UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 31, 2000
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act
of 1934
For the transition period to
-------------------- ------------------------
Commission File Number 0-31197
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Airbomb.com Inc.
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(Exact name of small Business Issuer as specified in its charter)
Delaware 51 - 0401121
- ---------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Suite 505 - 1155 Robson Street
Vancouver, British Columbia, Canada V6E 1B5
- ---------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 604-689-1659
---------------------------------
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(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) 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 issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days [X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 12,843,462 Shares of $.001 par value
Class A Common Stock outstanding as of December 31, 2000.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and Item 310 (b) of Regulation S-B, and,
therefore, do not include all information and footnotes necessary for a complete
presentation of financial position, results of operations, cash flows, and
stockholders" equity in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered necessary
for a fair presentation of the results of operations and financial position have
been included and all such adjustments are of a normal recurring nature.
Operating results for the nine months ended December 31, 2000 are not
necessarily indicative of the results that can be expected for the year ending
March 31, 2001.
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Stated in U.S. Dollars)
- --------------------------------------------------------------------------------
DECEMBER 31 MARCH 31
2000 2000
- --------------------------------------------------------------------------------
ASSETS
Current
Cash $ 51,501 $ 267,050
Accounts receivable 18,735 32,154
Inventory 121,274 141,106
Prepaid expenses and deposits 10,052 11,566
----------------------------
201,562 451,876
Capital Assets (Note 3) 88,221 93,745
----------------------------
$ 289,783 $ 545,621
================================================================================
LIABILITIES
Current
Accounts payable and accrued liabilities $ 113,580 $ 103,247
Current portion of loans and advances payable 49,070 70,650
----------------------------
162,650 173,897
Loans And Advances Payable (Note 4) - 17,149
----------------------------
162,650 191,046
----------------------------
SHARE CAPITAL AND DEFICIT
Share Capital (Note 5)
Authorized:
100,000,000 common shares, par value of $0.001
per share
Issued and Outstanding:
12,843,462 common shares at September 30, 2000
and
8,315,462 common shares at March 31, 2000 1,271,329 179,610
Special Warrants (Note 6)
Issued and Outstanding:
500,000 special warrants at December 31,
2000 and
3,320,000 special warrants at March 31, 2000 28,890 700,898
Deficit (1,173,086) (525,933)
----------------------------
127,133 354,575
----------------------------
$ 289,783 $ 545,621
================================================================================
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT
(Unaudited)
(Stated in U.S. Dollars)
- -------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31 DECEMBER 31
2000 1999 2000 1999
- -------------------------------------------------------------------------------------------------------------------------
Sales $ 227,464 $ 85,766 $ 799,734 $ 267,626
Cost Of Sales
Opening inventory 143,303 141,130 141,106 54,468
Purchases 187,303 77,378 707,606 347,223
Less: Ending inventory (121,274) (65,748) (121,274) (65,748)
----------------------------------------------------------------------------
Cost of sales 209,332 152,760 727,438 335,943
----------------------------------------------------------------------------
Gross Profit (Loss) 18,132 (66,994) 72,296 (68,317)
----------------------------------------------------------------------------
Expenses
Advertising and promotion 3,984 7,695 82,504 11,607
Amortization 9,237 2,148 26,974 3,783
Auto and travel 4,624 3,009 18,532 8,666
Bad debts - - 1,125 -
Bank charges, interest and foreign exchange (88) 12,171 11,733 19,406
Consulting 13,076 7,678 15,128 12,252
Corporate finance fee - - 33,668 -
Investor relations 12,402 - 84,022 -
Management fees 5,098 - 15,185 -
Office and sundry 11,534 488 54,110 7,810
Professional fees 41,291 7,530 107,360 22,684
Regulatory and transfer agent 2,661 - 8,016 -
Rent and utilities 11,175 4,324 28,830 10,605
Telephone and internet 3,815 6,028 15,948 14,830
Wages and contract labour 67,438 58,821 216,314 74,730
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186,247 109,892 719,449 186,373
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Loss For The Period (168,115) (176,886) (647,153) (254,690)
Deficit, Beginning Of Period (1,004,971) (104,479) (525,933) (26,675)
----------------------------------------------------------------------------
Deficit, End Of Period $ (1,173,086) $ (281,365) $ (1,173,086) $ (281,365)
=========================================================================================================================
Loss Per Share $ (0.01) $ (0.02) $ (0.06) $ (0.03)
=========================================================================================================================
Weighted Average Shares Outstanding 11,993,462 8,014,212 10,955,462 8,014,212
=========================================================================================================================
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
- -------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31 DECEMBER 31
2000 1999 2000 1999
- -------------------------------------------------------------------------------------------------------------------------
Cash Flows From Operating Activities
Loss for the period $ (168,115) $ (176,886) $ (647,153) $ (254,690)
Adjustment for:
Amortization 9,237 2,148 26,974 3,783
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(158,878) (174,738) (620,179) (250,907)
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Changes in non-cash working capital items:
(Increase) Decrease in accounts
receivable 24,145 (11,796) 13,419 (6,066)
(Increase) Decrease in inventory 22,029 75,382 19,832 (11,280)
(Increase) Decrease in prepaid expenses
and deposits 21,593 79,683 1,514 69,707
Increase (Decrease) in accounts payable
and accrued liabilities 22,227 (99,884) 10,333 (23,135)
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(68,884) (131,353) (575,081) (221,681)
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Cash Flows From Investing Activities
Purchase of capital assets (893) (997) (21,450) (22,423)
Acquisition of subsidiary, net of
cash acquired - (32,852) - (32,852)
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(893) (33,849) (21,450) (55,275)
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Cash Flows From Financing Activities
Issue of special warrants - - 338,190 -
Issue of common shares 80,027 - 81,521 -
Loans payable (14,651) 176,415 (38,729) 284,852
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65,376 176,415 380,982 284,852
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Increase (Decrease) In Cash (4,401) 11,213 (215,549) 7,896
Cash, Beginning Of Period 55,902 670 267,050 3,987
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Cash, End Of Period $ 51,501 $ 11,883 $ 51,501 $ 11,883
=========================================================================================================================
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES:
During the period ended December 31, 2000, the Company issued 3,820,000 common
shares on the exercise of 3,820,000 special warrants.
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
DECEMBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
COMMON SHARES SPECIAL WARRANTS
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NUMBER AMOUNT NUMBER AMOUNT DEFICIT TOTAL
----------------------------------------------------------------------------------------------
Issue of common shares 100 $ 70 - $ - $ - $ 70
Loss for the period - - - - (27,694) (27,694)
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Balance, March 31, 1998 100 70 - - (27,694) (27,624)
Net income for the year - - - - 1,019 1,019
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Balance, March 31, 1999 100 70 - - (26,675) (26,605)
Adjustment to number of
common shares issued and
outstanding as a result of
the reverse take-over
transaction
Sports Link Direct
Marketing Ltd. (100) - - - - -
Airbomb.com Marketing
Ltd. 5,412,962 - - - - -
Ascribed value of common
shares and special warrants
issued in connection with
the acquisition of Sports
Link Direct Marketing Ltd. 2,300,000 63,479 620,000 35,849 - 99,328
Issue of common shares 602,500 116,061 - - - 116,061
Issue of special warrants - - 2,700,000 665,049 - 665,049
Loss for the year - - - - (499,258) (499,258)
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Balance, March 31, 2000 8,315,462 179,610 3,320,000 700,898 (525,933) 354,575
Exercise of special warrants - - (2,820,000) (672,008) - (672,008)
Issue of common shares 4,528,000 1,091,719 - - - 1,091,719
Issue of special warrants - - 1,000,000 338,190 - 338,190
Exercise of special warrants - - (1,000,000) (338,190) - (338,190)
Loss for the period - - - - (647,153) (647,153)
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Balance, December 31, 2000 12,843,462 $ 1,271,329 500,000 $ 28,890 $ (1,173,086) $ 127,133
===============================================================================================
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
1. NATURE OF OPERATIONS
The unaudited consolidated financial statements as of December 31, 2000
included herein have been prepared without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with United States generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
It is suggested that these consolidated financial statements be read in
conjunction with the March 31, 2000 audited consolidated financial
statements and notes thereto.
Airbomb.com Inc., through its subsidiary, Sports Link Direct Marketing
Ltd., is in the business of retailing and wholesaling sporting goods,
specifically bicycles and related accessories, through the Internet.
Sports Link Direct Marketing Ltd. markets products acquired from a variety
of suppliers, and also distributes its own "Airbomb" line of products,
which are acquired from established manufacturers and labelled with the
Company's "Airbomb" label.
These financial statements have been prepared on the basis of accounting
principles applicable to a going concern which assumes the realization of
assets and discharge of liabilities in the normal course of business.
During the period ended December 31, 2000, the Company incurred a loss of
$647,153. The Company's ability to continue its operations on a going
concern basis is dependent upon obtaining additional financing and the
support of creditors. There is no assurance that the Company will be
successful in achieving any, or all, of these objectives over the coming
year. These financial statements do not give effect to any adjustments
that would be necessary should the Company be unable to continue as a going
concern.
2. SIGNIFICANT ACCOUNTING POLICIES
a) Consolidation
These financial statements include the accounts of the Company and its
wholly owned Canadian subsidiary, Sports Link Direct Marketing Ltd.
b) Inventory
Inventory is recorded at the lower of cost and net realizable value.
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
c) Revenue Recognition
Revenue from sale of products is recognized at the time of shipment.
d) Amortization of Capital Assets
Computers and office furniture and equipment are stated at cost,
amortization is provided at the following rates:
Computer equipment 30% on the declining balance method
Computer software 100% on the declining balance method
Furniture and equipment 20% on the declining balance method
Goodwill related to the acquisition of Sports Link Direct Marketing Ltd.
is recorded at cost and is amortized on a straight line basis over three
years.
e) Foreign Currency Translation
The Company's functional currency is the U.S. dollar. Transactions in
foreign currencies are translated at the exchange rates in effect on the
transaction dates. Monetary assets and liabilities resulting from such
transactions are adjusted to reflect the exchange rates in effect at the
balance sheet date and the resulting gain or loss is recognized in the
statement of earnings.
f) Non-Monetary Transactions
Shares of common stock of the Company issued for non-monetary
consideration are valued at the quoted market price per share at the
close of trading on the date of completion of the transaction except for
those circumstances where, in the opinion of the Company and due to the
nature of the transaction, the trading price does not fairly represent
the value of the transaction. In such circumstances, the value of the
shares is determined based on the estimated fair value of the
consideration received.
g) Income Taxes
The Company has adopted Statement of Financial Accounting Standards No.
109 - "Accounting for Income Taxes" (SFAS 109). This standard requires
the use of an asset and liability approach for financial accounting and
reporting on income taxes. If it is more likely than not that some
portion, or all, of a deferred tax asset will not be realized, a
valuation allowance is recognized.
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
h) Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. By their
nature, these estimates are subject to measurement uncertainty, and the
effect on the financial statements of changes in such estimates in
future periods could be significant.
i) Stock Based Compensation
The Company measures compensation cost for stock based compensation
using the intrinsic value method of accounting as prescribed by A.P.B.
Opinion No. 25 - "Accounting for Stock Issued to Employees". The
Company has adopted those provisions of Statement of Financial
Accounting Standards No. 123 - "Accounting for Stock Based
Compensation", which requires disclosure of the pro-forma effect on net
earnings and earnings per share as if compensation cost had been
recognized based upon the estimated fair value at the date of grant for
options awarded.
j) Earnings Per Share
Basic earnings per share excludes any dilutive effects of options,
warrants and convertible securities. Basic earnings per share is
computed using the weighted average number of common shares outstanding
during the period. Diluted earnings per share is computed using the
weighted average number of common and common stock equivalent shares
outstanding during the period. Common stock equivalent shares are
excluded from the computation if their effect is anti-dilutive. Fully
diluted loss per share is not presented as it is anti-dilutive.
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
3. CAPITAL ASSETS
Capital assets and related accumulated amortization consist of the
following:
------------------------------------ -------------
DECEMBER 31 MARCH 31
2000 2000
Accumulated Net Book Net Book
Cost Amortization Value Value
------------------------------------- -------------
Computer equipment $ 37,129 $ 11,315 $ 25,814 $ 19,132
Computer software 5,425 3,474 1,951 256
Furniture and equipment 12,591 2,466 10,125 5,153
------------------------------------- -------------
55,145 17,255 37,890 24,541
Goodwill 75,495 25,164 50,331 69,204
------------------------------------- -------------
$ 130,640 $ 42,419 $ 88,221 $ 93,745
===================================== ============
4. LOANS AND ADVANCES PAYABLE
DECEMBER MARCH
31 31
2000 1999
----------------------------
Loans payable due May 8, 2001, with
interest at 12% per annum commencing
November 8, 1999 $ 16,902 $ 17,149
Loans payable to a director with no
specific terms of repayment, with
interest at 12% per annum 32,168 70,650
----------------------------
49,070 87,799
Less: Current portion 49,070 70,650
----------------------------
$ - $ 17,149
============================
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
5. SHARE CAPITAL
a) During the period, the Company changed its authorized capital to
100,000,000 shares with a par value of $0.001, and the Company
became domesticated as a Delaware Corporation.
b) As at December 31, 2000, there were outstanding incentive stock
options for the purchase of:
170,000 shares at $0.50 CDN to January 27, 2005
105,000 shares at $0.50 CDN to January 28, 2005
135,000 shares at $0.45 CDN to November 11, 2004
98,000 shares at $0.28 CDN to December 20, 2004
105,000 shares at $0.50 CDN to March 1, 2005
100,000 shares at $0.50 CDN to January 25, 2005
25,000 shares at $0.50 CDN to February 18, 2005
10,000 shares at $0.29 CDN per share to April 8, 2004
25,000 shares at $0.49 CDN per share to June 8, 2005
15,000 shares at $0.49 CDN per share to June 8, 2002
226,000 shares at $0.45 CDN per share to October 2, 2005
185,000 shares at $0.45 CDN per share to October 2, 2002
c) As at December 31, 2000 there were outstanding share purchase warrants
for the purchase of:
1,500,000 shares at $0.50 CDN per share to January 5, 2001
or at $0.75 CDN per share to January 5, 2002
1,200,000 shares at $0.50 CDN per share to February 21, 2001
or at $0.65 CDN per share to February 21, 2002
6. SPECIAL WARRANTS
As at December 31, 2000, the Company has 500,000 special warrants
outstanding which were issued in connection with the Sports Link Direct
Marketing Ltd. acquisition. These special warrants are exercisable without
additional consideration into 500,000 common shares.
7. FINANCIAL INSTRUMENTS
The carrying amounts for cash, accounts receivable, prepaid expenses and
deposits, accounts payable and accrued liabilities, and loans and advances
payable approximate their respective fair values due to their short term
maturity or capacity of prompt liquidation.
AIRBOMB.COM INC.
(Formerly Airbomb.com Marketing Ltd.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
8. RELATED PARTY TRANSACTIONS
During the period, the following amounts were paid to parties not dealing
at arm's length with the Company:
a) Companies controlled by a director were paid $54,000 for office rent and
administrative support services.
b) The Company's president was paid wages totalling $46,156.
9. SUBSEQUENT EVENTS
a) Subsequent to December 31, 2000, the Company granted incentive stock
options for the purchase of up to 75,000 common shares at $0.25 per
share to January 15, 2006.
b) Subsequent to December 31, 2000, the exercise price of the 1,500,000
share purchase warrants described in Note 5(c) was reduced from $0.75 to
$0.41 per share to January 5, 2002.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Airbomb.com Inc., through its wholly-owned subsidiary, Sportslink Direct
Marketing Ltd., is an internet retailer/wholesaler of sporting goods, primarily
bicycles and related parts and accessories. Because of the Company's unique
relationship with original equipment manufacturers (OEMs), it is able to acquire
a variety of products at preferential prices and sell them to wholesalers,
distributors or consumers at a significant discount. The Company has developed
strong relationships with some of the largest component manufacturers in Asia
and North America. The retail market in the United States for bicycles and
related parts and accessories is approximately U.S. $5.4 billion, and globally
is U.S. $25 billion.
The Company has applied for trademark protection in Canada and the United States
for the brand name "Airbomb. The Company has four web sites. The primary
marketing of bicycles, bicycle components and outdoor sporting equipment is
conducted at www.airbomb.com; sunglass sales are conducted at www.sunbomb.com;
--------------- ---------------
and cycling products are marketed in Canada at http://store.airbomb.com/Can. The
----------------------------
fourth web site is a secure, password-protected site for wholesale transactions.
The company supports various other internet retailer "web stores" by acting as a
virtual store and completing any transactions (sales) generated. In this fashion
airbomb.com is the "store behind the store". An example of this can be seen at
NSMB.com.
Continued marketing efforts directed towards B2B customers produced exponential
growth in that sector. The company has worked to be qualified as a manufacturer
in the cycling industry and as such gained access to lower OEM prices from
numerous important suppliers. This has strengthened the ability to provide
private label branded bikes to retailers and other resellers. The
password-protected website directly responds to this demand. The private label
concept is new to this industry and has been recognized by resellers as
innovative, unique and profitable. The Company feels its competitive advantage
will be most successful in the B2B category and by Q2 of 2001 this categories
sales will exceed B2C sales. A new Canadian based production facility assembles
components purchased in bulk into high quality bicycles. These completed bikes
are either labeled according to the request of the retailer or sold direct to
consumers under the well-known "Nuke Proof" name.
Airbomb.com has outlasted hundreds of well-financed e-tailers largely through
the use of inexpensive marketing methods. Weekly email "specials" are broadcast
to an increasing number of opt-in users. Custom software helps the
"tell-a-friend" program track referrals and encourage word-of-mouth about the
Company. At present the company has links on a record number of other sites
ranging from simple customer personal sites to those of large manufacturers. In
the last 90 days the Company has attracted new customers by linking items placed
on popular auction sites through to the airbomb.com store. A firm specializing
in maintaining the simultaneous presence of individual items on multiple auction
sites has proved extremely effective. During the last quarter the company
enjoyed greater web traffic than ever before.
The Company has seen a marked increase in the proportion of its sales that are
processed purely through the internet versus those sales transacted by phone or
other means. This is seen as support for management's recognition that its
market segment is a proven early adopter of online buying than are those for
other segments such as groceries, furniture, etc. The Company's customers do
not have to be enticed online; they are already there. This provides some
distance from the risk associated with the rate at which the general public
embraces online buying.
Other upgrades were made throughout the website as a reflection of the expanded
product offering and software upgrades. A concomitant growth in the company's
website traffic saw the benchmark of 1 million hits per month eclipsed.
Airbomb.com dominates the Canadian market for online cycling sales, Q3 results
are estimated to be 10 times larger than the closed competitor.
Results of Operations
Nine months ended December 31, 2000 and December 31, 1999.
Sales increased by 198.8 % or $532,108 to $ 799,734 during the period ending
December 31, 2000 compared to $ 267,626 for the period ending December 31, 1999.
This increase was due to a higher level of sales through the Company's web site
as well as increased performance from the Company's Business to Business
website.
Cost of goods sold increased by 116.5 % or $ 391,495 to $ 727,438 for the period
ending December 31, 2000, compared to $ 335,943 for the period ending December
31, 1999. The cost of goods sold increased as the sales volume increased
Inventory increased by 84.4 % or $ 55,526 to $ 121,274 for the period ending
December 31,2000, compared to $ 65,748 for the period ending December 31, 1999.
Inventory levels are up over the past year as a result of the increase in sales
and to facilitate timely product deliveries.
General and administrative expenses increased by 286.0 % or $ 533,076 to $
719,449 for the period ending December 31, 2000 compared to $ 186,373 for the
period ending December 31, 1999. The Company incurred higher costs in every
category primarily due to the expense of being a public company (listed on the
Canadian Venture Exchange and OTC Bulletin Board) along with an increase in
sales.
Advertising and Promotion increased by 610.8 % or $ 70,897 to $ 82,504 for the
period ending December 31, 2000 compared to $ 11,607 for the period ending
December 31, 1999.
Amortization costs rose $ 23,191 to $ 26,974 for the period ending December 31,
2000 compared to $ 3,783 for the period ending December 31, 1999 and relates to
the amount of goodwill created as a result of the Sportslink acquisition.
Interest and foreign exchange decreased $ 7,673 to $11,733 for the period ending
December 31, 2000 compared to $ 19,406 for the period ending December 31, 1999.
This is as a result of the loss on conversion from Canadian to U.S. dollars
advanced to fund the operations of Sportslink and expansion of the business
operations.
Investor relations is a new expense category now that the Company is a
publicly-traded company. For the nine month period ending December 31, 2000, the
Company incurred expenses of $84,022.
Office and Sundry costs increased by 592.8 % or $ 46,300 to $ 54,110 for the
period ending December 31, 2000 compared to 7,810 for the period ending December
31, 1999. These expenses support the increased costs of being a public company
and expansion of the business operations.
Professional fees increased 373.2 % or $ 84,676 to $ 107,360 for the period
ending December 31, 2000 compared to $ 22,684 for the period ending December
31, 1999. Again, these expenses included the increased legal and accounting
costs of being a public company and the expansion of the business operations.
Wages and contract labor increased 189.4 % or $ 141,584 to $ 216,314 for the
period ending December 31, 2000 compared to $ 74,730 for the period ending
December 31, 1999. The increase in staff was necessary to support the Company's
expansion.
Plan of Operations
The Company's marketing plans and strategies include:
- - Expand into the B to B market through acquisition of a wholesaler
- - Expanding the product base and continuing to upgrade the web site.
- - Developing brand names that link on-line customers to the Company.
- - Launch a new brand of bicycles with a name TBA
- - Upgrading web search engine results for key search words, often brand
names, that bring on-line shoppers directly to the Company web site.
- - Expanding the customer database by developing additional opt-in
subscription strategies
- - Purchasing/renting other highly qualified opt-in subscriber lists.
- - Working with suppliers to match customers to a supplier's target market.
- - Enhancing the "weekly specials sheet" to attract buyers to special deals
and clear-out sales. This has proven attractive to both suppliers, who use
the feature to move inventory, and on-line buyers looking for special
prices.
- - Offering competitive prices relative to the online channel.
- - Expanding the "Tell-A-Friend" referral program through support materials
provided to motivated customers.
- - Continuing to sponsor a professional bike racing team.
- - Publishing bi-monthly brochures and mailing to customer base.
- - Continuing with sales force training programs to enhance telephone
customer service.
- - Enter new markets via new online storefronts.
To be successful, the Company will have to develop marketing, brand development
and sales on a rapidly expanding basis. There is no guarantee that the Company
will be successful in managing such a complex strategy of marketing and sales or
that the Company will be able to do so soon enough to be successful.
The Company intends to derive substantially all of its revenues from the sale of
goods using the Internet as the chief instrument of transaction. The Company's
ability to generate revenues will depend upon, among other factors, consumers'
acceptance of the Web as an attractive and sustainable medium, and development
of a large base of repeat customers for the Company's products. In addition,
there is intense competition in the sale of goods and services on the Internet,
which makes it difficult to project the future levels of Internet revenues that
will be realized generally or by any specific company
To be successful, the Company plans to continue entering into strategic
partnerships with other local, national and international businesses to help in
a focused marketing effort and to provide operational support. The Company
cannot guarantee that it will be able to find strategic partners who will be
available and who are suitable for the Company's needs, or if enough strategic
partners can be found to market the Company's products and support its
operations.
The success of the Company cannot be guaranteed or accurately predicted. There
is no assurance that the Company will be able to operate profitably. Such
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered in the establishment of new product lines and retail
sales outlets in an emerging e-commerce market.
There is no assurance that the Company will be able to operate and manage on a
profitable basis or that cash flow from operations will be sufficient to pay the
operating costs of the Company. The Company anticipates that it will need to
raise additional capital to finance growth of its operations. The Company may
seek additional financing through debt or equity financings. There is no
assurance that additional financing will be available to the Company, or that,
if available, the financing will be on terms acceptable to the Company. There
is no assurance that the Company's estimate of its reasonably anticipated
liquidity needs is accurate or that new business developments or other
unforeseen events will not occur that will result in the need to raise
additional funds. In the event that the Company cannot raise needed capital, it
will have a material adverse effect on the Company.
Although the Company has based its web site upon commercially available software
and hardware, the Company will need to do substantial additional development in
order to offer the goods, services and user-friendly interfaces the Company
believes are needed to attract and retain customers.
The Company may incur significant operating losses and generate negative cash
flow from operating activities during the next several years while it develops
its web sites and services, and builds a customer and subscriber base. There is
no assurance that the Company will achieve or sustain profitability or positive
cash flow from operating activities in the future or that it will generate
sufficient cash flow to service any debt requirements.
To the extent that any financing involves the sale of the Company's equity
securities, the interests of the Company's then-existing shareholders could be
substantially diluted.
The Company's future success is dependent upon continued growth in the use of
the Internet. Rapid growth in the use of and interest in the Internet is a
recent phenomenon. There is no assurance that commerce over the Internet will
become widespread or that extensive content will continue to be provided over
the Internet. In addition, to the extent that the Internet continues to
experience significant growth in the number of users and level of use, there is
no assurance that the Internet infrastructure will continue to be able to
support the demands placed upon it by such potential growth. If use of the
Internet does not continue to grow, or if the Internet infrastructure does not
effectively support growth that may occur, the Company's business, results of
operations and financial condition would be materially and adversely affected.
As is typical in the case of a new and rapidly evolving industry, demand and
market acceptance for recently introduced products and services are subject to a
high level of uncertainty and risk. The Company does not know the extent to
which additional customers will use its products and services. It is difficult
to predict the future growth rate, if any, and size of this market via Internet
sales. In order to sustain rapid growth rates, the Company will need to
continue increasing its share of the bicycle and other sporting goods markets.
There is no assurance either that the market for the Company's products and
services will grow or that the Company can successfully and rapidly expand its
market share. If the market fails to grow, grows more slowly than expected, or
becomes saturated with competitors, or if the Company's products and services do
not achieve or sustain market acceptance and expanded market share, the
Company's business, results of operations and financial condition will be
materially and adversely affected.
The Company will rely on a combination of common law, copyright and trademark
law, and nondisclosure agreements to establish and protect its proprietary
rights in its products and the content of its web sites. Others, however, might
successfully challenge these protections.
The Company has applied for trademark protection in Canada for the brand name
"Airbomb", and anticipates filing for trademark protection in the United States
for the same brand name. The Company is the owner of the web site domain names
http://www.airbomb.comhttp://www.airbomb.com and http://www.sunbomb.com and
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maintenance fees for the domain names have been paid and are up to date. The
Company may file applications for trademark protection of other intellectual
property. No assurance can be given that such trademark applications will be
accepted for registration. Furthermore, the possibility exists that the Company
could be found to infringe on patents, service marks, trademarks or copyrights
held by others. The Company's use of trademarks, service marks, trade names,
slogans, phrases and other expressions in the course of its business may be the
subject of dispute and possible litigation. Given the growth of business being
conducted on the Internet, electronic commerce and the use of domain names,
there can be no assurance that the Company will be able to continue to use its
current trade name, domain name and Internet and business identification. Such
changes could result in confusion to potential customers and negatively affect
the Company's business.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
None
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AIRBOMB.COM INC.
Date: February 5, 2001
By: /s/ David Houston
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DAVID HOUSTON, Director, President