UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS SUBJECT TO THE 1934 ACT
REPORTING REQUIREMENTS
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________to ___________________
Commission File Number: 000-24595
AUDIOMONSTER ONLINE, INC.
(Exact name of registrant as specified in its charter)
Nevada 000-24595 88-0343832
(State of (Commission (I.R.S. Employer
organization) File Number) Identification No.)
200-1311 Howe St., Vancouver, B.C. Canada V6Z 2P3
(Address of principal executive offices)
Registrant's telephone number, including area code (604) 691-1765
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months and (2)
has been subject to such filing requirements for the past 90 days. Yes X
There are 13,945,000 shares of common stock issued and outstanding as of
September 30, 2000.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Unaudited financial statements for the quarter ended September
30, 2000.
AudioMonster Online, Inc.
(A DEVELOPMENT-STAGE COMPANY)
BALANCE SHEET
<TABLE>
<S> <C> <C>
September 30, March 31,
ASSETS 2000 2000
CURRENT ASSETS (Unaudited)
Cash and cash equivalents $ 59,744 $ 323,650
Receivables 44,767 5,024
Loan receivable 130,284 29,794
Investment in trading securities - 75,310
---------- ----------
Total current assets 234,795 433,778
Deposit on acquisition 250,000 -
Property and equipment, at cost, net of
accumulated depreciation of $1,032 and $- 6,804 5,359
0-
---------- ----------
TOTAL ASSETS $ 491,599 $ 439,137
========== ==========
LIABILITIES AND STOCKHOLDERS'
(DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 26,057 $9,997
Over subscription of offering 16,750 -
---------- ----------
Total current liabilities 42,807 9,997
Long-term convertible notes 1,655,000 655,000
---------- ----------
Total liabilities 1,697,807 664,997
---------- ----------
Commitments and contingencies - -
STOCKHOLDERS' (DEFICIT)
Common Stock - $.001 par value;
50,000,000 shares authorized,
13,945,000 and 2,000,000
shares issued and outstanding 13,945 2,000
Additional paid in capital 2,079,303 (2,000)
Deficit accumulated during the
development stage (3,307,631)
Cumulative foreign currency
translation adjustment 8,175 (712)
---------- ----------
Total stockholders' (deficit) (1,206,208) (225,860)
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT) $ 491,599 $ 439,137
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 1 -
AudioMonster Online, Inc.
(A DEVELOPMENT-STAGE COMPANY)
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<S> <C> <C>
Three Months August 30, 1999
Ended (Inception) to
September 30, September 30,
2000 2000
Sales $288 $2,676
Cost of sales 2,501 3,588
----------- ----------
Gross profit (loss) (2,213) (912)
General and administrative expense 2,293,173 3,063,696
----------- ----------
Loss from operations before other
income
(expense) and income taxes (2,295,386) (3,064,608)
Interest income 4,575 21,176
Interest expense (82,389) (269,000)
Gain (loss) on trading securities (-) 4,801
------------ -----------
Loss before income taxes (2,373,200) (3,307,631)
Income tax expense - -
------------ -----------
Net loss $(2,373,200) $(3,307631)
============ ===========
NET LOSS PER COMMON SHARE
Basic and diluted $(0.20) $(0.00)
============ ===========
COMMON SHARES
Basic and diluted 11,846,667 -
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 2 -
AudioMonster Online, Inc.
(A DEVELOPMENT-STAGE COMPANY)
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<S> <C> <C>
Six Months August 30, 1999
Ended (Inception) to
September 30, September 30,
2000 2000
Sales $2,676 $2,676
Cost of sales 3,588 3,588
------------ ------------
Gross profit (loss) (912) (912)
General and administrative expense 2,813,569 3,063,696
------------ ------------
Loss from operations before other
income
(expense) and income taxes (2,814,481) (3,064,608)
Interest income 18,339 21,176
Interest expense (260,267) (269,000)
Gain (loss) on trading securities (26,075) 4,801
------------ ------------
Loss before income taxes (3,082,484) (3,307,631)
Income tax expense - -
------------ ------------
Net loss $(3,082,484) $(3,307,631)
============ ============
NET LOSS PER COMMON SHARE
Basic and diluted $(0.00) $(0.00)
============ ============
COMMON SHARES
Basic and diluted 11,846,667 -
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 3 -
AudioMonster Online, Inc.
(A DEVELOPMENT-STAGE COMPANY)
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<S> <C> <C>
Six Months August 30, 1999
Ended (Inception) to
September 30, September 30,
2000 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,082,484) $(3,307,631)
Adjustments to reconcile net loss to net cash
used
by operating activities:
Gain (loss) on securities 26,075 (4,801)
Depreciation 1,032 1,032
Issuance of common stock for services 1,783,675 1,783,675
Non cash interest expense 239,502 239,502
Changes in certain assets and liabilities:
Increase in receivables (39,744) (44,769)
Increase in loan receivable (100,489) (130,283)
Increase in accounts payable and accrued 16,060 26,057
expense
----------- -----------
Net cash used by operating activities (1,156,373) (1,437,218)
----------- -----------
CASH FLOWS FROM INVESTMENT ACTIVITIES:
Purchases of fixed assets (250,000) (250,000)
Deposit on acquisition (2,476) (7,835)
Investment in trading securities (44,434)
Sale of trading securities 49,235 49,235
----------- -----------
Net cash used by investment activities (203,241) (253,034)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceed from issuance of stock 86,821 86,821
Proceeds from notes payable 1,000,000 1,655,000
----------- -----------
Net cash provided from financing activities 1,086,821 1,741,821
EFFECTS OF EXCHANGE RATE
CHANGES ON CASH 8,887 8,175
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS (263,906) 59,744
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 323,650 -
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $59,744 $59,744
=========== ===========
</TABLE>
Supplemental Cash Flow Information:
During the three month and initial periods ended June 30, 2000, the
Company paid no cash for interest or income taxes.
Non-cash Financial Activities:
Interest expense attributable to a beneficial conversion feature of the
debentures totaled $239,502.
On June 14, 2000, 25,000 shares of common stock, valued at $346,075, were
issued for legal services provided to the Company.
On August 17, 2000, 2,000,000 shares of common stock, valued at
$1,437,600, were issued for services provided to the Company.
$500,000 of proceeds from notes payable were paid directly to the seller
as a deposit for an acquisition.
The accompanying notes are an integral part of these financial statements.
- 4 -
AudioMonster Online, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Deficit
Accumulated Foreign
Additional During Currency
Common Stock Paid-in Development Translation
Shares Amount Capital Stage Adjustment Total
Balance, August 30, 1999 - $- $- $ - $- $-
Issuance of founders
shares,
August 30, 1999 2,000,000 2,000 (2,000) - - -
Foreign currency
translation adjustment - - - - (712) (712)
Net loss - - - (225,148) - (225,148)
---------- ---------- ---------- ----------- ----------- ------------
-
Balance, March 31, 2000 2,000,000 2,000 (2,000) (225,148) (712) (225,860)
Acquisition of public
shell
corporation, May 12, 2000 9,780,000 9,780 (9,780) - - -
Additional paid in capital
attributable to beneficial
conversion feature of - - 239,502 - - 239,502
debentures
Issuance of shares for
services, June 14, 2000 25,000 25 346,050 - - 346,075
Issuance of shares for
services, August 17, 2000 2,000,000 2,000 1,435,600 - - 1,437,600
Shares sold under
Reg. S offering 173,500 174 86,647 - - 86,821
Refund of over- (33,500) (34) (16,717) - - (16,750)
subscription
Foreign currency
translation adjustment - - - - 8,887 8,887
Net loss - - - (3,082,483) - (3,082,483)
---------- ---------- ---------- ----------- ----------- ------------
Balance, September 30,
2000 13,945,000 $13,945 $2,079,269 $(3,307,632) $(8,175) $(1,206,208)
========== ========== ========== =========== =========== ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 5 -
AudioMonster Online, Inc.
(Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying financial statements include the accounts of
AudioMonster Online, Inc. ("Audiomonster"), a Nevada
corporation formed on August 28, 1995 as Professional Mining
Consultants, Inc., and its wholly owned subsidiary 591519 B.C.
Ltd. ("591519"), a Canadian corporation formed on August 30,
1999. On June 5, 2000, 591519 changed its name to
AudioMonster Online, Inc. Audiomonster and 591519 are
collectively referred to as the "Company". All significant
inter-company accounts and transactions have been eliminated
in consolidation. The Company's fiscal year end is March 31.
The Company conducts its operations from offices located in
Vancouver, Canada.
Effective May 12, 2000, Audiomonster acquired all of the
issued and outstanding common stock of 591519. As a result of
this transaction, 591519's former shareholder obtained control
of Audiomonster, a shell corporation with no operations. For
accounting purposes, this acquisition has been treated as a
recapitalization of 591519.
The financial statements presented include only the accounts
of 591519 from its inception (August 30, 1999) through
September 30, 2000 and of Audiomonster from May 12, 2000
through September 30, 2000.
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles,
which contemplate continuation of the Company as a going
concern. However, the Company has no significant source of
revenue. This factor raises substantial doubt about the
Company's ability to continue as a going concern. Without
realization of additional capital, it would be unlikely for
the Company to continue as a going concern. The financial
statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts
and classification of liabilities that might be necessary
should the Company be unable to continue in existence.
Management plans to take the following steps that it believes
will be sufficient to provide the Company with the ability to
continue in existence:
i Raise additional working capital through private placements.
The private placement will be in the form of debt, equity or a
convertible debenture.
ii Seek acquisitions for the company. Acquisitions will be
operating companies in the entertainment, e-commerce,
internet or electronic industries.
iii Commence operations as described below.
- 6 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Unaudited Financial Information
In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to
present fairly its financial position as of September 30, 2000
and the results of its operations and cash flows for the three
months ended September 30, 2000. These statements are
condensed and therefore do not include all of the information
and footnotes required by generally accepted accounting
principles for complete financial statements. The results of
operations for the three months ended September 30, 2000 are
not necessarily indicative of the results to be expected for
the full year.
Nature of Operations
The Company is currently a development-stage company under the
provisions of the Financial Accounting Standards Board
("FASB") Statement of Financial Accounting Standards ("SFAS")
NO. 7.
The Company is creating licensable technology including e-
commerce components and content management systems for the
Internet music industry. The Company is also building an audio
advertising and music distribution network.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased
with original maturities of three months or less to be cash
equivalents.
Property and Equipment
Property and equipment is stated at cost and are depreciated
using the straight-line method over their estimated useful
lives.
Useful
Life
Furniture and equipment 7 years
Computer software and hardware 3 years
Maintenance and repairs are charged to expense as incurred.
- 7 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Concentration of Credit Risk
The Company places its cash in what it believes to be credit-
worthy financial institutions. However, cash balances may
exceed FDIC insured levels at various times during the year.
Fair Value of Financial Instruments
The carrying value of cash and cash equivalents, receivables,
loans receivable and accounts payable and accrued expenses
approximates fair value due to the relatively short maturity of
these instruments. The carrying value of convertible notes
payable approximates fair value as the instruments were issued
currently at market rates.
Long-lived Assets
Long-lived assets to be held and used are reviewed for
impairment whenever events or changes in circumstances indicate
that the related carrying amount may not be recoverable. When
required, impairment losses on assets to be held and used are
recognized based on the fair value of the assets and long-lived
assets to be disposed of are reported at the lower of carrying
amount or fair value less cost to sell.
Licenses
Costs to acquire licenses are capitalized as incurred. These
costs will be amortized as royalties are paid in accordance
with the license terms.
Income Taxes
Income taxes are provided for based on the liability method of
accounting pursuant to SFAS No. 109, "Accounting for Income
Taxes". Deferred income taxes, if any, are recorded to
reflect the tax consequences on future years of differences
between the tax bases of assets and liabilities and their
financial reporting amounts at each year-end.
Translation of Foreign Currency
The Company translates the foreign currency financial
statements of its Canadian subsidiary in accordance with the
requirements of SFAS No. 52, "Foreign Currency Translation".
Assets and liabilities are translated at current exchange
rates, and related revenue and expenses are translated at
average exchange rates in effect during the period. Resulting
translation adjustments are recorded as a separate component
in stockholders' equity. Foreign currency transaction gains
and losses are included in the statement of operations.
- 8 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Earnings Per Share
The Company calculates earnings per share in accordance with
SFAS No. 128, "Earnings Per Share", which requires
presentation of basic earnings per share ("BEPS") and diluted
earnings per share ("DEPS"). The computation of BEPS is
computed by dividing income available to common stockholders
by the weighted average number of outstanding common shares
during the period. DEPS gives effect to all dilutive
potential common shares outstanding during the period. The
computation of DEPS does not assume conversion, exercise or
contingent exercise of securities that would have an
antidilutive effect on earnings. The Company has no
securities that would effect loss per share if they were to be
dilutive.
Comprehensive Income
SFAS No. 130, "Reporting Comprehensive Income", establishes
standards for the reporting and display of comprehensive
income and its components in the financial statements. The
items of other comprehensive income that are typically
required to be displayed are foreign currency items, minimum
pension liability adjustments, and unrealized gains and losses
on certain investments in debt and equity securities.
NOTE 2 - CORPORATE REORGANIZATION AND MERGER
On May 12, 2000, Audiomonster, a public shell, and 591519
executed an Acquisition Agreement (the "Agreement") that
provided that Audiomonster would acquire all of the issued and
outstanding common stock of 591519. In connection with the
transaction, the sole shareholder of 591519 received 2,000,000
shares of Audiomonster common stock for its 1 share of 591519.
As a result of this transaction, the former shareholder of
591519 acquired or exercised control over Audiomonster.
Accordingly, the transaction has been treated for accounting
purposes as a recapitalization of 591519 and, therefore, these
financial statements represent a continuation of the accounting
acquirer, 591519, not Audiomonster, the legal acquirer.
In accounting for this transaction:
i) 591519 is deemed to be the purchaser and surviving company for
accounting purposes. Accordingly, its net assets are included
in the balance sheet at their historical book values;
ii) Control of the net assets and business of Audiomonster was
acquired effective May 12, 2000 (the "Effective Date").
This transaction has been accounted for as a purchase of the
assets and liabilities of Audiomonster by 591519. At the
effective date Audiomonster had no assets or liabilities.
- 9 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 2 - CORPORATE REORGANIZATION AND MERGER (Continued)
iii) The consolidated statements of operations and cash flows
include 591519's results of operations and cash flows
from August 30, 1999 (date of inception) and Audiomonster's
results of operations from the Effective Date.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows:
June 30, March 31,
2000 2000
Computer Equipment & Software $ 4,892 $ 2,415
Furniture and Fixtures 2,944
2,944
----------- -----------
7,836 5,359
Less: Accumulated Depreciation 1,032 -
----------- -----------
$ 6,804 $ 5,359
=========== ===========
Depreciation expense for the period ended March 31, 2000 was $-0-
and for the period ended September 30, 2000 was $1,032.
NOTE 4 - CONVERTIBLE NOTES
During the period ended March 31, 2000, the Company sold an
aggregate of $655,000 of its 8% Convertible Notes (the "Notes"),
due at the second anniversary date of issuance, pursuant to
Regulation S under the Securities Act.
The holder of the notes has the full right to convert its Notes,
in whole or in part, into shares of Common Stock at a conversion
price equal to the lesser of (1) $.50 or (2) 70% of the lowest
average bid price of the Common Stock for the five trading days
immediately preceding a notice of conversion provided, however,
that in no event shall the Holder be entitled to convert any
portion of the Notes in excess of that portion of the Notes upon
conversion of which the sum of (1) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other
than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unconverted portion of the
Notes and (2) the number of shares issuable upon the conversion
of the portion of the Notes with respect to which the
determination of this proviso is being made, would result in
beneficial ownership by the Holder and its affiliates of more
than 20% of the outstanding Shares.
On June 8, 2000, the Company sold an aggregate of $1,000,000 of
its 8% Convertible Notes (the "June Notes"), due June 8, 2002.
- 10 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 4 - CONVERTIBLE NOTES (Continued)
The holder of the June Notes has the full right to convert its
Notes, in whole or in part, into shares of Common Stock at a
conversion price equal to the lesser of (1) $10.44 or (2) 70% of
the lowest average bid price of the Common Stock for the five
trading days immediately preceding a notice of conversion
provided, however, that in no event shall the Holder be entitled
to convert any portion of the Notes in excess of that portion of
the Notes upon conversion of which the sum of (1) the number of
shares of Common Stock beneficially owned by the Holder and its
affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unconverted
portion of the Notes and (2) the number of shares issuable upon
the conversion of the portion of the Notes with respect to which
the determination of this proviso is being made, would result in
beneficial ownership by the Holder and its affiliates of more
than 20% of the outstanding Shares.
Due to the fact that the June Notes contain a beneficial
conversion feature, the Company has recorded additional interest
expense of $239,502 during the three month period ended September
30,2000, with a corresponding credit to additional paid in
capital.
Long-term debt matures as follows:
Year ended Amounts
March 31, 2002 $ 655,000
March 31, 2003 1,150,000
NOTE 5 - LICENSE
On December 21, 1999, the Company acquired a license for ten
specified audio tracks of an artist named Art Bergmann ("the
artist"). The Company has the exclusive right to distribute
these audio tracks worldwide in any format. The license remains
exclusive until December 31, 2004, after which it will convert to
nonexclusive on a worldwide basis.
The Company has agreed to pay the artist royalties of 20% of the
net proceeds that the Company receives from its commerce
activities related to the sales and marketing of the audio
tracks. A non-refundable advance of CDN $1,000 (US $688) was
paid to acquire the license and charged to expense.
This license was terminated by the Company on September 27, 2000.
NOTE 6 - FOREIGN OPERATIONS
Substantially all of the Company's operations take place
throughout Canada, and the majority of its identifiable assets
are in Canada.
- 11 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 7 - INVESTMENT
At March 31, 2000, marketable investments classified as trading
securities were comprised of the following:
Common Stock:
Market Value $ 75,310
Cost 44,434
----------
Gross unrealized $ 30,876
gain
==========
The unrealized gain from trading securities for the period ending
March 31, 2000 is $30,876. This amount is included in Other
Income (Expense) in the accompanying statement of operations.
During the three month period ended September 30, 2000, the
Company sold its trading securities, resulting in a realized loss
for the period of $26,075.
NOTE 8 - RELATED PARTY TRANSACTIONS
a) The Company has signed an agreement with a company owned by
its President to pay management fees of CDN $5,000 per month.
The agreement commenced on January 1, 2000 and expires on
December 31, 2004.
The agreement provides that if the Company becomes a publicly-
traded company or establishes a fiscal quarter with gross revenue
of CDN $250,000 or greater, the monthly management fee will
increase to CDN $8,000.
b) The Company has signed lease agreements with its President to pay
CDN $1 annually for the lease of each of the domain names,
AudioMonster.com and DoubleListen.com. The agreements expire
January 31, 2001 and December 13, 2001, respectively. The parties
expect to extend the lease on the AudioMonster.com domain name.
NOTE 9 - DEPOSIT ON ACQUISTION
The Company has made deposits on a proposed acquisition to
acquire 100% of another entity. At June 30, the deposits
aggregate $600,000. The Company defaulted on making its July
deposit payment and forfeited the total $600,000 paid. This
amount is charged to expense for the period ended September 30,
2000.
- 12 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 10 - GOING CONCERN
The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern.
As of September 30, 2000, the Company has incurred operating
losses from inception and has no established source of revenue.
Based upon the Company's plan of operation, the Company estimates
that existing resources, together with funds generated from
operations will not be sufficient to fund the Company's working
capital. The Company has been acquired by a publicly-traded
company. The new parent is anticipating raising funds through
equity offerings to fund the Company's operations. There can be
no assurances that sufficient funds will be available on terms
acceptable to the parent or at all. If the company is unable to
obtain such funds, the Company will be forced to scale back
operations, which would have an adverse effect on the Company's
financial condition and results of operations.
NOTE 11 - SUBSEQUENT EVENTS
Subsequent to September 30, 2000:
- On October 6, 2000, St. George Capital Corporation invoiced the
Company for an amount of $251,875 for investment banking fees
related to the Lockwave merger. Previously, on May 30, 2000, the
Company loaned St. George $150,000. This loan will be used to
offset the October 6, 2000 invoice.
- On October 24, 2000, all $1,655,000 in long-term debt
represented by seven convertible notes were presented for
conversion. The conversion price was agreed to be $0.9668 and
will result in additional 1,600,000 common shares being issued in
the future.
- The Company is required to pay a total of $2,750,000 in staged
payments to Imojo, Inc. for the Lockwave asset due as follows:
(i)$500,000 on or before November 4, 2000;
(ii) $750,000 on or before December 4, 2000;
(iii)$500,000 on or before January 4, 2001;
(iv) $500,000 on or before February 4, 2001;
and (v) $500,000 on or before March 4, 2001.
A payment due on a day which is not a day in which banks are open
for business in the United States will be due the next business
day.
- 13 -
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF
OPERATIONS
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
This statement includes projections of future results and
"forward-looking statements" as that term is defined in Section
27A of the Securities Act of 1933 as amended (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934 as
amended (the "Exchange Act"). All statements that are included in
this Registration Statement, other than statements of historical
fact, are forward-looking statements. Although Management
believes that the expectations reflected in these forward-looking
statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors
that could cause actual results to differ materially from the
expectations are disclosed in this Statement, including, without
limitation, in conjunction with those forward-looking statements
contained in this Statement.
MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS
The following discussion should be read in conjunction with the
financial statements of the Company and related notes included
elsewhere in this Report and in the Company's Current Report on
Form 8-K for the period from inception to Sep 30, 2000. All
statements contained herein (other than historical facts)
including, but not limited to, statements regarding the Company's
future development plans, the Company's ability to generate cash
from its operations and any losses related thereto, are based
upon current expectations. These statements are forward looking
in nature and involve a number of risks and uncertainties. Actual
results may differ materially from the anticipated results or
other expectations expressed in the Company are forward-looking
statements. Generally, the words "anticipate," "believe,"
"estimate," "expects," "will," and similar expressions as they
relate to the Company and/or its management, are intended to
identify forward-looking statements. Among the factors that could
cause actual results to differ materially could be the inability
of the Company to obtain additional financing to meet its capital
requirements, needs and general business and economic conditions
as well as technological developments.
OVERVIEW
The Company has a limited history of operations and no history of
profitability. It was incorporated as Professional Mining
Consultants, Inc. on August 28, 1995. The Company was originally
organized for the purpose of setting up a Mining Consultant and
Engineering office in Las Vegas, Nevada. The objective was to
pursue consulting and management contracts with startup and small
mining companies who are seeking professional and management
expertise. The Company was to focus on and specialized in
developing strategies, extraction and process technology,
management and engineering for both open pit and placer gold,
silver and platinum mining operations.
In September 1999, the Company abandoned its original business
plan as noted above and decided to pursue endeavors to seek a
company or companies that it can acquire or with whom it can
merge.
The Company's common stock underwent a 2:1 forward split on May
2, 2000, effective on May 16, 2000. This increased the number of
shares outstanding from 4,890,000 to 9,780,000 without changing
the authorized common stock. No change in the rights or ownership
percentage of the holders has occurred as a result of the forward
split.
On May 12, 2000 the Company's predecessor, Professional Mining
Consultants, Inc. ("PFMC"), approved the Exchange Agreement
between itself and a company then known as 591519 BC Ltd. (d.b.a.
AudioMonster Online). Under the terms of the Agreement, the
Company exchanged 2,000,000 shares of its common stock for all of
the shares of capital stock of 591519 BC Ltd. PFMC was the legal
acquirer. Upon completion of the Exchange Agreement, PFMC changed
its name to AudioMonster Online, Inc. For accounting purposes,
this acquisition has been treated as a recapitalization of 591519
BC Ltd. (d.b.a. AudioMonster Online).
On May 15, 2000 the Company moved its principal place of business
to 200-1311 Howe St., Vancouver, B.C. Canada V6Z 2P3.
On June 5, 2000 591519 BC Ltd. changed its name to AudioMonster
Online, Inc. As a result two corporations exist with the name
AudioMonster Online, Inc. in both Nevada and British Columbia
with the British Columbia company as a subsidiary of the Nevada
company.
On June 20, 2000 the Company entered into share purchase
agreement with Asset Mix Investments Limited ("AMIL") to acquire
100% of the outstanding shares of ADS Technologies Inc. and paid
non refundable deposits totaling USD $600,000 pursuant to the
share purchase agreement.
On July 15, 2000 the Company missed a payment pursuant to the
payment schedule and AMIL elected to terminate the share purchase
agreement on July 17, 2000. The Company has received a legal
opinion that there is very little chance of recovering the
deposit amount and has chosen to write down the deposit amount.
On September 25, 2000 the Company through its wholly owned
subsidiary AMOL Inc. (Delaware) entered into an agreement and
plan of merger with Lockwave, Inc. a Delaware corporation.
AudioMonster Online Inc. will pay total consideration of
$3,000,000 of which $250,000 has been paid and an aggregate of
4,500,000 shares of AudioMonster common stock will be issued to
Imojo, Inc.
On September 25, 2000 on the closing of the Lockwave agreement
and plan of merger, Paul Steo became a director of the Company.
On September 27, 2000 the Company terminated all licenses with
its artist under contract. The company has chosen to write down
all advances paid to the artists and remaining inventory of CD
audio disks which was provided at no cost to the artists as
compensation for the Company not fulfilling its license
agreements.
On September 27, 2000 the Company abandoned its AudioMonster
online music business plan and decided to focus all resources on
completion of the Lockwave merger.
As of September 30, 2000 the Company had a total accumulated
deficit of $3,307,631.
Subsequently, on October 6, 2000 St. George Capital Corporation
invoiced the Company for an amount of $251,875 for investment
banking fees related to the Lockwave merger. Previously, on May
30, 2000 the Company loaned St. George $150,000. This loan will
be used to offset the October 6, 2000 invoice.
Subsequently, on October 24, 2000 all $1,655,000 in long term
debt represented by seven convertible notes were presented for
conversion. The conversion price was agreed to be $0.9668 and
will result in additional 1,600,000 common shares being issued in
the future.
See Notes to the Financial Statements for a description of the
Company's significant accounting policies.
RESULTS OF OPERATIONS
The Company was not operating prior to Dec 1, 1999, and had only
incurred minimal start-up expenses as of that date. Therefore,
comparing the results of operations for the current year to
comparable periods in the preceding year would not be meaningful.
For the three months ended Sep 30, 2000, net revenues were $288
and net loss was $2,373,200.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2000, the Company had a cash balance of
$59,744 down from a total of $358,952 of cash at June 30, 2000.
The Company's total accumulated deficit also rose from the June
30, 2000 balance of $931,119 to $3,307,361 at September 30, 2000.
The $1,655,000 included in long-term debt is represented by seven
convertible notes, which bear interest at a rate of 8% per annum.
The convertible notes mature at various dates between January 28,
2002 to June 8, 2002. $655,000 of the notes can be converted into
common stock at the lesser of $0.50 or a discount of 30% from the
lowest average bid price during any of the five days prior to the
notice to convert any portion of the notes. The remaining
$1,000,000 note can be converted equal to the lesser of the bid
price at the close of business on June 8, 2000, or a discount of
30% from the lowest average bid price during any five days prior
to the notice to convert any portion of the note.
On September 25, 2000 the company completed a Regulation S
offering which raised proceeds of $70,000 via the issuance of
140,000 Regulation S shares offered to 13 Canadian investors.
The Company states that its cash on hand and cash from operations
is not sufficient to complete the Lockwave merger and fund the
development of Lockwave.com web site. The Company is presently
contemplating a private placement of equity securities to
facilitate funding of its merger and development efforts. The
sale of additional equity securities or convertible debt will
result in additional dilution to our stockholders. The Company
can give no assurance that it will be able to generate adequate
funds from operations, that funds will be available to us from
debt or equity financing, or that if available, the Company will
be able to obtain such funds on favorable terms and conditions.
If the Company cannot secure additional funds it will not be able
to continue as a going concern. The Company currently has no
definitive arrangements with respect to additional financing.
Subsequently on October 24, all $1,655,000 in long term debt
represented by seven convertible notes were presented for
conversion. The conversion price was agreed to be $0.9668 and
will result in additional 1,600,000 common shares being issued in
the future.
YEAR 2000 DISCLOSURE
We do not anticipate any problem in dealing with computer entries
in the year 2000 or thereafter, with any computers currently used
at any of its facilities. All of our computer systems are new and
have been Year 2000 compliant since their acquisition. We keep
current with all updates and revisions with all software we
currently use. It is anticipated that the software updates
reflect required revisions to accommodate transactions in the
Year 2000 and thereafter.
We have concluded, based on our review of our operations and
computer systems and those of our major suppliers and
distributors have not had any problems associated with the Year
2000 issue. However, we cannot guarantee that such problems will
not arise in the future.
Current Developments
On September 19, 2000, the Company incorporated a wholly-owned
subsidiary named AMOL Inc. in Delaware., which entered into an an
Agreement and Plan of Merger with Lockwave, Inc., a Delaware
corporation on September 25, 2000. Under the terms of the
agreement, the Company will issue 4,500,000 shares of its common
stock to Imojo, Inc., the sole shareholder of Lockwave, Inc.
On September 25, 2000, the Board of Directors appointed Paul Steo
as a member of the Board of Directors, effective immediately.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Company has been threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No such matters were submitted during the most recent quarter.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS
2 Merger Agreement between AMOL, the Company's subsidiary, and
Lockwave, Inc.
3.1 The exhibit consisting of the Company's Articles of
Incorporation is attached to the Company's amended Form 10-SB,
filed on February 28, 2000. This exhibit are incorporated by
reference to that Form.
3.2 The exhibit consisting of the Company's Bylaws is attached
to the Company's amended Form 10-SB, filed on February 28, 2000.
This exhibit is incorporated by reference to that Form.
21 Subsidiaries
AMOL, Inc. - Incorporated in Delaware
27 Financial Data Schedule
Reports on Form 8-K:
On October 10, 2000, the Company filed a Form 8-K to announce
that the the Company incorporated a wholly-owned subsidiary named
AMOL Inc. in Delaware., which entered into an an Agreement and
Plan of Merger with Lockwave, Inc., a Delaware corporation on
September 25, 2000.
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this
registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
AudioMonster Online, Inc.
By: /s/ Greg Corcoran
Greg Corcoran,
President/Secretary/Treasurer
Date: November 20, 2000
