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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 333-25937
Crosswalk.com, Inc.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 54-1831588
------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4100 Lafayette Center Dr. Suite 110
Chantilly, VA 20151
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(Address of principal executive offices)
(703) 968-4808
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(Registrant's telephone number, including area code)
Check whether the registrant: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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.
(1) Yes X No
As of November 12, 2001 there were 7,959,721 and 80,000 shares of the
Registrant's common stock and Series A preferred stock outstanding,
respectively.
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PAGE
NUMBER
PART I FINANCIAL INFORMATION
ITEM 1: Financial Statements (Unaudited)
Consolidated Balance Sheets as of December 31, 2000
and September 30, 2001.......................................... 3
Consolidated Statements of Operations for the three months
and nine months ended September 30, 2000 and 2001............... 4
Consolidated Statements of Cash Flows for the nine months
ended September 30, 2000 and 2001............................... 5
Notes to Consolidated Financial Statements............................... 6
ITEM 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 10
ITEM 3: Quantitative and Qualitative Disclosures about Market Risk............... 17
PART II OTHER INFORMATION
ITEM 1: Legal Proceedings........................................................ 17
ITEM 2: Changes in Securities and Use of Proceeds................................ 17
ITEM 3: Defaults Upon Senior Securities.......................................... 17
ITEM 4: Submission of Matters to a Vote of Security Shareholders................. 18
ITEM 5: Other Information........................................................ 18
ITEM 6: Exhibits and Reports on Form 8-K......................................... 18
SIGNATURES and EXHIBITS.................................................. 18
CROSSWALK.COM, INC.
BALANCE SHEET
December 31, September 30,
2000 2001
-------------------------------------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,272,256 $ 619,702
Short-term investments 936,737 15,639
Accounts receivable including unbilled receivables of $54,646 and
$53,313 at December 31, 2000 and September 30, 2001, respectively 1,200,591 815,276
Deferred costs 356,842 316,905
Notes receivable from officers 22,111 17,500
Other current assets 37,559 831
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Total current assets 3,826,096 1,785,853
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LONG TERM INVESTMENTS 619,546 165,957
PROPERTY AND EQUIPMENT, net 1,452,311 791,718
OTHER ASSETS:
Deposits 91,151 89,073
Deferred costs 64,083 610
Intangible assets, net 5,256,366 4,368,865
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Total other assets 5,411,600 4,458,548
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TOTAL ASSETS $ 11,309,553 $ 7,202,076
===========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 428,964 $ 399,017
Accrued liabilities 598,578 555,367
Deferred revenue 509,946 203,630
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Total current liabilities 1,537,488 1,158,014
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OTHER LIABILITIES:
Accounts payable 105,002 121,402
Deferred revenue 227,649 133,831
Other liabilities 78,415 56,396
COMMITMENTS - -
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value, 5,000,000 shares authorized, 80,000 shares
issued and outstanding at both
December 31, 2000 and at September 30, 2001 80 80
Common stock, $.01 par value, 20,000,000 shares authorized,
7,926,971 and 7,959,721 shares issued and outstanding
December 31, 2000 and at September 30, 2001, respectively 79,270 79,597
Common stock warrants 127,660 127,660
Additional paid-in capital, common stock 41,228,118 41,256,566
Accumulated deficit (32,074,972) (35,735,918)
Accumulated other comprehensive loss:
Net unrealized gain on available-for-sale securities 843 4,448
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Total stockholders' equity 9,360,999 5,732,433
-------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,309,553 $ 7,202,076
===========================================
See accompanying notes.
CROSSWALK.COM, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------- ------------------ ------------------ -----------------
2000 2001 2000 2001
------------------- ------------------ ------------------ -----------------
TOTAL REVENUES 1,419,939 923,738 4,903,159 3,415,280
OPERATING EXPENSES:
Cost of goods and services 591,776 408,348 2,086,946 1,270,691
Crosswalk operations 1,472,346 749,147 4,330,011 2,464,627
Sales and marketing 1,029,937 397,397 3,043,914 1,240,225
Amortization of Goodwill and Intangibles 295,408 308,947 886,225 911,660
General and administrative 423,397 361,045 1,860,441 1,195,433
------------------- ------------------ ------------------ -----------------
Total operating expenses 3,812,864 2,224,884 12,207,537 7,082,636
LOSS FROM OPERATIONS (2,392,925) (1,301,146) (7,304,378) (3,667,356)
OTHER INCOME NET 9,979 19,085 128,433 6,410
Net loss before cumulative effect of a change
in accounting practice (2,382,946) (1,282,061) (7,175,945) (3,660,946)
Cumulative effect of a one-time adjustment to
reflect change in revenue and cost recognition - - (1,407,589) -
------------------- ------------------ ------------------ -----------------
NET LOSS (2,382,946) (1,282,061) (8,583,534) (3,660,946)
=================== ================== ================== =================
Amounts per common share:
Net loss before cumulative effect of a change
in accounting practice $ (0.31) $ (0.16) $ (0.93) $ (0.46)
Cumulative effect of a one-time adjustment to
reflect change in revenue and cost recognition - - (0.18) -
------------------- ------------------ ------------------ -----------------
Net loss per common share (basic and diluted) $ (0.31) $ (0.16) $ (1.11) $ (0.46)
Weighted average number of common
shares outstanding 7,802,305 7,959,721 7,709,965 7,943,455
=================== ================== ================== =================
See accompanying notes.
CROSSWALK.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months
Ended September 30,
----------------------------------
-------------- --------------
2000 2001
OPERATING ACTIVITIES:
Net loss $(8,583,534) $(3,660,946)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 580,400 579,811
Amortization 886,225 911,660
Loss on disposal of property and equipment 8,692 65,240
Stock compensation expense 7,693 -
Common stock issued in lieu of cash for advertising 1,045,249 -
Changes in operating assets and liabilities:
Accounts receivable 1,019,320 389,926
Deposits 48,040 2,078
Deferred costs (21,532) 103,410
Other current assets (407,913) 36,728
Accounts payable (1,591,848) (13,547)
Accrued liabilities (312,918) (65,230)
Deferred revenue 896,572 (400,134)
-------------- --------------
Net cash used in operating activities (6,425,554) (2,051,004)
-------------- --------------
INVESTING ACTIVITIES:
Purchases of property and equipment (300,374) (8,617)
Sales and maturities of investments 5,834,183 1,564,943
Purchase of investments - (186,652)
-------------- --------------
Net cash provided by investing activities 5,533,809 1,369,674
-------------- --------------
FINANCING ACTIVITIES:
Net proceeds from issuance of preferred stock 1,988,200 -
Net proceeds from issuance of common stock and warrants 52,784 28,776
Cost of issuing common stock in lieu of cash (11,229) -
-------------- --------------
Net cash provided by financing activities 2,029,755 28,776
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NET CHANGE IN CASH AND CASH EQUIVALENTS 1,138,010 (652,554)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 1,641,157 1,272,256
-------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,779,167 $ 619,702
============== ==============
See accompanying notes.
CROSSWALK.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 2001
A. THE COMPANY AND BASIS OF PRESENTATION
Crosswalk.com, Inc. (including its subsidiaries, "Crosswalk" or the "Company")
is the creator of its Website WWW.CROSSWALK.COM(TM) ("CROSSWALK.COM"), which the
Company believes is the premier portal site for the online Christian and
family-friendly community, with a focus on "the intersection of faith and life",
covering a growing spectrum of everyday life within a Christian context.
CROSSWALK.COM offers content channels focused on entertainment, money, family
living, teens, homeschooling, news, women, spiritual life, sports, travel and
classifieds; and services ranging from safety, shopping, family-friendly movie
reviews, bible study, greeting cards, games, chat, forums, local events, music,
free email and more. Crosswalk also provides email subscription service to send
information to over 880,000 opt-in email addresses.
The Company's business includes the development and aggregation of content and
services, which it believes are conducive to the online Christian and
family-friendly community. The Company sells advertising in this venue and
generates royalty sales from products sold through affiliate vendors linked with
CROSSWALK.COM. The Company intends to build traffic and visitors to
CROSSWALK.COM through efficient marketing and product development activities,
with the goal of building market awareness and acceptance of its product, which
it believes will result in revenue growth and profitability. The Company
operates in one business segment.
The Company has prepared the accompanying unaudited financial statements as of
September 30, 2001 and 2000 pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"). In the opinion of management,
all adjustments considered necessary for a fair presentation have been included.
The balance sheet at December 31, 2000 has been derived from the audited
consolidated financial statements at that date. These financial statements
should be read in conjunction with the Company's audited consolidated financial
statements and related notes included in the Company's Annual Report on Form
10-K for the year ended December 31, 2000. The results of operations for the
three and nine months ended September 30, 2001 are not necessarily indicative of
the results to be expected for any subsequent quarter or for the entire fiscal
year ending December 31, 2001.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of estimates - Management uses estimates and assumptions in preparing
financial statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities, and
the reported revenues and expenses. Actual results could vary from the estimates
that were used.
Cash equivalents - Cash and cash equivalents include cash and investments with
current maturities of three months or less from the date of the balance sheet.
Short and long-term investments - The Company invests in U.S. government bonds
and treasury notes, municipal bonds, and corporate bonds. Investments with
current maturities greater than three months but less than twelve months from
the balance sheet date are short-term investments. Those investments with
current maturities greater than twelve months from the balance sheet date are
long-term investments.
The Company's marketable securities are classified as available-for-sale as of
the balance sheet dates and are reported at fair value, with unrealized gains
and losses, net of tax, recorded in shareholders' equity. Realized gains or
losses and permanent declines in value, if any, on available-for-sale securities
are reported in other income or expense as incurred.
Depreciation and amortization - Property and equipment are stated at cost.
Depreciation is determined using the straight-line method over estimated useful
lives ranging from three to seven years. Leasehold improvements are amortized
over the life of the related lease. Intangible assets are amortized over useful
lives of five to ten years using the straight-line method.
Revenue recognition - As of January 1, 2000, the Company's revenues were
primarily derived from the sale of banner advertising. Advertising revenues are
recognized in the period in which the advertisement is displayed and collection
of the resulting receivable is probable.
6
CROSSWALK.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 2001
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company's revenue model prior to January 1, 2000 included significant
revenues from third party sponsorships for prime Website exposure in which the
Company recognized nonrefundable revenue upon completing the integration of a
sponsor's web based material onto the Crosswalk.com site. The Company previously
recognized nonrefundable content integration and development fees as revenue
upon completion of content integration. Effective January 1, 2000, the Company
changed its method of accounting for nonrefundable fees for Web integration
contracts entered into prior to January 1, 2000, to recognize such fees over the
term of the related agreement, which is generally a one to two year period when
the Company is maintaining the integrated content. The Company believes the
change in accounting principle is preferable based on guidance provided in SEC
Staff Accounting Bulletin No. 101 - REVENUE RECOGNITION IN FINANCIAL STATEMENTS.
The $1.4 million cumulative effect of the change in accounting principle was
reported as a charge in the quarter ended March 31, 2000, and represents the
associated revenues and related direct and incremental costs. The cumulative
effect was initially recorded as deferred revenue that will be recognized as
revenue over the remaining contractual terms of the agreements. During the
quarter ended March 31, 2000, the impact of the change in accounting was to
increase net loss by $1.0 million ($0.13 per share); comprised of the $1.4
million ($0.19 per share) cumulative effect of the change as described above,
net of $.4 million ($0.06 per share) of the related deferred revenue which was
recognized as revenue during the quarter. The impact of the change in accounting
for the nine months and three months ended September 30, 2001 was to decrease
net loss by $198,563 or $0.025 per share, and $59,661 or $0.0075 per share,
respectively. The impact of the change in accounting for the nine months and
three months ended September 30, 2000 was to decrease net loss by $871,798 or
$0.11 per share, and $185,250 or $0.02 per share, respectively.
Comprehensive income - Comprehensive income is defined as the change in equity
of a business enterprise during a period, from transactions and other events and
circumstances from non-owner sources. Accordingly, the Company presents the
elements of comprehensive income, which included net loss and unrealized losses
on available-for-sale securities. For the nine months ended September 30, 2001
and 2000, the Company's comprehensive loss was $3,657,341 and $8,582,607,
respectively.
Deferred costs - Deferred costs at September 30, 2001 consisted of contract
costs, insurance costs, software maintenance, investor relations, license fees,
and deferred barter costs associated with revenue deferred pursuant to
compliance with SEC Staff Accounting Bulletin No. 101. The software maintenance
and license fees are ratably expensed over the life of the maintenance and
license agreements. The contract and investor relation fees are charged to
expense once the services associated with these fees have been delivered to the
Company. Insurance costs are ratably expensed over the life of the policy for
which premiums have been paid. The barter costs are recognized as services are
rendered.
Derivative instruments and hedging activities - In June 1998, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging
Activities." In June 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133," and in June 2000, the FASB issued SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities -
An Amendment to FASB Statement No. 133."
These rules require that all derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities,
be reported in the consolidated financial statements at fair value. Changes in
the fair value of derivatives are to be recorded each period in earnings or
other comprehensive income, depending on whether the derivative is designated
and effective as part of a hedged transaction, and on the type of hedge
transaction. Gains and losses on derivative instruments reported in other
comprehensive income must be reclassified as earnings in the period in which
earnings are affected by the underlying hedged item, and the ineffective portion
of all hedges must be recognized in earnings in the current period. The Company
adopted SFAS No. 133 on January 1, 2001. Management believes that the adoption
of this standard has no material effect on the Company's financial position or
results of operations.
Reclassifications - Certain balances have been reclassified to conform to the
current period presentation.
7
CROSSWALK.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 2001
C. CASH AND CASH EQUIVALENTS, SHORT AND LONG-TERM INVESTMENTS
The Company invests in U.S. government bonds and treasury notes and corporate
bonds. All highly liquid instruments with current maturities of three months or
less are considered cash equivalents; those with current maturities greater than
three months but less than twelve months from the balance sheet date are
considered short-term investments; and those with maturities greater than twelve
months from the balance sheet date are considered long-term investments. The
Company's marketable securities are classified as available-for-sale as of the
balance sheet date and are reported at fair value, with unrealized gains and
losses, net of tax, recorded in shareholders' equity. Realized gains or losses
and permanent declines in value, if any, on available-for-sale securities are
reported in other income or expense as incurred.
Securities available-for-sale in the accompanying balance sheet at September 30,
2001 total $181,596. The Company has recorded an unrealized gain of $4,448 and
no unrealized loss as of September 30, 2001. The aggregate market value, cost
basis, and unrealized gains and losses of securities available for sale, by
major security type, as of September 30, 2001, are as follows:
Gross Unrealized Gross Unrealized
Market Value Cost Basis Gains (Losses)
------------ ---------- ---------- --------
U.S. Govt. Debt Securities $ 129,977 $ 126,356 $ 3,621 $ ---
Municipal Debt Securities 15,639 15,384 255 ---
Corporate Debt Securities 35,980 35,408 572 ---
------------ ---------- ---------- --------
Total at September 30, 2001 181,596 $ 177,148 $ 4,448 $ ---
============ ========== ========== ========
The Company recorded a net realized loss of $200 and $4,775 in the three months
and nine months ended September 30, 2001.
D. RELATED PARTY TRANSACTIONS
At September 30, 2001, the Company had an Advance Due from an Officer of the
Company in the amount of $17,500. The advance accrues 3.8% interest per annum.
The Company expects to receive payment in full before December 31, 2001, and
considers this advance to be a short-term receivable.
E. NET LOSS PER COMMON SHARE
The following is a reconciliation of the basic and diluted EPS calculations for
the periods presented:
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- -------------------
2000 2001 2000 2001
---- ---- ---- ----
Net loss (numerator) $(2,382,946) $ (1,282,061) $ (8,583,534) $ (3,660,946)
Weighted average shares (denominator) 7,802,305 7,959,721 7,709,965 7,943,455
Basic net loss per share $ (0.31) $ (0.16) $ (1.11) $ (0.46)
-------- -------- -------- --------
Dilutive shares (denominator) 7,802,305 7,959,721 7,709,965 7,943,455
Diluted net loss per share $ (0.31) $ (0.16) $ (1.11) $ (0.46)
-------- -------- -------- --------
As required by Securities and Exchange Commission (SEC) Staff Accounting
Bulletin No. 98, the above calculation of EPS is based on SFAS No. 128 "Earnings
Per Share." Thus, 45,730 stock options and purchase warrants granted at below
market prices outstanding, for both the nine months ended September 30, 2000 and
September 30, 2001, are not included in the calculation of diluted EPS as their
inclusion would be anti-dilutive.
8
CROSSWALK.COM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 2001
F. COMMITMENTS
In September 1999, the Company entered into a one-year Network Title Sponsorship
Agreement ("Agreement") with The Christian Network, Inc., which includes "Praise
on Pax" and "Worship on Pax." Under this Agreement, the Company was entitled to
a national title sponsorship on "Praise on Pax" telecasts and a national
corporate sponsorship on "Worship on Pax" telecasts. The Company also received
advertising and promotional rights. The total cost for these sponsorship and
advertising rights was $1,025,000, payable quarterly in cash or, at the
Company's option, in shares of the Company's common stock having a fair market
value equal to the required payment. The Company was also obligated to issue
additional shares of common stock for each new member generated for
Crosswalk.com as a result of these sponsorship and advertising arrangements,
based on a valuation of $1.00 for each member generated. In February, April,
July, and September 2000, respectively, 39,018, 52,196, 90,102, and 128,125
shares of Crosswalk common stock were issued for services rendered under this
Agreement that terminated September 30, 2000.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
BACKGROUND
Crosswalk.com, Inc. ("the Company") is primarily known as the creator of
CROSSWALK.COM(TM), an interactive Website, which provides information and
resources that the Company believes generally appeals to the Christian and
family-friendly community. The information and resources are developed and made
available, both by the Company, and by Christian and secular retailers,
publishers, charities and ministries. The Company generates revenues primarily
through the sale of online and offline advertising and sponsorship contracts and
referral fees from co-marketing relationships. During the third quarter of 2000,
the Company transitioned from online retail sales to an affiliate model that
provides advertising and royalties to the Company for their products offered on
CROSSWALK.COM. Crosswalk.com considers itself a media company which serves the
faith-based marketplace, by providing information, services, resources and
entertainment. The Company markets to advertisers who are interested in reaching
the Company's loyal user demographic.
One of the key objectives of the Company is to operate on a cash flow positive
basis. Management believes that there is potential that this objective may be
achieved sometime in the fourth quarter of 2001. In order to execute on this
objective, the Company must increase margins through generating growth in higher
margin cash advertising revenue, create new revenue streams and continue focus
on efficient delivery of content on CROSSWALK.COM. Advertisers are organizations
placing ads on CROSSWALK.COM, for which Crosswalk.com is paid a flat fee or a
fee per ad impression delivered. Sponsors are organizations that receive
premiere positioning for their content on various areas of CROSSWALK.COM and in
effect become a "sponsor" of those areas, a service for which Crosswalk.com
receives a fee.
Nielsen NetRatings ranked CROSSWALK.COM as one of the top ten "Religion and
Spirituality" Website based on time spent per person and highest number of
visits per person. Advertising click-thru rates reported by Nielsen ranked
higher than any site among the Web's 10 largest advertising venues and more than
twice as high as averages for the Top 10, 25, and 50 advertising supported
sites. In addition, The netScore Buying Power Index (BPI) report for May 2001
ranks Crosswalk.com as the number one Internet portal in terms of BPI, which
gauges the value of visitors to a Web site based on the dollars these visitors
spend across all sites on the Internet. With a BPI of 177, Crosswalk.com rates
above other popular portals such as Yahoo (125), America Online (140), and
Altavista (143). The netScore BPI report is compiled by Diameter, a division of
DoubleClick, Inc and comScore Networks, Inc. The number one rating serves as a
confirmation of the already-recognized loyal audience unique to Crosswalk.com.
The Company experienced a seasonal weakness in the third quarter of each of the
last three years. This was exacerbated by the unique adverse economic
circumstances we faced in late September, which led to a significant delay in
the closure of a few key deals. The expectation for the quarter was that sales
would continue at the second quarter level, which, coupled with a 6% or about
$130,000 decrease in quarter to quarter operating expenses, net of cost of
goods, which would have reduced cash burn yet again. Instead, sales were down
36% or approximately $500,000, and cash burn was up about $80,000 per month from
second quarter levels. The third quarter seasonality relevant to the niche the
Company serves is proving to be significant. The target market of ministries and
churches users of CROSSWALK.COM are involved with, experience seasonality in
their income which is heavily skewed to the end of each year due to the tax
factor. The summer months are also slow given the emphasis on vacation and
family time which results often in less church attendance and certainly
alternatives to spending time on the web. This produces a drain on cash burn and
makes year on year revenue and cash burn comparisons much more valid than
sequential quarter comparisons. The Company expects this trend to continue.
Advertising sales for the third quarter 2001 were down 18% from the third
quarter 2000, and monthly cash burn for the third quarter was approximately
$255,000 or 58% lower than the $600,000 monthly cash burn in the third quarter
of 2000. This was mostly due to a 42% reduction in operating expenses.
In spite of a weaker market, over 46% of the Company's advertising customers in
the third quarter were first-time advertisers with Crosswalk. New clients
included the Billy Graham Evangelistic Association and Zondervan Publishing.
Revenue generated from email publishing maintained its growth trend. The new
direct e-mail business
10
unit reflected strong sales, nearly selling out its scheduled distributions for
the quarter. Subscribers that make up the direct email distribution list
increased 17% to 40,000 from the previous quarter, making it the largest direct
e-mail list in the faith-based market that targets Christian households.
Since the September 11th terrorist attack we have seen an unprecedented turn to
God, with a strong show of patriotism and pleas of "God Bless America". National
Religious Broadcasters (NRB) reports that Bible sales have increased 20-30% in
the wake of the attacks and sales of Christian music are up over 20% for the
three weeks following the attacks. The Wall Street Journal indicated that the
number of people accessing Christian radio and television is up 10-60%.
Crosswalk also experienced impressive increases in traffic, in one case as high
as 300 percent. As the dominant faith-based community website for Christians,
the Company believes that it stands to gain significant new traffic as a result
of this growing trend.
The Company believes that by effectively serving its statistically proven loyal
Christian and family-friendly niche, it will continue to accelerate traffic and
thus revenue growth over time. The Company plans to continue enhancing
CROSSWALK.COM in order to maintain its leadership position as the preferred
online resource for Christians in search of information, interaction and
involvement opportunities that help them apply a Christian worldview across the
breadth of their life and interests.
The opportunity for the Company to generate revenues is largely predicated upon
the ability to maintain quality traffic on CROSSWALK.COM and to create new
revenue streams through providing low cost value added services to its loyal
users. Page views and email views are a measure of total pages viewed by
visitors to CROSSWALK.COM and the number of emails delivered at the request of
Crosswalk.com's constituents in a month. Average monthly pageviews for the third
quarter were up 2.9% to 21.0 million from 20.4 million in the second quarter of
2001. Average monthly e-mail's delivered during the third quarter 2001 were down
9% to 15.0 million from 16.7 million delivered in the second quarter of 2001.
This was due to the Company's decision to delay sending many regularly-scheduled
entertainment related newsletters, in sensitivity to the September 11 terrorist
attacks. Over the year, average monthly pageviews were up over 6%, compared with
19.8 million during the third quarter of last year, and average monthly e-mail's
delivered were up 15% compared to about 13.0 million during the third quarter of
last year. With over one million active opt-in addresses, e-mail marketing is a
key focus of the Company's revenue growth potential.
The Company has a limited operating history upon which an evaluation of the
Company and its business can be based. The Company's business must be considered
in light of the risks, expenses and problems frequently encountered by companies
in relatively new and rapidly changing markets, such as the Internet. The market
for the Company's services and products is characterized by an increasing number
of market entrants who have introduced or developed services and products for
use on the Internet. As a result, the Company's mix of services and products may
undergo substantial changes as the Company reacts to competitive and other
developments in the overall Internet market. The Company has incurred net losses
since inception and expects to continue to operate at a loss until sufficient
revenues are generated to cover expenses. As of September 30, 2001, the Company
had an accumulated deficit of $35,735,918.
The Company's expense levels are based in part on possible future revenues, of
which there can be no assurance. The Company's ability to generate revenue from
the commercial sale of advertising space on CROSSWALK.COM is tied to its ability
to generate traffic on the Web site and emails, and the effectiveness of its
sale staff. The Company plans to significantly increase its sales efforts,
however a shortfall in revenues without commensurate reductions in cost, could
have an immediate adverse impact on the Company's business, results of
operations and financial condition. The Company expects to experience
significant fluctuations in future quarterly operating results and believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as any indication of future
performance.
The management and directors of Crosswalk.com are committed to removing doubt
that Crosswalk.com will ever join the ranks of the insolvent. They are dedicated
to the judicious use of cash, which will result in conservative growth estimates
for revenues and cash flow. Accordingly, the Company is deferring any
investments to initiate additional revenue streams, unless risk is shared
through partnerships or until the goal of becoming cashflow positive is
achieved. It is the Company's intention to develop a business that endures and
to achieve this through prudent investing in our portal and constant attention
to the bottom line.
11
NEW ACCOUNTING STANDARDS
In June 2001, the Financial Accounting Standards Board (FASB) issued Statements
of Financial Accounting Standards (SFAS) No. 141, Business Combinations, and
SFAS No. 142, Goodwill and Other Intangible Assets, effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill and intangible
assets deemed to have indefinite lives will no longer be amortized but will be
subject to annual impairment tests in accordance with the Statements. Other
intangible assets will continue to be amortized over their useful lives.
The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002. Application of the
nonamortization provisions of the Statements is expected to affect the amounts
the Company records to amortize its intangibles. During 2002, the Company will
perform the required impairment tests of goodwill and indefinite-lived
intangible assets as of January 1, 2002, and has not yet determined what the
effect of these tests will be on the earnings and financial position of the
Company.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." In June 1999, the FASB issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133," and in June 2000, the FASB issued
SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities - An Amendment to FASB Statement No. 133."
These rules require the Company to recognize all derivatives on the consolidated
balance sheet at fair value. Derivatives that are not designed, as part of a
hedging relationship, must be adjusted to fair value through income. If the
derivative is a hedge, depending on the nature of the hedge, the effective
portion of the hedge's change in fair value is either (1) offset against the
change in fair value of the hedged asset, liability or firm commitment through
income, or (2) held in equity until the hedged item is recognized in income. The
ineffective portion of a hedge's change in fair value is immediately recognized
in income. The Company adopted SFAS No. 133 on January 01, 2001. Management
believes that the adoption of this standard will have no material effect on the
Company's financial position or results of operations.
RESULTS OF OPERATIONS
THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
NET LOSS
For the nine months ended September 30, 2001, the net loss was $3,660,946, down
49% compared to $7,175,945 for the nine months ending September 30, 2000, before
a cumulative effect of a 2000 change in accounting practices. After the
cumulative effect, the net loss for the nine months ending September 30, 2000
was $8,583,534. In the first quarter of 2000, the Company booked a $1,407,589
one-time adjustment in response to the Securities and Exchange Commission Staff
Accounting Bulletin 101 issued in December 1999. In this regard, the Company has
chosen to change its revenue and applicable cost recognition on the integration
and development fee portion of prior year sponsorship contracts, to a more
preferable method of deferral ratably over the term of the contract. The
decrease in loss before cumulative effect of a change in accounting practice for
the first nine months of 2001 over the first nine months of 2000 was $3,514,999.
It was due primarily to a major decrease in operating expenses, offset in part
by a reduction in total revenues. The decrease in loss consisted of a $5,124,902
or 42% decrease in operating expenses for the nine months ended September 30,
2001 as compared to the nine months ended September 30, 2000, and a $1,487,879
or (31%) decrease in total revenue.
REVENUES
12
For the nine month period ending September 30, 2001, revenue was $3,415,280 and
$4,903,159 in 2001 and 2000, respectively. The $3,415,280 revenue earned in the
first nine months of 2001 consisted of $3,342,413 from advertising/sponsorship
sales, $43,639 from Internet services and $29,228 from royalties and fees. In
the first nine months of 2000, the $4,903,159 consisted $4,534,046 from
Advertising/sponsorship sales, $91,787 of Internet services, and $277,326 from
retail sales which the Company curtailed at the end of the third quarter of
2000. The year on year change in Advertising/sponsorship sales was a $1,191,635
or 26% decrease in 2001 from 2000, due mostly to the Company's phase out of an
aggregate difference of $638,912 of barter deals, representing 5% and 21%
respectively of total revenue for the first six months of 2001 and 2000.
Year-to-year comparisons of revenue results are also impacted due to a change in
accounting practice recognition. In response to the Securities and Exchange
Commission Staff Accounting Bulletin 101 issued in December 1999, the Company
chose to change its revenue recognition on the integration and development fee
portion of 1999-year sponsorship deals, to a more preferable method of deferral
ratably over the term of the contract. Under this method, in the first nine
months of 2001, the amount of revenue recorded that was previously deferred
totaled $379,370 versus $1,379,061 for the same period in 2000, a reduction of
$999,691 or 72%. Total revenue in the first nine months of 2001 and 2000 would
have been $3,035,911 and $3,410,343, respectively net of the impact of this
change in accounting method. Gross margin in the first nine months of 2001 would
have been reduced by $198,563 or 9% to $1,946,026, and overall gross margin
increases to 64.1% net of the impact of this change in accounting method. In the
first nine months of 2000, the gross margin would have been reduced by $871,800
or 31% to $1,944,413, representing an overall decrease to a 55% gross margin net
of the impact of this change in accounting method.
The Company's emphasis going forward will be on leveraging what the Company
believes is content which is engaging to its niche, the personal experiences
shared on CROSSWALK.COM, and the great affinity of crosswalk members and the
Christian community. This involves increasing the number of advertisers, and
focusing on high margin affiliate relations with less emphasis on direct retail
for commodity items. With continued growth in site traffic, service
enhancements, and successful viral marketing campaigns, the Company hopes to
achieve continued progress in generating quality-advertising revenues.
COST OF GOODS AND SERVICES
Cost of goods and services, consisting of commissions and other costs related to
delivery of client online content and offline advertising products; retailing
Christian interest products on CROSSWALK.COM; and, the provision of internet
services was $1,270,691 and $2,086,946 for the nine months ended September 30,
2001 and 2000, respectively. The Company's gross margin for the nine months
ended September 30, 2001 increased to 62.8% from 57.4% for the same period in
2000. This increase is due primarily to the decrease in barter transactions that
accounted for about 6% of revenues in the nine months ended September 30, 2001
versus 18.5% in the same period in 2000; the planned decrease in low margin,
high dollar sponsorship deals; and significantly curtailed low margin direct
retail activities.
In response to the Securities and Exchange Commission Staff Accounting Bulletin
101 issued in December 1999, the Company chose to change its revenue and
applicable cost recognition on the integration and development fee portion of
1999-year sponsorship deals, to a more preferable method of deferral ratably
over the term of the contract. Under this method, the amount of deferred cost
recorded in the first nine months of 2001 was $180,804 versus $507,262 recorded
in the first nine months of 2000, a reduction of $326,458 or 64%. Total cost of
goods and services in the first nine months of 2001 and 2000 would have been
$1,089,887 and $1,579,684 respectively net of the impact of this change in
accounting method. Gross margin in the first nine months of 2001 would have been
reduced by $198,564 or 9% to $1,946,023, and overall gross margin would have
increased to 64.1% net of the impact of this change in accounting method. In the
first nine months of 2000, the gross margin would have been reduced by $871,798
or 31% to $1,944,414, representing an overall decrease to a 55% gross margin net
of the impact of this change in accounting method.
CROSSWALK OPERATIONS
13
Crosswalk operations expenses, consisting primarily of costs related to the
Company's development, maintenance, and enhancements for CROSSWALK.COM,
decreased to $2,464,627 for the nine months ended September 30, 2001, as
compared to $4,330,011 for the same period in 2000. The $1,865,384 or 43%
decrease in cost of Crosswalk operations was due primarily to reductions in
staffing.
SALES AND MARKETING
In the first nine months of 2001, sales and marketing expenses were $1,240,225
as compared to $3,043,914 for the same period in 2000. The $1,803,689 or 59%
decrease was largely due to maximizing efficient methods of corporate marketing.
The Company has been able to maintain brand awareness and market reach through
efficient viral marketing, instead of the expensive cross-media marketing
campaigns that the Company utilized in the prior year.
AMORTIZATION OF GOODWILL AND INTANGIBLES
In the first nine months of 2001, amortization of Goodwill and intangibles was
$911,660 as compared to $886,225 for the same period in 2000. This consists
primarily of the amortization of goodwill from the 1999 purchase of Wike
Associates. A portion of this goodwill is being amortized over five years and a
portion over ten years, using the straight-line method.
GENERAL AND ADMINISTRATIVE
The Company decreased its general & administrative costs in the first nine
months of 2001 to $1,195,433 from $1,860,441 in the first nine months of 2000.
This $665,008 or 35% decrease is due mostly to a $393,955 reduction in bad debt
expense, offset in part by the accrual of $90,000 for the dividends payable on
the Series "A" preferred shares which did not exist in the first nine months on
2000. In addition the Company has reduced facility expenses by $125,692,
staffing by just over $100,000, third party administrative expenses related to
investor relations and legal support by $107,557, and insurance expense by
$29,172.
OTHER INCOME NET
Other income net reduced to $6,410 for the nine months ended September 30, 2001
from $128,433 for the same period in 2000. This consists of interest income,
which decreased 41% to $81,426 from $137,125 for the first nine months ended
September 30, 2001 and 2000, respectively. This $55,699 decrease is due to the
use of investments for business expansion and operations. In addition, in the
first nine months of 2001, the Company has recorded approximately a $60,000
greater loss on sale of property and equipment than in 2000. The Company's
interest expense, which is mostly related to capital leases, is approximately
$6,000 greater in the nine months ending September 30, 2001 than that
experienced for the same nine months ending September 30, 2000.
THE THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
NET LOSS
For the quarter ended September 30, 2001, the Company incurred a net loss before
cumulative effect of a change in accounting practice of $1,282,061, as compared
to a net loss of $2,382,946 for the same quarter in 2000. The decreased loss for
the third quarter of 2001 over the same period in 2000 was $1,100,885 or 46%.
This was the result of an across the board decrease in four expense categories
(cost of goods sold, crosswalk operations, sales and marketing, and general and
administrative), offset in part by a decline in total revenues.
The decreased loss for the quarter ended September 30, 2001 versus September 30,
2000 consisted of a $183,428 or 31% decrease in cost of goods sold; a $723,199
or 49% decrease in crosswalk operations; a $632,540 or 61% decrease in sales and
marketing; a $62,352 or 15% decrease in general and administrative expenses; and
a $9,106 or 91% increase in other income net; offset to an extent by a $13,539
or 4.5% increase in amortization of goodwill and intangibles; and a $496,201 or
35% decrease in total revenues.
REVENUES
14
Total revenue for the quarter ending September 30, 2001 was $923,738 down
$496,201 or 35% from the same period in 2000. There was a $414,845 or 46%
decrease in advertising/sponsorship sales for the third quarter 2001 over 2000
due to market conditions surrounding the September 11, 2001 terrorist attacks,
reduction in barter revenue, the curtailment of retail offerings at the end of
September 2000, and the change in accounting practice revenue recognition.
In response to the Securities and Exchange Commission Staff Accounting Bulletin
101 issued in December 1999, the Company chose to change its revenue recognition
on the integration and development fee portion of 1999-year sponsorship deals,
to a more preferable method of deferral ratably over the term of the contract.
Under this method, the amount of deferred revenue recorded in the third quarter
of 2001 was $119,929 versus $306,186 recorded in the third quarter of 2000, a
reduction of $186,257.
Total revenue in the third quarter of 2001 and 2000 would have been $803,809 and
$1,113,753 respectively net of the impact of this change in accounting method.
Gross margin in the third quarter of 2001, would have been reduced by $59,660 or
12% to $455,728, and overall gross margin would have increased to 56.7% gross
margin net of the impact of this change in accounting method. In the third
quarter 2000, gross margin would have been reduced by $185,250 or 22% to
$642,913, representing an overall decrease to a 57.7% gross margin net of the
impact of this change in accounting method.
The Company's emphasis going forward will be on leveraging what the Company
believes is content which is engaging to its niche, the personal experiences
shared on CROSSWALK.COM, and the great affinity of CROSSWALK visitors and the
Christian community. The Company hopes to also leverage its market leadership
position through additional strategic relationships and long-term advertising
agreements. With continued growth in site traffic, and strategic alliances,
improved market position, and successful viral marketing campaigns, the Company
hopes to achieve continued progress in generating quality-advertising revenues.
COST OF GOODS AND SERVICES
Cost of goods and services, consisting of commissions and other costs related to
delivery of client online content and offline advertising products; retailing
Christian interest products on CROSSWALK.COM; and, the provision of Internet
services was $408,348 and $591,776 for the quarters ended September 30, 2001 and
2000, respectively. The Company's gross margin for the quarter ended September
30, 2001 decreased to 55.8% from 58.3% for the same period in 2000. This
decrease is due primarily to the decrease in high margin online advertising
revenue as a percentage of total revenue.
In response to the Securities and Exchange Commission Staff Accounting Bulletin
101 issued in December 1999, the Company chose to change its revenue and
applicable cost recognition on the integration and development fee portion of
1999-year sponsorship deals, to a more preferable method of deferral ratably
over the term of the contract. Under this method, the amount of deferred cost
recorded in the third quarter of 2001 was $60,268 versus $120,935 recorded in
the third quarter of 2000, a reduction of $60,667. Total cost of goods and
services in the third quarter of 2001 and 2000 would have been $348,081 and
$470,841, respectively net of the impact of this change in accounting method.
Gross margin in the third quarter of 2001, would have been reduced by $59,660 or
12% to $455,728, and overall gross margin would have increased to 56.7% gross
margin net of the impact of this change in accounting method. In the third
quarter 2000, gross margin would have been reduced by $185,250 or 22% to
$642,913, representing an overall decrease to a 57.7% gross margin net of the
impact of this change in accounting method.
CROSSWALK OPERATIONS
Crosswalk operations expenses, consisting primarily of costs related to the
Company's development, maintenance, content and enhancements for CROSSWALK.COM,
decreased to $749,147 for the three months ended September 30, 2001, as compared
to $1,472,346 for the same period in 2000. The $723,199 or 49% decrease in cost
of Crosswalk operations was due primarily to reduction in staffing. Other
expenses included in this category of content expenses, software license and
maintenance charges, and consulting expenses, offset in part by increases in the
cost outsourcing of hosting and web development, accounted for approximately 9%
of the overall reduction.
15
SALES AND MARKETING
In the second quarter of 2001, sales and marketing expenses decreased to
$397,397 as compared to $1,029,937 for the same period of 2000. Sales and
marketing expenses decreased by $632,540 or 61% largely due to maximizing
efficient methods of corporate marketing. The Company has reduced staffing in
this area and has been able to maintain brand awareness and market reach through
efficient viral marketing, instead of the expensive cross-media marketing
campaigns that the Company utilized in the prior year.
AMORTIZATION OF GOODWILL AND INTANGIBLES
In the three months ended September 30, 2001, amortization of Goodwill and
intangibles was $308,947 as compared to $295,408 for the same period in 2000.
This consists primarily of the amortization of goodwill from the 1999 purchase
of Wike Associates. A portion of this goodwill is being amortized over five
years and a portion over ten years, using the straight-line method.
GENERAL AND ADMINISTRATIVE
The Company decreased its general & administrative costs in the third quarter of
2001 to $361,045 from $423,397 in the third quarter of 2000. This $62,352 or 15%
decrease resulted from reductions in facility related expenses and third party
administrative expenses relating to legal, accounting and investor relations
services, offset to an extent by the accrual of $30,000 for the dividend payable
on Series "A" preferred shares that did not exist in the third quarter of 2000.
OTHER INCOME NET
Other income net increased to $19,085 for the three months ended September 30,
2001 from $9,979 for the same period in 2000. This consists of interest income,
which increased to $24,410 from $18,877 for the three months ended September 30,
2001 and 2000, respectively. In addition, in the third quarter of 2000, the
Company recorded a $9,362 loss on sale of property and equipment. The Company's
interest expense, mostly related to capital leases for the three months ending
September 30, 2001, is approximately $2,500 greater than that experienced for
the same period in 2000.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ending September 30, 2001 and 2000, net cash used in
operating activities was $2,051,004 and $6,425,554, respectively. Net cash
provided by investing activities was $1,369,674 for the first nine months of
2001, and net cash used in investment activities was $5,533,809 for the same
period 2000. Net cash provided in financing activities was $28,776 and
$2,029,755 for the nine months ended September 30, 2001 and 2000, respectively.
The cash provided by investing activities in 2000 was from the receipt of
$2,000,000, pursuant to the issuance of 80,000 shares of Series A preferred
stock on September 29, 2000. The three-year Series A Preferred Stock, is
convertible into 862,069 shares of common stock. This is equivalent to $2.32 per
common share, representing a 42.8% premium over the average closing price of
Crosswalk's common stock for the five trading days preceding closing. The Series
A Preferred Stock will also accrue a 6% dividend per annum.
The Company currently anticipates that its $627,840 working capital balance at
September 30, 2001 may not enable the Company to continue as a going concern
beyond January 2001, unless revenue and expense targets for the fourth quarter
of 2000 are achieved. Therefore, the Company may seek to raise additional
capital and new business opportunities that may result in increased liquidity.
There can be no assurance that current working capital will be sufficient to
meet the Company's needs, or that additional financing will be available to the
Company or will be available on acceptable terms.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
16
As a result of the Company's limited operating history and the rapid
technological change experienced in the Internet industry generally, the Company
has limited historical financial data upon which to base future operating
expenses. Accordingly, the Company's expense levels are based in part on its
expectations as to future revenues, of which there can be no assurance. There
can be no assurance that the Company will be able to accurately predict the
levels of future revenues, if any, and the failure to do so would have a
materially adverse effect on the Company's business, results of operations and
financial condition
The Company expects to experience significant fluctuations in future quarterly
operating results that may be caused by multiple factors. Causes of such
significant fluctuations may include, among other factors, demand for the
Company's services, the number, timing and significance of new service
announcements by the Company and its competitors, acceptance of its marketing
initiatives, the ability of the Company to develop, market and introduce new and
enhanced versions of its services on a timely basis, the level of product and
price competition, changes in operating expenses, changes in service mix,
changes in the Company's sales incentive strategy, and general economic factors.
The Company's operating expense levels are based, in significant part, on the
Company's expectations of future revenue on a quarterly basis. If actual revenue
levels on a quarterly basis are below management's expectations, both gross
margins and results of operations are likely to be adversely affected because a
relatively small amount of the Company's costs and expenses varies with its
revenue in the short term.
FORWARD LOOKING STATEMENTS
Certain information in this quarterly report on Form 10-Q may contain
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. All statements other than statements of
historical fact are forward-looking statements for purposes of these provisions,
including any projections of earnings, revenues or other financial items, any
statements of the plans and objectives of management for future operations, any
statements concerning proposed new products or services, any statements
regarding future economic conditions or performance, and any statement of
assumptions underlying any of the foregoing. In some cases, forward-looking
statements can be identified by the use of terminology such as "may," "expects,"
"believes," "plans," "anticipates," "estimates," "potential," or "continue," or
the negative thereof or other comparable terminology. Although the Company
believes that the expectations reflected in its forward-looking statements are
reasonable, it can give no assurance that such expectations or any of its
forward-looking statements will prove to be correct, and actual results could
differ materially from those projected or assumed in the Company's
forward-looking statements.
ITEM 3: Quantitative and Qualitative Disclosures about Market Risk
None to report.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None to report.
ITEM 2. CHANGE IN SECURITIES
None to report.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None to report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
17
None to report.
ITEM 5. OTHER INFORMATION
On July 16, 2001, Eric Oliver was appointed as a director of Crosswalk.com. Mr.
Oliver is President of SoftSearch Investment, Inc., which manages an investment
fund he created in 1998. Since 1997 he has also served as President of Midland
Map Company, L.L.C., a fifty year old company that creates hand drafted
ownership maps throughout the Permian Basin. From 1990 to 1997, Mr. Oliver
served in varied capacities and ultimately became President of Autofuel Company,
a network of unattended fueling stations which was sold in 1997. Mr. Oliver is a
1981 graduate of Abilene Christian University with a BA in Chemistry. He also
serves as a director of the First National Bank of Midland.
ITEM 6. EXHIBITS, LIST AND REPORTS ON FORM 8-K
(a) EXHIBITS:
EXHIBIT
NUMBER DESCRIPTION
------- -----------
11 Computation of Earnings Per Share
(b) Reports on Form 8-K
None to report.
SIGNATURES
In accordance with the requirements of Securities Act of 1934,
Crosswalk.com, Inc., the registrant, has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CROSSWALK.COM, INC.
November 13, 2001 By: /s/ Scott Fehrenbacher
----------------------
Scott Fehrenbacher
Chief Executive Officer and President
November 13, 2001 By: /s/ Gary A. Struzik
-------------------
Gary A. Struzik, Chief Financial Officer and
Secretary, Chief Accounting Officer
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION PAGE
------ ----------- ----
11 Computation of Earnings Per Share 1-2
18