VirtualSellers.com Announces Third Quarter Results
CHICAGO--(BUSINESS WIRE)--Jan. 18, 2000--VirtualSellers.com Inc. (OTCBB:VDOT) Tuesday announced its financial results for the fiscal third quarter ended Nov. 30, 1999.
Revenues from operations increased 279 percent from $144,207 for the nine months ended Nov. 30, 1998 to $546,978 for the nine months ended Nov. 30, 1999. The increase is due to the acquisitions of the operations of VirtualSellers.com on April 15, 1999 and CallDirect Enterprises on May 6, 1999, as well as a 450 percent increase in the subscriber base for Northstar Telesolutions. The company anticipates future growth in revenues from TAME licensing sales and transaction processing.
Costs and expenses increased 115 percent from $1,390,955 for the nine months ended Nov. 30, 1998 to $2,989,957 for the nine months ended Nov. 30, 1999. The increase is due to the acquisitions referred to above and an increase in general and administrative costs required to support the company's expansion. The company also incurred significant legal, accounting and consulting costs in conjunction with the preparation of TAME as a shrink-wrapped product.
Other income (expense) increased 978 percent from $113,599 for the nine months ended Nov. 30, 1998 to $1,276,262 for the nine months ended Nov. 30, 1999.
The loss for the nine months increased from $1,133,149 to $1,166,717 due to the factors noted above. Cash flow from operations improved significantly from an outflow of $1,393,304 for the nine months ended Nov. 30, 1998 to a cash outflow of $298,663 for the nine months ended Nov. 30, 1999.
Three Months Ended Nov. 30, 1999 Compared with Three Months Ended Nov. 30, 1998
The results for the three months ended Nov. 30, 1999 compared with the three months ended Nov. 30, 1998 are consistent with the nine month results discussed above. The increase in the loss for the period from $522,928 to $1,031,618 is due to an increase in selling, general and administrative costs as the company integrates its acquired operations and markets its products and preparation of the selling of the TAME. Also in this period, the company's transaction processing facility, with the capacity of 53 million transactions per day, became fully operational.
The company improved its financial position considerably over the nine months ended Nov. 30, 1999. Cash and cash equivalents decreased from $75,763 at Dec. 31, 1998 to $51,853 at Nov. 30, 1999. The decrease in cash is due to funding of the operating loss for the nine months and acquisitions of capital assets, somewhat offset by the conversion of long-term debt to share capital and the issuance of shares for cash. Non-cash working capital increased from a net obligation position of $128,747 to net working capital assets of $227,307 due primarily to the increase in prepaid expenses and advances. The company issued shares for rent and certain payroll obligations, which are being amortized over the terms of the related agreements.
Subsequent to Nov. 30, 1999, the company has received in excess of $2 million in private placements, which will be used to finance the company's expansion and integration of recently acquired operations. Capital assets increased from $97,800 at Dec. 31, 1998 to $973,373 due to the acquisitions of the assets of CallDirect and VirtualSellers.com and due to investments in software, hardware, office and telecommunications equipment. The company expects that these acquisitions will improve the company's ability to generate revenues and cash flows in the future. Obligations under capital lease in the amount of $7,343 were acquired on the acquisition of the operations of CallDirect. Shareholders' equity increased from a deficiency in assets of $228,044 to shareholders' equity of $1,245,190. The increase is due to the issuance of shares on the conversion of long-term debt and the issuance of shares for cash consideration, offset by the loss for the period of $1,166,717. As a result, the company has removed all of its long-term debt obligations.
eCommerce Solutions Inc. doing business as VirtualSellers.com
VirtualSellers.com provides turnkey e-commerce transaction processing and customer services to small and medium size businesses. With no monthly fees and small set-up charges, VirtualSellers.com can provide these businesses with immediately available, customized, secure and complete e-commerce services so that these businesses can retail their products over the Internet. VirtualSellers.com earns its revenues by charging the businesses a percentage of each transaction conducted over the Internet. VirtualSellers.com has added 80 new Web sites in the last quarter and is expected to increase the number of sites by end of the fourth quarter.(1)
Preferred Telemanagement Inc. doing business as CallDirect Enterprises
CallDirect is a catalogue reseller of telephone related products and will soon be a provider of transaction processing and customer services. The company intends to use its Call Center to provide customer service functions for CallDirect. The company has also developed a Web site with e-commerce transaction processing capabilities, which will enable CallDirect to retail its products over the Internet.
Although CallDirect's revenue is stable, CallDirect incurred a small loss from operations for the quarter ended November 30, 1999. For the quarter, CallDirect incurred a negative cash flow of approximately $6,000 per month. The company anticipates that CallDirect will be operating on a positive cash flow basis by February, 2000.(1) The company anticipated that CallDirect's first catalog would be published by November 1, 1999, but the company's management decided to delay publication of the catalog until after the holiday season. Accordingly, the company anticipates that the catalog will be distributed by the end of January, 2000.(1) Most of CallDirect's current customers are government entities or larger corporations which are established customers of CallDirect and as a result, a significant portion of CallDirect's revenue is generated by reorders from such established customers. The Company expects that the release of the catalog will result in expanded sales from established and new customers.(1)
NorthNet Telecommunications Inc. doing business as NorthStar Telesolutions
NorthStar Telesolutions is the company's subsidiary that operates the Call Center. The Call Center provides transaction processing, centralized billing, customer service and dispatch functions for cable companies in the United States. During the quarter, the Call Center increased the number of subscribers it serves by approximately 25%. The company expected its subscriber base to grow to approximately 50,000 subscribers, but this was delayed due to late delivery of new technology, which the company expects to be implemented by February 28, 2000.(1) The company has doubled the manpower at the Call Center and the addition of ISP subscribers, billing and collection should be implemented by the first quarter of 2001.(1)
"Over the past several months, our company has worked diligently to innovate, integrate and grow our business and I firmly believe we have accomplished significant growth in the three main business units. However, the most significant achievement during this period was the development and the introduction of TAME Software. The company's proprietary programming software language called TAME (Tag Activated Markup Enhancement) uses an interpretive language that is Microsoft and Linux compatible, thereby simplifying the entire approach to Web development and enterprise infrastructure development over existing solutions, and at the same time maintaining its compatibility through links to Java© and JavaScript©. TAME enables applications to communicate with each other in a very unique way within the Web's infrastructure, and more importantly provide a solution with a whole new level of interoperability. We shifted resources and focus into TAME to ensure that TAME's foundation was strong enough to carry VirtualSellers.com into the future and establish the company as a technology leader. VirtualSellers.com is now able to sell TAME as a shrink-wrapped product. Secondly, we believe the integration of TAME with transaction processing services gives VirtualSellers.com the most comprehensive and flexible solution in enterprise e-commerce," said Dennis Sinclair, Ph.D., CEO, VirtualSellers.com.
The company will have an exhibit at the upcoming LinuxWorld Conference & Expo to be held in New York City on February 1 through 4. The company's exhibit at the expo will present the latest technical updates pertaining to its recent launch of TAME version 4.0. The company will also distribute demonstration copies of TAME on compact disc. LinuxWorld Conference & Expo is the premier event for supporters, investors and enthusiasts of the Linux operating system. The company anticipates that the expo will help to create brand equity for TAME as the expo presents invaluable opportunity to expose TAME to avid Linux users, as well as money managers and others who have a strong interest in this dependable operating system.(1)
Safe Harbor Statement
Statements identified with a "(1)" are forward looking statements.
Those forward-looking statements involve risks and uncertainties. When used in this document, the words "expects," "believe," "anticipates," "intends," "plans," "small" and similar expressions are also intended to identify other forward-looking statements. The company's actual results could differ materially from those discussed in the forward-looking statements found in this document. Factors, risks and uncertainties that could cause or contribute to such differences include those specific risks and uncertainties discussed below and those discussed in the company's Form 20-F for the period ended February 28, 1999. The cautionary statements made in this document should be read as being applicable to all related forward-looking statements wherever they appear in this document.
TAME is a trademark of VirtualSellers.com, Inc.
virtualsellers.com
(Formerly Suncom Telecommunications Inc.)
Consolidated Balance Sheets
(Expressed in United States dollars)
(Unaudited -- Prepared by Management)
Nov. 30, Feb. 28,
1999 1999
Assets
Current assets:
Cash and cash equivalents $ 51,853 $ 75,763
Accounts receivable 118,507 29,864
Inventories 26,149 --
Prepaid expenses and advances 376,624 14,408
573,133 120,035
Investment -- 1
Capital assets 973,373 97,800
$ 1,546,506 $ 217,836
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $ 293,973 $ 173,019
Current portion of long-term debt -- 272,861
293,973 445,880
Obligations under capital leases 7,343 --
Shareholders' equity:
Share capital 11,435,073 8,795,122
Retained earnings (10,189,883) (9,023,166)
1,245,190 (228,044)
$ 1,546,506 $ 217,836
virtualsellers.com
(Formerly Suncom Telecommunications Inc.)
Consolidated Interim Quarterly Statements of Operations and Deficit
(Expressed in United States dollars)
(Unaudited -- Prepared by Management)
Three months ended Nov. 30, Nine months ended Nov. 30,
1999 1998 1999 1998
Revenue $ 220,230 $ 55,527 $ 546,978 $ 144,207
Costs and expenses:
Cost of goods
sold 85,277 141,901 217,537 141,901
Selling, general and
administrative
expenses 1,131,576 486,557 2,691,969 1,234,930
Depreciation and
amortization 44,423 6,754 80,451 14,124
1,261,276 635,212 2,989,957 1,390,955
Loss before other
income 1,041,046 579,685 2,442,979 1,246,748
Other income (expense):
Interest revenue 2,194 8,359 22,863 38,450
Foreign exchange
gains 2,226 30,948 90,804 40,280
Income tax interest
and penalties -- -- -- (14,812)
Miscellaneous 5,008 17,450 1,162,595 49,681
9,428 56,757 1,276,262 113,599
Net income (loss) for
the period (1,031,618) (522,928) (1,166,717) (1,133,149)
Deficit, beginning of
period (9,158,265)(8,037,910) (9,023,166) (7,427,689)
Deficit, end of
period $ (10,189,883)$(8,560,838) $(10,189,883) $(8,560,838)
Net income (loss)
per common share $(0.01) $(0.01) $(0.01) $(0.01)
virtualsellers.com
(Formerly Suncom Telecommunications Inc.)
Consolidated Interim Quarterly Statements of Cash Flows
(Expressed in United States dollars)
(Unaudited -- Prepared by Management)
Three months ended Nov. 30, Six months ended Nov. 30,
1999 1998 1999 1998
Cash provided by (used in):
Operations:
Net income (loss)
for the year $(1,031,618) $(522,928) (1,166,717) $(1,133,149)
Items not involving cash:
Depreciation and
amortization 44,423 6,754 80,451 14,124
Non-cash
compensation 62,657 -- 642,488 --
Non-cash administration
expenses
140,786 -- 505,219 --
Change in non-cash operating working capital:
Accounts
receivable 17,750 (5,223) (88,480) (6,843)
Inventories 14,227 -- (26,267) --
Prepaid expenses
and advances 61,083 398 (363,589) (5,931)
Assets held for
resale -- -- -- --
Accounts payable and accrued
liabilities 51,525 (198,042) 118,232 (261,505)
(693,167) (719,041) (298,663) (1,393,304)
Financing:
Issuance of common
shares 100,358 383,984 950,117 893,803
Proceeds from issuance of
notes -- 7,730 -- 17,755
Capital lease
obligations -- -- 7,376 --
100,358 391,714 957,493 911,558
Investments:
Restricted cash held
in trust -- 90,346 -- --
Loans receivable -- -- -- --
Acquisition of capital
assets 35,230 (13,111) (706,457) (14,679)
35,230 77,235 (706,457) (14,679)
Increase (decrease) in cash and cash equivalents
(503,579) (250,092) (24,180) (533,120)
Foreign currency effect
on cash (16,210) (23,421) 23,447 (36,695)
Cash and cash equivalents, beginning
of period 571,642 483,007 75,763 742,614
Cash and cash equivalents,
end of period $ 51,853 $209,494 $ 51,853 $ 209,494 |
