SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------------
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1999
( ) Transition Report under Section 13 or 15(d) of the Exchange Act of 1934 for
the transition period from __________ to _________
DME INTERACTIVE HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 0-27944 98-0157860
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(State of Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
519 E. Palisade, Englewood Cliffs, New Jersey 07632
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, Including area code 201-816-1285
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- --------------------------------------------------------------------------------
(Former Name of Former Address, if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirement for the past 90 days. Yes __X__ No ___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
As of August 31, 1999 there were 23,356,599 shares of common stock
outstanding.
===============================================================================
<PAGE>
DME INTERACTIVE HOLDINGS, INC.
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet as of August 31, 1999 (Unaudited)
Consolidated Statements of Operations for the Three Months ended
August 31, 1999 (Unaudited) and August 31, 1998 (Unaudited) and for
the Nine Months Ended August 31, 1999 (Unaudited) and August 31,
1998 (Unaudited)
Consolidated Statements of Cash Flows for the Nine Months ended
August 31, 1999 (Unaudited) and August 31, 1998 (Unaudited)
Notes to Consolidated Financial Statements
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION AND SUBSEQUENT EVENTS
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
2
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENT
DME INTERACTIVE HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
As of
August 31,
ASSETS 1999
-----------
<S> <C>
CURRENT ASSETS
Cash $ 357,750
Accounts receivable 11,645
Employee Loan 10,650
Other receivable 15,882
---------
Total Current Assets 395,927
PROPERTY AND EQUIPMENT (Note 2)
Property and Equipment, net 31,857
---------
TOTAL ASSETS $ 427,784
=========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 201,698
Notes payable 128,681
Other liabilities 36,804
---------
TOTAL CURRENT LIABILITIES 367,183
LOAN FROM OFFICERS 166,893
TOTAL LIABILITIES 534,076
=========
SHAREHOLDERS' DEFICIT:
Preferred stock, $.01 par value, 2,000,000 shares
authorized, none issued or outstanding
Common stock, $.001 par value;
30,000,000 shares authorized;
and 23,356,599 shares issued and
outstanding 23,357
Additional paid-in capital 831,770
Accumulated Deficit (961,419)
---------
TOTAL SHAREHOLDER'S DEFICIT (106,292)
---------
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT $ 427,784
=========
</TABLE>
See accompanying notes to the consolidated financial statements.
3
<PAGE>
DME INTERACTIVE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
August 31, August 31,
1999 1998 1999 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
GROSS REVENUES $ 325,980 $ 189,428 $ 67,219 $ 59,667
------------ ------------ ------------ ------------
EXPENSES:
Selling, General and
Administrative Expenses 471,418 168,562 237,508 30,844
Professional Fees 344,051 111,938 188,126 19,000
Salaries and Related Expenses 232,447 66,590 137,578 31,046
Depreciation Expense 8,998 7,628 6,639 1,769
------------ ------------ ------------ ------------
TOTAL EXPENSES 1,056,914 354,718 569,851 82,659
------------ ------------ ------------ ------------
LOSS FROM OPERATIONS (730,934) (165,290) (502,632) (22,992)
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE):
Net Interest Income/(Expense) (4,339) 285 4,134 (259)
------------ ------------ ------------ ------------
NET LOSS BEFORE PROVISION
FOR INCOME TAXES (735,273) (165,005) (498,498) (23,251)
PROVISION FOR INCOME TAXES -- -- -- --
------------ ------------ ------------ ------------
NET LOSS $ (735,273) $ (165,005) $ (498,498) $ (23,251)
============ ============ ============ ============
NET LOSS PER COMMON SHARE
- - BASIC + DILUTIVE ($ 0.08) ($ 0.06) ($ 0.02) ($ 0.01)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING - BASIC + DILUTIVE 9,570,528 2,822,500 23,356,599 2,822,500
</TABLE>
See accompanying notes to the consolidated financial statements.
4
<PAGE>
DME INTERACTIVE HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the
Nine Months Ended
August 31,
1999 1998
--------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C>
Net loss ($735,273) ($165,006)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation 8,998 7,628
Changes in certain operating assets
and liabilities:
(Increase) decrease in:
Accounts receivable (11,644) --
Employee loans 49,915 (59,981)
Due from affiliate (15,852) 276
Increase (decrease) in:
Accounts payable and accrued expenses 213,007 16,878
Other liabilities (37,836) 75,000
--------- ---------
Net cash (used in) operating
activities (528,685) (125,205)
--------- ---------
INVESTING ACTIVITIES:
Acquisition of property and equipment (8,010) (12,674)
--------- ---------
FINANCING ACTIVITIES
(Repayment) and proceeds from officer's loans (110,276) 138,500
Proceeds from notes payable 128,681 --
Proceeds from merger 855,127 --
--------- ---------
Net cash provided by financing
activities 873,532 138,500
--------- ---------
Net increase in cash and
cash equivalents 336,837 621
CASH AND CASH EQUIVALENTS:
Beginning of period 20,913 --
--------- ---------
End of period $ 357,750 $ 621
========= =========
</TABLE>
See accompanying notes to the consolidated financial statements.
5
<PAGE>
DME INTERACTIVE HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) Business Organization And Activity
DME Interactive Holdings Inc. ("DME" or the "Company) is an advanced
technology provider offering an array of digital products and strategic
services ranging from Internet, Intranet and Extranet development and
maintenance, and turnkey e-commerce solutions to online advertising
and software creation.
(B) Business Merger
The accompanying unaudited consolidated financial statements of DME
include the accounts of the Company and all of its wholly owned
subsidiaries. All material intercompany transactions and balances
have been eliminated in consolidation. On June 18, 1999, Pride
Automotive Group, Inc. ("PAG"), pursuant to an agreement concerning
the Exchange of Common Stock dated March 30, 1999 as amended
("Agreement"), exchanged 14,800,000 shares of its Common Stock
(representing approximately 64% of the outstanding shares after the
exchange) for all of the membership interests of Digital Mafia
Entertainment, LLC (the "LLC"). In connection with the exchange, PAG
sold all of its interest in its two operating subsidiaries to Pride,
Inc., its parent and owner of more than 50% of the outstanding common
stock of the Pride prior to the transaction, for $1.00 each. Those
disposed subsidiaries accounted for substantially all of the revenue
and expenses reflected in PAG's historical financial statements that
had previously been filed with the Securities Exchange Commission. As
a result of such transactions, the LLC became a wholly owned
subsidiary of PAG. For accounting purposes, the exchange is treated
as a reverse acquisition (recapitalization), that is, as if the LLC
acquired PAG. On June 18, 1999, PAG changed its name to DME
Interactive Holdings, Inc. As a result, the historic financial
statements of the Company are those of the LLC. The deemed
acquisition will be accounted for using the purchase method of
accounting and the financial results of the Company will be
consolidated with those of the LLC commencing on June 18, 1999.
In the opinion of management, the consolidated financial statements
reflect all normal and recurring adjustments, which are necessary for
a fair presentation of the Company's financial position, results of
operations, and cash flows as of the dates and for the periods
presented. The consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for
interim financial information. Consequently, these statements do not
include all the disclosures normally required by generally accepted
accounting principles for annual financial statements. Accordingly,
these financial statements should be read in conjunction with the
Company's audited financial statements and notes thereto for the
period ended June 17, 1999, included in the Form 8-K filed by the
Company with the Securities and Exchange Commission as amended in the
Form 8-K/A filed by the Company with the Securities and Exchange
Commission on September 7, 1999. The consolidated results of
operations for the quarter ended August 31, 1999, are not necessarily
indicative of results for the full year.
(C) Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchases with an original maturity of
three months or less to be cash equivalents.
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<PAGE>
(D) Use of Estimates
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles. The preparation of
financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported 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.
(E) Reclassification
Certain prior year amounts has been reclassified to conform with
current period presentation
(F) Income Taxes
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109).
SFAS 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in the
Company's financial statements or tax returns. In estimating future tax
consequences, SFAS 109 generally considers all expected future events
other than enactments of changes in the tax law or rates. Any available
deferred tax assets arising from net operating loss carryforwards has
been offset by a deferred tax valuation allowance on the entire amount.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciated using the
straight line method over the estimated economic useful life of 3 to 5
years when placed in service. Maintenance and repairs are charged to
expense as incurred.
Property and equipment at August 31, 1999 consisted of the following:
Office equipment $ 32,772
Furniture and fixtures 13,772
Software 1,950
---------
48,494
Less: Accumulated depreciation (16,637)
---------
Total property and equipment $ 31,857
==========
NOTE 3 - EARNINGS PER SHARE:
The Company adopted the provisions of SFAS No. 128, "Earnings Per
Share," effective July 7, 1997. Under SFAS No. 128 basic earnings per
share excludes any dilution for Common Stock equivalents and is
computed on the basis of net income divided by the weighted average
number of common shares outstanding during the relevant period. Diluted
earnings per share reflects the potential dilution that occur if
options or other securities or contracts entitling the holder to
acquire shares of Common Stock were exercised or converted, resulting
in the issuance of additional shares of Common Stock that would then
share in earnings. However, diluted earnings per share do not consider
such dilution if its effect would be to reduce the loss per share
("anti-dilutive").
NOTE 4 - RELATED PARTY TRANSACTION:
The Company shared rental space with a related company. Some
administrative expenses of each company may from time to time be paid
by the other company. The amount outstanding due from the related
company was $15,882 as of August 31, 1999.
7
<PAGE>
NOTE 5 - SUBSEQUENT EVENTS
(A) Lease Commitments
In September 1999, the Company entered into a lease agreement for
its office space under a non-cancelable operating lease, which
expires April 28, 2010. Over the term, the minimum lease payments
will total $3.3 million.
(B) Employment Agreement
On September 3, 1999 the Company entered into an employment
agreement with a Senior Vice President of DME. The effective date
of this agreement is August 1, 1999, and is for a period of three
years at which time it can be renewed by mutual agreement of both
parties. The agreement may be terminated at any time by mutual
written agreement by the parties. The consideration is $125,000
annually to be paid at regular payroll periods. As additional
compensation, the Company is issuing a total of 60,000 stock
options exercisable at annual intervals ranging from August 1,
1999 to August 1, 2002 at a $2.00 exercise price.
NOTE 6 - STOCKHOLDER'S DEFICIT
DME's articles of incorporation, as amended, authorize the
issuance of up to thirty million (30,000,000) shares of common
stock, $.001 par value per share. No preferred stock has been
authorized by DME.
Warrants
Currently, 2,300,000 redeemable common stock purchase warrants
(the "Warrants") are outstanding. The Warrants were issued in the
initial public offering in 1996. Each warrant gives the holder the
right to purchase one share of DME's Common Stock, subject to
adjustment in certain events at an initial price of $5.75 per
share. The Warrants will be exercisable until April 23, 2000. DME
may redeem the Warrants at any time upon 30 days notice at a
redemption price of $.05 per Warrant, provided that the closing
bid quotation of the Common Stock for at least 20 consecutive
trading days ending not more than 15 days prior to the date on
which DME provides notice has been at least 150% of the then
effective exercise price of the Warrants.
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion contains forward-looking statements involving
risks and uncertainties based on management's current expectations, estimates
and projections about the internet industry and the evolution of on-line
Internet commerce. All statements in this 10-Q related to DME's changing
financial operations and expected future growth or profitability constitute
forward-looking statements. The actual results may differ significantly from
those anticipated or expressed in these statements. The following discussion and
analysis should be read in conjunction with the unaudited financial statements.
The results of interim periods are not necessarily indicative of the results to
be obtained in a full fiscal year.
OVERVIEW
DME Interactive Holdings, Inc. is an Internet professional services
firm and is a leader in developing Internet marketing services aimed at the
urban minority market. We provide creative, technology and strategic services
that we believe will enable our clients to gain a competitive advantage in
creating, enhancing and benefiting from relationships with African-American and
Latino-American customers. We derive our revenues from services performed under
one of three pricing arrangements: maintenance, time-and-materials and
fixed-price.
8
<PAGE>
We bill and recognize revenues from time-and-materials projects on the
basis of costs incurred in the period. We use a standardized estimation and work
plan development process to determine the requirements and estimated price for
each project. This process takes into account the type and overall complexity of
the project, the anticipated number of personnel of various skill sets needed
and their associated billing rates, and the estimated duration of and risks
associated with the project. Management personnel familiar with the production
process evaluate and price all project proposals.
We recognize revenues from fixed-price projects using the
percentage-of-completion method based on the ratio of costs incurred to the
total estimated project costs. Fees are billed to the client over the course of
the project. We estimate the price for fixed-price projects using the same
methodology as time-and-materials projects. All fixed-price proposals must first
be approved by a member of our senior management team. Provisions for estimated
losses on contracts are made during the period in which such losses become
probable and can be reasonably estimated. To date, such losses have not been
significant. We report revenue net of reimbursable expenses.
We bill and recognize revenues from maintenance agreements on a monthly
basis while the agreement is in effect. We believe that maintenance arrangements
are indicative of our strong, long-term relationships with clients which yield
significant benefits both to our clients and to us. We believe that we will
achieve greater predictability of revenues and higher revenue growth with
clients who engage us in maintenance-based relationships. Maintenance agreements
are generally one to two years in length and include a renewal clause.
Typically, maintenance relationships with clients result in additional
fixed-price and time-and-materials projects. Maintenance fees currently
represent a small percentage of our overall revenues. Consistent with our focus
on long-term relationships, our goal is to increase our number of
maintenance-based arrangements.
Our revenues and earnings are affected by a number of factors,
including:
- the amount of business developed from existing relationships;
- our ability to meet the changing needs of the marketplace;
- employee retention;
- billing rates;
- our ability to deliver complex projects on time; and
- efficient utilization of our employees.
Many of our business initiatives are aimed at enhancing these factors.
Further, we believe that our focus on maintenance-based arrangements will
continue to improve the predictability of our quarter-to-quarter results.
Our expenses include direct salaries and costs, sales and marketing,
general and administrative and depreciation. Direct salaries and costs includes
salaries, benefits and incentive compensation of billable employees and other
direct costs associated with revenue generation. Sales and marketing expenses
include promotion and new business generation expenses and the salary and
benefit costs of personnel in these functions. General and administrative
expenses include the salaries and benefits costs of management and other
non-billable employees, rent, accounting, legal and human resources costs.
Depreciation expenses primarily include depreciation of technology equipment and
furniture and fixtures. Personnel compensation and facilities costs represent a
high percentage of our operating expenses and are relatively fixed in advance of
each quarter.
To date, we have grown organically by attracting new clients,
attracting new professional staff and expanding the range and complexity of the
services that we offer. In the future, we intend to grow revenues by pursuing a
strategy of increasing revenue from existing lines of businesses, business
alliances and through developing new lines of business.
9
<PAGE>
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED AUGUST 31, 1999 TO THREE MONTHS ENDED AUGUST
31, 1998
REVENUES. Revenues for the third quarter of 1999 increased by $7,552 or
12.7% over the comparative quarter of 1998. The increase in revenues in both
periods was attributable to several factors, including: an increase in the
number of clients served, sales of additional projects to existing clients and
additional service offerings provided by DME.
SELLING, GENERAL AND ADMINISTRATIVE.Selling, general and administrative
expenses increased $206,664 in the third quarter of 1999 from the third quarter
of 1998. These increases were primarily due to the process of establishing the
necessary infrastructure to enable DME to meet its revenue growth goals over the
next 24 months.
PROFESSIONAL FEES. Professional Fees were $188,126 in the third quarter
of 1999 compared to $19,000 during the third quarter of 1998. Professional fees
increased $169,126 in the third quarter of 1999 from the third quarter of 1998.
The increases were primarily due to the increase usage for accounting,
consulting and legal services.
SALARIES AND RELATED EXPENSES. Salary expenses for the third quarter of
1999 was $137,578 compared to $31,046 during the third quarter of 1998. This is
an increase of $106,532 over the comparative quarter of 1998. This increase was
the result of hiring additional salaried employees to support the Company's
internal growth and expanded service offerings.
COMPARISON OF NINE MONTHS ENDED AUGUST 31, 1999 TO NINE MONTHS ENDED AUGUST 31,
1998
REVENUES. Revenues for the first nine months of 1999 increased $136,552
or 72.1% over the first nine months of 1998. The increase in revenues was
attributable to several factors, including: an increase in the number of clients
served, sales of additional projects to existing clients and additional service
offerings provided by DME.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased $302,856 for the first nine months of 1999
compared to the first nine months of 1998. These increases were primarily due to
the process of establishing the necessary infrastructure to enable DME to meet
its revenue growth goals over the next 24 months. During the nine month period
the Company incurred $550,964 in expenses that were mainly associated with the
development of the aforementioned infrastructure.
PROFESSIONAL FEES. Professional Fees were $344,051 in the first nine
months of 1999 compared to $111,938 during the first nine months of 1998.
Professional fees increased $232,113 in the first nine months of 1999 from the
first nine months of 1998. The increases were primarily due to an increase usage
for accounting, consulting and legal services.
SALARIES AND RELATED EXPENSES. For the first nine months of 1999,
Salary expenses increased to $232,447 compared to $66,590 during the first
nine months of 1998. This is an increase of $165,857 over the first nine months
of 1998. This increase was the result of hiring additional salaried employees to
support the Company's internal growth and expanded service offerings.
10
<PAGE>
LIQUIDITY
At August 31, 1999, the Company had $357,390 of cash and cash
equivalents compared to $621 at August 31, 1998. Prior to the reverse merger
(recapitalization) transaction on June 18, 1999, the Company's primary source of
liquidity had been proceeds from officer's loan and operating cash flows.
Net cash used in operating activities was $529,045 for the nine months
ended August 31, 1999 compared to $125,205 used during the comparable period of
1998. During the nine months ended August 31,1999, net cash used in operating
activities was primarily attributable to the process of establishing the
necessary infrastructure that will enable DME to meet its revenue growth goals
over the next 24 months. During the comparable period of 1998, net cash used in
operating activities was primarily attributable to an increase in accrued
expenses and other liabilities.
Net cash used in investing activities was $8,010 for the first nine
months of 1999 compared to $12,674 used during the comparative period of 1998.
The use of cash for investing activities in 1999 and 1998 was attributable to
the acquisition of property and equipment.
Net cash provided in financing activities was $873,532 for the nine
months ended August 31, 1999 compared to $138,500 provided by financing
activities during the first nine months of 1998. The cash provided for financing
activities during 1999 was primarily the result of proceeds from the private
placement of common stock for the reverse acquisition (recapitalization)
transaction. The primary sources of cash from financing activities during the
first nine months of 1998 was $138,500, proceeds from officer's loans.
The Company believes that cash generated from its operations in fiscal
1999-2000 will be sufficient to fund its operations and continue the Company's
growth strategy. Concurrently, the Company is pursing external financing. There
can be no insurance that such additional capital will be available when needed.
The inability to obtain such financing, if needed, could adversely affect the
Company's ability to achieve its business objectives.
IMPACT OF YEAR 2000 ISSUE
BACKGROUND. Many computer programs have been written using two digits
rather than four to identify the year. Any computer programs that have
date-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. Systems that do not properly recognize this information
could fail or generate miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities. This situation
is commonly referred as the Year 2000 or "Y2K" problem.
SCOPE AND IMPACT OF Y2K ON DME. DME uses standard off the shelf
accounting software package for all of its accounting requirements. Management
has contacted the software vendor and determined that the accounting software is
Microsoft based and management continually monitors the Year 2000 status of such
software. Costs of investigating internal and external Year 2000 compliance
issues have not been material to date.
DME may experience material problems and costs with Y2K compliance that
could adversely affect its business, results of operations and financial
condition. DME has not yet fully developed a contingency plan to address
situations that may result if it is unable to achieve Y2K readiness of its
critical operations. Finally, the Company is also subject to external forces
that might generally affect industry and commerce, such as utility or
transportation company Y2K compliance failures and related service
interruptions.
11
<PAGE>
UNCERTAINTIES AND CONTINGENCIES. DME presently believes that with
modifications to existing software and conversions to new software, the Y2K
issue can be mitigated. Management does not believe that DME will incur
significant operating expenses or be required to invest heavily in computer
system improvements to be Y2K compliant. However, even if such modifications or
conversions are not made, or are not completed timely, DME would be able to
continue operations manually. This would result in more cumbersome and less
efficient operations but is not currently expected to have a material adverse
effect on DME's business, operations or financial condition.
However, there is no guarantee that the software of other companies on
which DME's software relies will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with DME's
systems, would not have a material adverse effect on DME and its operations.
Significant uncertainty exists concerning the potential costs and effects
associated with any Year 2000 compliance.
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION AND SUBSEQUENT EVENTS
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS. None.
(b) REPORTS ON FORM 8-K. On June 25, 1999 the Company filed a current report on
Form 8-K relating to the reverse acquisition (recapitalization) of Digital Mafia
LLC on June 17, 1999 and reporting changes in control of Company, acquisition or
deposition of assets, (ITEM 2) and change in certifying accountants (ITEM ). The
financial statements relating to the reverse acquisition (recapitalization) ITEM
7, were filed by amendment to the Form 8-K on September 7, 1999.
12
<PAGE>
SIGNATURE
Pursuant to requirements of the Securities Exchange Act of 1934, as
amended, the Issuer has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
October 14, 1999 DME Interactive Holdings, Inc.
By:________________________
Andre H. McKoy
Executive Vice President, Finance
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statements of income for the nine months August 31, 1999 and the
consolidated balance sheet as of August 31, 1999 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-START> DEC-1-1998
<PERIOD-END> AUG-31-1999
<CASH> 367,750
<SECURITIES> 0
<RECEIVABLES> 11,645
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 395,927
<PP&E> 31,857
<DEPRECIATION> 0
<TOTAL-ASSETS> 427,784
<CURRENT-LIABILITIES> 367,183
<BONDS> 0
0
0
<COMMON> 23,357
<OTHER-SE> 129,649
<TOTAL-LIABILITY-AND-EQUITY> 427,784
<SALES> 0
<TOTAL-REVENUES> 325,980
<CGS> 0
<TOTAL-COSTS> 1,056,914
<OTHER-EXPENSES> (4,339)
<LOSS-PROVISION> (735,273)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
