Item 1. Financial Statements.
AMERICA’S SUPPLIERS,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
68,660
|
|
|
$
|
777,650
|
|
Certificates of deposit
|
|
|
250,000
|
|
|
|
250,000
|
|
Accounts receivable
|
|
|
308,155
|
|
|
|
107,352
|
|
Inventory
|
|
|
33,806
|
|
|
|
55,077
|
|
Prepaid expenses and other current assets
|
|
|
167,488
|
|
|
|
238,822
|
|
Total current assets
|
|
|
828,109
|
|
|
|
1,428,901
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
438,908
|
|
|
|
502,438
|
|
Deposits and other assets
|
|
|
7,250
|
|
|
|
7,250
|
|
Total assets
|
|
$
|
1,274,267
|
|
|
$
|
1,938,589
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity (Deficit)
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
1,198,944
|
|
|
$
|
1,630,552
|
|
Accrued expenses
|
|
|
252,110
|
|
|
|
176,395
|
|
Total current liabilities
|
|
|
1,451,054
|
|
|
|
1,806,947
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity (deficit):
|
|
|
|
|
|
|
|
|
Preferred stock $0.001 par value, 1,000,000 shares
|
|
|
|
|
|
|
|
|
authorized, no shares outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.001 par value, 50,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
13,970,339 shares issued and outstanding at June 30, 2013
|
|
|
|
|
|
|
|
|
and December 31, 2012
|
|
|
13,970
|
|
|
|
13,970
|
|
Additional paid in capital
|
|
|
6,740,316
|
|
|
|
6,736,252
|
|
Accumulated deficit
|
|
|
(6,931,073
|
)
|
|
|
(6,618,580
|
)
|
Total stockholders' equity (deficit)
|
|
|
(176,787
|
)
|
|
|
131,642
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity (deficit)
|
|
$
|
1,274,267
|
|
|
$
|
1,938,589
|
|
See accompanying notes to unaudited
condensed consolidated financial statements.
AMERICA’S SUPPLIERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(unaudited)
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
3,890,574
|
|
|
$
|
3,954,957
|
|
|
$
|
6,984,923
|
|
|
$
|
7,299,936
|
|
Advertising revenue
|
|
|
119,134
|
|
|
|
184,421
|
|
|
|
257,162
|
|
|
|
303,278
|
|
Cost of goods sold
|
|
|
(2,554,676
|
)
|
|
|
(2,567,706
|
)
|
|
|
(4,605,103
|
)
|
|
|
(4,771,732
|
)
|
Gross profit
|
|
|
1,455,032
|
|
|
|
1,571,672
|
|
|
|
2,636,982
|
|
|
|
2,831,482
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
906,195
|
|
|
|
898,753
|
|
|
|
1,685,340
|
|
|
|
1,647,245
|
|
General and administrative
|
|
|
608,743
|
|
|
|
578,038
|
|
|
|
1,265,868
|
|
|
|
1,134,216
|
|
Total operating expenses
|
|
|
1,514,938
|
|
|
|
1,476,791
|
|
|
|
2,951,208
|
|
|
|
2,781,461
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
(59,906
|
)
|
|
|
94,881
|
|
|
|
(314,226
|
)
|
|
|
50,021
|
|
Other income
|
|
|
1,676
|
|
|
|
941
|
|
|
|
1,733
|
|
|
|
1,982
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
(58,230
|
)
|
|
|
95,822
|
|
|
|
(312,493
|
)
|
|
|
52,003
|
|
Income tax expense
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(58,230
|
)
|
|
$
|
95,822
|
|
|
$
|
(312,493
|
)
|
|
$
|
52,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.00
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.00
|
|
Diluted
|
|
$
|
(0.00
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
13,970,339
|
|
|
|
13,970,339
|
|
|
|
13,970,339
|
|
|
|
13,885,941
|
|
Diluted
|
|
|
13,970,339
|
|
|
|
14,300,855
|
|
|
|
13,970,339
|
|
|
|
14,189,871
|
|
See accompanying notes to unaudited condensed
consolidated financial statements.
AMERICA’S SUPPLIERS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited)
|
|
Six Months Ended June, 30
|
|
|
|
2013
|
|
|
2012
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(312,493
|
)
|
|
$
|
52,003
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
70,979
|
|
|
|
55,964
|
|
Bad debt expense (recovery)
|
|
|
8,170
|
|
|
|
(12,792
|
)
|
Stock-based compensation
|
|
|
4,064
|
|
|
|
28,563
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(208,973
|
)
|
|
|
(143,030
|
)
|
Inventory
|
|
|
21,271
|
|
|
|
27,046
|
|
Prepaid and other current assets
|
|
|
71,334
|
|
|
|
(125,867
|
)
|
Accounts payable
|
|
|
(431,608
|
)
|
|
|
(141,537
|
)
|
Accrued expenses
|
|
|
75,715
|
|
|
|
108,968
|
|
Accrued interest on loan to Business Calcium
|
|
|
-
|
|
|
|
1,508
|
|
Deferred revenue
|
|
|
-
|
|
|
|
(30,000
|
)
|
Other liabilities
|
|
|
-
|
|
|
|
(2,931
|
)
|
Net cash used in operating activities
|
|
|
(701,541
|
)
|
|
|
(182,105
|
)
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
Maturities of certificates of deposit
|
|
|
-
|
|
|
|
215,009
|
|
Purchases of property and equipment
|
|
|
(7,449
|
)
|
|
|
(42,742
|
)
|
Net cash provided by (used in) investing activities
|
|
|
(7,449
|
)
|
|
|
172,267
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activity
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
|
|
(708,990
|
)
|
|
|
(9,838
|
)
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
777,650
|
|
|
|
655,219
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
$
|
68,660
|
|
|
$
|
645,381
|
|
See accompanying notes to unaudited condensed
consolidated financial statements.
AMERICA’S SUPPLIERS, INC.
Notes
to the CONDENSED Consolidated Financial Statements
(unaudited)
Note 1: Organization and Basis of Presentation
Background
On December 14, 2009,
America’s Suppliers, Inc. (“ASI”) was incorporated under the laws of the State of Delaware. ASI is an
internet-based provider of general merchandise through its wholly owned subsidiaries, DollarDays International, Inc.
(“DollarDays”) and WowMyUniverse Inc. (“Wow”). DollarDays is a wholesaler of general merchandise to
small independent resellers through its website, www.DollarDays.com. Wow is a retailer of general merchandise that focuses
its business on sales to retail consumers through its website, www.WowMyUniverse.com. Orders are placed by customers through
the websites of DollarDays and Wow, and upon receiving full payment for those orders, the related merchandise is shipped
directly to the customer by third-party suppliers.
Basis of Presentation
In the opinion of management, the accompanying
unaudited condensed consolidated financial statements include all adjustments, consisting of only normal recurring accruals, necessary
for a fair statement of financial position, results of operations and cash flows. The information included in this Quarterly Report
on Form 10-Q (this “Quarterly Report”) should be read in conjunction with the consolidated financial statements and
the accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2012 (the “2012 Annual
Report”). The accounting policies are described in the “Notes to the Consolidated Financial Statements” in the
2012 Annual Report and have been updated, as necessary, in this Quarterly Report. The year-end consolidated balance sheet data
presented for comparative purposes was derived from audited consolidated financial statements, but does not include all disclosures
required by accounting principles generally accepted in the United States (“GAAP”). The results of operations for the
three and six months ended June 30, 2013 are not necessarily indicative of the operating results for the full year or for any other
subsequent interim period.
A reclassification has been made to the
statement of cash flows for the six months ended June 30, 2012. There was no change to previously reported stockholders’
equity or net income.
Note 2: Summary of Significant Accounting
Policies
Revenue Recognition
Revenue is recognized when the four
criteria for revenue recognition are met: (1) persuasive evidence of an arrangement exists; (2) shipment or delivery has
occurred; (3) the price is fixed or determinable; and (4) collectability is reasonably assured. Cash payments
received in advance of product shipment are deferred as reflected as a deferred revenue liability in the accompanying
consolidated balance sheets. Allowances for sales returns and discounts are recorded as a component of revenues in the
period the allowances are recognized.
All amounts billed to customers for shipping
and handling costs are included in revenues in the consolidated statements of operations. Actual shipping costs incurred
are reflected as a component of cost of goods sold in the accompanying consolidated statements of operations. Total
shipping expense included in cost of goods sold for the three and six months ended June 30, 2013 was $463,092 and $877,001, respectively,
and for the three and six months ended June 30, 2012 was $505,940 and $923,193, respectively.
The Company has evaluated the provisions
of GAAP Accounting Standards Codification Topic 605-45 regarding reporting revenue gross as a principal or net as an agent, noting
that the task force determined that it is a matter of judgment and a preponderance of the evidence as to whether a company satisfies
the gross versus net indicators. As a result of its analysis, the Company has determined that it qualifies for “gross”
revenue recognition.
Advertising revenue is recognized as the
service is provided on our website.
Accounts Receivable
Accounts receivable represent amounts earned
but not collected in connection with the Company’s revenues. Trade receivables are carried at their estimated collectible
amounts and generally consist of amounts due from credit card transactions.
The Company follows the allowance method
of recognizing uncollectible accounts receivable. The allowance method recognizes bad debt expense as a percentage of accounts
receivable based on a review of individual accounts outstanding, and prior history of uncollected accounts receivable. The allowance
for doubtful accounts at June 30, 2013 and December 31, 2012 was $0 as the Company expected to collect substantially all amounts
due. Bad debt expense (recovery) was ($538) and $8,170 for the three and six months ended June 30, 2013, respectively, and was
$0 and ($12,792) for the three and six months ended June 30, 2012.
The Company follows the allowance method
of recognizing sales returns. The allowance method recognizes sales returns as a percentage of sales based on a prior history of
sales returns. The allowance for sales returns at June 30, 2013 and December 31, 2012 was $0. Sales returns expense for the three
and six months ended June 30, 2013 was $73,295 and $130,710 and for the three and six months ended June 30, 2012 was $94,346 and
$192,165, respectively.
Note 3: Fair Value of Financial Instruments
Fair value measurements are performed in
accordance with the guidance provided by GAAP Accounting Standards Codification Topic 820 (“ASC 820”). ASC 820 defines
fair value as the price that would be received from selling an asset, or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters
or derived from such prices or parameters. Where observable prices or parameters are not available, valuation models are applied.
ASC 820 establishes a fair value hierarchy
that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair
value. Assets and liabilities recorded at fair value in the financial statements are categorized based upon the hierarchy of levels
of judgment associated with the inputs used to measure their fair value. Hierarchical levels directly related to the amount of
subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:
Level 1 – Quoted prices in active
markets for identical assets or liabilities that an entity has the ability to access.
Level 2 – Observable inputs other
than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices
for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated
by observable market data.
Level 3 – Unobservable inputs that
are supportable by little or no market activity and that are significant to the fair value of the asset or liability.
The Company’s financial instruments
include cash and cash equivalents, certificates of deposit, and short term receivables and payables. The carrying value of these
instruments approximates fair value due to the short-term nature of such instruments.
Note 4: Line of Credit
The Company has two revolving lines of
credit with major financial institutions totaling $375,000.
The first line of credit, totaling $150,000, has no stated maturity date and interest payments are due
monthly at an annual rate of 6.5%. The second line of credit, totaling $225,000, has a stated maturity date of March
26, 2014 and interest payments are due monthly at an annual rate of prime plus 1.5% (with the prime rate never to be below
LIBOR plus 2.5%). As of June 30, 2013 and December 31, 2012 the balance outstanding on these lines of credit was $0. No
interest expense was recorded during the three and six months ended June 30, 2013 and 2012.
Note 5: Equity Compensation
Stock Options
The Company has historically granted stock options to certain of its suppliers and employees, and in connection
with certain financing transactions.
The following table summarizes the Company’s
stock option activity during the six months ended June 30, 2013:
|
|
Number of Units
|
|
|
Weighted- Average Exercise Price
|
|
|
Weighted- Average Remaining Contractual Term (in years)
|
|
|
Aggregate Intrinsic Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2012
|
|
|
998,586
|
|
|
$
|
0.24
|
|
|
|
3.3
|
|
|
$
|
43,083
|
|
Forfeitures
|
|
|
(5,500
|
)
|
|
|
3.71
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2013
|
|
|
993,086
|
|
|
$
|
0.22
|
|
|
|
2.8
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and exercisable at June 30, 2013
|
|
|
770,460
|
|
|
$
|
0.23
|
|
|
|
2.9
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and exercisable at June 30, 2013 and expected to vest thereafter
|
|
|
932,977
|
|
|
$
|
0.22
|
|
|
|
2.8
|
|
|
$
|
-
|
|
The Company
recognized expenses of $2,032 and $4,064 during the three and six months ended June 30, 2013 and $15,500 and $19,650 during the
three and six months ended June 30, 2012, respectively, related to stock option awards. The Company’s future expense relating
to unvested option awards (net of estimated forfeitures) is $
4,848 as of June 30, 2013, and will be recognized over a weighted
average period of 1.1 years.
The following table sets forth exercise
prices of outstanding options at June 30, 2013.
Exercise
|
|
|
Number of Shares
|
|
|
|
|
Price
|
|
|
Outstanding
|
|
|
Exerciseable
|
|
|
|
|
|
|
|
|
|
|
$0.15 - .20
|
|
|
|
991,086
|
|
|
|
768,460
|
|
$
|
7.50
|
|
|
|
1,000
|
|
|
|
1,000
|
|
$
|
26.80
|
|
|
|
1,000
|
|
|
|
1,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
993,086
|
|
|
|
770,460
|
|
A summary of the status of the Company’s nonvested shares
as of June 30, 2013, and changes during the six months ended June 30, 2013, is presented below:
Nonvested Shares
|
|
Shares
|
|
|
Weighted-Average Grant-Date Fair Value
|
|
December 31, 2012
|
|
|
250,826
|
|
|
$
|
0.062
|
|
Vested
|
|
|
(28,200
|
)
|
|
|
0.065
|
|
June 30, 2013
|
|
|
222,626
|
|
|
$
|
0.062
|
|
Warrants
The following table summarizes the Company’s
warrant activity for the six months ended June 30, 2013:
|
|
Number of Units
|
|
|
Weighted- Average Exercise Price
|
|
|
Weighted- Average Remaining Contractual Term (in years)
|
|
|
Intrinsic value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2012
|
|
|
1,722,628
|
|
|
$
|
0.41
|
|
|
|
1.1
|
|
|
$
|
123,169
|
|
Forfeitures
|
|
|
(1,272,628
|
)
|
|
|
0.49
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2013
|
|
|
450,000
|
|
|
$
|
0.19
|
|
|
|
2.5
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exerciseable at June 30, 2013
|
|
|
450,000
|
|
|
$
|
0.19
|
|
|
|
2.5
|
|
|
$
|
-
|
|
The following table sets forth exercise
prices of outstanding warrants at June 30, 2013:
Exercise Price
|
|
|
Number of Shares
|
|
$
|
0.18
|
|
|
|
150,000
|
|
$
|
0.20
|
|
|
|
300,000
|
|
|
|
|
|
|
450,000
|
|
Note 6: Net Income (Loss) Per Share
Basic net income (loss) per share is computed
based on the weighted average number of common shares outstanding and excludes any potential dilution. Diluted income (loss) per
share reflects potential dilution from the exercise or conversion of securities into common stock. The dilutive effect of the Company’s
share-based awards is computed using the treasury stock method, which assumes that all share-based awards are exercised and the
hypothetical proceeds from exercise are used to purchase common stock at the average market price during the period. As the Company
reported a net loss for the three and six months ended June 30, 2013, the incremental shares from assumed conversions of the Company’s
potentially dilutive securities are not included in computing diluted net loss for those periods, as the effect would be anti-dilutive.
Accordingly, basic net loss per common share is equal to diluted net loss per common share for the three and six months ended June
30, 2013.
The following represents a reconciliation
of the numerators and denominators of the basic and diluted income per share computation for the three and six months ended June
30, 2013 and 2012:
|
|
Three Months Ended June 30,
|
|
|
Six Months Ended June 30,
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(58,230
|
)
|
|
$
|
95,822
|
|
|
$
|
(312,493
|
)
|
|
$
|
52,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common shares outstanding
|
|
|
13,970,339
|
|
|
|
13,970,339
|
|
|
|
13,970,339
|
|
|
|
13,885,941
|
|
Add incremental shares for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
-
|
|
|
|
330,516
|
|
|
|
-
|
|
|
|
303,930
|
|
Diluted weighted average common shares outstanding
|
|
|
13,970,339
|
|
|
|
14,300,855
|
|
|
|
13,970,339
|
|
|
|
14,189,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.00
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.00
|
|
Diluted
|
|
$
|
(0.00
|
)
|
|
$
|
0.01
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.00
|
|
The following potentially dilutive securities were excluded
from the computation of diluted net loss per shares for the three and six months ended June 30, 2013 and 2012:
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
993,086
|
|
|
|
1,233,070
|
|
Warrants
|
|
|
450,000
|
|
|
|
867,483
|
|
Note 7: Subsequent Events
Effective July 25, 2013, the Company’s
Board of Directors elected Jeffrey Dorsey as the Vice President of Finance and Operations of the Company. Mr. Dorsey’s job
responsibilities include functions typically performed by persons serving as a principal financial officer or principal accounting
officer of a company of similar size and organizational structure as the Company.
Mr. Dorsey will initially receive an annual
salary of $120,000, and will be entitled to bonuses, calculated monthly, that could range from 20% to 40% of his gross monthly
salary. Prior to the end of 2013, the Company intends to grant Mr. Dorsey an option to acquire 25,000 shares of the Company’s
common stock, subject to a five year vesting schedule. Additionally, Mr. Dorsey will be entitled to other employment benefits,
such as certain insurance benefits, similar to those received by other executives of the Company.
Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Forward-Looking Information
Unless otherwise indicated, the terms
“America’s Suppliers,” the “Company,” “we,” “us”
and “our” refer to America’s Suppliers, Inc. and its subsidiaries.
The statements contained in this Quarterly
Report that are not historical fact are forward-looking statements (as such term is defined in the Private Securities Litigation
Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which include statements regarding our plans, strategies, objectives, expectations, intentions
and resources. The forward-looking statements contained herein are based on current expectations that involve a number of risks
and uncertainties. These statements can be identified by the use of forward-looking terminology such as “believes,”
“expects,” “may,” “will,” “should,” “intend,” “plan,” “could,”
“is likely” or “anticipates,” or the negative thereof, or other variations thereon or comparable terminology,
or by discussions of strategy that involve risks and uncertainties. These forward-looking statements are not historical facts but
only predictions. No assurances can be given that the future results indicated, whether expressed or implied, will be achieved.
While sometimes presented with numerical specificity, these projections and other forward-looking statements are based upon a variety
of assumptions relating to the business of the Company, which, although considered reasonable by the Company, may not be realized.
Because of the number and range of assumptions underlying the Company’s projections and forward-looking statements, many
of which are subject to significant uncertainties and contingencies that are beyond the reasonable control of the Company, some
of the assumptions inevitably will not materialize, and unanticipated events and circumstances may occur subsequent to the date
of this report. These forward-looking statements are based on current expectations and the Company assumes no obligation to update
this information. Therefore, the actual experience of the Company and the results achieved during the period covered by any particular
projections or forward-looking statements may differ substantially from those projected. Consequently, the inclusion of projections
and other forward-looking statements should not be regarded as a representation by the Company or any other person that these estimates
and projections will be realized, and actual results may vary materially. There can be no assurance that any of these expectations
will be realized or that any of the forward-looking statements contained herein will prove to be accurate.
The following discussion and analysis
provides information that management believes is relevant for an assessment and understanding of our results of operations and
financial condition. The following selected financial information should be read in conjunction with our audited historical
consolidated financial statements, which are included in our 2012 Annual Report and the forward-looking statements explanation
included herein.
Overview
America’s Suppliers, Inc. develops
software programs that allow the Company to provide general merchandise to resale businesses and retail consumers through the
websites of its wholly-owned subsidiaries, DollarDays International Inc. (“DollarDays”) and WowMyUniverse Inc. (“Wow”).
The websites for DollarDays and Wow are www.DollarDays.com and www.WowMyUniverse.com, respectively.
DollarDays’ objective is to provide a one-stop, discount,
on-line shopping destination for general merchandise for smaller distributors, retailers and non-profit organizations nationwide
that are seeking single and small cased-sized lots at bulk prices. We launched the DollarDays website to sell merchandise in October
2001. The site offers customers an opportunity to shop for bargains conveniently, while offering our suppliers an alternative
sales channel. We believe the DollarDays website offers a unique benefit to smaller businesses in that they are able to purchase
goods from wholesalers and importers in single and small case-sized lots, with no minimum purchase requirements, at discounted
prices. We believe the prevailing reason DollarDays has been able to obtain bulk pricing for single case-sized lots is its ability
to reach smaller distributors, retailers and non-profit organizations that most general merchandise suppliers cannot economically
reach. We provide all the logistics and customer support to serve this sales channel and grow DollarDays’ customer base.
We
continually add new, limited inventory products to the DollarDays website in order to create an atmosphere that encourages customers
to visit frequently and purchase products before the available inventory sells out. Through its on-line catalog, DollarDays offers
approximately 230,000 products, including up to 25,000 closeout items at further discounted prices. Closeout merchandise is typically
available in inconsistent quantities and prices.
We accept orders, either online or via
telephone, collect payment in the form of credit or debit card, PayPal or similar means, and coordinate with manufacturers, importers
and close-out specialists regarding delivery particulars. PayPal refers to the online payment platform located at www.paypal.com
and its localized counterparts. Our proprietary software and service procedures allow us to sell merchandise to a single
customer, and bill as a singer order, items purchased and delivered from multiple suppliers. We do not take possession
of inventory, but we are responsible for processing customer claims and returns.
The DollarDays website has a
registered base of approximately 230,000 small businesses and receives approximately 3 million monthly page
views. We receive an average of approximately 5,000 orders per month. Our target customers are smaller
businesses and not-for-profit companies.
In 2010, we established a majority-owned
subsidiary, Wow, to develop a retail online business to sell directly to consumers. On October 1, 2010, this subsidiary became
wholly-owned as we acquired the non-controlling interest in exchange for our interest in an unconsolidated subsidiary. While we
experienced limited sales through test marketing in early 2011, we began full operations in the second half of 2011. Net losses
from Wow were $23,386 and $35,214 for the three and six months ended June 30, 2013 and were $14,154 and $47,668 for the three
and six months ended June 30, 2012 respectively.
Results of Operations
Revenue
Revenue
|
|
2013
|
|
|
2012
|
|
|
Change from
Prior Year
|
|
|
Percent Change
from Prior Year
|
|
Three months ended June 30,
|
|
$
|
3,890,574
|
|
|
$
|
3,954,957
|
|
|
$
|
(64,383
|
)
|
|
|
(1.6
|
)%
|
Six months ended June 30,
|
|
$
|
6,984,923
|
|
|
$
|
7,299,936
|
|
|
$
|
(315,013
|
)
|
|
|
(4.3
|
)%
|
Revenues decreased for the three and six
months ended June 30, 2013, as compared to the three and six months ended June 30, 2012 as a result of a smaller average order
sizes for the three and six months ended June 30, 2013, which we believe to be correlated to the state of the economy.
Advertising Revenue
Advertising Revenue
|
|
2013
|
|
|
2012
|
|
|
Change from
Prior Year
|
|
|
Percent Change
from Prior Year
|
|
Three months ended June 30,
|
|
$
|
119,134
|
|
|
$
|
184,421
|
|
|
$
|
(65,287
|
)
|
|
|
(35.4
|
)%
|
Six months ended June 30,
|
|
$
|
257,162
|
|
|
$
|
303,278
|
|
|
$
|
(46,116
|
)
|
|
|
(15.2
|
)%
|
Advertising revenues decreased during the
three and six months June 30, 2013 as compared to the three and six months ended June 30, 2012, due primarily to a decrease in
advertisers who do not target DollarDays’ core customer base.
Cost of Goods Sold
Cost of Goods Sold
|
|
2013
|
|
|
2012
|
|
|
Change from
Prior Year
|
|
|
Percent Change
from Prior Year
|
|
Three months ended June 30,
|
|
$
|
2,554,676
|
|
|
$
|
2,567,706
|
|
|
$
|
(13,030
|
)
|
|
|
(0.5
|
)%
|
Six months ended June 30,
|
|
$
|
4,605,103
|
|
|
$
|
4,771,732
|
|
|
$
|
(166,629
|
)
|
|
|
(3.5
|
)%
|
Cost of goods sold decreased during the
three and six months June 30, 2013 as compared to the three and six months ended June 30, 2012 due primarily to the decrease in
net revenues as discussed above. Gross margin as a percentage of revenue, excluding advertising revenue, was 34.3% and 34.1% for
the three and six months ended June 30, 2013, respectively, as compared to 35.1% and 34.6% for the three and six months ended June
30, 2012, respectively.
Factors that may influence the cost of
goods sold include our general sales volume, negotiated terms with suppliers and general economic conditions.
Sales and Marketing
Sales and Marketing
|
|
2013
|
|
|
2012
|
|
|
Change from
Prior Year
|
|
|
Percent Change
from Prior Year
|
|
Three months ended June 30,
|
|
$
|
906,195
|
|
|
$
|
898,753
|
|
|
$
|
7,442
|
|
|
|
0.8
|
%
|
Six months ended June 30,
|
|
$
|
1,685,340
|
|
|
$
|
1,647,245
|
|
|
$
|
38,095
|
|
|
|
2.3
|
%
|
Sales and marketing expense includes fees
for attracting users to our site, including search engine optimization, telemarketing and other marketing efforts as well as promotional
activities to increase sales by end users. Sales and marketing expenses for the three and six months ended June 30, 2013 was comparable
to the three and six months ended June 30, 2012.
Factors influencing sales and marketing
expenses include strategic decisions with respect to the cost-effectiveness of each of our marketing activities.
General and Administrative
General and Administrative
|
|
2013
|
|
|
2012
|
|
|
Change from
Prior Year
|
|
|
Percent Change
from Prior Year
|
|
Three months ended June 30,
|
|
$
|
608,743
|
|
|
$
|
578,038
|
|
|
$
|
30,705
|
|
|
|
5.3
|
%
|
Six months ended June 30,
|
|
$
|
1,265,868
|
|
|
$
|
1,134,216
|
|
|
$
|
131,652
|
|
|
|
11.6
|
%
|
General and administrative expenses include
management fees, salaries and other compensation expenses, rent, utilities, general office expenses, insurance and other costs
necessary to conduct business operations.
General and administrative expenses increased
in the three months ended June 30, 2013 as compared to the three months ended June 30, 2012 due to the following: increases in
(i) labor-related expenses of approximately $21,000, (ii) travel expenses of approximately $12,000 and (iii) health and other insurance
expenses of approximately $14,000; all of which were at least partially offset by a decrease in other expenses of approximately
$16,000.
General and administrative expenses increased
in the six months ended June 30, 2013 as compared to the six months ended June 30, 2012 due to the following: increases in (i)
labor-related expenses of approximately $35,000, (ii) travel expenses of approximately $22,000, (iii) health and other insurance
expenses of approximately $35,000, (iv) rent expense of approximately $13,000, (v) depreciation expense of approximately $15,000
and (vi) other expense of approximately $12,000.
Factors that influence the amount of general
and administrative expenses include the amount and extent by which we compensate our consultants, executives and directors with
stock-based or other compensation, the rate of growth of our business and the extent to which we outsource or bring certain activities
in-house.
Other Income
Other Income
|
|
2013
|
|
|
2012
|
|
|
Change from
Prior Year
|
|
|
Percent Change
from Prior Year
|
|
Three months ended June 30,
|
|
$
|
1,676
|
|
|
$
|
941
|
|
|
$
|
735
|
|
|
|
78.1
|
%
|
Six months ended June 30,
|
|
$
|
1,733
|
|
|
$
|
1,982
|
|
|
$
|
(249
|
)
|
|
|
(12.6
|
)%
|
Other income for the three and six months
ended June 30, 2013 consisted of interest income on cash balances and short-term investments.
Net Income (Loss)
Net Income (Loss)
|
|
2013
|
|
|
2012
|
|
|
Change from
Prior Year
|
|
|
Percent Change
from Prior Year
|
|
Three months ended June 30,
|
|
$
|
(58,230
|
)
|
|
$
|
95,822
|
|
|
$
|
(154,052
|
)
|
|
|
(160.8
|
)%
|
Six months ended June 30,
|
|
$
|
(312,493
|
)
|
|
$
|
52,003
|
|
|
$
|
(364,496
|
)
|
|
|
(700.9
|
)%
|
The Company incurred a net loss for the
three and six months ended June 30, 2013, as compared to the net income incurred for the three and six months ended June 30, 2012.
This decrease in earnings is primarily due to a decrease in net revenues and an increase in sales and marketing costs and general
and administrative costs, each of which is described above.
Liquidity and Capital Resources
Our operating cash outflows were $701,541
for the six months ended June 30, 2013 as compared to outflows of $182,105 for the six months ended June 30, 2012, constituting
an increase in cash used by operations of $519,436.
The change in net operating cash outflows is attributable
to an increase in net loss of $364,496 and a decrease in accounts payable and accrued liabilities of $323,324, partially offset
by an increase in prepaid and other current assets of $197,201, and other minor changes in non-cash charges and operating assets
and liabilities.
Investing cash outflows for the six months
ended June 30, 2013 consisted of $7,449 of purchases of equipment to support our business operations. Investing cash inflows for
the six months ended June 30, 2012 consisted of $215,009 of cash received from the maturities of certificates of deposit, offset
by $42,742 of purchases of equipment and website development costs.
There were no financing activities for
the six months ended June 30, 2013 or 2012.
We intend to generate operating cash flows
through the growth of our existing business, the improvement of operating margins and growth through acquisitions. Although there
can be no assurance, management believes such measures will provide enough liquidity to operate our current business and continue
as a going concern in the short term.
Off-balance sheet arrangements
We did not have any off-balance sheet arrangements
at June 30, 2013.