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 September 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
September 30, 2000
------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 64,464
Accounts receivable, net of reserves of $31,505 4,247,816
Inventory 985,933
Prepaid expenses and other assets -
----------------
Total current assets 5,298,213
----------------
Property and equipment, net of
accumulated depreciation and amortization 1,386,817
Goodwill, net of accumulated depreciation 2,313,503
----------------
$ 8,998,533
================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities-
Accounts payable and accrued expenses $ 5,606,144
Income taxes payable 19,668
Short term loans, related party 144,462
Current portion of loan payable 102,796
----------------
Total current liabilitities 5,873,070
Loan payable, bank, less current portion 333,960
Stockholders' 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 (340,632)
Accumulated deficit (6,754,122)
-----------------
Total stockholders' equity 2,791,503
-----------------
$ 8,998,533
=================
SCOOP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended Three months ended Nine months ended Nine months ended
September 30, 2000 September 30, 1999 September 30, 2000 September 30, 1999
------------------- ------------------ ------------------ ------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenue: $ 6,123,828 $ 5,286,060 $ 19,475,909 $ 14,470,067
Cost of Revenue 5,388,810 4,653,463 17,474,995 12,727,563
--------------- --------------- -------------- --------------
Gross profit 735,018 632,597 2,000,914 1,742,504
Operating expenses:
Distribution costs 111,505 169,146 362,979 382,589
Other administrative expenses 683,080 425,147 2,230,898 3,221,709
Depreciation 24,811 53,208 81,500 81,302
Amortization 147,134 247,728 477,394 543,970
--------------- --------------- -------------- --------------
Total operating expenses 966,530 895,229 3,152,771 4,229,570
--------------- --------------- -------------- --------------
Net loss before interest and other
income and interest expense (231,512) (262,632) (1,151,857) (2,487,066)
Interest and other income (3,805) (637) (9,154) (1,767)
Interest expense 30,673 165,552 235,496 393,274
--------------- --------------- -------------- --------------
Net loss before provision for income taxes (258,380) (427,547) (1,378,199) (2,878,574)
Provision for income taxes 701 21,853 (18,749) 21,460
---------------- --------------- -------------- --------------
Net loss $ (259,081) $ (449,400) $ (1,359,450) $ (2,900,034)
================ =============== =============== ==============
Net loss per share -
basic and diluted $ (0.00) $ (0.01) $ (0.02) $ (0.04)
================ =============== =============== ==============
Weighted average number of shares outstanding -
basic and diluted 85,486,716 66,795,457 79,735,559 66,465,114
================ =============== =============== ==============
SCOOP, INC.
COMBINED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
Nine months ended Nine months ended
September 30, 2000 September 30, 1999
------------------ ------------------
(Unaudited) (Unaudited)
Cash flows provided by (used for) operating activities:
Net loss $ (1,359,450) $ (2,900,033)
Adjustments to reconcile net income (loss) to net cash
provided by (used for) operating activities:
Depreciation 82,936 81,302
Amortization 477,394 543,970
Foreign currency translation (98,676) (27,369)
Other - net (42,887) -
------------- -------------
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts receivable (528,364) 99,482
Inventory (162,857) 9,330
Changes in assets and liabilities:
(Increase) decrease in assets:
Accounts payable and accrued expenses (613,444) 2,156,196
Income taxes payable (65,934) (86,603)
------------- -------------
Total adjustments (951,832) 2,776,308
------------- -------------
Net cash used by operating activities (2,311,282) (123,725)
Cash flows provided by (used for) investing activities:
Acquisition of property and equipment (6,985) -
Due to/from related parties 58,173 -
------------- -------------
Net cash provided by investing activities 51,188 -
------------- -------------
Cash flows provided by (used for) financing activities:
Proceeds from issuance of common stock 1,860,445 -
Payment on long-term debt, related parties (1,351,255) -
Payment on long-term debt, bank (45,077) -
------------- -------------
Net cash provided by financing activities 464,113 -
------------- -------------
Net increase (decrease) in cash (1,795,981) (123,725)
Cash, beginning of period 1,860,445 242,529
------------- -------------
Cash, end of perod $ 64,464 $ 118,804
============= =============
Supplemental disclosure of non-cash investing and financing activities:
Interest paid $ 102,537 $ 215,503
============== =============
Income taxes paid $ 30,015 $ 230,891
============== =============
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
NINE MONTHS ENDED SEPTEMBER 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)
NINE MONTHS ENDED SEPTEMBER 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 Nine Months ended September 30, 2000:
NET SALES. Net sales for the nine months ended September 30, 2000 were
$19,475,909 compared to $14,470,067 for the nine months ended September 30,
1999, representing an increase of 34%. This increase reflects the inclusion of
the net sales of the UK Group, acquired May 6, 1999, for the entire nine month
period, compared to only five months of operations included in the nine months
ended September 30, 1999.
GROSS PROFIT. Gross profits for the nine months ended September 30, 2000 were
$2,000,914 compared to $1,742,504 for the nine months ended September 30, 1999,
representing an increase of 15% for the nine months, for the reasons noted
above. Gross profits as a percentage of sales for the nine months ended
September 30, 2000 were 10.3% compared to 12% for the nine months ended
September 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 nine months ended September 30, 2000
were $2,675,377 compared to $3,685,600 for the nine months ended September 30,
1999 representing a decrease of 27%. The reduction in SG&A in the nine months
ended September 30, 2000 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 nine months ended September
30, 2000 was $477,394 compared to $543,970 for the nine months ended September
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, see below.
INTEREST EXPENSE. Interest expense, net of interest income for the nine months
ended September 30, 2000 was $226,342 compared to $391,507 for the nine months
ended September 30, 1999 representing a decrease of 42% for the nine months
ended September 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 nine months ended September 30, 2000 were tax
credit of $18,749, representing an overpayment of the Company's 1999 tax
expense, compared to an expense of $21,460 for the nine months ended September
30, 1999.
RESULTS OF OPERATIONS
For the Three Months ended September 30, 2000:
NET SALES. Net sales for the three months ended September 30, 2000 were
$6,123,828 compared to $5,286,060 for the three months ended September 30, 1999
representing an increase of 16%, for the same reasons as for the nine month
period.
GROSS PROFIT. Gross profit for the three months ended September 30, 2000 were
$735,018 compared to $632,597 for the nine months ended September 30, 1999
representing an increase of 16% for the three months, again for the same reasons
as apply in the six month period. Gross profit as a percentage of sales for the
three months ended September 30, 2000 were 12%, the same as for the three months
ended September 30, 1999 .
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative ("SG&A") expenses for the three months ended September 30, 2000
were $823,861 compared to $647,500 for the three months ended September 30, 1999
representing an increase of 27% for the three months ended September 30, 2000.
The increased expenses are a result of the increased employee costs, overhead
and professional fees.
GOODWILL AMORTIZATION. Goodwill amortization for the three months ended
September 30, 2000 was $147,134 compared to $247,728 for the three months ended
September 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 three months
ended September 30, 2000 were $26,868 compared to $164,915 for the three months
ended September 30, 1999, a decrease of 83%. This 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 September 30, 2000 were
$701, net of a tax credit for an overpayment of taxes in 1999, compared to
$21,853 for the three months ended September 30, 1999 representing a decrease of
97% for the three months ended September 30, 1999. This decrease is the result
of the inclusion of the 1999 tax overpayment in the 2000 tax expense.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents at September 30, 2000 were $64,464 compared to
$1,860,445 as of December 31, 1999. The reduction in cash at September 30, 2000
was primarily attributable to a reduction in borrowings against the revolving
line of credit against eligible receivables in the United Kingdom operating
subsidiaries.
Cash used for operating activities for the nine months ended September 30, 2000
was $2,311,282 compared to net cash used by operating activities of $123,725 in
the nine months ended September 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 September 30, 2000 the Company had a working capital deficit of $574,857
compared to a working capital deficit of $8,146,694 as of December 31, 1999.
Cash provided by investing and financing activities was $51,188 and $464,113,
respectively, in the nine months ended September 30, 2000 compared to no cash
provided by investing and financing activities in the nine months ended
September 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 reorganization 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.
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
----------------------------
Martin Clarke
President and Chief
Executive Officer
By: /s/ Michael Neame
----------------------------
Michael Neame
Chief Financial Officer and
Principal Accounting Officer