10-Q 1 a10-q.txt FORM 10-Q U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended JUNE 30, 2000 [ ] 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 0-29781 AMERICABILIA.COM, INC. -------------------------------------------------------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Florida 65-0142472 -------------------------------- -------------------------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 9155 LAS VEGAS BOULEVARD SOUTH, SUITE 242, LAS VEGAS, NEVADA 89123 -------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) 702-914-8411 ------------------------------- (ISSUER'S TELEPHONE NUMBER) Not Applicable -------------------------------------------------------------------------------- (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 Exchange Act of 1934 during the past 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 --- As of July 24, 2000, the Company had 6,652,692 shares of its $.001 par value common stock issued and outstanding. PART I - FINANCIAL INFORMATION Page ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) ---- Condensed Consolidated Balance Sheets (Unaudited) at June 30, 2000 and December 31, 1999...................................3 Condensed Consolidated Statements of Operations (Unaudited) for the Three Months ended June 30, 2000 and 1999, for the Six Months ended June 30, 2000, and for the period from March 2, 1999 (Date of Inception) to June 30, 1999.......................5 Condensed Consolidated Statement of Stockholders' Equity (Unaudited) for the Six Months ended June 30, 2000.......................6 Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months ended June 30, 2000 and for the period from March 2, 1999 (Date of Inception) to June 30, 1999..................7 Notes to Unaudited Condensed Consolidated Financial Statements.............9 -2- AMERICABILIA.COM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) JUNE 30, 2000 AND DECEMBER 31, 1999 --------------------------------------------------------------------------------

JUNE 30, DECEMBER 31, ASSETS 2000 1999 CURRENT ASSETS: Cash and cash equivalents $ 57,948 $ 323,127 Accounts receivable, net 245,175 236,583 Inventories 700,860 446,448 Prepaid expenses and deposits 17,221 23,796 ---------- ---------- Total current assets 1,021,204 1,029,954 PROPERTY AND EQUIPMENT, Net 140,034 154,399 GOODWILL, Net 229,185 282,061 OTHER ASSETS 8,354 7,494 ---------- ---------- TOTAL $1,398,777 $1,473,908 ========== ==========

See accompanying notes to unaudited condensed consolidated financial statements. (Continued) -3- CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) JUNE 30, 2000 AND DECEMBER 31, 1999 --------------------------------------------------------------------------------

JUNE 30, DECEMBER 31, LIABILITIES AND STOCKHOLDERS' EQUITY 2000 1999 CURRENT LIABILITIES: Accounts payable and accrued expenses $ 161,106 $ 224,422 Current portion of long-term debt 9,139 9,122 Income taxes payable 3,549 ----------- ----------- Total current liabilities 170,245 237,093 LOANS FROM STOCKHOLDERS 238,584 34,508 LONG-TERM DEBT, Less current portion 157,859 12,092 ----------- ----------- Total liabilities 566,688 283,693 ----------- ----------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, $0.01 par value; authorized 50,000,000 shares; 6,652,692 shares issued and outstanding at June 30, 2000 and December 31, 1999 6,653 6,653 Additional paid-in capital 1,677,525 1,637,525 Notes receivable from stockholders for stock (108,848) (104,412) Accumulated deficit (743,241) (349,551) ----------- ----------- Total stockholders' equity 832,089 1,190,215 ----------- ----------- TOTAL $ 1,398,777 $ 1,473,908 =========== ===========

See accompanying notes to unaudited condensed consolidated financial statements. (Concluded) -4- CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) THREE MONTHS ENDED JUNE 30, 2000 AND 1999, SIX MONTHS ENDED JUNE 30, 2000, AND PERIOD FROM MARCH 2, 1999 (DATE OF INCEPTION) TO JUNE 30, 1999 -------------------------------------------------------------------------------

THREE THREE SIX PERIOD FROM MONTHS MONTHS MONTHS MARCH 2, 1999 ENDED ENDED ENDED TO JUNE 30, JUNE 30, JUNE 30, JUNE 30, 2000 1999 2000 1999 REVENUES: Retail/wholesale $ 420,131 $ 14,554 $ 807,504 $ 22,199 Cost of sales 282,808 11,886 591,940 14,512 ----------- ----------- ----------- ----------- Gross profit 137,323 2,668 215,564 7,687 ----------- ----------- ----------- ----------- OPERATING EXPENSES: General and administrative expenses 266,930 43,532 460,935 48,516 Marketing expenses 40,922 876 61,259 876 Depreciation and amortization 46,182 2,112 69,684 2,217 Organization costs -- 757 -- 2,257 ----------- ----------- ----------- ----------- Total operating expenses 354,034 47,277 591,878 53,866 ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS BEFORE INTEREST AND TAXES (216,711) (44,609) (376,314) (46,179) ----------- ----------- ----------- ----------- OTHER (EXPENSE) INCOME: Interest expense (10,368) -- (13,101) -- Interest income and other 3,568 -- 7,725 -- ----------- ----------- ----------- ----------- Total other expense - net (6,800) -- (5,376) -- ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS BEFORE INCOME TAXES (223,511) (44,609) (381,690) (46,179) BENEFIT FOR INCOME TAXES - Deferred tax benefit -- -- -- -- ----------- ----------- ----------- ----------- NET LOSS $ (223,511) $ (44,609) $ (381,690) $ (46,179) =========== =========== =========== =========== EARNINGS PER SHARE: Basic - Net loss $ (223,511) $ (44,609) $ (381,690) $ (46,179) =========== =========== =========== =========== Weighted-average common shares outstanding $ 6,652,692 $ 1,343,333 6,652,692 1,011,250 =========== =========== =========== =========== Loss per share $ 0.03 $ 0.03 $ 0.06 $ 0.05 =========== =========== =========== ===========

See accompanying notes to unaudited condensed consolidated financial statements. -5- AMERICABILIA.COM, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) SIX MONTHS ENDED JUNE 30, 2000 --------------------------------------------------------------------------------

NOTES COMMON STOCK ADDITIONAL RECEIVABLE ------------------------- PAID-IN FROM ACCUMULATED SHARES AMOUNT CAPITAL STOCKHOLDERS DEFICIT TOTAL BALANCE, JANUARY 1, 2000 6,652,692 $ 6,653 $ 1,637,525 $ (104,412) $ (349,551) $ 1,190,215 Contributed services of officers and employees 28,000 28,000 Interest income from notes receivables from stockholders (4,436) (4,436) Net loss (381,690) (381,690) --------- ------- ----------- ---------- ---------- --------- BALANCE, JUNE 30, 2000 6,652,692 $ 6,653 $ 1,665,525 $ (108,848) $ (731,241) $ 832,089 ========= ======= =========== ========== ========== =========

See accompanying notes to unaudited condensed consolidated financial statements. -6- CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) SIX MONTHS ENDED JUNE 30, 2000 AND PERIOD FROM MARCH 2, 1999 (DATE OF INCEPTION) TO JUNE 30, 1999 --------------------------------------------------------------------------------

PERIOD FROM SIX MONTHS MARCH 2, 1999 ENDED TO JUNE 30, 2000 JUNE 30, 1999 CASH FLOWS USED IN OPERATING ACTIVITIES: Net loss $(381,690) $ (46,179) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 69,684 2,217 Provision for bad debts Contributed services of officers and employees 28,000 11,000 Changes in operating assets and liabilities, net of effects from acquisition of businesses: Increase in trade accounts receivable (8,592) Increase in inventories (254,412) (91,367) Decrease in prepaid assets and deposits 6,575 -- Increase in other assets (860) (Decrease) Increase in trade accounts payable and accrued expenses (63,316) 9,010 Decrease in income taxes payable (3,549) -- --------- --------- Net cash used in operating activities (608,160) (115,319) --------- --------- CASH FLOWS USED IN INVESTING ACTIVITIES - Purchase of property and equipment (2,443) (54,478) --------- --------- Net cash used in investing activities (2,443) (54,478) --------- --------- CASH FLOWS USED IN FINANCING ACTIVITIES: Increase in interest receivables from loans to shareholders (4,436) -- Proceeds from loans 150,000 -- Payments on loans (4,216) -- Loans from stockholders 204,076 131,943 Common stock issued, net of receivable from stockholders 200,000 --------- --------- Net cash provided by financing activities 345,424 331,943 --------- --------- (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (265,179) 162,146 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 323,127 -- --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 57,948 $ 162,146 ========= =========

See accompanying notes to unaudited condensed consolidated financial statements. (Continued) -7- PERIOD FROM MARCH 2, 1999 (DATE OF INCEPTION) TO JUNE 30, 1999 --------------------------------------------------------------------------------

PERIOD FROM SIX MONTHS MARCH 2, ENDED 1999 TO JUNE 30, JUNE 30, 2000 1999 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 13,101 ======== Income taxes $ 3,700 =======

See accompanying notes to unaudited condensed consolidated financial statements. (Concluded) -8- AMERICABILIA.COM, INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited condensed consolidated financial statements include the consolidated accounts of americabilia, com, Inc. together with its subsidiaries (collectively referred to herein as the "Company"). All material intercompany balances and transactions have been eliminated. These statements have been prepared in conformity with accounting principles generally accepted in the United States of America and used in preparing the Company's annual audited consolidated financial statements but do not contain all of the information and disclosures that would be required in a complete set of audited financial statements. They should, therefore, be read in conjunction with the Company's audited consolidated financial statements and related notes thereto for the period from March 2, 1999 (inception) to December 31, 1999. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the financial results for the interim periods presented. 2. LONG-TERM DEBT During the first quarter of 2000 each of the Company's Chairman and President loaned the Company $50,000 each under terms similar to their previous loans. See the Related Party Note 6. The Company secured a $350,000 line of credit in April 2000 and has drawn down $150,000 for inventory purchases. The line of credit bears interest at nine percent and must be paid in full for at least 30 days during any 12-month period. 3. LEASES During the first quarter of 2000, the Company rented production equipment under a three-year operating lease for $1,600 per month, which included maintenance and certain supplies. 4. STOCKHOLDERS' EQUITY EARNINGS PER SHARE - Basic EPS is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income by common and common equivalent shares outstanding for the period. Options to purchase common stock, whose exercise price was greater than the average market price for the period, have been excluded from the computation of diluted EPS. For the interim periods presented, there were no dilutive options, as the options would have been anti-dilutive due to the net loss for the periods. 5. INCOME TAXES Statement of Financial Accounting Standards No. 109 requires a valuation allowance to be recorded when it is more likely than not that some or all of the deferred tax assets will not be realized. A valuation allowance has been established on the computed deferred tax asset at June 30, 2000 and December 31, 1999 due to the uncertainties associated with realizing such assets in the future. 6. RELATED PARTY TRANSACTIONS The Company's chairman of the board and the Company's president each loaned the Company $50,000 in the first quarter of 2000, which bears interest at the rate of eight percent per annum and is due and payable in February 28, 2001. -9- 7. SUBSEQUENT EVENTS The Company, through its wholly owned subsidiary, Unique Images, entered into a supply contract with Art Vivant, Ltd. of Japan. Under the contract, Unique Images will grant Art Vivian, Ltd. of Japan the exclusive right to market Unique Images sports and movie collectibles in Japan. The Company expects to satisfy the contract with its existing manufacturing capacity. 8. SEGMENT REPORTING The Company has two reportable segments based upon products offered: retail sales and corporate operations, and wholesale distribution and manufacturing. The Company evaluates each segment's performance based on segment operating profit. The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies. Information pertaining to the operations of reportable segments is as follows: -10-

FOR THE THREE MONTHS ENDED JUNE 30, 2000 WHOLESALE RETAIL AND DISTRIBUTION AND CORPORATE MANUFACTURING TOTAL Revenues from external customers $ 180,512 $ 239,619 $ 420,131 Intersegment revenues 4,133 36,044 40,177 Depreciation and amortization 41,649 4,533 46,182 Interest income and other 3,183 385 3,568 Intersegment interest income 3,935 -- 3,935 Interest expense 7,817 2,551 10,368 Intersegment interest expense -- 3,935 3,935 Segment loss before interest and taxes (90,115) (126,596) (216,711) Net loss before taxes (95,510) (128,001) (223,511) Income tax (benefit) provision -- -- -- Net property and equipment 54,642 85,392 140,034 RECONCILIATION OF SEGMENT REVENUES TO CONSOLIDATED REVENUES Total revenues for reportable segments $ 460,308 Elimination of intersegment revenues 40,177 --------- Total consolidated revenues $ 420,131 =========

Significantly all (over 95 percent) of the Company's sales are in the United States. -11-

FOR THE THREE MONTHS ENDED JUNE 30, 1999 WHOLESALE RETAIL AND DISTRIBUTION AND CORPORATE MANUFACTURING TOTAL Revenues from external customers $14,554 $-- $14,554 Intersegment revenues -- -- -- Depreciation and amortization 2,212 -- 2,212 Segment loss before interest and taxes 44,609 -- 44,609 Net loss before taxes 44,609 -- 44,609 Income tax (benefit) provision -- -- -- Net property and equipment 54,478 -- 54,478 RECONCILIATION OF SEGMENT REVENUES TO CONSOLIDATED REVENUES Total revenues for reportable segments $14,554 Elimination of intersegment revenues -- ------- Total consolidated revenues $14,554 =======

Significantly all (over 95 percent) of the Company's sales are in the United States. Prior to August 11, 1999, the Company had no wholesale distribution and manufacturing segment. -12-

FOR THE SIX MONTHS ENDED JUNE 30, 2000 WHOLESALE RETAIL AND DISTRIBUTION AND CORPORATE MANUFACTURING TOTAL Revenues from external customers $ 311,150 $ 496,354 $ 807,504 Intersegment revenues 4,133 75,569 79,702 Depreciation and amortization 60,619 9,065 69,684 Interest income and other 6,579 1,146 7,725 Intersegment interest income 6,809 6,809 Interest expense 9,169 3,932 13,101 Intersegment interest expense -- 6,809 6,809 Segment loss before interest and taxes (222,441) (153,873) (376,314) Net loss before taxes (225,031) (156,659) (381,690) Income tax (benefit) provision -- -- -- Net property and equipment 54,642 85,392 140,034 RECONCILIATION OF SEGMENT REVENUES TO CONSOLIDATED REVENUES Total revenues for reportable segments $ 887,206 Elimination of intersegment revenues 79,702 --------- Total consolidated revenues $ 807,504 =========

Significantly all (over 95 percent) of the Company's sales are in the United States. -13-

WHOLESALE FOR THE PERIOD FROM MARCH 2, 1999 (DATE OF RETAIL AND DISTRIBUTION AND INCEPTION) TO JUNE 30, 1999 CORPORATE MANUFACTURING TOTAL Revenues from external customers $ 22,199 $-- $ 22,199 Intersegment revenues -- -- -- Depreciation and amortization 2,217 -- 2,217 Segment loss before interest and taxes (46,179) -- (46,179) Net loss before taxes (46,179) -- (46,179) Income tax (benefit) provision -- -- -- Net property and equipment 54,478 -- 54,478 RECONCILIATION OF SEGMENT REVENUES TO CONSOLIDATED REVENUES Total revenues for reportable segments $ 22,199 Elimination of intersegment revenues -- -------- Total consolidated revenues $ 22,199 ========

Significantly all (over 95 percent) of the Company's sales are in the United States. Prior to August 11, 1999, the Company had no wholesale distribution and manufacturing segment. ****** -14- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION OVERVIEW SPECIAL FACTORS AFFECTING THE COMPARABILITY OF CURRENT PERIOD AND PRIOR PERIOD OPERATING RESULTS The following discussion should be read in conjunction with, and is qualified in its entirety by our unaudited condensed consolidated financial statements as of and for the period ended June 30, 2000 and for the period from March 2, 1999 (Date of Inception) through June 30, 1999. The Company was formed on March 2, 1999. The Company did not achieve substantial operations until after June 30, 1999. Further, the Company acquired Unique Images in the third quarter of 1999. The period presented in the unaudited condensed consolidated financial statements from March 2, 1999 through June 30, 1999 is not a full six months of operations and was during the development stage of the Company. Such period may not be comparable to the six months ended June 30, 2000. The period from March 2, 1999 through June 30, 1999 is referred to herein as the "June 1999 period" while the period from January 1, 2000 through June 30, 2000 is referred to herein as the "June 2000 period". The period from April 1, 1999 through June 30, 1999 is referred to herein as the "June 1999 quarter" while the period from April 1, 2000 through June 30, 2000 is referred to herein as the "June 2000 quarter". DESCRIPTION OF BUSINESS The Company is engaged in direct internet merchandising of American-themed collectibles, gifts, and memorabilia. The Company manufactures and assembles its own products and also purchases products from a number of sources. The Company's products are marketed on an internet shopping site, www.americabilia.com. The Company strives to offer its customers a broad selection of products, a convenient shopping experience, and a competitive price. The Company commenced with organizational and operational activities on March 2, 1999 in Nevada as americabilia.com. The Company offers both framed memorabilia which it manufactures and products which it acquires from suppliers. Generally, the products acquired from suppliers are purchased by the Company, shipped by the supplier to the Company's facilities in Nevada and held in inventory until sale and shipment to customers. In selected instances, the Company purchases products from suppliers which drop ship the products to the Company's customers. In each instance, the Company acquires title to the product from the supplier and has all risks and rewards of ownership of the product. In each instance, the Company and not the supplier bears the risk of collection. In the case the customer returns the product, the product is returned to the Company and held by the Company in inventory for sale to a future customer. The Company acts as principal and not agent in connection with all product sales. On August 11, 1999, the Company acquired the outstanding capital stock of Veltre Enterprises, Inc. dba Unique Images. Unique Images designs and manufactures Hollywood and sports memorabilia for fine art and memorabilia galleries. Unique Images also provides high volume and custom picture framing services. Unique Images uses computerized joiner and mat cutting equipment. The purchase price paid for Unique Images consisted of (i) $200,000 in cash, (ii) a Promissory Note in the original principal amount of $200,000 and (iii) 100,000 shares of the Rule 506 common stock of americabilia.com Nevada. The stock was issued at its fair value on the issue date of $1.00 per share or $100,000 in total. The Promissory Note was paid in full in November 1999. As part of the purchase, americabilia.com Nevada agreed to lease from Keith -15- Veltre and his affiliates the premises that are used for Unique Images' business operations as well as certain business equipment. The Company was originally organized under the laws of the state of Florida on August 22, 1989 under the name First Zurich Investments, Inc. On November 15, 1996, the name of the entity was changed to Terra International Pharmaceuticals, Inc. On September 7, 1999, the entity's name was changed to americabilia.com, Inc. On September 17, 1999, the Company conducted a recapitalization through the merger of americabilia.com Nevada with and into Worldwide Collectibles, Inc., a Nevada corporation and a wholly owned subsidiary of the Company formed for the purpose of the merger. Pursuant to an Agreement of Merger dated September 14, 1999, each of the former stockholders of americabilia.com Nevada received one (1) share of Common Stock, in exchange for their shares of americabilia.com Nevada. As a result of the acquisition, a total of 6,115,000 shares of common stock were issued to the former shareholders of americabilia.com Nevada. Prior to its acquisition of americabilia.com Nevada, the Company did not have any operations. For accounting purposes, the acquisition has been treated as a recapitalization of americabilia.com with americabilia.com as the acquirer (reverse merger). As a result of this transaction the Company became a publicly traded company. The recapitalization was accounted for by adjusting common stock by $537 for the 537,692 shares of common stock held by the shareholders at the time that the entity was known as Terra International Pharmaceuticals, Inc. In addition, because the net assets of Terra International Pharmaceuticals, Inc. were $0, paid in capital was decreased by an amount equal to the par value of the 537,692 shares. Prior to the reverse merger, Terra Pharmaceuticals had no operations. The companies involved in the recapitalization included Terra Pharmaceuticals, Terra's wholly owned subsidiary, Worldwide Collectibles, and americabilia.com Nevada. Unique Images is a wholly owned subsidiary of Worldwide Collectibles. RESULTS OF OPERATIONS - JUNE 2000 QUARTER COMPARED TO JUNE 1999 QUARTER REVENUES The Company's revenues increased $405,577 from $14,554 in the June 1999 quarter to $420,131 in the June 2000 quarter. The increase is due to the fact that in the June 2000 quarter, the Company had three months of operations from both Worldwide Collectibles as well as Unique Images. In the June 1999 quarter, however, the Company's sales were limited due to the fact that the Company's only sales outlet at that time was through Ebay. In the June 2000 quarter, Worldwide Collectibles sales were $180,512 compared to $14,554 for the June 1999 quarter. Unique Images external sales for the June 2000 quarter were $239,619. External sales refer to sales to third parties, excluding intercompany sales by Unique Images to Worldwide Collectibles, Inc. EXPENSES Costs of sales in the June 2000 quarter were $282,808, or 67% of sales compared to $11,886 or 82% of sales in the June 1999 quarter. The increase in the costs of sales compared to 1999 activity relates to the fact that the June 2000 quarter includes operations from both Worldwide Collectibles and Unique Images whereas the 1999 results included only Worldwide Collectibles activity. Additionally, during the June 1999 quarter, the Company was not renting inventory warehouse space and had limited operations and inventory. -16- General and administrative expenses increased $223,398 from $43,532 in the June 1999 quarter to $266,930 in the June 2000 quarter due to the Company adding significant staff and operations for the reasons mentioned above. Marketing expenses increased $40,046 from $876 in the June 1999 quarter to $40,922 in the June 2000 quarter as the Company increased its marketing efforts once a viable Internet and retail showroom were available for customers to visit. Marketing was 10% of revenues for the June 2000 quarter. Several officers of the Company are currently not receiving salaries. However, contributed salary expense has been recognized in the form of contributed capital during the June 2000 quarter ($8,000) and the June 1999 quarter ($10,000). OTHER INCOME (EXPENSE) Interest expense in the June 2000 quarter was $10,368 due to debt carried by the Company that did not exist in the June 1999 quarter. Interest income for the June 2000 quarter was $3,568 due to available and interest bearing cash in the June 2000 quarter that did not exist in the June 1999 quarter as well as interest earned on the loans to shareholders of $2,348. The loans to shareholders related to stock issued in exchange for loans receivable in 1999. NET LOSS The Net Loss in the June 2000 quarter compared to the June 1999 quarter increased by $178,902 from $44,609 to $223,511 as a result of corporate operations and due to the results of operations for World Wide Collectibles and from Unique Images whose operations were acquired on August 11, 1999 as discussed above. RESULTS OF OPERATIONS - JUNE 2000 PERIOD COMPARED TO JUNE 1999 PERIOD REVENUES The Company's revenues increased $785,305 from $22,199 in the June 1999 period to $807,504 in the June 2000 period. The increase is due to the fact that in the June 2000 period, the Company had six months of operations from both Worldwide Collectibles as well as Unique Images. In the June 1999 period, however, the Company's sales were limited due to the short operating period and the fact that the Company's only sales outlet at that time was through Ebay. In the June 2000 period, Worldwide Collectibles sales were $311,150 compared to $22,199 for the June 1999 period. Unique Images external sales for the June 2000 period were $496,354. External sales refer to sales to third parties, excluding intercompany sales by Unique Images to Worldwide Collectibles, Inc. EXPENSES Costs of sales in the June 2000 period were $591,940, or 73% of sales compared to $14,512 or 65% of sales in the June 1999 period. The increase in the costs of sales compared to 1999 activity relates to the fact that the June 2000 period includes operations from both Worldwide Collectibles and Unique Images whereas the 1999 results included only Worldwide Collectibles activity. Additionally, the during the June 1999 period, the Company was not renting inventory warehouse space and had limited operations and inventory. -17- General and administrative expenses increased $412,419 from $48,516 in the June 1999 period to $460,935 in the June 2000 period due to the Company adding significant staff and operations for the reasons mentioned above. Marketing expenses increased $60,383 from $876 in the June 1999 period to $61,259 in the June 2000 period as the Company increased its marketing efforts once a viable Internet and retail showroom were available for customers to visit. Marketing was 8% of revenues for the June 2000 period. Several officers of the Company are currently not receiving salaries. However, contributed salary expense has been recognized in the form of contributed capital during the June 2000 period ($28,000) and the June 1999 period ($11,000). OTHER INCOME (EXPENSE) Interest expense in the June 2000 period was $13,101 due to debt carried by the Company that did not exist in the June 1999 period. Interest income for the June 2000 period was $7,725 due to available and interest bearing cash in the June 2000 period that did not exist in the June 1999 period as well as interest earned on the loans to shareholders of $4,436. The loans to shareholders related to stock issued in exchange for loans receivable in 1999. NET LOSS The Net Loss in the June 2000 period compared to the June 1999 period increased by $335,511 from $46,179 to $381,690 as a result of corporate operations and due to the results of operations for World Wide Collectibles and from Unique Images whose operations were acquired on August 11, 1999 as discussed above. LIQUIDITY AND CAPITAL RESOURCES At June 30, 2000, the Company had cash and cash equivalents of $57,948. The Company had working capital of $850,959 and stockholders' equity of $832,089. The cash decreased during the June 2000 period as compared to the June 1999 period when there were no loans from related parties or loans to shareholders such as existed in the June 2000 period. Cash flow from operations is expected to be sufficient to pay operating costs of the Company during the remainder of fiscal 2000. However the Company expects to raise additional funds through a combination of private placements, public offerings of its stock or bank loans in order to expand operations and increase its technical infrastructure and inventory. However, there can be no assurance that any additional financing, if needed to meet liquidity needs, will be available to us on favorable terms or at all. There can be no assurance that our estimate of foreseeable liquidity needs is accurate or that no new business developments or other unforeseen events will not occur, any of which could result in the need to raise additional funds. We expect that the adequacy of our operating cash flow will depend upon: - customer acceptance of our products; - the continued development of the Internet market as a source for our products; - the intensity of our competition; - the efficiency of operations; -18- - the depth of customer demand, and the effectiveness of our marketing and promotional efforts. LOANS FROM RELATED PARTIES During the June 2000 period, Henry E. Cartwright, the Company's Chairman of the Board and Gary Moore, the Company's President, each loaned the Company $50,000. Each of these loans bear interest at the rate of eight percent (8%) per annum and are due and payable on February 28, 2001. RECENTLY ISSUED ACCOUNTING STANDARDS The Financial Accounting Standards Board recently issued FAS No. 137, "Deferral of FAS 133 Accounting for Derivatives" which delays the implementation of that pronouncement to June 15, 2000. The Company has not determined what effect, if any, that FAS 133 may have on its financial position or results of operations. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 clarifies existing accounting principles related to revenue recognition in financial statements. The Company is required to comply with the provisions of SAB 101 by the fourth quarter of 2000. Management has not yet completed an analysis of the impact that SAB 101 will have on the Company's current revenue recognition practices. FORWARD LOOKING STATEMENTS The Private Securities Litigation Reform Act provides a "safe harbor" for certain forward-looking statements. Certain matters discussed in this filing could be characterized as forward-looking statements such as statements relating to plans for future expansion, as well as other capital spending, financing sources and effects of regulation and competition. Such forward-looking statements involve important risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company invests its cash and cash equivalents in FDIC insured savings accounts which, by their nature, are not subject to interest rate fluctuation. As of June 30, 2000, the Company had $405,582 in borrowings. The borrowings are related to bank loans, capitalized leases and loans from officers and directors which, by their nature, are not subject to interest rate fluctuations. -19- PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Inapplicable. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. Inapplicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Inapplicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Inapplicable. ITEM 5. OTHER INFORMATION. Inapplicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (A) EXHIBITS 27.1 Financial Data Schedule (B) REPORTS ON FORM 8-K None. -20- SIGNATURES In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICABILIA.COM, INC. (Registrant) Dated: August 7, 2000 By: /s/ HENRY E. CARTWRIGHT -------------------------------- Henry E. Cartwright, Chairman of the Board Dated: August 7, 2000 By: /s/ DIXIE L. CARTWRIGHT -------------------------------- Dixie L. Cartwright, Treasurer (Principal Financial Officer) -21-