to net cash used by operating activities of $8,112 in the
three months ended March 31, 1999. The increased use of cash reflects the
increased operations of the acquired entities as compared to pre-acquisition
operations at March 31, 1999, including increased overhead and employee costs as
a result of the growth. Secondly, additional money was used to fund the Norway
entity, which is in financial difficulty. Additionally, the Company incurred
increased professional fees in 2000.
As of March 31, 2000 the Company had a working capital deficit of $255,113
compared to a working capital deficit of $8,146,694 as of December 31, 1999.
Cash used by investing activities was $51,025 in the three months ended March
31, 2000 and cash provided by financing activities was $499,797, compared to no
cash provided by investing and financing activities in 1999. The Company also
issued $8,008,441 in shares in a non-cash transaction to satisfy debt. See
discussion in "Part II, Item 5 - Other Information."
The change in working capital, and the cash provided by investing and financing
activities is primarily attributable to the restructuring of debt that occurred
on March 24, 2000. See discussion in "Part II, Item 5 - Other Information."
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%.
Item 3. Quantitive and Qualitative Disclosures 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.
PART II
OTHER INFORMATION
Item 5. Other Information.
On May 6, 1999, Michael Neame ("Neame") and Martin Clarke ("Clarke") sold to
24STORE 100% of the outstanding capital stock of each of LapLand U.K. Limited,
Mobile Planet Limited and Cyberia (UK) Limited, each of which are companies
incorporated in England. 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. To effect the restructuring, the
Company issued to each of Neame and Clarke 4,953,455 shares of the Company's
Common Stock and 24STORE paid to each of Neame and Clarke the sum of 425,753
Pounds Sterling, or approximately $675,627, in cash in consideration for which
(i) 24STORE issued to the Company 4,200,000 additional shares of its capital
stock and (ii) Neame and Clarke released and discharged the obligations of
24STORE owed by 24STORE to Neame and Clarke pursuant to a Loan Note Instrument
executed by 24STORE and InfiniCom dated May 6, 1999. The Company also assumed
from 24STORE all of the obligations of 24STORE under (a) a Loan Note issued by
24STORE in favor of InfiniCom dated April 9, 1999 in the principal amount of
$2,368,000, (b) a Loan Note issued by 24STORE in favor of InfiniCom dated April
9, 1999 in the principal amount of $1,581,000, (c) a Loan Note issued by 24STORE
in favor of InfiniCom dated May 6, 1999 in the principal amount of 16,300,000
SEK and (d) certain other debt obligations ((a), (b), (c) and (d) above
collectively, the "Debt Obligations") in consideration for which 24STORE issued
to the Corporation 16,142,972 additional shares of its capital stock. Following
the foregoing assumptions, InfiniCom released and discharged amounts (including,
without limitation, principal and interest) owing under the Debt Obligations in
consideration for which the Company issued to InfiniCom 7,819,217 shares of its
Common Stock.
Also as a part of the restructuring, (x) 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 (y) the Company subscribed for and purchased
4,308,580 shares of the capital stock of 24STORE at a subscription price of
L0.25 per share (equivalent to an aggregate subscription price of
$1,695,426).
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit Number Description
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10.1 Deed of Subscription, Amendment and Release
dated March 31, 2000 among Michael John
Neame, Martin Clarke, 24STORE.com Limited,
InfiniCom AB and Scoop, Inc.
10.2 Subscription Agreement dated March 31,
2000 between InfiniCom AB and Scoop, Inc.
10.3 Subscription Agreement dated March 31, 2000
between Michael John Neame and Scoop, Inc.
10.4 Subscription Agreement dated March 31, 2000
between Martin Clarke and Scoop, Inc.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter for which this
report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: March 6, 2001 SCOOP, INC.
By: /s/ Martin Clarke
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Martin Clarke
President and Chief Executive Officer
By: /s/ Michael Neame
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Michael Neame
Chief Financial Officer and
Principal Accounting Officer