U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2001
-------------
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from __________ to __________
Commission File Number 0-26325
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UPSIDE DEVELOPMENT, INC.
-----------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
DELAWARE 39-1765590
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
141 N. Main Street, Suite 207, West Bend, Wisconsin 53095
---------------------------------------------------------
(Address of Principal Executive Offices)
(262) 334-4500
--------------
(Issuer's Telephone Number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such a
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes No X
---- ----
The number of shares outstanding of the Issuer's Common Stock, $.01 Par
Value, as of June 30, 2001 was 37,153,687.
Transitional Small Business Disclosure Format:
Yes No X
---- ----
UPSIDE DEVELOPMENT, INC.
(f/k/a ALOTTAFUN!, INC.)
Index
Page
Part I - Financial Information
Item 1. Financial Statements
Balance Sheet -
June 30, 2001.................................................. 1
Statements of Operations -
Three and six months ended June 30, 2001 and 2000.............. 2
Statements of Changes in Stockholders' Deficit -
Six months and ended June 30, 2001............................. 3
Statements of Cash Flows -
Six months ended June 30, 2001 and 2000........................ 4
Notes to Financial Statements....................................5 - 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................7 - 10
Part II - Other Information
Item 1. Legal
Proceedings............................................................... 10
Signatures................................................................ 11
i
Upside Development, Inc.
Balance Sheet
June 30, 2001
(unaudited)
Assets
Current assets:
Cash $ 5,209
Accounts receivable 30,604
---------------------
Total current assets 35,813
---------------------
Property and equipment, net of accumulated depreciation 14,223
---------------------
Other assets:
Deposit on acquisitions 142,313
Advances to Stockholder 7,500
Other assets 10,132
---------------------
Total other assets 159,945
---------------------
$ 209,981
=====================
Liabilities and Stockholders' Deficit
Current liabilities:
Bank overdrafts 10,765
Notes payable, net of discounts 410,399
Accounts payable 383,667
Accrued expenses 364,741
---------------------
Total current liabilities 1,169,572
---------------------
Stockholders' deficit:
Preferred stock; par value of $.0001; 5,000,000 shares
authorized; 2,000,000 shares issued and outstanding. 200
Common stock; par value of $.01 per share; 50,000,000 shares
authorized; 37,153,687 shares issued and outstanding. 371,536
Additional paid-in capital 7,325,102
Accumulated deficit (8,532,929)
---------------------
(836,091)
Stock subscription receivable (123,500)
---------------------
Total stockholders' deficit (959,591)
---------------------
$ 209,981
=====================
The accompanying notes are an integral part of the financial statements.
1
Upside Development, Inc.
Statements of Operations
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
-------------------------------------- -------------------------------------
2001 2000 2001 2000
-------------------------------------- -------------------------------------
Sales, net of allowance and discounts $ 38,501 $ 454 $ 71,584 $ 410
Cost of sales 30,061 (594) 31,800 2,941
-------------------------------------- -------------------------------------
Gross profit 8,440 1,048 39,784 (2,531)
-------------------------------------- -------------------------------------
Operating expenses:
Selling 4,138 8,650 22,112 21,842
General and administrative 1,005,258 279,104 1,268,155 501,093
Depreciation and amortization 20,442 8,660 31,497 17,320
-------------------------------------- -------------------------------------
1,029,838 296,414 1,321,764 540,255
-------------------------------------- -------------------------------------
Loss from operations (1,021,398) (295,366) (1,281,980) (542,786)
-------------------------------------- -------------------------------------
Other expenses:
Net realized gain on sale
of securities, trading - - - 5,344
Interest expense, net (143,722) (12,098) (202,399) (23,318)
-------------------------------------- -------------------------------------
Total other expenses (143,722) (12,098) (202,399) (17,974)
-------------------------------------- -------------------------------------
Net loss before extraordinary gain (1,165,120) (307,464) (1,484,379) (560,760)
Extraordinary (loss) gain on
forgiveness of debt - 2,292 11,234 64,316
-------------------------------------- -------------------------------------
-------------------------------------- -------------------------------------
Net loss $ (1,165,120) $ (305,172) $ (1,473,145) $ (496,444)
====================================== =====================================
Loss per common share:
Loss before extraordinary gain (0.04) (0.03) (0.06) (0.05)
Extraordinary gain - - - -
-------------------------------------- -------------------------------------
Net loss per common share $ (0.04) $ (0.03) $ (0.06) $ (0.05)
====================================== =====================================
-------------------------------------- -------------------------------------
Weighted average shares outstanding 26,973,852 11,509,193 23,432,025 10,774,918
====================================== =====================================
The accompanying notes are an integral part of the financial statements.
2
Upside Development, Inc.
Statements of Changes in Stockholders' Deficit
(unaudited)
Preferred Stock Common Stock
--------------------------------------
---------------------------------------
Shares $.0001 Par Shares $.01 Par
Issued Value Issued Value
------------------ -------------------
-------- -------- -------- --------
Balance, December 31, 2000 2,000,000 $ 200 16,360,437 163,604
Issuance of common stock for cash - - 2,087,000 20,870
Issuance of common stock for offering costs - - 2,482,000 24,820
Issuance of common stock for services - - 10,828,750 108,287
Issuance of common stock to settle debt - - 4,995,000 49,950
Common stock and warrants issued in
connection with debt - - 400,500 4,005
Issuance of stock options for services - - - -
Amortization of prepaid consulting services - - - -
Net loss for the six months
ended June 30, 2001 - - - -
-------- -------- -------- --------
-------- -------- -------- --------
Balance, June 30, 2001 2,000,000 $ 200 37,153,687 $371,536
======== ======== ======== ========
======== ======== ======== ========
Additional Prepaid Stock
Paid-in Accumulated Consulting Subscription
Capital Deficit Services Receivable Total
-------- --------- ---------- ------- --------
$ 6,270,387 $(7,059,784) $ (50,375) $(123,500) $ (799,468)
81,755 - - - 102,625
(24,820) - - - -
674,112 - - - 782,399
230,706 - - - 280,656
62,962 - - - 66,967
30,000 - - - 30,000
- - 50,375 - 50,375
- (1,473,145) - - (1,473,145)
-------- --------- ---------- ------- --------
$ 7,325,102 $(8,532,929) $ - $(123,500) $(959,591)
======== ========= ========== ======= ========
The accompanying notes are an integral part of the financial statements.
3
Upside Development, Inc.
Statements of Cash Flows
(unaudited)
Six Months Ended June 30,
-----------------------------------
2001 2000
-----------------------------------
Operating activities
Net loss $ (1,473,145) $ (496,444)
-----------------------------------
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 31,497 17,320
Loss on marketable securities (5,344)
Amortization of discount on notes payable 175,866 -
Amortization of prepaid consulting services 50,375 -
Common stock and options issued for services
and other expenses 812,399 78,200
Purchase of marketable securities - -
(Increase) decrease in:
Accounts receivable (17,010) 2,685
Inventory 593 -
Other assets (5,000) (10,966)
Increase (decrease) in: -
Accounts payable 24,514 (114,785)
Accrued expenses 170,222 29,458
-----------------------------------
Total adjustments 1,243,456 (3,432)
-----------------------------------
Net cash used by operating activities (229,689) (499,876)
-----------------------------------
Investing activities
Deposit on acquisitions (142,313) -
Advances to stockholder (7,500) -
Acquisition of equipment and intangible assets - (78,904)
Proceeds from sale of marketable securities - 5,344
-----------------------------------
Net cash used by investing activities (149,813) (73,560)
-----------------------------------
Financing activities
Increase in bank overdraft 1,555 17,640
Proceeds from issuance of notes payable 280,000 15,000
Proceeds from common stock and related paid-in capital 102,625 570,500
Net proceeds/payments on credit line - (18,397)
-----------------------------------
Net cash provided by financing activities 384,180 584,743
-----------------------------------
Net increase in cash 4,678 11,307
Cash at beginning of period 531 5,310
-----------------------------------
Cash at end of period $ 5,209 $ 16,617
===================================
Supplemental disclosures of cash flow information
and noncash financing activities
Cash paid during the period for interest $ - $ 12,587
During the six month period ended June 30, 2001, the Company issued 2,370,000
shares of restricted common stock in satisfaction of notes payable, including
interest, of $33,327.
During the six month period ended June 30, 2001, the Company issued 2,625,000
shares of restricted common stock in satisfaction of debt of $147,330.
During the six month period ended June 30, 2001, the Company issued 2,482,000
shares of restricted common stock valued at $134,100 for the payment of offering
costs.
During the six month period ended June 30, 2001, the Company issued $280,000 of
notes payable. In connection with the notes, the Company issued 400,500 shares
of restricted common stock valued at $24,672 and detachable warrants to purchase
1,312,500 shares of restricted common stock valued at $42,295. These amounts
have been recorded as a discount on the notes and are being amortized over the
life of the note.
During the six month period ended June 30, 2001, the Company issued 10,828,750
shares of restricted common stock for services valued at $782,399.
The accompanying notes are an integral part of the financial statements.
4
UPSIDE DEVELOPMENT, INC.
Notes to Financial Statements
Note 1 - Basis of presentation
In the opinion of the Company, the accompanying unaudited financial statements
contain all adjustments (which are of a normal and recurring nature) necessary
for a fair presentation of the financial statements. The results of operations
for the three and six month periods ended June 30, 2001 and 2000 are not
necessarily indicative of the results to be expected for the full year.
The unaudited financial statements and notes are presented as permitted by Form
10-QSB. Accordingly, certain information and note disclosures that are normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been omitted. The
accompanying financial statements and notes should be read in conjunction with
the audited financial statements and notes for the Company for the fiscal year
ended December 31, 2000. The operating results for the six months ended June 30,
2001 are not necessarily indicative of those to be expected for the year ended
December 31, 2001.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. However, the Company has sustained
substantial losses since inception that total approximately $8,533,000 and has
used cash in operations of approximately $230,000 and $500,000 for the six month
periods ended June 30, 2001 and 2000, respectively. The Company has a negative
working capital of approximately $1,134,000 at June 30, 2001 and has negative
net worth of approximately $960,000 at June 30, 2001. In addition, the Company
is currently in default on approximately $362,000 of notes payable.
Additionally, the Company has not had significant revenues over the past two
years. These issues indicate that the Company may be unable to continue as a
going concern. Realization of the Company's assets is dependent upon the
Company's ability to raise additional capital, as well as generate revenues
sufficient to result in future profitable operations. The accompanying financial
statements do not include any adjustments that might be necessary should the
Company be unable to continue as a going concern.
Note 2 - Per share calculations
Per share data was computed by dividing net loss by the weighted average number
of shares outstanding during the three and six month periods ended June 30, 2001
and 2000. The weighted average shares outstanding for the three month period
ended June 30, 2001 was 26,973,852 as compared to 11,509,193 for the three month
period ended June 30, 2000. The weighted average shares outstanding for the six
month period ended June 30, 2001 was 23,432,025 as compared to 10,774,918 for
the six month period ended June 30, 2000.
Note 3 - Equity Transactions
Please refer to Audited Financial Statements consisting of the Company's balance
sheet as of December 31, 2000, and related statements of operations, changes in
stockholders' equity, and cash flows ended December 31, 2000, as audited by
Pender, Newkirk & Company, Certified Public Accountant.
During the six month period ended June 30, 2001, the Company issued 2,370,000
shares of restricted common stock in satisfaction of notes payable, including
interest, of $33,327.
During the six month period ended June 30, 2001, the Company issued 2,625,000
shares of restricted common stock in satisfaction of debt of $147,330.
During the six month period ended June 30, 2001, the Company issued 2,482,000
shares of restricted common stock valued at $134,100 for the payment of offering
costs.
During the six month period ended June 30, 2001, the Company issued $280,000 of
notes payable. In connection with the notes, the Company issued 400,500 shares
of restricted common stock valued at $24,672 and detachable warrants to purchase
1,312,500 shares of restricted common stock valued at $42,295. These amounts
have been recorded as a discount on the notes and are being amortized over the
life of the note.
During the six month period ended June 30, 2001, the Company issued 10,828,750
shares of restricted common stock for services valued at $782,399.
5
UPSIDE DEVELOPMENT, INC.
Notes to Financial Statements (continued)
On June 1, 2001, David Bezalel resigned as the Company's Director and Chief
Operating Officer. Mr. Bezalel returned to the Company options to purchase
2,500,000 shares of the Company's Common Stock at an exercise price of $.15 per
share. In exchange, Mr. Bezalel was issued an option to purchase 1,000,000
shares of the Company's Common Stock which the Company expects to be exercised
within one year at a price of .0. The Company valued the options at $30,000.
During the six month period ended June 30, 2001, the Company issued 2,087,000
shares of restricted common stock for cash of $102,625.
Note 4 - Deposits on Acquisitions
During the six month period ended June 30, 2001, the Company signed letters of
intent to acquire three tire recycling companies and a logistics company.
To-date the Company has made deposits of $142,313 on these acquisitions.
6
UPSIDE DEVELOPMENT, INC.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The statements contained in this Report on Form 10-QSB, that are not purely
historical, are forward-looking information and statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These include statements regarding the Company's
expectations, intentions, or strategies regarding future matters. All
forward-looking statements included in this document are based on information
available to the Company on the date hereof. It is important to note that the
Company's actual results could differ materially from those projected in such
forward-looking statements contained in this Form 10-QSB. The forward-looking
statements contained here-in are based on current expectations that involve
numerous risks and uncertainties. Assumptions relating to the foregoing involve
judgments regarding, among other things, the Company's ability to secure
financing or investment for capital expenditures, future economic and
competitive market conditions, and future business decisions. All these matters
are difficult or impossible to predict accurately and many of which may be
beyond the control of the Company. Although the Company believes that the
assumptions underlying its forward-looking statements are reasonable, any of the
assumptions could be inaccurate and, therefore, there can be no assurance that
the forward-looking statements included in this form 10-QSB will prove to be
accurate.
GENERAL
We were founded in August 1993. Until we generated significant revenues in 1996,
we were a development stage enterprise. During the development stage period, we
devoted the majority of our efforts to development of a viable product line,
testing of product concepts, developing channels of distribution, financing and
marketing. These activities were funded by investments from stockholders and
borrowings from unrelated third parties.
We have not, through the present time, been in a position to generate sufficient
revenues during our limited operating history to fund on-going operating
expenses or product development activities. As a result, we resorted to raising
capital through equity fundings and from borrowings. In June of 1998, we
acquired inventory, equipment, and goodwill of the Mother Hubbard's Creations
toy line. We renamed the Mother Hubbard's Creations toy line Hearthside
Treasures.
In May 1999, Alottafun! joint ventured with E-Commerce Fulfillment, LLC. which
contracted with M.W Kasch, an independent U.S. toy distributor, to launch an
e-commerce Internet portal called TOYPOP.COM. The Joint venture was owned 33.3%
by E-Commerce Fulfillment and 67.7% by Alottafun!, Inc. E-Commerce Fulfillment
(ECF) was a wholly owned by Jeffrey C. Kasch, President of M.W. Kasch Company.
On February 28, 2000, the M. W. Kasch and us agreed to terminate our
relationship and thereupon, M.W. Kasch Co. gave notice that effective March 28,
2000 our agreement with them was terminated.
We announced our business-to-business Internet strategy on February 22, 2000.
Our e-commerce site was originally launched on September 21, 1999. The Web-site
e-commerce development program cost about $235,144 during 1999. In comparison
with other retailers of toys, our expenditures were relatively small. Marketing
expenditures included limited newspapers, radio, magazine, and internet
advertisements. Our expected marketing program was not funded for the 1999
holiday selling season. Our lack of marketing resources has had a negative
impact on our sales and our ability to meet our sales projections. Our
Toypop.com site was processing orders through February 10, 2000 when it was
closed.
Our operating results may hinder our ability to raise additional capital to fund
our operations going forward. To date, we have funded our Web-site e-commerce
development with working capital provided by the sales of our securities and
borrowings. However, there is no assurance that these working capital reserves
will be sufficient to complete, launch, and market our e-commerce site.
Furthermore, there is no assurance that we will be able to raise additional
funds through securities sales and borrowings in the future.
We have sustained significant operating losses since inception resulting in an
accumulated deficit of approximately $8,533,000 at June 30, 2001.
7
Because of the need for capital and the diminishing prospects for obtaining new
monies, we have reduced our focus on the toy industry and concentrated our
efforts on the scrap tire market. In an effort to develop a viable business
model to realize value for our shareholders we were presented with "roll-up"
opportunities with the scrap tire industry. This strategy utilizes proprietary
experience that we developed in our business-to-business Internet initiatives.
We have identified a strategy to focus all our future resources to develop a
business model that focuses on the acquisition of smaller privately owned
regional operations in the scrap tire recycling industry.
In January 2001, we signed letters of intent to acquire three tire recycling
companies and a logistics company, allowing us to expand our technology
expertise into a fast growth industry. We are currently seeking capital in order
to complete these acquisitions, however, there is no assurance that we will be
successful in securing this funding to secure these potential acquisitions.
We will continue to incur losses until we are able to complete acquisition
within the tire recycling industry that will increase sales to a sufficient
level to offset ongoing operating and administrative costs.
RESULTS OF OPERATIONS
Three months ended June 30, 2001 compared to three months ended June 30, 2000
Total revenue for the three months ended June 30, 2001 was $38,501 compared to
$454 for the same period of 2000, which represents an increase of $38,047. This
increase was primarily the result of higher sales relating to our logistic
product supply business and the sale of crumb rubber. We focused our efforts
primarily on expanding into the warehousing logistic industry and decreased our
focus on toy sales.
Gross profit was $8,440 and $1,048, respectively, for the three month period
ended June 30, 2001, as compared to the prior period ended June 30, 2000, an
increase of $7,392. This increase is primarily attributable higher margins
realized on the sale of crumb rubber.
For the three months ended June 30, 2001, total selling expenses were $4,138 as
compared to $8,650 for the same period of the previous year, a decrease of
$4,512 or 52%. This decrease is the result of lower marketing expenses relating
to our logistic supply business as we focus more on entering the tire recycling
business. Total general and administrative expense for the three months ended
June 30, 2001, was $1,005,258 as compared to $279,104 for the same period of the
previous year, an increase of $726,154, or 260%. This increase is primarily due
to legal and consulting expenses paid during the three month period ended June
30, 2001.
We had a net loss of $1,165,120 for the period ended June 30, 2001 as compared
to a loss of $305,172 for the same prior year period. This increase in the
operating loss over that of the preceding year period primarily reflects higher
selling, general and administrative expenses despite lower depreciation and
amortization expenses. General and administrative costs included accounting,
legal and consulting expenses of approximately $715,000 in the three month
period ended June 30, 2001.
The loss and loss per share were $1,105,504 and $0.04 per share respectively,
for the three months ended June 30, 2001 as compared to a loss and loss per
share of $305,172 and $0.03 respectively, for the same period in 2000. This loss
represents a 262% increase over the loss experienced in the year ago quarter.
The weighted average shares outstanding for the quarter ended June 30, 2001 was
26,973,852 as compared to 11,509,193 for the preceding year quarter ended June
30, 2000.
Six months ended June 30, 2001 compared to six months ended June 30, 2000
Total revenue for the six months ended June 30, 2001 was $71,584 compared to
$410 for the same period of 2000, which represents an increase of $71,174. This
increase was primarily the result of higher sales relating to our logistic
product supply business and the sale of crumb rubber. We focused our efforts
primarily on expanding into the warehousing logistic industry and on entering
the tire recycling business and decreased our focus on toy sales.
8
Gross profit was $39,784 and $(2,531), respectively, for the six month period
ended June 30, 2001, as compared to the prior period ended June 30, 2000, an
increase of $42,315. This increase is primarily attributable to the sale of
$25,500 of confectionary products assumed by us at little or no cost and margins
realized on sales of $28,800 of crumb rubber..
For the six months ended June 30, 2001, total selling expenses were $22,112 as
compared to $21,842 for the same period of the previous year, an increase of
$270. Total general and administrative expense for the six months ended June 30,
2001, was $1,268,155 as compared to $501,093 for the same period of the previous
year, an increase of $767,062, or 153%. This increase is primarily due to legal
and consulting expenses paid during the six month period ended June 30, 2001.
We had a net loss of $1,473,145 for the period ended June 30, 2001 as compared
to a loss of $496,444 for the same prior year period. This increase in the
operating loss over that of the preceding year period primarily reflects higher
general and administrative expenses despite lower depreciation and amortization
expenses. General and administrative costs included accounting, legal and
consulting expenses of approximately $888,000 in the six month period ended June
30, 2001.
The loss and loss per share were $1,473,145 and $0.06 per share respectively,
for the six months ended June 30, 2001 as compared to a loss and loss per share
of $496,444 and $0.05 respectively, for the same period in 2000. This loss
represents a 197% increase over the loss experienced in the year ago quarter.
The weighted average shares outstanding for the quarter ended June 30, 2001 was
23,432,025 as compared to 10,774,918 for the preceding year quarter ended June
30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has largely funded its operations and its product
development activities with funds provided by issuing securities and from
borrowings. During the six months ended June 30, 2001, the Company received
$280,000 in the form of notes payable and convertible debt.
Net cash used in operating activities for the six months ended June 30, 2001 was
$229,689 compared to net cash used of $499,876 for the six months ended June 30,
2000. This decrease in cash used by operating activities is primarily due to
increases in accounts payable and accrued expenses as well as the issuance of
common stock for payment of legal and consulting fees.
Cash used in investing activities for the six months ended June 30, 2001 and
2000 was $149,813 and $73,560, respectively. This increase reflects deposits
made pursuant to letters of intent signed with three tire recycling companies
and a logistics company.
Cash provided by financing activities for the six months ended June 30, 2001 was
$384,180 as compared to cash provided by financing activities of $584,743 for
the six months ended June 30, 2000. During the recent period, the Company issued
notes payable that generated proceeds of $280,000 to provide working capital and
to support our expenditures. In the year ago period, we issued common stock with
an aggregate value of $570,500.
As of June 30, 2001, the Company had a net working capital deficit of
$1,134,000. The Company is not presently profitable and continues to fund itself
from the proceeds of securities placements, notes payable, and convertible debt.
We do not presently have sufficient cash to operate for more than the next 90
days. We will need capital to development our scrap tire recycling business. We
will need this capital to provide for our anticipated working capital needs over
the next twelve months. We are presently seeking $500,000 in equity to allow us
to sustain ourselves.
9
We cannot provide any assurance that we will be successful in raising such
capital as such undertakings are difficult to complete. We are optimistic that
we will be successful in obtaining future financing.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
None
Item 2. Change in Securities and Use of Proceeds.
-----------------------------------------
During the six month period ended June 30, 2001, the Company issued 2,370,000
shares of restricted common stock in satisfaction of notes payable, including
interest, of $33,327.
During the six month period ended June 30, 2001, the Company issued 2,625,000
shares of restricted common stock in satisfaction of debt of $147,330.
During the six month period ended June 30, 2001, the Company issued 2,482,000
shares of restricted common stock valued at $134,100 for the payment of offering
costs.
During the six month period ended June 30, 2001, the Company issued $280,000 of
notes payable. In connection with the notes, the Company issued 400,500 shares
of restricted common stock valued at $24,672 and detachable warrants to purchase
1,312,500 shares of restricted common stock valued at $42,295. These amounts
have been recorded as a discount on the notes and are being amortized over the
life of the note.
During the six month period ended June 30, 2001, the Company issued 10,828,750
shares of restricted common stock for services valued at $782,399.
On June 1, 2001, David Bezalel resigned as the Company's Director and Chief
Operating Officer. Mr. Bezalel returned to the Company options to purchase
2,500,000 shares of the Company's Common Stock at an exercise price of $.15 per
share. In exchange, Mr. Bezalel was issued an option to purchase 1,000,000
shares of the Company's Common Stock which the Company expects to be exercised
within one year at a price of .0. The Company valued the options at $30,000.
During the six month period ended June 30, 2001, the Company issued 2,087,000
shares of restricted common stock for cash of $102,625.
Item 3. Defaults Upon Senior Securities.
--------------------------------
The Company is currently in default on approximately $362,000 of notes payable
principal and $162,000 in interest in arrears on these notes.
10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant had
duly caused the report to be signed on its behalf by the undersigned thereunto
duly authorized.
Alottafun!, Inc.
Dated 9/20/2001
/s/ Michael Porter
------------------------------------
Michael Porter, President
11