UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2001
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File No. 0-28407
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NETMAXIMIZER.COM, INC.
----------------------
(Exact name of registrant as specified in its charter)
FLORIDA 65-0907899
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(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification Number)
7491 North Federal Highway, C-5, Suite 262, Boca Raton, Florida 33487
---------------------------------------------------------------------
(Address of principal executive office) (Zip Code)
(561) 750-2143
--------------
Registrant's telephone number, including area code)
4400 North Federal Highway, Suite 307, Boca Raton, FL 33431
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of the issuer's Common Stock, $.001 par value,
as of August 10, 2001 was 40,290,482.
NETMAXIMIZER.COM, INC.
INDEX
Page
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Facing Sheet..................................................................... Cover Page
Index............................................................................ i
Part I - Financial Information 1
Item 1. Financial Statements
Condensed Balance Sheets
June 30, 2001 and December 31, 2000................................ 2
Condensed Statements of Operations
Three months and six months ended June 30, 2001 and June 30, 2000;
and cumulative from inception...................................... 3
Condensed Statements of Cash Flows
Six months ended June 30, 2001 and June 30, 2000; and cumulative
from inception..................................................... 4
Notes to Condensed Financial Statements................................. 5 - 7
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations.......................................... 8 - 11
Item 3. Quantitative and Qualitative Disclosures about Market Risk......... 11
Part II - Other Information
Item 1. Legal Proceedings.................................................. 11
Item 2. Changes in Securities.............................................. 11
Item 3. Defaults Upon Senior Securities.................................... 11
Item 4. Submission of Matters to a Vote of Security Holders................ 11
Item 5. Other Information.................................................. 11
Item 6. Exhibits and Reports on Form 8-K................................... 11
Signature........................................................................ 12
i
PART I - FINANCIAL INFORMATION
This Form 10-Q contains various forward-looking statements and information,
including under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations," that are based on management's beliefs as
well as assumptions made by and information currently available to management,
including statements regarding future economic performance and financial
condition, liquidity and capital resources and management's plans and
objectives. When used in this document, the words "expect," "anticipate,"
"estimate," "believe," and similar expressions are intended to identify
forward-looking statements. Such statements are subject to various risks and
uncertainties which could cause actual results to vary materially from those
stated. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated, expected or projected. Such risks
and uncertainties include the Company's limited operating history; history of
losses; competition; our ability to manage growth and integration; risks of
technological change; competition for customers; our dependence on key
personnel; relationships with third party site operators and Aggregators; our
ability to protect our intellectual property rights; government regulation of
Internet commerce; economic and political factors; dependence on continued
growth in use of the Internet; risk of technological change; capacity and
systems disruptions; liability for Internet content; uncertainty regarding
infringing intellectual property rights of others; and security risks. Certain
of these as well as other risks and uncertainties are described in more detail
in the Company's Annual Report on Form 10-K for the year ended December 31,
2000. The Company undertakes no obligation to update any such factors or to
publicly announce the result of any revisions to any of the forward-looking
statements contained herein to reflect future events or developments.
Condensed Balance Sheets June 30, 2001 and December 31, 2000
--------------------------------------------------------------------------------
June 30, December 31,
ASSETS 2001 2000
------------ ------------
(Unaudited)
Current Assets:
Cash, including restricted cash of $1,272 $ 242,143 $ 80,448
Inventories -- 158,287
------------ ------------
Total current assets 242,143 238,735
Property and Equipment 27,736 80,637
Web Site Design, Net 1,133,284 521,389
Other Assets 75,016 93,940
------------ ------------
Total assets $ 1,478,179 $ 934,701
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accounts payable and accrued liabilities
Accrued interest, stockholder $ 224,103 $ 134,961
Related parties -- 113,450
Other 579,199 475,728
Due to officer/stockholder 21,887 23,046
4,696 4,696
------------ ------------
Total current liabilities 829,885 751,881
------------ ------------
Long-Term Debt and Other Obligations
Notes payable, stockholder, net of unamortized discount of $1,232,395
and $1,519,421 748,544 461,518
Deposits on stock to be issued -- 437,388
Obligation related to stock options to be issued 660,000 660,000
Note payable, other 6,564 7,625
------------ ------------
1,415,108 1,566,531
------------ ------------
Commitments, Contingencies and Subsequent Events -- --
Stockholders' Deficiency:
Common stock, $.001 par value; 75,000,000 shares authorized;
40,290,482 and 39,203,006 shares issued and outstanding 40,290 39,203
Additional paid-in capital 11,322,330 9,386,029
Deficit accumulated during the development stage (12,129,434) (10,808,943)
------------ ------------
Total stockholders' deficiency (766,814) (1,383,711)
------------ ------------
Total liabilities and stockholders' deficiency $ 1,478,179 $ 934,701
============ ============
See consolidates notes to financial statements.
2
Condensed Statements of Operations
Three months and six months ended June 30, 2001 and June 30, 2000; and
cumulative from inception
--------------------------------------------------------------------------------
Three Months Six Months
Ended June 30, Ended June 30, Cumulative
---------------------------- ---------------------------- from
2001 2000 2001 2000 Inception
------------ ------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited)
Revenue $ 40,126 $ 5,005 $ 42,904 $ 9,338 $ 76,669
------------ ------------ ------------ ------------ ------------
Costs and Expenses:
Direct costs of revenue 157,589 3,339 160,662 7,784 188,514
General and administrative 287,545 743,697 682,651 1,277,004 3,155,133
Amortization of web site design 80,961 74,979 147,915 149,979 561,516
Amortization of debt discount 143,513 111,165 287,026 185,275 748,544
Interest expense, stockholder 44,571 32,367 85,141 50,140 224,103
Amortization of deferred
compensation expense -- -- -- -- 964,972
Stock and options issued for services -- 321,657 -- 643,314 6,363,321
------------ ------------ ------------ ------------ ------------
714,179 1,287,204 1,363,395 2,313,496 12,206,103
------------ ------------ ------------ ------------ ------------
Net Loss (674,053) (1,282,199) (1,320,491) (2,304,158) (12,129,434)
============ ============ ============ ============ ============
Net Loss Per Share - Basic and Diluted (0.02) (0.03) (0.03) (0.06)
============ ============ ============ ============
Weighted Average Shares Outstanding 40,003,625 39,153,006 39,605,527 39,153,006
============ ============ ============ ============
See consolidates notes to financial statements.
3
Condensed Statements of Cash Flows
Six months ended June 30, 2001 and June 30, 2000; and cumulative from inception
--------------------------------------------------------------------------------
Six Months
Ended June 30, Cumulative
-------------- from
2001 2000 Inception
------------ ------------ ------------
(Unaudited) (Unaudited)
Cash Flows from Operating Activities:
Net loss $ (1,320,491) $ (2,045,440) $(12,129,434)
Adjustments to reconcile net loss to net cash used in operating
activities
Amortization of deferred compensation -- -- 964,972
Amortization of discount 287,026 185,275 748,544
Depreciation and amortization 182,113 156,469 649,855
Officer compensation -- -- 150,000
Consulting fees paid by stockholder on behalf of Company -- -- 24,000
Options granted for services -- 643,314 6,163,321
Common stock issued for services -- -- 205,000
Loss on sale of assets 23,082 -- 33,187
Changes in operating assets and liabilities:
Inventories 158,287 (141,492) --
Other assets 14,535 (159,071) (55,988)
Accounts payable and accrued liabilities (146,479) 337,921 329,249
Accrued interest, stockholder 89,142 -- 224,103
------------ ------------ ------------
Net cash used in operating activities (712,785) (1,023,024) (2,693,191)
------------ ------------ ------------
Cash Flows from Investing Activities:
Expenditures for property and equipment -- (38,562) (59,386)
Web site design costs (623,300) (330,000) (1,158,300)
Other (1,159) (1,353) (7,773)
------------ ------------ ------------
Net cash used in investing activities (624,459) (369,915) (1,225,459)
------------ ------------ ------------
Cash Flows from Financing Activities:
Proceeds from long-term debt, related party -- 1,383,975 1,980,939
Proceeds from sales of common stock 1,500,000 -- 2,184,388
Repayments on long-term debt (1,061) (372) (4,534)
------------ ------------ ------------
Net cash provided by financing activities 1,498,939 1,383,603 4,160,793
------------ ------------ ------------
Net Increase (Decrease) in Cash 161,695 (9,336) 242,143
Cash, Beginning 80,448 39,055 --
------------ ------------ ------------
Cash, Ending $ 242,143 $ 29,719 $ 242,143
============ ============ ============
Non-Cash Investing and Financing Transactions:
Equipment purchased in exchange for debt $ -- $ 15,794
============ ============
Common stock issued for web site development services
$ -- $ 288,000
============ ============
Proceeds from sales of common stock remitted directly to web site
developers $ -- $ 62,000
============ ============
Equipment purchased from officer in exchange for debt
$ -- $ 23,859
============ ============
See consolidates notes to financial statements.
4
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2001
(Unaudited)
NOTE 1. SUMMARY OF BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared by
the Company pursuant the rules and regulations of the Securities and Exchange
Commission ("SEC") and, in the opinion of management, include all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
financial position, results of operations and cash flows for the interim
periods. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and regulations
of the SEC. The Company believes that the disclosures contained herein are
adequate to make the information presented not misleading. The statements of
operations for the three months and six months ended June 30, 2001 are not
necessarily indicative of the results to be expected for the full year. These
unaudited financial statements should be read in conjunction with the audited
financial statements and accompanying notes included in the Company's 2000
Annual Report on Form 10-K for the year ended December 31, 2000.
The condensed financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and satisfaction of liabilities in
the normal course of business. Recurring losses from operations and operating
cash constraints are potential factors which, among others, may indicate that
the Company will be unable to continue as a going concern for a reasonable
period of time. The independent auditors' report on the December 31, 2000
financial statements stated that "... the Company's recurring losses from
operations and current cash constraints raise substantial doubt about the
Company's ability to continue as a going concern. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty."
The financial statements do not include adjustments relating to the
recoverability and classification of recorded asset amounts, or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern. The Company's ability to continue as a
going concern is dependent upon its ability to generate sufficient cash flow to
meet its obligations on a timely basis and ultimately to attain profitable
operations.
Business
The Company is an Internet marketing company that introduces customers to those
who sell goods and services. The Company collects fees based on visitors who
reach third party sites and commissions on any purchases made by such customers.
The Company provides access to third party sites primarily to members of
affinity groups such as churches, schools and unions.
5
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Continued)
NOTE 1. SUMMARY OF BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Development Stage Enterprise
As described above, the Company was incorporated on June 29, 1995, and, since
that time, has been primarily involved in organizational activities, developing
a strategic plan for the marketing of its products, and raising capital. Planned
operations, as described above, have not commenced to any significant extent.
Accordingly, the Company is considered to be in the development stage, and the
accompanying financial statements represent those of a development stage
enterprise.
Net Loss Per Common Share
The Company computes earnings (loss) per share in accordance with SFAS No. 128,
"Earnings Per Share." This standard requires dual presentation of basic and
diluted earnings per share on the face of the income statement for all entities
with complex capital structures and requires a reconciliation of the numerator
and denominator of the diluted earnings per share computation.
Net loss per common share (basic and diluted) is based on the net loss divided
by the weighted average number of common shares outstanding during the year.
The Company's potentially issuable shares of common stock pursuant to
outstanding stock options and warrants are excluded from the Company's diluted
computation, as their effect would be anti-dilutive.
NOTE 2. WEB SITE DESIGN
These costs consist of fees for a total of $1,694,800 paid to a consultant,
which is owned or controlled by a major stockholder, as follows: $1,406,800 to
be paid in cash and 56,655 shares of Company common stock valued at the market
value of such stock on the date of issuance ($5.08 per share) or $288,000.
The following is an analysis of web site design costs by Phase as of June 30,
2001:
Phase Phase Phase Phase Phase
One Two Three Four Five Total
--- --- ----- ---- ---- -----
Cost $350,000 $330,000 $155,000 $625,000 $234,800 $1,694,800
Accumulated amortization 350,000 110,000 38,750 67,073 -- 561,516
-------- -------- -------- -------- -------- ----------
Unamortized cost $ - $220,500 $116,250 $557,927 $234,800 $1,133,284
========= ======== ======== ======== ======== ==========
6
NETMAXIMIZER.COM, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Continued)
NOTE 2. WEB SITE DESIGN (Continued)
Phase One of the web site was available for use on November 4, 1999, and the
Company commenced amortizing the cost of Phase One ($350,000) over an estimated
useful life of fourteen months as of that date. Phases Two and Three were placed
in service during 2000, Phase Four was placed in service in 2001 and are being
amortized over an estimated useful life of thirty-six months. Phase Five has not
yet been placed in service.
In the opinion of management, the functionality of the website and therefore
recoverability of costs is not materially affected by the change in the
Company's business model.
NOTE 3. DISPOSITION OF ASSETS
Inventory
In May 2001, pursuant to a change in business model, the Company sold all the
inventory in a liquidation sale for approximately $40,000. The inventory sold
had a cost of approximately $158,000.
Property and Equipment
In May 2001, the Company exchanged property and equipment with a net book value
of approximately $44,000 for prepaid rent of approximately $21,000 resulting in
a loss on sale of approximately $23,000.
NOTE 4. COMMON STOCK
On September 13, 2000 the Company entered into an agreement to issue up to
1,000,000 units, comprised of one share of Company common stock and one warrant,
for $5.00 per unit for total proceeds of up to $5,000,000. The warrant entitles
the holder to purchase one share of Company common stock for $10.00 for a term
of five years. As of December 31, 2000, the Company received $437,388 for the
purchase of 87,477 units.
On February 12, 2001, the Company entered into an agreement to sell 666,666
units, comprised of one share of Company common stock and two warrants, for
$1.50 per unit for total proceeds of $1,000,000. The warrant entitles the holder
to purchase two shares of Company common stock for $1.875 per share for a term
of five years. The Company received $1,000,000 of proceeds on February 14, 2001.
On May 16, 2001, the Company entered into an agreement to sell 333,333 units,
comprised of one share of Company common stock and two warrants, for $1.50 per
unit for total proceeds of $500,000. The warrant entitles the holder to purchase
two shares of Company common stock for $1.85 per share for a term of five years.
The Company received $500,000 of proceeds on May 16, 2001.
7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations Overview
The availability of a broad range of content and the acceptance of electronic
commerce has driven rapid adoption of the Internet for use by businesses and
consumers alike, which has in turn stimulated the proliferation of additional
content and electronic commerce. During the last Quarter, we have elected to
capitalize more aggressively on the recent developments in doing business on the
Internet by revising our business model.
Under our original business model, we intended to provide turnkey, individually
branded, e-commerce department stores to sell a wide variety of consumer goods
to members of affinity groups, paying a commission on those sales to the
affinity groups. An "affinity group" is a group of people who are members of an
entity or organization based upon a common interest or goal. Churches, schools,
fraternities, and unions are examples of affinity groups.
Subsequently, we expanded that model to include creating redemption centers for
recipients of premiums from various merchants. Our idea meant reaching
agreements with merchants to "reward" their customers for various activities
with premium incentives and establishing a branded site for each participating
merchant through which their customers may redeem incentive vouchers for
premiums. This aspect of our plan captured the value we had created by making
our web site appear to be individually-branded, whether to the affinity group or
to the merchant.
Although aspects of those concepts remain within our core business strategy, we
have refined our model to exploit more fully the potential of the Internet
without persisting in the traditional sale and fulfillment paradigm. As reported
below, we have, therefore, sold our inventory and vacated our warehouse and much
of our office space. We no longer intend to sell goods to consumers; rather, we
will introduce consumers to those who sell goods and services. We will no longer
be endeavoring to collect sales revenues; instead we will be following a new
model by which we collect fees based on visitors who reach third party sites by
means of links through Originating Sites (defined below) and commissions based
on sales made to such visitors.
The cornerstone of our business model remains our Originating Sites, portals
that appear uniquely and individually branded for each affinity group. Using
proprietary technology, we can quickly and efficiently establish these
Originating Sites which, although customizable, will allow for pictures of the
affinity group leaders, messages and calendars unique to the groups, and even
bulleting boards for group posting. Inextricably intertwined with the affinity
group material, are various links to third party sites through which affinity
group members can obtain goods and services. In order to take full advantage of
the Originating Sites' capabilities, a member of an affinity group must register
by e-mail address and create his or her unique password. No other identifier
data is solicited or collected and no membership fee is required. Once
registered, however, a member's accessing certain links or making purchases
through third party sites accessed through the Originating Site will allow us to
collect a fee from the third party site and pay a portion of that fee to the
affinity group. This presents the motivating force behind members' use of the
Originating Site and the affinity groups' promotion of the use of the site.
The linchpin of our marketing strategy, therefore, will continue to be to
utilize and potentially enhance the affinity groups' internal methods of
communication to their members to grow our market share. We have enrolled and
continue to enroll affinity groups through the use of commission-only, outside
sales representatives. The representatives use our on-line description of an
Originating Site and the affinity group program to demonstrate to affinity
groups how their members will be able to access third party sites through the
8
Originating Site, the accuracy of our transaction tracking system and the
potential profitability for the affinity group as its members make the purchases
from the third party sites that they would otherwise make elsewhere. The
affinity group completes an on-line application. Since the affinity group
receives a commission on nearly every site visit and purchase its members make,
the leaders of that affinity group are incentivized to use the group's internal
communications methods (such as the pulpit, a newsletter, a payroll insert, or a
flier brought home from school) to market their branded, Originating Site.
We are able to provide access to such a rich and varied collection of third
party sites (and derive revenues from fees and commissions resulting from such
access) due to relationships we have formed with five industry Aggregators.
These Aggregators have each established the electronic means to connect members
from the Originating Sites to the sites of leading providers of goods and
services, while tracking their activity, recording the value of their visits
and, as applicable, transactions, and disbursing the fees and commissions to us
that result from such activities. Both the sales representative that recruits an
affinity group and the affinity group itself are paid commissions only if and
when activities by members of that affinity group result in fees or commissions
to us, thereby substantially eliminating the up front marketing and advertising
costs typically found in the retail sales industry. Because we collect no money
from anyone, maintain no inventory and have minimal need for customer service,
our operating expenses will be dramatically reduced.
A number of risks remain under this new business model. Some important factors
that could cause actual results or outcomes to differ materially from those
discussed in the foregoing include, but are not limited to the following: our
limited operating history; history of losses; competition; our ability to manage
growth and integration; risks of technological change; competition for
customers; our dependence on key personnel; relationships with third party site
operators and Aggregators; our ability to protect our intellectual property
rights; government regulation of Internet commerce; economic and political
factors; dependence on continued growth in use of the Internet; risk of
technological change; capacity and systems disruptions; liability for Internet
content; uncertainty regarding infringing intellectual property rights of
others; and security risks.
Material Changes in Results of Operations
We are a development stage company. As of June 30, 2001, the Company was
primarily involved in organizational activities, revising our strategic plan and
completing the development of the latest phase of our website. Full operations,
as defined by our strategic plan, have not commenced, although as of August 3,
2001, we have opened a small number of Originating Sites for live load testing
by means of the actual utilization by the members of those affinity groups. We
plan to accelerate our marketing efforts through those and other affinity groups
while we open additional Operating Sites throughout the remainder of the third
quarter. Prior to June 2000, we had no active business operations and therefore,
no material or substantive transactions or results of operations. As a result,
no meaningful comparison can be made between our present operations and our
operations during the years ended December 31, 1995 to December 31, 1999.
Material Changes in Financial Condition
Our total assets were approximately $1,478,000 at June 30, 2001, compared with
$935,000 at December 31, 2000, and $1,325,000 at March 31, 2001. The increase in
assets during the first six months of calendar year 2001 was primarily
attributable to our further development of our web site. Due to the change in
our strategic business plan, we sold all of our inventory in a liquidation sale
for approximately $40,000. The inventory sold had a cost of approximately
$158,000. During this same period we exchanged certain of our property and
equipment with a book value of $44,000 for prepaid rent of approximately
$21,000. The combined effect of the liquidation of our inventory and the
9
investment in our common stock, discussed below, was to improve our cash
account. Our cash and short-term investments were $242,143 at June 30, 2001,
compared with $80,448 at December 31, 2000 and $202,295 at March 31, 2001. Our
current liabilities were $829,885 at June 30, 2001, compared with $751,881 at
December 31, 2000 and $646,946 at March 31, 2001. This increase was principally
the result of operating costs.
For the six months ended June 30, 2001, we had revenue from limited operations
of $42,904 resulting primarily from the liquidation sale, $40,126 during the
second quarter when the sale was conducted and $2,778 during the first quarter.
During the six months ended June 30, 2000, we also had minimal active business
operations, resulting in revenue from operations of $9,338. Because we have not
begun full operations as of June 30, 2001, we consider these revenue numbers to
be immaterial.
During the six months ended June 30, 2001 we incurred general and administrative
expenses of approximately $1,203,000 as compared to approximately $1,920,000 for
the six months ended June 30, 2000. This decrease was due primarily to the
revision to our strategic plan, reducing the number of employees, eliminating
inventory and certain infrastructure. The components of the general and
administrative expenses of approximately $1,203,000 are as follows: amortization
of discount $287,000; payroll $231,000; amortization of web site design costs
$148,000; professional fees $101,000; interest on promissory notes $90,000; rent
$77,000; consulting fees $76,000; commissions $39,000; telephone $21,000; travel
$15,000; insurance costs $14,000; depreciation $8,000; other operating costs
$96,000.
Liquidity and Capital Resources
As of June 30, 2001, we had $242,143 in cash, as compared with $33,297 at March
31, 2001. We received approximately $43,000 in cash from our operations during
the six month period ending June 30, 2001. During this same six-month period
ending June 30, 2001, we have increased net cash by approximately $162,000,
primarily as a result of proceeds from the sale of stock and the liquidation of
our inventory during the last quarter.
We intend to fund continuing operations of the Company through revenues
generated by fees and commissions which are commencing as we establish
additional Operating Sites. Nonetheless, it may be necessary for us to raise
additional capital through additional sales of unregistered shares of our common
stock conducted under exemptions provided by the Securities Act or by the rules
of the SEC. There can be no assurance that we will be able to receive sufficient
revenue for operations or to raise additional capital on favorable terms and in
the time required. If we are unable to generate sufficient revenues from
operations or raise additional capital it is questionable whether we could
continue as a going concern.
Because of the revision to our business plan, we anticipate that our cash
requirements will be smaller than originally projected due to the reduced number
of employees and operating facilities that will be required, as well as the
elimination of costs associated with inventory expansion and maintenance.
Nonetheless, there can be no assurance that our actual expenditures for the
remainder of the year will not exceed our estimated operating budget. Actual
expenditures will depend upon a number of factors, some of which are beyond our
control, including, among other things, reliability of the assumptions of
management in estimating revenues versus costs and timing, and the time expended
by professionals and consultants and fees associated therewith. Moreover, we
have significant short term liabilities that must be satisfied.
Recent Financing
On September 13, 2000, we entered into an agreement to issue up to 1,000,000
units, comprised of one share of our common stock and one warrant, for $5.00 per
unit. The warrant entitles the holder to purchase one share of our common stock
for $10.00 for a term of five years. As of December 31, 2000, when that
agreement had expired according to its terms, we had received $437,388 for the
purchase of 87,477 units. The shares were issued on April 5, 2001.
10
On February 12, 2001, we entered into an agreement to sell 666,666 units,
comprised of one share of our common stock and two warrants, for $1.50 per unit
for total proceeds of $1,000,000. The warrant entitles the holder to purchase
two shares of our common stock for $1.875 per share for a term of five years. We
received $1,000,000 of proceeds on February 14, 2001. The shares were issued on
April 3, 2001.
On May 16, 2001, the Company entered into an agreement to sell 333,333 units,
comprised of one share of Company common stock and two warrants, for $1.50 per
unit for total proceeds of $500,000. The warrant entitles the holder to purchase
two shares of Company common stock for $1.85 per share for a term of five years.
The Company received $500,000 of proceeds on May 16, 2001. The shares were
issued June 13, 2001.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
None.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Company is a party to routine litigation
incidental to its business. Management does not believe that any of these
pending legal proceedings or the previously-reported suit by Charles Aker,
individually or in the aggregate, will materially impact the Company's financial
condition or results of operations.
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
Except for agreements with our affinity groups, the Company has
terminated substantially all of the leases and contracts previously disclosed.
To the best information available to management, we believe there are no
remaining material obligations under any of those leases or contracts.
Item 6. Exhibits and Reports on Form 8-K
(a) Index and Exhibits
None.
(b) The following reports on Form 8-K have been filed by the Company
during the period covered by this report:
None
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 14, 2001
NETMAXIMIZER.COM, INC.
/s/David A. Saltrelli
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David A. Saltrelli, President
/s/Peter G. Schuster
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Peter G. Schuster, Treasurer
Chief Financial Officer
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