UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 March 31, 2001
[ ]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 00-28667
HOUSEHOLD DIRECT.com, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 51-0388634
(State or other (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
HOUSEHOLD DIRECT.com, INC.
900 MAIN STREET SOUTH
SOUTHBURY, CONNECTICUT 06488
(Address of principal executive offices) (Zip Code)
(203) 267-1400
(Registrant's telephone number, including area code)
----------
None
(Former name or former address, if changed since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant (i) filed all report required to
be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past
twelve months (or for such shorter period that the registrant to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [ X ] No [ ]
the number of shares outstanding of each the issuer's class of common
stock
CLASS OUTSTANDING ON MARCH 31, 2001
-------- ----------------------------
Common stock 35,326,109
Transitional Small Business Disclosure Format: ___Yes ____No
HOUSEHOLD DIRECT.COM, INC.
Table of Contents
Part I. FINANCIAL INFORMATION
Item 1: Consolidated Financial Statements:
Consolidated Balance Sheet at March 31, 2001
Consolidated Statements of Operations for the three Months Ended March 31, 2001
and 2000, and from inception on May 18, 1998 to March 31, 2001
Consolidated Statements of Cash Flows for the three Months Ended March 31, 2001
and 2000, and from inception on May 18, 1998 to March 31, 2001
Notes to Consolidated Financial Statements
Item 2: Management's Discussion and Analysis of Financial Conditions and Results
of Operations
Part II. Other Information
Part II. Other
Information.....................................................................
Item 1: Legal
Proceedings.....................................................................
Item 2: Changes in Securities.................................................
Item 3: Defaults Upon Senior Securities.......................................
Item 4: Submission of Matters to Vote of Security Holders.....................
Item 5: Exhibits and Reports on Form 8-K......................................
HOUSEHOLD DIRECT.com, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31, 2001
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7,187
Prepaid expenses and other current assets 76,631
-----------
Total current assets 83,818
PROPERTY AND EQUIPMENT, net 84,324
Intangible assets, net of accumulated amortization 38,758
Deposits 7,564
-----------
TOTAL ASSETS $ 214,464
===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 1,584,964
Accrued salaries 507,982
Current portion of note payable 236,574
Amounts payable to related parties 271,689
-----------
Total current liabilities 2,601,209
NOTE PAYABLE, net of current portion 23,031
-----------
TOTAL LIABILITIES 2,624,240
-----------
SHAREHOLDERS' DEFICIT
Common stock, 50,000,000 shares of $0.001 par value
authorized; 35,326,109, Shares issued and
outstanding at March 31, 2001 35,251
Additional paid-in capital 4,794,182
Common stock subscriptions receivable (34,355)
Deficit accumulated during the development stage (7,204,854)
-----------
TOTAL SHAREHOLDERS' DEFICIT (2,409,776)
-----------
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT $ 214,464
===========
The accompanying notes are an integral part of these consolidated financial
statements.
HOUSEHOLD DIRECT.com, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Cumulative
During
Development
Stage Three Months Ended
May 18, 1998 March 31,
to March 31, 2001 2001 2000
-------------- --------- ---------
REVENUES:
Consulting services $ 259,793 $ 32,075 $ 32,625
Service fees 61,713 25,810 11,907
Sales 236,357 -- --
-------------- ----------- -----------
TOTAL REVENUES 557,863 57,855 44,532
-------------- ----------- -----------
OPERATING EXPENSES:
Cost of Goods Sold 238,741 24,419 --
Salaries and benefits 1,188,074 71,994 129,011
Research and development 747,587 9,919 53,311
Depreciation and amortization 103,862 11,657 161,604
Consulting and professional fees 2,132,403 188,980 284,230
General and administrative 2,955,647 119,284 364,321
-------------- ------------ -----------
TOTAL OPERATING EXPENSES 7,366,314 426,253 992,477
-------------- ------------ ------------
LOSS FROM OPERATIONS (6,808,451) (368,368) (947,945)
-------------- ------------ ------------
OTHER EXPENSE:
Interest expense 6,812 4,971 215
Loss from subsidiary - PCNI 319,737 -- --
Write-off Inventory and Equipment 69,854 69,854 --
-------------- ----------- -----------
TOTAL OTHER EXPENSE 396,403 74,825 215
-------------- ----------- -----------
NET LOSS BEFORE INCOME TAX
PROVISION (7,204,854) (443,193) 948,160
INCOME TAX PROVISION -- -- --
-------------- ----------- -----------
NET LOSS $ (7,204,854) $ (443,193) $ 948,160
============== =========== ===========
Basic and diluted net loss per weighted
average share of common stock
outstanding $ (0.33) $ (.01) $ (.04)
============== ============ ===========
Weighted average number of shares of
basic and diluted common stock
outstanding 21,666,680 35,288,619 22,475,296
============== ============ ===========
The accompanying notes are an integral part of these consolidated financial
statements.
HOUSEHOLD DIRECT.com, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the For the Cumulative
Period from Period from During
January 1, January 1, Development
2001 to 2000 to Stage
March 31, March 31, May 18, 1998
2001 2000 to March 31, 2001
------------- ------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (443,193) $ ( 948,160) $ (7,204,854)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 8,424 10,818 87,150
Amortization 3,233 150,786 16,712
Shares issued for services, consulting and
purchases of Company's 45,622 145,000 2,618,249
Write-off Inventory and Equipment 69,854 -- 69,854
Interest paid with stock -- -- 20,500
(Increases) decreases in operating assets:
Accounts receivable 4,500 (652,872) --
Prepaid expenses and other current assets 4,600 ( 84,749) --
Inventory (15,443) ( 36,290) (48,613)
Increases (decreases) in operating liabilities:
Accounts payable and accrued salaries 133,191 216,841 2,092,946
Amounts payable to related parties 7,658 ( 65,789) 271,689
Deferred revenue -- 612,688 --
----------- ----------- ----------
Net cash used in operating activities (150,668) (651,727) (2,076,367)
----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposits on Web construction ( 57,031) -- ( 64,595)
Investment in Software -- -- ( 36,750)
Cash acquired from acquisition of Thunderstick -- -- ( 18,720)
Additions to property and equipment -- ( 42,124) (192,715)
Investment cross check -- (149,750) --
---------- ---------- ---------
Net cash used in investing activities ( 57,031) (191,874) (312,780)
---------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock issued for cash -- 1,059,187 2,156,329
Advances on notes payable 228,502 -- 259,605
Payments on notes payable (13,616) ( 1,338) (19,600)
---------- ---------- ---------
Net cash provided by financing activities 214,886 1,057,849 2,396,334
---------- ---------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 7,187 214,248 7,187
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- 31,013 --
---------- ---------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,187 $ 245,265 $ 7,187
========== ========== =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for interest 450 215 2,340
========== ========== =========
Cash paid during the period for income taxes -- -- --
========== ========== =========
The accompanying notes are an integral part of these consolidated financial
statements.
SUPPLEMENTAL INFORMATION March 31, 2001:
1. During the period January 1, 2001 to March 31, 2001 the company issued
1,180,833 shares for financial advisory services valued at $45,622.
The accompanying notes are an integral part of these consolidated financial
statements.
HOUSEHOLD DIRECT.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION
On January 2, 1992, RDI Marketing, Inc. ("RDI") (AKA HouseHold Direct.com) was
formed as a Florida corporation. Upon formation, RDI issued 1,000 shares of
common stock. RDI essentially remained dormant with no direct or indirect
business activity until reinstatement on May 18, 1998. On May 18, 1998, RDI
adopted a plan of recapitalization whereby the 1,000 shares of common stock were
converted into 1,000,000 shares of .001 par value common stock. In addition to
the recapitalization on May 18, 1998, RDI filed a disclosure statement under
Rule 15C2-11 of the Securities and Exchange Act of 1934 (hereafter the "Exchange
Act") with the National Association of Securities Dealers ("NASD"). As a result,
commencing on June 11, 1998, RDI's common stock was quoted on the OTC Bulletin
Board.
On July 10, 1998, RDI exchanged 10,000,000 shares of common stock for all of the
outstanding stock of Preferred Consumer Network International, Inc. ("PCNI").
PCNI, incorporated on June 13, 1997, was engaged in the business of developing
and operating a wholesale buying club that, in addition provided buying,
marketing and financial services to third party owned wholesale buying clubs.
The traditional buying club business model (the "Traditional Model") being
utilized by PCNI was predicated on the sale of memberships to the general
public, which memberships entitled the holders to purchase goods and services
through the wholesale buying club at wholesale prices (exclusive of separately
charged taxes, handling and shipping charges and a processing fee of up to 10%).
During the fourth quarter of 1998, RDI elected to suspend development and
implementation of the Traditional Model in preference to a new business model
(the "New Model") predicated on the mass marketing (through telemarketing and
the Internet) of memberships. Additionally, the operations of PCNI, based on the
Old Model were suspended and PCNI became inactive. Subsequently, RDI sold all of
the issued and outstanding capital stock of PCNI to Mr. John Folger (the
President, a member of the Board of Directors and a principle shareholder of
RDI) for nominal consideration of $1.00.
RDI, in furtherance of the development of the New Model, entered into several
acquisitions during 1999. On May 7, 1999, the Company acquired all of the common
stock of Thunderstick LLC in exchange for 1,000,000 shares of the Company's
common stock. A shareholder loaned 500,000 shares to the Company and the shares
were given as 50% of the consideration to the former shareholders of
Thunderstick. The Company recorded a liability of $5,000 as due to the former
owner of Thunderstick, pending the issuing of an additional 500,000 shares. In
May 2000, the Company issued the additional 500,000 shares to the former
shareholders of Thunderstick and charged off the liability. Thunderstick,
through its wholly-owned affiliate Thunderstick Software, LLC, is engaged in the
business of developing and marketing Internet software which will be utilized to
support the Company's Web site and e-commerce operations and in providing
similar services, on a consulting basis, to third parties.
In July, 1999, RDI, changed its corporate domicile from Florida to Delaware, and
its name to HouseHold Direct.com, Inc. (the "Company"). These changes were
effectuated by merging the Company into its wholly-owned Delaware subsidiary,
and such merger had no impact on the shareholders or the capital accounts of the
Company.
HOUSEHOLD DIRECT.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION (Continued)
In September, 1999, the Company entered into an acquisition agreement with
Megappliance, Inc. ("Mega") pursuant to which the Company agreed to acquire a
Web site (including software, technology and related commercial relationships)
in exchange for 124,000 shares of the Company's common stock.
On March 9, 2000, the Company executed an Agreement and Plan of Merger with
CrossCheck Corp., a Colorado corporation ("Cross") and a Letter Agreement with
the shareholders of Cross. Pursuant to such agreements, the Company merged Cross
(which had no business operations but was registered, and fully reporting, under
the Exchange Act) into the Company so that the Company could achieve "successor
issuer" status under the Exchange Act. In connection with such merger which was
consummated on March 20, 2000, the Company paid $150,000 in cash and issued
100,000 shares of common stock of the Company to the former shareholders of
Cross. The Company expensed the acquisition in the second quarter of 2000 in the
amount of $164,130.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles which contemplate the
continuation of the Company as a going-concern. However, the Company is in the
development stage, and since inception has been engaged primarily in raising
capital and developing its Web site, product, and market strategy. The Company
has not generated significant revenues from operations, and in the course of
funding product and Web site development and other start-up activities, has
experienced cumulative net losses of $ 7,204,854 for the period from May 18,
1998 (inception) to March 31, 2001, and has used cash in operations of
$2,076,367 for the period from May 18, 1998 (inception) to March 31, 2001. The
Company expects that it will continue to incur net operating losses as it
expends substantial resources on Web site development and sales and marketing in
an attempt to capture market share and develop market recognition. Management is
continually trying to raise additional capital through issuance of stock and
debt. Management of the Company believes that the additional capital that is
expected to be raised in the future will be sufficient to cover its working
capital needs until the Company's revenue volume reaches a sufficient level to
cover operating expenses. The absence of assurances of additional capital,
raises a substantial doubt about the Company's ability to continue as a
going-concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
HOUSEHOLD DIRECT.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary. Intercompany transactions and balances
have been eliminated in consolidation.
Research and Development Costs
Research and development costs are expensed as incurred.
Start-up Costs
The Company has implemented the Statement of Position 98-5, "Reporting on the
Costs of Start-Up Activities," (SOP 98-5) which requires costs of start up
activities to be expensed as incurred.
Revenue Recognition
Revenue for services is recognized when the service is rendered, while product
revenue is recognized when the product is shipped to the customer. Revenue
consisted of products sold and shipped pursuant to the operating agreements with
PCNI and PCS, consulting services performed by Thunderstick, and service income
earned related to the contract entered into with Personal Consumer Services,
Inc. ("PCS").
Deferred Revenues
Deferred revenues, as presented on the balance sheet, relate to unpaid service
agreement fees to be paid by PCS from uncollected accounts receivable of
Personal Consumer Services, Inc (PCS). Due to the uncertainty of collection
history of PCS, only the fee actually paid by PCS to the Company during the year
and the first two months of 2000 were recorded as revenue. Only revenues
projected to be collected in the next year are shown as current.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives, ranging from three to five
years. Maintenance and repair costs are expensed as incurred.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards No. 107 "Disclosure About Fair Value
of Financial Instruments," requires disclosure about the fair value of all
financial assets and
HOUSEHOLD DIRECT.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
liabilities for which it is practicable to estimate. At December 31, 2000, the
carrying value of all of the Company's accounts receivable, accounts payable and
accrued liabilities approximate fair value because of their short-term nature.
The note payable carrying value approximates fair value based on the borrowing
rate currently available for similar loans
Goodwill/Intangibles
Goodwill reflects the excess of purchase price over the fair value of net assets
purchased and is amortized on a straight-line basis over 3 years.
Cash and Cash Equivalents
For purposes of the consolidated statements of cash flows, the Company considers
all highly liquid investments with initial maturities of three months or less to
be cash equivalents.
Inventory
Inventory is stated at the lower of cost or market. Cost is determined
principally on the average cost method. Inventory of merchandise available for
resale was $0, at March 31, 2001. During the first quarter of 2001 the Company
closed out the inventory of merchandise it was holding in its two Southern
facilities and realized a loss on the sale of $48,613.
Common Stock Issued for Consideration Other Than Cash
When common stock is issued for consideration other than cash, the fair market
value of the stock or the fair market value of the property or services,
whichever is more objectively determinable is used to record the transaction.
The quoted market values of the shares, restricted as to marketability, are
discounted for limited liquidity. The discount factor is computed as the
difference between the average price of the shares issued for cash, computed
from the beginning of the year until the date of transaction, and the market
price of the shares at the date of transaction. The average cash prices, during
the current year, are used: to recognize substantial yearly changes in the
nature and size of the Company's operations; to reduce the impact of random
price movements associated with low volume transactions; and to incorporate
recently available market value information.
Website Development Costs
The Company accounts for website development costs in accordance with the AICPA
Statement of Position 98-12, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". Computer software costs that are
incurred in the preliminary project stage are expensed as incurred. Internal and
external costs incurred to develop
HOUSEHOLD DIRECT.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
internal-use software during the application development stage are capitalized.
Post implementation and operation costs of training and maintenance are expensed
as incurred.
Loss per Share
Net loss per share is computed by dividing net loss by the weighted average
number of common shares outstanding for the period. Net loss per share has been
stated for all periods presented in accordance with SFAS No. 128.
Use of Estimates
The preparation of consolidated 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 and
disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of the revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Income Taxes
Deferred income taxes, reflecting the net tax effects of temporary differences
between the carrying amount of assets and liabilities recognized for financial
reporting purposes and the amounts recognized for income ax purposes, are based
on tax laws currently enacted. A valuation allowance is established when
necessary to reduce deferred tax assets to the amount expected to be realized.
NOTE 3. RELATED PARTY TRANSACTIONS
Directors, Officers and Shareholders of the Company, John Folger and Ann
Jameson, have entered into various transactions with the Company since
inception. The balance of the loan due them on March 31, 2001 was $271,689.
HOUSEHOLD DIRECT.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at March 31, 2001:
Office and Computer equipment $ 49,290
Motor Vehicles 49,565
Computer software 25,452
-------
124,307
Less: accumulated depreciation ( 39,983)
--------
$ 84,324
=======
Depreciation expense for the period ended March 31, 2001 was $8,424 . During the
first quarter of 2001 the Company sold off its equipment in its Southern
operations and realized a loss of $21,241.
NOTE 5. INTANGIBLE ASSETS/GOODWILL
Investment CISI $36,750
Investment Megappliance 18,720
------
Total 55,470
Less: Accumulated Amortization 16,712
------
$38,758
======
For the quarter ended March 31, 2001, amortization of Intangible Assets was
$3,233.
HOUSEHOLD DIRECT.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6. NOTES PAYABLE
On April 7, 1999, the Company entered into a note payable agreement with a third
party for $13,500. A $2,500 payment was made by the Company. The note payable
bears interest at 12% per annum and requires monthly principal and interest
payments of $518 beginning May 1, 1999. The balance of note payable, $2,020, is
payable by May 1, 2001.
On August 18,2000, the Company entered into a note payable agreement with a
third party for $35,525 to purchase an auto. A $540 payment was made by the
Company at the signing of the agreement. The note bears interest at 2.16% which
is an inducement by the auto Company to attract buyers. The Company has not
discounted the value of the asset purchased to better reflect the market rate of
interest. Monthly payments are $561.70 and the note expires on July 18, 2005.
2001 $ 4,539
2002 6,212
2003 6,376
2004 6,545
2005 3,898
------
$ 27,570
======
During the first quarter of 2001 the Company issued the following notes:
Date Amount Rate Term Collateral
02/02/01 $100,000 12% 60 days Assets of Borrower
02/12/01 $ 50,000 12% 60 days Assets of Borrower
02/15/01 $ 50,000 18% 150 days N/A
03/13/01 $ 30,000 12% 60 days Assets of Borrower
--------
$230,000
HOUSEHOLD DIRECT.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases certain office space under an operating lease that requires
monthly rental payments of approximately $2,522 and expires April 30, 2002.
Total rent expense related to this lease totaled $7,566 for the quarter ended
March 31, 2001.
Future minimum lease payments are as follows:
Quarter ended March 31, 2001:
2001 $ 24,300
2002 8,025
-------
$ 32,325
=======
NOTE 8. CAPITAL STOCK
Common Stock Shares Issued
During 1998, the Company issued an aggregate of 12,917,000 shares of Common
Stock at $.001 par value ("the Common Stock"). The aggregate consideration
received by the Company in connection with the issuance of such shares consisted
of (a) $175,961 in the form of cash payments, received in connection with the
issuance of 1,627,095 shares, (b) $100,540 in the form of services performed for
or an behalf of the Company received in connection with the issuance of 914,000
shares, (c) 175,905 shares issued in lieu of interest of $20,500: and (d) on
December 28, 1998, the Company issued 200,000 shares at $0.25 per share to an
unrelated third party under the terms of a stock subscription agreement; the
amount is payable on demand.
The outstanding stock subscriptions are classified in the accompanying
consolidated balance sheets and statement of changes in shareholders' deficit as
a contra account to shareholders' deficit. No payments for stock subscriptions,
were received as of December 31, 1998. The Company also received all of the
outstanding shares of the capital stock of PCNI in connection with the issuance
of (e) 10,000,000 shares of the Company's common stock. The 10,000,000 shares
were recorded as common stock subscriptions receivable since it was deemed that
the purchase of PCNI resulted in little to no value to the Company. During
calendar year 1999, the Company issued an additional 6,323,304 shares of Common
Stock ("the Additional Shares"); and in connection with such issuance received
(f) $902,179 in the form of cash in connection with issuance of 4,784,504
Additional Shares, (g) $369,372 in the form of services in connection with the
issuance of 1,488,800 Additional Shares; and (h) on April 6, 1999, the Company
issued 50,000 shares at $0.46 per share to an unrelated third party under the
terms of a stock subscription agreement; the amount is payable on demand. The
outstanding amounts are classified in the accompanying consolidated balance
sheets and statement of changes in shareholders' deficit as a contra account to
shareholders' deficit. A total amount of $38,645 was received as of December 31,
1999 in respect of all stock issued for subscriptions receivable. The $9,999
stock subscriptions receivable related to the PCNI transaction were reclassed
against the amounts payable to related parties balance at December 31, 1999.
HOUSEHOLD DIRECT.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. CAPITAL STOCK (Continued)
All stock for services were valued at the average stock for cash value .01 to
.50 in 2000 ($.19 in 1999 and $.11 in 1998). However, where specific values of
services could be determined, those values were used to record the transactions.
The quoted market values of the shares, restricted as to marketability, were
discounted for limited liquidity. The discount factor was computed as the
difference between the average price of the shares issued for cash, computed
from the beginning of the year until the date of transaction, and the market
price of the shares at the date of transaction. The average cash prices, during
the current year, are used: to recognize substantial yearly changes in the
nature and size of the Company's operations; to reduce the impact of random
price movements associated with low volume transactions; and to incorporate
recently available market value information. The computed discount factors
ranged between 37% to 47.6% of the market values in the year ended December 31,
2000,
Detail Stock Transactions
For the period from May 18, 1998 to March 31, 2001, for the common stock of the
Company, the dates of issuance, number of shares issued, type of consideration
received, and the value of the shares issued are presented below:
1998
Number of
Issue Date Shares Amount
Stock issued in for cash:
May 18 1,000,000 $ 1,000
August 20 125,000 13,750
October 2 245,000 51,500
October 6 200,000 500
October 20 50,000 1,000
October 9 135,000 8,100
November 6 792,095 92,311
November 24 55,000 6,050
December 3 25,000 2,750
----------- --------
1,727,095 176,961
Stock issued in lieu of interest:
November 20 175,905 20,500
Stock issued for acquisition of PCNI:
July 10 10,000,000 10,000
Stock issued for subscriptions receivable:
December 28, 200,000 50,000
Stock issued for services:
August 26 100,000 11,000
September 17 180,000 19,800
October 6 224,000 24,640
October 20 100,000 11,000
November 16 210,000 23,100
November 23 25,000 2,750
December 8 50,000 5,500
December 15 25,000 2,750
-------- -------
914,000 100,540
------- -------
Total 1998 13,917,000 $ 358,001
========== =======
HOUSEHOLD DIRECT.COM
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. CAPITAL STOCK (Continued)
Detail Stock Transactions (Continued)
1999
- ----
Number of
Issue Date Shares Amount
---------- --------- --------
Stock issued in 1999 for cash:
February 2 150,000 $ 35,500
February 11 101,000 46,020
February 16 50,000 23,000
February 18 100,000 46,000
February 19 250,000 98,250
February 23 1,300,000 130,000
February 25 100,000 19,000
March 3 369,109 60,189
March 8 200,000 38,000
March 18 550,000 136,355
March 19 300,000 75,000
May 4 505,000 11,870
May 14 100,000 15,645
December 6 494,117 80,000
December 20 215,278 87,350
--------- --------
4,784,504 $ 902,179
Stock issued for subscriptions receivable:
April 6 50,000 $ 23,000
Stock issued for services:
February 2 150,000 $ 57,300
February 11 138,300 26,277
February 23 195,000 37,050
March 1 100,000 76,700
March 3 50,000 9,500
May 4 70,000 13,300
August 2 15,000 2,850
August 9 100,000 19,000
September 22 86,500 16,435
December 6 515,000 97,850
December 69,000 13,110
---------- --------
1,488,800 369,372
Total 1999 6,323,304 $ 1,294,551
========= =========
HOUSEHOLD DIRECT.COM, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. CAPITAL STOCK (Continued)
Detail Stock Transactions (Continued)
2000
Number of
Issue Date Shares Amount
Stock issued in 2000 for cash:
January 3 215,000 $ 191,586
January 19 385,000 292,600
April 3 442,478 435,000
April 3 180,000 90,000
May 31 210,527 40,000
October 6 408,359 122,507
October 20 384,650 50,000
November 7 145,000 25,000
November 27 250,000 15,000
--------- ---------
2,621,014 1,261,694
Stock issued for cash and services
January 3 1,000,000 $ 524,266
Stock issued to related parties as return of loan of shares:
August 500,000 5,000
August 7 124,000 34,720
------- -------
624,000 39,720
Stock issued to officers in lieu of salaries:
December 11 22,500 1845
December 27 1,785,714 101,328
December 27 1,116,072 63,330
--------- --------
2,924,286 166,504
Stock issued for payment of loans made to the Company:
December 27 2,857,142 162,125
Stock issued to purchase corporate shell (CrossCheck):
May 8 100,000 34,642
Stock issued to acquire consulting business (Thunderstick):
May 31 500,000 5,000
HOUSEHOLD DIRECT.COM, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 8. CAPITAL STOCK (Continued)
Detail Stock Transactions (Continued)
2000
Number of
Issue Date Shares Amount
Shares issued for research and development- Website
January 26 200,000 $ 131,067
June 14 3,800 1,011
November 7 82,570 10,412
November 8 69,725 8,794
------ ---------
356,095 151,284
Stock issued for investor relations, consulting, technical, and professional
fees:
January 3 125,000 $ 98,300
January 3 125,000 98,300
January 3 50,000 39,320
January 3 25,000 19,660
February 5 50,000 24,641
May 26 300,000 81,657
August 11 40,000 9,898
July 3 100,000 22,889
August 16 40,000 11,135
October 16 230,000 33,353
October 19 200,000 25,220
October 26 500,000 69,354
November 1 50,000 6,305
November 2 8,000 1,110
November 2 500,000 69,354
November 3 35,435 4,915
November 3 25,000 3,468
November 3 32,000 4,439
November 8 32,000 4,035
November 28 45,000 5,107
December 4 360,000 24,967
December 4 25,000 1,734
December 7 25,000 1,734
------ --------
2,922,435 660,892
--------- --------
Total 2000 13,904,972 $ 3,006,128
========== =========
HOUSEHOLD DIRECT.COM, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENT (CONTINUED)
NOTE 8. CAPITAL STOCK (Continued)
Detail Stock Transactions (Continued)
2001
Shares issued for financial consulting services in 2001
Number of
Issue Date Shares Amount
January 2 250,000 $ 9,450
February 15 303,333 15,287
March 30 552,500 20,885
--------- ---------
1,180,833 45,622
HOUSEHOLD DIRECT.COM, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 9. STOCK GRANTS, OPTIONS AND WARRANTS
The Company has a nonqualified stock option plan that provides for the granting
of the options to employees and consultants. The option price, number of shares,
and grant date are determined at the discretion of the Company's Board of
Directors. Grantees vest in the options at various intervals as determined by
the Board of Directors. Options granted under the plan are exercisable for a
period of up to five years from the grant date. Options were also granted to
third parties to obtain capital.
During the year 2000 and the first quarter of 2001, no new options were granted
and no options were exercised.
The balance of options and warrants outstanding as of December 31, 2000 is as
follows:
Date Number of Exercise Expiration Outstanding
Issued Shares Price Date Value
------ ---------- ---------- ------------- ----------
11/11/99 610,000 1.35 12/1/04 2,025,000
11/11/99 2,800,000 .15 11/1/04 420,000
---------
Value of options 2,445,000
=========
The Company accounts for its stock based awards to employees using the intrinsic
value method in accordance with APB 25, "Accounting for Stock Issued to
Employees," and its related interpretations. Deferred compensation of $15,000
was recorded in accordance with APB 25. The fair value of each option grant was
estimated in accordance with SFAS 123 using the Black-Scholes option-pricing
model with the following weighted-average assumptions:
1999
Dividend Yield 0.0%
Expected Volatility 0.294%
Risk-free rate of return 6.8%
Expected life 5 Years
Compensation costs for stock options determined at the grant date in accordance
with the fair value method consistent with SFAS 123, requires no additional
amounts in compensation costs to be recognized for the years ended December 31,
1999 and 1998 as fair market value calculated using the Black-Scholes model, was
lower than the option prices in all cases. Where options were issued to third
parties for services rendered, the value of the consideration received is used
to record the transactions, as allowed by SFAS 123. A total amount of $110,131
was recorded in 1999 on this basis. This amount is included in consulting fees
in the accompanying consolidated statements of operations.
HOUSEHOLD DIRECT.COM, INC.
Item 2. Management's Discussion and Analysis.
OVERVIEW
HouseHold Direct.com, Inc. is in the process of creating a unique new "consumer
services membership club" by creating a shopping platform that will offer direct
access to "cost-plus handling charge" prices from manufacturers and
distributors. The Company believes manufacturers are seeking a new Internet
based consumer service solution for the first time, which can be coupled to a
network of physical locations or service centers. Through its fulfillment
partners and direct relationships, the Company provides direct pricing from
brand name manufacturers/distributors on their entire current product line. The
Company believes the Management Team when completed will possess the required
skills and experience from corporate to startup backgrounds; and, will be
experienced in business development, marketing, operations, web-site design and
management, and database application support.
The Company was initially engaged, through its subsidiary PCNI, in the business
of developing and operating a wholesale buying club that, in addition provided
buying, marketing and financial services to third party owned wholesale buying
clubs. The traditional buying club business model (the "Traditional Model") was
predicated on the sale of memberships to the general public. The membership
entitled the holders to purchase goods and services through the wholesale buying
club at manufacturer direct prices (exclusive of separately charged taxes,
handling and shipping charges and a processing fee of up to 10%). During the
fourth quarter of 1998, the Company elected to suspend development and
implementation of the Traditional Model in preference to a new business model
(the "New Model") predicated on the mass marketing (through telemarketing and
the Internet) of memberships. Additionally, the operations of PCNI, based on the
Old Model were suspended and PCNI became inactive. Subsequently, the Company
sold all of the issued and outstanding capital stock of PCNI to Mr. John Folger
(the President, a member of the Board of Directors and a principle shareholder
of the Company) for nominal consideration of $1.00.
The services being developed by the Company are expected to create a substantial
benefit for two constituent groups - consumer and manufacturer. The consumers
benefit by a dramatic reduction in product prices. While supplying this price
advantage, the Company collects significant and valuable personal data and
product preferences information on the members who purchase products from the
Company. This rich demographic product and psychographic data can be helpful to
manufacturers in developing a consumer-direct, knowledge based, product order
and fulfillment capability. These manufacturers are expected to contribute
advertising dollars and participation fees for these services. Value added
service providers, such as insurance and financial services can also be allied
strategically with the Company. This innovative concept of "cost-plus handling
charge" may position the Company in a groundbreaking new business category for
Internet service companies and informational content providers, and drive
revenue for membership fees and advertising.
The Company expects to expand its membership base by using a "members only"
style of telemarketing program. Residual monthly membership revenues could be
increased by the introduction of additional bundled services. The inexpensive
monthly fee for core services allows for the bundling of additional ISP
(Internet Service Provider), Telco and utility payment services. This revenue
stream, coupled with rich consumer data, will become a valuable corporate asset.
The Company has retained a boutique investment banking firm in Atlanta, Georgia
to advise on strategic transactions and related financings.
Financing efforts will center on: a) guiding the Company from its planning stage
into an aggressive implementation phase, pursuing the consolidation strategy; b)
providing and coordinating a wide range of skills from strategic planning,
market assessment, technology evaluation, financial analysis, deal structure and
negotiation, and financial and legal engineering; c) advisement and coordination
of the near term expansion of the management team and the nomination of the
Board of Directors; d) providing a full spectrum of investment banking services,
focused upon a contemplated series of acquisitions to begin the Company's
consolidation of the private wholesale buying club industry; e) separate
financing for each acquisition, combining debt, equity, and/or coordinating the
multi-disciplinary activities of other experts and advisors to participate in
the due diligence and integration process of anticipated acquisitions.
We have signed a definitive financing contract for a $10 million equity credit
line with JJT Investors, an investment fund associated with Wall Street
Financing Group of Boca Raton, Florida.
A bridge-financing package of $250,000 is part of the larger agreement, from
which the Company has already drawn $50,000. The Company intends to focus
working capital upon immediate needs of the core operation to ensure ongoing
financial stability and the rapid implementation of its consolidation by
acquisition strategy.
We are working out the schedule by which to draw against the larger equity
package, which is related to the Company filing an SB-2 Registration Statement
in the near future.
RESULTS OF OPERATIONS
Revenues
Three Months Ended March 31, 2001 Compared to the Three Months Ended March 31,
2000
The Company has been in its developmental stage since May 18, 1998. Net Revenues
for the three months ended March 31, 2001 were $57,855 as compared to revenues
for the three months ended March 31, 2000 which were $44,532.
The Company has not focused its attention on revenues until it can get its
financing in place.
From Inception May 18, 1988 to March 31, 2001
Company revenues earned since inception were $557,863. Revenues from sales were
$236,357 or 42% of the total revenues from inception. Consulting income was
$259,793 which is 46% of the total revenues, over the same period. Membership
fees, all earned from January 1, 2000, were only 12% of the total revenues.
Operating Expenses
Three Months Ended March 31, 2000 compared to the three Months Ended March 31,
2001
Total Operating Expenses other than Cost of Sales for the three months ended
March 31, 2001 were $377,415 compared with $992,477 for the same period in 2000,
a decrease of 61%.
Salaries and related costs decreased from $129,011 for the three months ended
March 31, 2000 to $71,994 for the three months ended March 31, 2001; a 44%
decrease. This is primarily attributable to the Company's closing the two
Southern facilities and the Company's executives working almost exclusively to
arrange financing
Consulting and professional fees decreased by $95,250 (34%) from $284,230 for
the three months ended March 31, 2000 to $188,980, for the three months ended
March 31, 2001.
Research and development costs are primarily to develop the Company's Web site.
General and Administrative expenses decreased from $364,321 for the three months
ended March 31, 2000 to $119,284 for the same period in 2001.
Liquidity and Future Plans
Three Months Ended March 31, 2001 compared to the three months Ended March 31,
2000
For the three months ended March 31, 2001, net cash used by operations was
$150,668 principally due to the quarterly loss of $443,193. This was partially
offset by depreciation of $8,424, amortization of $3,233 and shares issued for
services in the amount of $45,622 while current assets and liabilities provided
$165,392. For the quarter ended March 31, 2000, net cash used by operations was
$161,604 which was offset by depreciation and amortization of $23,610 and shares
issued for services $145,000, while current assets and liabilities used cash of
$10,171.
Cash used by investing activities for the three months ended March 31, 2001 were
principally related to the investment in software $57,031. For the quarter ended
March 31, 2000, cash used in investing activities was $191,874, primarily for
the acquisition of property and equipment amounting to $42,124.
The Company anticipates that the current working capital deficiency of
$2,517,391 will be supplemented in the short term by the sale of common stock
and short term borrowing.
From Inception May 18, 1988 to March 31, 2001
The net cash outflow from operations was $2,076,367, over the period May 18,
1998 to March 31, 2001. Primarily, through issuance of common stock, the Company
obtained the funds needed to pay for the operating cash deficiency and the
investment of $255,749 in property, equipment, and other assets. The use of debt
to offset cash deficiency was $259,605.
The net loss of the Company was $7,204,854. The loss was essentially financed
through issuance of $2,156,329 common stock for cash and $2,618,249 for
services. The issuance of common stock provided 66% of the net loss amount.
Essentially, accounts payable and accrued salaries of $2,092,946 provided the
additional 34% of the funding for the net loss.
The Company plans to continue the policy of financing its operations primarily
through issuance of common stock for cash and services until such time as the
development stage is completed.
Risk Factors
Acquisition Activities
The growth plans are substantially based on acquisitions of complementary
businesses, product lines and technology. The acquisition activities may not be
profitable for the following reasons:
1. Acquisition agreements may require substantial expense and
management time. Suitable acquisition candidates may not be
found or potential acquisitions consummated.
2. The acquisitions terms may turn out to be unfavorable or the acquired
companies personnel, assets, or technology may not be
successfully integrated into the Company
3. The Company may have to incur debt or issue equity securities to pay
for any future acquisition, the issuance of which may
be dilutive to our existing stockholders.
4. The Company's products and services may not receive market
acceptance or the Company may not be able to expand its
operations in a cost-effective or timely manner.
Dependence on the Internet and Internet Infrastructure Development.
1. If the Internet fails to develop, or develops more slowly than we expect as a
commercial or business medium, it may adversely affect our business. 2. We
expect competition to intensify in the future because barriers to entry in the
e-commerce marketplace are minimal, and current and new competitors can launch
new Web sites at a relatively low cost. 3. We currently compete primarily with
other wholesalers and distributors. We also compete with the growing number of
manufacturers who sell their products directly, either online or through
traditional distribution channels. Many of these manufacturers, wholesalers and
distributors are larger and have substantially greater resources than we do. 4.
We expect to continually enhance and expand our technology and transaction
processing systems, and network infrastructure and other technologies, to
accommodate increases in the volume of traffic on our Web site. We may be
unsuccessful in these efforts or we may be unable to accurately project the rate
or timing of increases in the use of our Web site. 5. If competitors introduce
products and services embodying new technologies or if new industry standards
and practices emerge, then our existing Web sites, proprietary technology and
systems may become obsolete 6. While we contract with a third party to provide
back up web hosting services, our systems and operations are vulnerable to
damage or interruption from fire, flood, power loss, telecommunications failure,
break-ins, earthquake and other third party events and Acts of God. We carry no
business interruption insurance to compensate us for losses that may occur. In
addition, our security mechanisms or those of our suppliers may not prevent
security breaches or service breakdowns. Despite our implementation of security
measures, our servers may be vulnerable to computer viruses, physical or
electronic break-ins and similar disruptions. These events could cause
interruptions or delays in our business, loss of data or render us unable to
accept and fulfill orders.
7. We may not be able to convert customers from traditional shopping methods
or draw them from our online competitors. Among other things, our
potential customers may be concerned with shopping at our Web site due to
shipping costs, delivery time, and product.
8. Our Internet product sales currently are not subject to sales tax, except
for purchases made in the state of Connecticut. Nonetheless, if individual
states or the federal government choose to impose sales tax obligations on
out-of-state e-commerce transactions, our revenues and growth potential
may be materially and adversely affected.
9. The success of the Company's service will depend in large part upon the
development and maintenance of the Web infrastructure, such as a
reliable network backbone with the necessary speed, data capacity and
security. The infrastructure of complementary products or services
necessary to make the Web a viable commercial marketplace of the
long-term may not be developed and, even if it is developed, the Web
may not become a viable commercial marketplace for products and
services such as those offered by the Company. If the necessary
infrastructure, standard or protocols or complementary
Governmental Regulation of the Internet
1. The growth and development of the market for online commerce may prompt
calls for more stringent consumer protection laws, both in the United
States and abroad, that may impose additional burdens on companies
conducting business online. The adoption or modification of laws or
regulations relating to the Internet could adversely affect our business.
2. In the future, more stringent consumer protection laws in the United
States and abroad could impose additional burdens on e-commerce companies.
The adoption or modification of such laws or regulations could materially
and adversely affect our business.
Inability to Continue as a Going Concern without a Significant Improvement in
the Company's Financial Condition
Although we were formed in 1992, we are still in the development stage. From
inception through March 31, 2001, we had an accumulated deficit of $7,204,854.
We expect that our deficit will continue to increase. Revenues were
insignificant which are primarily from our membership service agreement with
PCS. We do not currently have any significant source of membership revenue. At
this time we have no basis to believe that we will ever generate operating
revenues from the sale of, or services to, any membership base.
The Company may not be able to obtain additional financing that is needed to
continue and expand its operations. If adequate funds are not available, or are
not available on terms favorable to us, we may not be able to effectively
continue or complete the implementation of the business plan.
Dependence on Manufacturers, Distributors, Shippers, and Key Personnel
1. The Company does not have long-term or exclusive arrangements with any
supplier, vendor or distributor that guarantees the availability of
products for purchase or auction. From time to time the Company has
experienced difficulty in obtaining sufficient product allocation from
certain vendors. If the Company is not able to offer its customers or
contractors sufficient quantities or a variety of products, the
Company's business, financial condition and operating results will be
materially adversely affected.
2. We are not certain that any manufacturer or distributor who supplies
goods or services to our Company might not change their business
practices, adjust their prices, modify their distribution requirements
or distribution areas, or do anything else that may make it impossible
to us to continually have access to the products that we intend to
offer for sale to our "members".
3. The Company relies upon third party carriers to ship the products the
Company sells. Therefore, the Company is subject to risks affecting a
carrier's ability to provide delivery services to meet its shipping
needs. In the past, the Company's failure to promptly deliver products
has led to customer complaints and regulatory action against the
Company. Failure to deliver the products the Company sells in a timely
manner could materially adversely affect its business, financial
condition and operating results.
4. HouseHold Direct is currently wholly dependent upon the personal
efforts and abilities of our three full-time executive officers, only
one of whom, John Folger, Chief Executive Officer, has any experience
in the membership club industry. The loss or unavailability to us of
the services of John Folger or Ann Jameson, Vice President of
Operations, could have a material negative impact on our business
prospects and any potential earning capacity; and, therefore, we have
obtained "key-man" insurance on the lives of Mr. Folger and Ms.
Jameson in the amounts of $1,000,000 and $1,000,000 respectively. If
our level of operations significantly increases, the business may
depend upon our abilities to attract and hire additional management
and staff employees. It is possible that we will be unable to secure
such additional management and staff when necessary.
Legal Risks
1. It is possible that claims could be made against online services
companies under both United States and foreign law for defamation,
libel, invasion of privacy, negligence, copyright or trademark
infringement, or other theories based on the nature and content of the
material disseminated through their services. Several private lawsuits
seeking to impose such liability upon other online services companies
are currently pending.
2. In addition, legislation has been proposed in several states, including
California, Maryland, Nevada, Virginia and Washington that imposes
liability for, or prohibits the transmission over the Internet, of
certain types of unsolicited e-mail or advertisements.
3. The imposition upon the Company and other online service providers of
potential liability for information carried on or disseminated through
their services could require the Company to implement measures to
reduce its exposure to such liability, which may require the Company to
expend substantial resources and/or to discontinue certain service
offerings.
4. The Company does not carry liability insurance. Therefore, any costs
incurred by the Company as a result of such liability or asserted
liability could harm the Company's business, financial condition and
results of operations.
5. Buyers of the Company's products may sue if they are harmed by any of
the products whose sales the Company facilitates. Although the Company
does not manufacture these products, the Company is exposed to
potential liability. Liability claims could require the Company to
spend significant time and money in litigation and to pay significant
damages, which could harm the Company's business, financial condition
and results of operations. Although the Company intends to disclaim all
warranties and rely on the manufacturers to fulfill their warranty
obligations, the Company cannot be certain that the manufacturers will
be able to fulfill their warranty obligations. In addition, the Company
believes that some disclaimers may be unenforceable under the laws of
certain foreign jurisdictions.
6. The U.S. Patent Office recently issued several business-method patents
having an impact on business conducted on the Internet, among them the
business-method patents relating to `one click' online shopping
transactions (whereby third party affiliates provide certain services,
including book review, online) issued to Amazon.com. While the Company
does not believe that any of the business process patents issued to
date will directly impact the way the Company conducts business, there
are no assurances that the U.S. Patent Office will not issue
additional business-method patents which could have an adverse impact
on the Company's business, forcing modification to some of the
Company's business activities in order to avoid possible future claims
of patent infringement. The recent granting of such patents is still
being challenged. Furthermore, the likelihood and ability to enforce
such broad patents remains undetermined. Nonetheless, the continued
granting of such broad patents could, in the future, force the Company
to change its method of advertising, as well as other important
aspects of the Company's business, or face the risk of litigation.
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is not a party to any material litigation and is not aware
of any threatened material litigation.
ITEM 2. Changes in Securities
None
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of a Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits None
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 hereunto duly authorized.
May 21, 2001 /s/ John Folger
- ------------------ ----------------------------------
Date President and
Chief Executive Officer