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 June 30, 2000
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)
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
----- -----
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 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.
CONSOLIDATED BALANCE SHEET
June 30, 2000
-------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 268,569
Accounts receivable, net of reserves of $29,989 3,886,215
Prepaids and other current assets -
Inventory 1,569,849
--------------
Total current assets 5,724,633
Loan receivable, related party -
Property and equipment, net of
accumulated depreciation and amortization 1,473,844
Goodwill, net of accumulated amortization 2,587,221
--------------
$ 9,785,698
==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 5,845,803
Income taxes payable 45,288
Short term loans, related party 184,923
Current portion of loan payable 102,796
--------------
Total current liabilities 6,178,810
Loan payable, bank less current portion 366,237
Shareholders' equity:
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,
85,486,716 shares issued and outstanding 26,081
Additional paid in capital 9,860,176
Other comprehensive loss (150,466)
Accumulated deficit (6,495,140)
--------------
Total shareholders' equity 3,240,651
--------------
$ 9,785,698
==============
SCOOP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Three months ended Six months ended Six months ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
------------- ------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue: $ 5,482,773 $ 7,575,191 $ 13,352,081 $ 9,184,007
Cost of Revenue 4,992,089 6,750,983 12,086,185 8,074,099
------------- ------------- -------------- -------------
Gross profit 490,684 824,208 1,265,896 1,109,908
Operating expenses:
Distribution costs 100,851 120,162 251,474 213,444
General and adminstrative expenses 765,124 2,531,364 1,547,817 2,796,563
Depreciation 27,590 27,108 56,689 28,094
Amortization 153,212 532,258 330,260 532,258
------------- ------------- -------------- -------------
Total operating expenses 1,046,777 3,210,892 2,186,240 3,570,359
------------- ------------- -------------- -------------
Net loss before other interest and other
income and interest expense (556,093) (2,386,684) (920,344) (2,460,451)
Interest and other income (2,134) (1,130) (5,249) (1,130)
Interest expense 4,494 225,641 204,823 227,722
------------- ------------- -------------- -------------
Net loss before provision for income taxes (558,453) (2,611,195) (1,119,918) (2,687,043)
Provision for income taxes (19,450) (393) (19,450) (393)
------------- ------------- -------------- -------------
Net loss $ (539,003) $ (2,610,802) $ (1,100,468) $ (2,686,650)
============= ============= ============== =============
Net loss per share -
basic and diluted $ (0.01) $ (0.04) $ (0.01) $ (0.04)
============= ============= ============== =============
Weighted average number of shares outstanding -
basic and diluted 85,486,716 65,815,201 76,859,981 66,299,943
============= ============= ============== =============
SCOOP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Six months ended Six months ended
June 30, 2000 June 30, 1999
------------- -------------
(Unaudited) (Unaudited)
Cash flows provided by (used for) operating
activities:
Net income (loss) $(1,100,468) $(2,686,650)
Adjustments to reconcile net income
(loss) to net cash provided by (used for)
operating activities:
Depreciation 56,689 28,094
Amortization 330,260 532,258
Foreign currency translation 45,304 (105,436)
Other - net (33,700) -
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable 37,998 242,039
Inventory (724,199) 6,721
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts payable and accrued expenses (677,277) 1,908,032
Income taxes payable (41,911) (16,551)
----------- ------------
Total adjustments (1,006,836) 2,595,157
----------- ------------
Net cash used for operating activities (2,107,304) (91,493)
Cash flows provided by (used for)
investing activities:
Acquisition of property and equipment (29,980) -
Due to/from related parties 60,120 -
Group distribution, common ownership - (84,738)
----------- ------------
Net cash provided by (used for)
investing activities 30,140 (84,738)
----------- ------------
Cash flows provided by (used for) financing
activities:
Proceeds from issuance of common stock 1,870,426 -
Payment on long-term debt, related parties (1,351,255) -
Payment on long-term debt, bank (33,883) -
----------- ------------
Net cash provided by financing activities 485,288 -
----------- ------------
Net increase (decrease) in cash (1,591,876) (176,231)
Cash, beginning of period 1,860,445 242,529
----------- ------------
Cash, end of period $ 268,569 $ 66,298
=========== ============
Supplemental disclosure of cash flow
information:
Interest paid $ 73,687 $ 140,576
=========== ============
Income taxes paid $ 1,149 $ 150,613
=========== ============
Supplemental disclosure of non-cash investing
and financing activities:
Shares issued in satisfaction of debt $ 8,008,441
===========
SCOOP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SIX MONTHS ENDED JUNE 30, 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 Six Months ended June 30, 2000:
NET SALES. Net sales for six months ended June 30, 2000 were $13,352,081
compared to $9,184,007 for the six months ended June 30, 1999, representing an
increase of 45% for the six month period. This increase reflects the inclusion
of the net sales of the UK Group, acquired May 6, 1999, for the entire six month
period, compared to only two months of operations included in the six months
ended June 30, 1999.
GROSS PROFIT. Gross profit for the six months ended June 30, 2000 was $1,265,896
compared to $1,109,908 for the six months ended June 30, 1999, representing an
increase of 14% for six months, for the reasons noted above. Gross profit as a
percentage of sales for the six months ended June 30, 2000 was 9.5%, compared to
12.1% for the six months ended June 30, 1999. Gross profit as a percentage of
sales decreased this period as a result of pressure on selling prices due to a
downturn in the IT market in Europe.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses for the six months ended June 30, 2000 were
$1,855,980 compared to $3,038,101 for the six months ended June 30, 1999,
representing a decrease of 39% for the six months ended June 30, 1999. The
reduction in SG&A is primarily due to a non-recurring charge in 1999 for
Research and Development related to the companies websites.
GOODWILL AMORTIZATION. Goodwill amortization for the six months ended June 30,
2000 was $330,260 compared to $532,258 for the six months ended June 30, 1999.
The decrease is a result of the amortization in 1999, including amortization of
the Goodwill recognized upon the acquisition of the Company's Norwegian
subsidiary, which was written off as an impairment loss at December 31, 1999.
INTEREST EXPENSE. Interest expense, net of interest income for the six months
ended June 30, 2000 was $199,574 compared to $226,592 for the six months ended
June 30, 1999, representing a decrease of 12% for the six months ended June 30,
1999. The decrease is primarily attributable to the settlement by the Company on
March 24, 2000 of interest bearing loan notes related to acquisitions made in
1999. See discussion in "Part II, Item 5 - Other Information" of the Company's
quarterly report on Form 10-Q for the quarterly period ended March 31, 2000,
filed with the Securities and Exchange Commission.
INCOME TAXES. Income taxes for the six months ended June 30, 2000 were tax
credits of $19,450 compared to tax credits of $393 for the six months ended June
30, 1999.
RESULTS OF OPERATIONS
For the Three Months ended June 30, 2000:
NET SALES. Net sales for the three months ended June 30, 2000 were $5,482,773
compared to $7,575,191 for the three months ended June 30, 1999, representing a
decrease of 28%, due to a downturn in demand in the IT market in Europe.
GROSS PROFIT. Gross profit for the three months ended June 30, 2000 was $490,684
compared to $824,208 for the three months ended June 30, 1999, a decrease of
40%. Gross profit as a percentage of sales for the three months ended June 30,
2000 was 8.9%, compared to 10.9% for the three months ended June 30, 1999. Gross
profits decreased this period as a result of the downturn discussed above, and
the reduction of profits necessary to compete in the European market.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses for the three months ended June 30, 2000 were
$893,565 compared to $2,678,634 for the three months ended June 30, 1999
respectively, representing a decrease of 71%. The reduction in SG&A is primarily
due to a non-recurring charge in 1999 for Research and Development related to
the companies websites.
GOODWILL AMORTIZATION. Goodwill amortization for the three months ended June 30,
2000 was $153,212 compared to $532,258 for the three months ended June 30, 1999.
The decrease is a result of the amortization in 1999, including amortization of
the Goodwill recognized upon the acquisition of the Company's Norwegian
subsidiary, which was written off as an impairment loss at December 31, 1999.
INTEREST EXPENSE. Interest expense, net, for the three months ended June 30,
2000 were $2,360 compared to $224,510 for the three months ended June 30, 1999,
representing a decrease of 99%. The decrease is primarily attributable to the
settlement by the Company on March 24, 2000 of interest bearing loan notes
related to acquisitions made in 1999. See discussion in "Part II, Item 5 - Other
Information" of the Company's quarterly report on Form 10-Q for the quarterly
period ended March 31, 2000, filed with the Securities and Exchange Commission.
INCOME TAXES. Income taxes for the three months ended June 30, 2000 were tax
credits of $19,450 compared to tax credits of $393 for the three months ended
June 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at June 30, 2000 were $268,569 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 six months ended June 30, 2000 was
$2,107,304 compared to net cash used by operating activities of $91,493 in the
six months ended June 30, 1999. The increased use of cash reflects the increased
operations in 2000, including the operations of the acquired entities, resulting
in increased overhead and employee costs. 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 June 30, 2000 the Company had a working capital deficit of $454,177
compared to a working capital deficit of $8,146,694 as of December 31, 1999.
Cash provided by investing and financing activities was $30,140 and $485,288,
respectively, in the six months ended June 30, 2000 compared to no cash provided
by investing and financing activities in the six months ended June 30,1999. The
Company also issued $8,008,441 in shares in a non-cash transaction to satisfy
debt.
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" of
the Company's quarterly report on Form 10-Q for the quarterly period ended March
31, 2000, filed with the Securities and Exchange Commission.
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 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit Number Description
-------------- -----------
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.
* previously filed
(b) Reports on Form 8-K.
The Company filed a report on Form 8-K on April 5, 2000 reporting the
change in control of the Company due to its acquisition by InfiniCom
AB, the acquisition by the Company of 24STORE.com Limited, the
confirmation of the Company's Chapter 11 Plan of Reorganization and a
change in the Company's Certifying Accountant.
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
-------------------------------------
Martin Clarke
President and Chief Executive Officer
By: /s/ Michael Neame
-------------------------------------
Michael Neame
Chief Financial Officer and
Principal Accounting Officer