-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MdPN70qFapgsiZBQ1cdxVdMOxk8TK/iUUQJQKYBzeWC9XSv1VABTOYL0/nBjIe58 na5Mx92Ri+2f/AfHPEZp4w== /in/edgar/work/20000914/0001005477-00-006535/0001005477-00-006535.txt : 20000922 0001005477-00-006535.hdr.sgml : 20000922 ACCESSION NUMBER: 0001005477-00-006535 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000731 FILED AS OF DATE: 20000914 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANTS SOFTWARE COM INC CENTRAL INDEX KEY: 0000796655 STANDARD INDUSTRIAL CLASSIFICATION: [8731 ] IRS NUMBER: 133054685 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-16299 FILM NUMBER: 723000 BUSINESS ADDRESS: STREET 1: 500 AIRPORT BLVD STREET 2: SUITE 100 CITY: BURLINGAME STATE: CA ZIP: 94010 BUSINESS PHONE: 6505796625 MAIL ADDRESS: STREET 1: 500 AIRPORT BLVD STREET 2: SUITE 100 CITY: BURLINGAME STATE: CA ZIP: 94010 FORMER COMPANY: FORMER CONFORMED NAME: CHOPP COMPUTER CORP /DE/ DATE OF NAME CHANGE: 19990805 10QSB 1 0001.txt FORM 10QSB ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 10-QSB (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: July 31, 2000 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 number: 0000796655 --------------------- ANTS SOFTWARE.COM (Exact name of registrant as specified in its charter) Nevada 13-3054685 (State or other jurisdiction of (IRS Employer Identification Number) Incorporation or Organization) 801 Mahler Rd, Suite G, Burlingame, CA 94010 (Address of principal executive offices) (Zip Code) (650) 692-0240 (Registrant's Telephone Number, including area code) 500 Airport Blvd, Suite 100, Burlingame, CA 94010 (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 reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate the number of shares outstanding of each of the issuer's classes of Common stock, as of the latest practicable date: 12,756,197 shares of common stock as of 7/31/00 ================================================================================ TABLE OF CONTENTS - -------------------------------------------------------------------------------- PART I. Financial Information Item 1. Financial Statements................................ Item 2. Management's Plan of operation...................... PART II. Other Information Item 1. Legal Proceedings................................... Item 4. Submission of Matters to a Vote of Security Holders. Item 5. Other Matters ...................................... Signatures 1 ANTs software.com (A NEVADA CORPORATION) PART 1. FINANCIAL INFORMATION The financial statements set forth herein have been prepared by ANTs software.com (the "Company") without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles may have been condensed or omitted. The Company believes that the information contained herein is accurate. 2 ITEM 1. FINANCIAL STATEMENTS ANTs software.com BALANCE SHEET July 31, 2000 (Unaudited) ASSETS CURRENT ASSETS: Cash & cash equivalents $ 2,037,658 Interest receivable 25,734 Pre-paid insurance 248,364 ------------ Total current assets 2,311,756 PROPERTY AND EQUIPMENT: Computers and software 277,281 Office furniture and fixtures 24,459 Leasehold improvements 54,297 Less accumulated depreciation (17,354) ------------ Property and equipment, net 338,683 OTHER ASSETS - Security deposits 211,798 ------------ TOTAL ASSETS $ 2,862,237 ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 252,550 Accrued vacation 69,422 Payable to employees 723 Notes payable 176,470 ------------ Total current liabilities 499,165 ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, $.001 par value; 20,000,000 authorized; 12,756,197 shares issued and outstanding 12,756 Common stock subscribed, 70,000 shares 119,500 Notes receivable from officers for stock purchases (337,500) Additional paid-in capital 13,049,452 Accumulated deficit (10,481,136) ------------ Total stockholders' equity 2,363,072 ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,862,237 ============ See accompanying notes to financial statements. 3 ANTs software.com STATEMENTS OF OPERATIONS (Unaudited) For the three months ended July 31, 2000 1999 ------------------------------ General and administrative expenses $1,196,624 $109,881 Research and development expenses 193,137 0 ------------------------------ LOSS FROM OPERATIONS (1,389,761) (109,881) OTHER INCOME: Interest income 50,920 0 Interest expense (5,368) 0 ------------------------------ Other income, net 45,552 0 LOSS BEFORE INCOME TAXES (1,344,209) (109,881) INCOME TAXES 800 0 ------------------------------ NET LOSS ($1,345,009) ($109,881) ============================== BASIC LOSS PER COMMON SHARE ($0.11) ($0.01) ------------------------------ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 12,689,030 10,767,165 See accompanying notes to financial statements. 4 ANTs software.com STATEMENTS OF CASH FLOWS (Unaudited) For the three months ended July 31, 2000 1999 ----------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ($1,345,009) ($109,881) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation 11,808 0 Changes in operating assets and liabilities: Interest receivable (3,469) 0 Pre-paid rent 60,651 0 Accounts payable (31,679) 0 Accrued expenses (124,041) (10,000) ----------------------------- Net cash used by operating activities (1,431,739) (119,881) CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (239,313) 0 CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of shares 150,000 362,400 Notes payable & other payable (84,556) 0 ----------------------------- Net cash provided by financing activities 65,444 362,400 NET (DECREASE) INCREASE IN CASH (1,605,608) 242,519 CASH, BEGINNING OF PERIOD 3,643,266 16,050 ----------------------------- CASH, END OF PERIOD $2,037,658 $258,569 ============================= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $5,368 $0 Income taxes $800 $0 See accompanying notes to financial statements. 5 ANTs software.com NOTES TO FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business - ANTs software.com (the "Company"), a Nevada corporation, was incorporated on September 24, 1996. The Company is the successor to CHoPP Computer Corp., a Delaware corporation. In February 1999, the Company changed its name from CHoPP Computer Corp. to ANTs software.com. Going Concern - The Company has incurred significant losses since inception and expects to continue to incur such losses until its software successfully achieves commercial viability. The accompanying financial statements were prepared assuming the Company will continue to operate on a going-concern basis and do not include any adjustments to the recorded amounts of assets or to the recorded amounts or classification of liabilities which would be required if the Company were unable to realize its assets and satisfy its liabilities and obligations in the normal course of business. Cash and Cash Equivalents - The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Property and Equipment - Property and equipment are stated at cost with depreciation provided over the estimated useful life of 5 years using the straight-line method. Research and Development - Company-sponsored research and development costs related to both present and future products are expensed currently as a separate line item in the accompanying statements of operations. Pervasiveness of Estimates - The preparation of 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Income Taxes - The Company accounts for its income taxes under the provisions of Statement of Financial Accounting Standards ("SFAS") 109 ("SFAS 109"). The method of accounting for income taxes under SFAS 109 is the asset and liability method. This method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences is accounting for tax and financial reporting bases of other assets and liabilities. The provision for income taxes in the accompanying financial statements represents the California corporate minimum franchise tax. Fair Value of Financial Instruments - Pursuant to SFAS 107, "Disclosures About Fair Value of Financial Instruments," the Company is required to estimate the fair value of all financial instruments included on its balance sheet at July 31, 2000. The Company considers the carrying value of such amounts in the financial statements to approximate their current fair values. Reclassifications - Certain items in the prior year's financial statements have been reclassified to conform to the current year's presentation. Basic Income (Loss) Per Share - The Company adopted the provisions of SFAS 128, "Earnings Per Share" ("EPS") that established standards for the computation, presentation and disclosure of earnings per share, replacing the presentation of Primary EPS with a presentation of Basic EPS. It also requires dual presentation of Basic EPS and Diluted EPS on the face of the statement of operations for 6 ANTs software.com NOTES TO FINANCIAL STATEMENTS entities with complex capital structures. Basic EPS is based on the weighted average number of common shares outstanding during the period, which totalled 12,689,030 and 10,767,165 for 2000 and 1999, respectively. The Company did not present Diluted EPS, since the result was anti-dilutive in 2000 and immaterial in 1999. Operating Segment Information - The Company operates in one industry segment, computer software. Substantially all of the Company's assets and employees are located at the Company's headquarters in Burlingame, California. New Accounting Pronouncements - SFAS 130, "Reporting Comprehensive Income," establishes standards for reporting and displaying comprehensive income and its components in financial statements. The Company adopted the provisions of SFAS 130 in 1998, but has had no elements of comprehensive income since inception. SFAS 131, "Disclosures About Segments of an Enterprise and Related Information," establishes a new model for segment reporting, called the "management approach" and requires certain disclosures for each segment. The management approach is based on the way the chief operating decision-maker organizes segments within a company for making operating decisions and assessing performance. The Company adopted the provisions of SFAS 131 in 1998, but currently operates in only one industry segment. 2. INCOME TAXES The Company has net operating loss carryforwards totaling approximately $3.4 million for Federal income tax purposes available to offset future taxable income through 2020. Deferred tax assets consist substantially of the net operating loss carryforward. The Company has made a 100% valuation allowance against the deferred tax assets. The valuation allowance increased approximately $1.3 million in the three months ended July 31, 2000 representing the tax effect of the Company's net taxable loss for that quarter. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of sufficient future taxable income prior to the expiration of the net operating loss carryforward. Management considered the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company has not filed Federal income tax returns since 1994 and has not filed state income tax returns since inception. 3. WARRANTS As of July 31, 2000, the Company had warrants for 3,194,000 common shares outstanding. These securities give the holder the right to purchase shares of the Company's restricted common stock in accordance with the terms of the instrument. Warrants to purchase 1,984,000 shares are exercisable at July 31, 2000. Outstanding at April 30, 2000 3,164,000 Granted 230,000 Exercised or retired (200,000) --------- Outstanding at July 31, 2000 3,194,000 ========= 7 ANTs software.com NOTES TO FINANCIAL STATEMENTS 4. OPERATING LEASES The Company leases office space under a noncancellable operating lease agreement. The agreement requires monthly payments of $49,858 that began in May 2000. The agreement expires in April 2005. The agreement provides for annual cost of living increases. The Company leases additional office space on a month-to-month basis for a monthly payment of $3,600. Rental expense related to operating leases totalled approximately $150,000 in the three months ended July 31, 2000. Future minimum lease payments under the noncancellable operating lease as of July 31, 2000 are as follows: 2001 $598,299 2002 598,299 2003 598,299 2004 598,299 2005 448,299 ---------- TOTAL $2,841,495 ========== 5. LEGAL MATTERS A law firm has filed a lawsuit against the Company in California Superior Court based on a contract allegedly entered into between the firm and the Company in June 1988. The firm claims that the terms of the alleged contract entitle it to a 20% bonus premium of legal fees billed to the Company between 1993 and 1996 and that such bonus is payable in Company stock. The firm demands issuance of 436,864 shares of Company stock to the firm and approximately $220,000 in satisfaction of the Company's alleged obligation. The Company believes the firm's claim is without merit. The Company has made a full provision in the financial statements for the legal fees sought by the firm, but the Company has made no provision for the shares of common stock sought by the firm. If the Company is found ultimately liable in this matter, it would be obligated to record a charge to earnings of approximately $7.5 million. 8 ITEM 2. MANAGEMENT'S PLAN OF OPERATION Overview We are engaged in the development of a proprietary, software technology that is intended to significantly improve the speed at which computers can process commutative transactions. Our operations currently consist of start-up activities, including research and development of our asynchronous non-pre-emptive tasking software technology ("ANTs technology"), personnel recruiting and capital raising. We intend to use the ANTs technology as the basis for providing outsourcing services to enhance performance of ERP and other software applications used by large enterprises and in e-commerce. We are in the process of developing our technology and have not realized any revenues to date. Plan of Operation Our operations over the next six to nine months will primarily consist of continued research and development of our proprietary software technologies. Research and development will be focused initially upon developing a prototype system utilizing and demonstrating the capabilities of our technology. We anticipate this prototype system to be completed during the third quarter of calendar 2000. Thereafter, research and development will be directed towards developing certain initial customer applications utilizing our technology. General commercial applications utilizing our technology are expected to be available in the second half of calendar 2001. We also expect to begin recognizing revenues from the sales of our products at that time. The majority of our operating expenses and costs over the next six to nine months are expected to be for and in connection with existing and additional personnel. We currently have fifteen fulltime employees and are actively recruiting additional personnel domestically and overseas. We view the recruitment of additional qualified technical personnel as essential to the further development and commercialization of our proprietary technologies. Should we be successful in our recruitment efforts, we expect that our personnel and other operating costs will increase significantly over current levels. We anticipate that current cash resources and committed additional funding will be sufficient to fund our operations through the end of calendar 2000. We intend to fund our operations for the first half of 2001 by issuing additional debt and/or equity securities. We are currently in active discussions for the sale of up to $5 million of securities. We expect to close this financing by the end of the third quarter of calendar 2000. We expect to secure additional financing in late calendar 2000 and/or the first half of calendar 2001. We believe that additional sources of financing can be secured to enable us to complete the development and commercialization of our proprietary technologies, although there is no assurance of our ability to do so. General and Administrative General and administrative expenses increased from $109,881 during the three months ended July 31, 1999 to $1,196,624 for the three months ended July 31, 2000. The Company incurred salaries expenses of approximately $475,236. These expenses are related to approximately 10 administrative and corporate management employees. The Company expects that its general and administrative expenses will continue to increase as additional staff are recruited. The Company intends to continue to focus significant resources on recruiting additional personnel for engineering, technical development, marketing and administrative roles. There can be no assurances that the Company will be able to recruit the appropriate personnel necessary for the development of the Company. Professional service expenses increased from near $0 during the three months ended July 31, 1999 to $222,642 for the three months ended July 31, 2000. These were principally legal expenses associated with general corporate matters, review of the Company's legal records, patents and trademarks, and current litigation (See "Legal Proceedings"). Professional service expenses were also incurred for retention of certified public accountants and web site development. The Company expects to continue to incur significant professional fee expense with providers of outside legal, accounting, technical and financial services as the Company continues to execute its operation plans. 9 We incurred facilities expenses of approximately $199,917 during the first quarter. Most of these expenses were related to the Company's lease for five years of approximately 15,341 square feet in San Mateo, California. We believe that these facilities will be adequate to accommodate our growth plans through at least fiscal year 2001. These facilities represent an obligation of approximately $598,299 per year. Research and Development We incurred research and development expenses of approximately $193,137 during the first quarter. These expenses are directly related to the development of the Company's proprietary products and consisted primarily of software engineers' salaries. Capital and Liquidity Resources We anticipate significantly increasing our expenditures over the coming months as we continue to develop and productize our technology. We do not expect to realize any revenues through calendar year 2000. Our cash balance as of July 31, 2000 was approximately $2 million, which we believe is adequate to fund our activities through the calendar year at our current rate of spending. There can be no assurance that our continued product development and infrastructure development will not require a much higher rate of spending than currently. We are currently seeking investment from additional investors to support continued operations, although there can be no assurance that we will be able to obtain such investment. Forward-Looking Statements The forward-looking statements herein are based on current expectations that involve a number of risks and uncertainties. Such forward-looking statements are based on assumptions that the Company will have adequate financial resources to fund the development and operation of its business, and there will be no material adverse change in the Company's operations or business. The foregoing assumptions are based on judgments with respect to, among other things, information available to the Company, future economic, competitive and market conditions and future business decisions. All are difficult or impossible to predict accurately and many are beyond the Company's control. Accordingly, although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any such assumption could prove to be inaccurate and therefore there can be no assurance that the results contemplated in the forward-looking statements will be realized. There are a number of risks presented by the Company's business and operations which could cause the Company's financial performance to vary markedly from prior results or results contemplated by the forward-looking statements. Such risks include failure of the ANTs technology, the failure to develop commercially viable products or services from the ANTs technology, delays in or lack of market acceptance, failures to recruit adequate personnel, and problems with protection of intellectual property, among others. Management decisions, including budgeting, are subjective in many respects and periodic revisions must be made to reflect actual conditions and business developments, the impact of which may cause the Company to alter its capital investment and other expenditures, which may also adversely affect the Company's results of operations. In light of significant uncertainties inherent in forward-looking information included in this Quarterly Report on Form 10QSB, the inclusion of such information should not be regarded as a representation by the Company or any person that the Company's objectives or plans will be achieved. 10 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings The information is hereby incorporated by reference from our 10-KSB filing for the fiscal year ended April 30, 2000. There have been no material developments. ITEM 4. Submission of Matters to a Vote of Security Holders The information is hereby incorporated by reference from our Proxy Statement on Form DEFR14A filed on September 6, 2000. ITEM 5. Other Matters Resignation and Appointment of Directors On September 7, 2000, the Company announced that John Williams would be resigning from the Board of Directors to become a full-time employee of the Company. No replacement for Mr. Williams on the Board of Directors has been elected at this time. On August 28, 2000, the Company announced that Richard Lee joined the Company's Board of Directors. On August 3, 2000, the Company announced that Dean Witter III joined the Company's Board of Directors and will chair the Audit Committee. Robert Mountain's resignation as a member of the Board of Directors was accepted by the Board of Directors on August 10, 2000. 11 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. ANTs software.com Date: September 13, 2000 By: /s/ FREDERICK D. PETTIT ------------------------------------- Frederick D. Pettit Chairman and Chief Executive Officer Date: September 13, 2000 By: /s/ Miles Mochizuki ------------------------------------- Miles Mochizuki Acting Chief Financial Officer and Secretary 12 EX-27 2 0002.txt FDS
5 YEAR JUL-31-2000 MAY-01-2000 APR-30-2001 2,037,658 0 25,734 0 0 2,311,756 356,037 (17,354) 2,862,237 499,165 0 0 0 12,756 0 2,862,237 0 0 0 0 1,389,761 0 5,368 (1,344,209) 800 0 0 0 0 (1,345,009) (0.11) 0
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