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] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
For the quarterly period ended June 30, 2000 Commission File No.
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 11,805,000 shares of common stock issued and
outstanding as of June 30, 2000.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Unaudited financial statements for the quarter ended
June 30, 2000.
AudioMonster Online, Inc.
(A DEVELOPMENT-STAGE COMPANY)
BALANCE SHEET
<TABLE>
<S> <C> <C>
June 30, March 31,
ASSETS 2000 2000
---------- ---------
CURRENT ASSETS (Unaudited)
Cash and cash equivalents $358,952 $323,650
Receivables 53,001 5,024
Inventory 3,706 -
Loan receivable 242,466 29,794
Investment in trading securities - 75,310
---------- ---------
Total current assets 658,125 433,778
Deposit on acquisition 600,000 -
Property and equipment, at cost, net of
accumulated
depreciation of $370 and $-0- 7,036 5,359
---------- ---------
TOTAL ASSETS $1,265,161 $439,137
========== ========
LIABILITIES AND STOCKHOLDERS'
(DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $36,042 $9,997
Long-term convertible notes 1,655,000 655,000
---------- ---------
Total liabilities 1,691,042 664,997
---------- ---------
Commitments and contingencies - -
STOCKHOLDERS' (DEFICIT)
Common Stock - $.001 par value;
50,000,000 shares
authorized, 11,805,000 and 2,000,000
shares issued
and outstanding 11,805 2,000
Additional paid in capital 493,938 (2,000)
Deficit accumulated during the (931,119) (225,148)
development stage
Cumulative foreign currency (505) (712)
translation adjustment
---------- ---------
Total stockholders' (deficit) (425,881) (225,860)
---------- ---------
TOTAL LIABILITIES AND $1,265,161 $439,137
STOCKHOLDERS' (DEFICIT)
========== ========
</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
June 30, June 30,
2000 2000
-------- --------
Sales $2,407 $2,407
Cost of sales 1,602 1,602
---------- ----------
Gross profit 805 805
General and administrative expense 516,692 766,715
---------- ----------
Loss from operations before other
income
(expense) and income taxes (515,887) (765,910)
Interest income 13,869 16,601
Interest expense (177,878) (186,611)
Gain (loss) on trading securities (26,075) 4,801
---------- ----------
Loss before income taxes (705,971) (931,119)
Income tax expense - -
---------- ----------
Net loss $(705,971) $(931,119)
========== ==========
NET LOSS PER COMMON SHARE
Basic and diluted $(0.10) $(0.26)
========== ==========
COMMON SHARES
Basic and diluted 7,378,297 3,599,428
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
- 2 -
AudioMonster Online, Inc.
(A DEVELOPMENT-STAGE COMPANY)
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<S> <C> <C>
Three Months August 30,
1999
Ended (Inception)
to
June 30, June 30,
2000 2000
------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(705,971) $(931,119)
Adjustments to reconcile net loss to net
cash used
by operating activities:
Gain (loss) on securities 26,075 (4,801)
Depreciation 370 370
Issuance of common stock for services 346,075 346,075
Non cash interest expense 159,668 159,668
Changes in certain assets and liabilities:
Increase in receivables (47,977) (53,001)
Increase in inventory (3,706) (3,706)
Increase in loan receivable (212,672) (242,466)
Increase in accounts payable and accrued 26,045 36,042
expense
-------- --------
Net cash used by operating activities (412,093) (692,938)
-------- --------
CASH FLOWS FROM INVESTMENT ACTIVITIES:
Purchases of fixed assets (2,047) (7,406)
Deposit on acquisition (100,000) (100,000)
Investment in trading securities - (44,434)
Sale of trading securities 49,235 49,235
-------- --------
Net cash used by investment activities (52,812) (102,605)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 500,000 1,155,000
-------- --------
EFFECTS OF EXCHANGE RATE
CHANGES ON CASH 207 (505)
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 35,302 358,952
CASH AND CASH EQUIVALENTS - BEGINNING OF 323,650 -
PERIOD
-------- --------
CASH AND CASH EQUIVALENTS - END OF PERIOD $358,952 $358,952
======== ========
</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 $159,668.
On June 14, 2000, 25,000 shares of common stock, valued at
$346,075, were issued for legal 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.
- 3 -
AudioMonster Online, Inc.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<S> <<C> <<C> <<C> < <C> <<C> < <<C>
C C C C C C C
> > > > > > >
Deficit
Accumulated Foreign
Additional During Currency
Common Stock Paid-in Development Translatio
n
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 debentures - - 159,668 - - 159,668
Issuance of shares for
services, June 14, 2000 25,000 25 346,050 - - 346,075
Foreign currency
translation
adjustment - - - - 207 207
Net loss - - - (705,971) - (705,971)
Balance, June 31, 2000 11,805,000 $11,805 $493,938 $(931,119) $(505) $(425,881)
========== ======= = ======== ========== ======= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 4 -
AudioMonster Online, Inc.
(Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 June 30, 2000 and of Audiomonster from
May 12, 2000 through June 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:
-Raise additional working capital through private
placements. The private placement will be in the
form of debt, equity or a convertible debenture.
-Seek acquisitions for the company. Acquisitions
will be operating companies in the entertainment, e-
commerce, internet or electronic industries.
-Commence operations as described below.
- 5 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 June 30, 2000 and
the results of its operations and cash flows for the three
months ended June 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 June 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.
<TABLE>
<S>
<C>
Useful Life
Furniture and equipment 7 years
Computer software and 3 years
hardware
</TABLE>
Maintenance and repairs are charged to expense as
incurred.
- 6 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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.
- 7 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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.
- 8 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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:
<TABLE>
<S> <C> <C>
June 30, March 31,
2000 2000
Computer Equipment & $4,462 $2,415
Software
Furniture and Fixtures 2,944 2,944
7,406 5,359
Less: Accumulated 370 -
Depreciation
$7,036 $5,359
</TABLE>
Depreciation expense for the period ended March 31,
2000 was $-0- and for the period ended June 30, 2000
was $370.
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.
- 9 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 $159,668 during the
three month period ended June 30,2000, with a
corresponding credit to additional paid in capital.
Long-term debt matures as follows:
<TABLE>
<C>
<S>
Amounts
Year ended
--------- --------
-
March 31, 2002 $ 655,000
March 31, 2003 1,150,000
</TABLE>
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.
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.
- 10 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
NOTE 7 - INVESTMENT
At March 31, 2000, marketable investments classified as
trading securities were comprised of the following:
<TABLE>
<S> <C>
Common Stock:
Market Value $
75,310
Cost 44,434
Gross unrealized gain $ 30,876
</TABLE>
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 June 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, 2000 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 will be charged to expense
in July 2000.
- 11 -
AudioMonster Online, Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 June 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 June 30, 2000:
- The acquisition agreement described in Note 9 was
terminated due to a default by the Company in making
scheduled payments and the deposits were forfeited.
- The Company issued 2,000,000 shares of stock
pursuant to consulting agreements.
- 12 -
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 (August 30, 1999) to June
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's forward looking statements. Generally, the words
"anticipate," "believe," "estimate," "expects," 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. (dba
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. (dba AudioMonster Online).
As a result of the merger the Company is now in the development
stage and is engaged in the business of providing Internet and
traditional music label services. The company is also actively
seeking acquisition opportunities in the Internet and audio
market spaces.
On May 15, 2000, 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 a 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. Subsequently, 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.
As of June 30, 2000 the Company had a total accumulated deficit
of $931,119.
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 June 30, 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 June 30, 2000, net
revenues were $2,407 and net loss was $705,971.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2000, the Company had a cash balance of $358,952
up from a total of $323,650 of cash at March 31, 2000. The
Company's total accumulated deficit also rose from the March 31,
2000 year-end balance of $225,148,137 to $931,119 at June 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. These funds
are the origin of the Company's cash at June 30, 2000.
The Company believes its cash on hand and cash from operations
will be sufficient to maintain its present level of development
efforts over the next 12 months, after consideration is given to
the reduction in operating expenses due to certain non-recurring
expenses related to the merger in May, 2000. However, our
projections of future cash needs and cash flows may differ from
actual results. The Company is presently contemplating a private
placement of equity securities to facilitate funding of its
development efforts at an accelerated pace and to fund possible
future acquisitions. The sale of additional equity securities or
convertible debt could result in additional dilution to our
stockholders. We can give you no assurance that we will be able
to generate adequate funds from operations, that funds will be
available to us from debt or equity financings, or that if
available, we will be able to obtain such funds on favorable
terms and conditions. We currently have no definitive
arrangements with respect to additional financing.
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.
In addition, most of the purchases on our web site are expected
to be made with credit cards, and our operations may be adversely
affected to the extent its customers are unable to use their
credit cards due to any Year 2000 issues that are not rectified
by their credit card vendors. In a worst case scenario, if our
customers' computer systems or that of suppliers and vendors do
not contain the necessary software updates to be Year 2000
compliant, a multitude of problems could occur which may include,
among others, lost orders, merchandise not shipped or shipped to
incorrect addresses and credit card purchases incorrectly
credited or debited. As a result, we could lose customers,
clients, and credibility, which could have a material adverse
effect on our business and our financial condition. Such problems
could occur with Sound Delivery, our supplier of music CDs,
cassettes and other related products. With all expected dates for
problems now past and the fact that no interruptions or improper
recording of transactions have occurred that the period for
concern has passed. We do not have, nor do we intend to create, a
contingency plan to handle such an event.
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.
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 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
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.
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
a) 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.
b) 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.
c) Reports on Form 8-K:
On May 22, 2000, the Company filed a Form 8-K to announce the
Exchange Agreement between itself and Audio entered into on
May 12, 2000. 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 Audio. The Company was the
acquiring company and changed its name to AudioMonster Online,
Inc. On July 27, 2000, the Company filed a subsequent amended
Form 8-K to include the financials of the acquired company
(Audio).
27 Financial Data Schedule
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: August 21, 2000
